Landlord and Tenant Act 1954 – Business tenancy – Renewal – Grounds of opposition – Appellant tenant serving notice on respondent landlord under section 26 of 1954 Act requesting new business tenancy – Respondent opposing application under section 30(1)(f) relying on intention to convert premises into two units – County court dismissing application for new tenancy – Whether judge wrongly holding reasonable time for commencing works within 12 months of obtaining vacant possession – Whether judge deciding works fell within ground (f) failed to exclude works possible under right of entry – Appeal allowed in part
The appellant was the tenant of premises at 80 Jermyn Street, St James’, London W1, from which it carried on business as a textile dealership and consultancy, specialising in antique tapestries and textile art. The remainder of the building was occupied and managed by the respondent landlord as a luxury hotel, including car parks at basement and sub-basement levels, as well as retail outlets. The local authority had designated St James’ as a special policy area in which they sought to protect and promote private members’ clubs, art galleries and niche retail outlets.
On 16 March 2015, the appellant served notice under section 26 of the Landlord and Tenant Act 1954 requesting a new tenancy, specifying a commencement date of 3 January 2016. The respondent served counter-notices opposing a new tenancy under section 30(1)(f) of the 1954 Act. The appellant instituted proceedings in the county court and, in its defence, the respondent averred that, on termination of the existing tenancy, it intended to carry out works to ready the premises for conversion into two retail units.
The judge accepted the appellant’s argument that some aspects of the intended works had been contrived only for the purposes of ground (f). However, he dismissed the appellant’s claim for a new tenancy. He concluded, amongst other things, that the respondent had proved that it had, in good faith, a firm, settled and unconditional intention to proceed immediately with the works immediately on termination of the tenancy, within a reasonable time (12 months) of obtaining vacant possession. The appellant appealed.
Held: The appeal was allowed in part.
(1) Section 30(1)(f) of the 1954 Act required the court to consider the nature and quality of the landlord’s intention at the termination of the tenancy, including the prolongation of the contractual term by force of section 64, extending the date of termination to three months and 21 days after the judge’s order. The courts had interpreted ground (f) to include a period of reasonable time after the end of the tenancy and the court’s consideration of the landlord’s intention had to cover that period, assessed on the evidence available at the date of the hearing. To that extent, the landlord’s intention was current but regard must also be had to what the landlord intended to do once he obtained vacant possession, including any period of reasonable time thereafter. The unconditionality of a landlord’s intention required account to be taken of all relevant circumstances including, in the present case, the respondent’s undertaking to carry out the works. Ultimately, it was for the judge to assess the value of the undertaking. In this case, the judge held in terms that the respondent’s underlying motive did not serve to undermine its protestation that it had a genuine and settled intention to proceed. That was a sufficient intention within ground (f).
(2) Section 31(2) provided that where a landlord failed to prove his ground at trial, but the court was satisfied that it would be able to proceed within twelve months of the date specified in the section 26 request, the court might make a declaration to that effect. The court did not accept that the effect of section 31(2) was to prevent a court from holding that a reasonable time for the purposes of section 30(1)(f) was limited to twelve months. Section 30(1)(f) and section 31(2) were not necessarily looking at the same period. The court’s power under section 31(2) was tied to the relevant notice and enabled the period specified to be extended. Section 30(1)(f) was looking at a different period, namely a reasonable time after the termination of the tenancy. Accordingly, there was not direct comparison of like with like under section 30(1)(f) and 31(2) respectively.
The length of a reasonable time was a matter of impression for the trial judge who, in the present case, had not received detailed submissions on that issue. He considered that the respondent would need up to 12 months to surmount the practical issues but had failed to explain why such a generous period was reasonable in all the circumstances. The court could not simply hold the respondent to its undertaking to commence the works immediately. That dealt with the aspects of the subjective element of the landlord’s intention as mandated by the authorities. However, it did not deal with the objective element, as to which further findings of fact had to be made: Method Developments v Jones [1971] 1 WLR 168, London Hilton Jewellers Ltd v Hilton International Hotels Ltd [1990] 1 EGLR 112 and Edwards v Thompson (1990) 60 P & CR 526 considered.
(3) It was incumbent on the judge to divide or partition the works into those which could be effected under the right of entry in the lease and those which could not. Works which could be carried out under the right of entry fell outside ground (f) because they could be performed without obtaining possession of the holding. In the present case, it was clear that the judge was considering the entire works for the purpose of determining whether they qualified under ground (f). It was not arguable that the judge had excluded from account any works which could be undertaken pursuant to the right of entry. The works had to be apportioned or divided up to the extent necessary to determine whether or not the respondent needed possession of the holding: Cerex Jewels Ltd v Peachey Property Corporation plc [1986] 2 EGLR 65, Romulus Trading Co Ltd v Trustees of Henry Smith’s Charity (No 1) [1990] 2 EGLR 75 and Ivorygrove Ltd v Global Grange Ltd [2003] 1 WLR 2090; [2003] 2 EGLR 87 considered.
Joanne Wicks QC (instructed by David Cooper & Co) appeared for the appellant; Nicholas Taggart (instructed by Maples Teesdale LLP) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of S Franses Ltd v Cavendish Hotel (London) Ltd.
