Landlord and Tenant – Business tenancy – Renewal – Grounds of opposition – Appellant tenant serving notice on respondent landlord under section 26 of Landlord and Tenant Act 1954 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 – High Court upholding decision – Whether landlord entitled to oppose new tenancy if intended works having no other purpose than getting rid of tenant and not undertaken if tenant left voluntarily – Appeal allowed
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 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 landlord served counter-notices opposing a new tenancy under section 30(1)(f) of the 1954 Act, namely that it intended to demolish or reconstruct the buildings on the termination of the current tenancy. 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 respondent landlord gave an undertaking that the works would be carried out if possession was granted. The county court and, on appeal, the High Court held that the respondent had established the requisite intention even if it only intended to carry out the works if they were necessary to satisfy ground (f) and the works had no other commercial objective: [2017] EGLR 34; [2017] EWHC 1670 (QB).
Held: The appeal was allowed.
(1) The touchstone of section 30(1)(f) was a firm and settled intention to carry out the scheme of works. The landlord’s purpose or motive were irrelevant save as material for testing whether a firm and settled intention existed. It was for the landlord to decide what works he wished to carry out and where. If his intention was genuine, it did not matter whether it was reasonable or whether reasonable changes to the scheme would make it consistent with the tenant’s continued possession: Majorstake Ltd v Curtis [2008] 1 EGLR 44 applied. Decca Navigator Co Ltd v Greater London Council [1974] 1 WLR 748 and Blackburn v Hussain [1988] 1 EGLR 77 considered.
(2) The present appeal did not turn on the landlord’s motive or purpose, nor on the objective reasonableness of the proposed works, but on the nature and quality of the intention that ground (f) required. The entire value of the works proposed by the landlord derived from obtaining vacant possession, not from any benefit arising from the reconstruction itself. The commercial reality was that the landlord was proposing to spend money to obtain vacant possession. The landlord’s intention to carry out the works was conditional. It intended to carry them out only conditionally on their being necessary to get the tenant out and not, for example, if he left voluntarily or if the judge was persuaded that the works could be done by exercising a right of entry. An intention of that type did not engage ground (f). The problem was not the mere conditionality of the landlord’s intention, but the nature of the condition.
(3) Section 30(1)(f) assumed that the landlord’s intention to demolish or reconstruct the premises was being obstructed by the tenant’s occupation. Hence the requirement that the landlord “could not reasonably do so without obtaining possession of the holding”. Further, section 31A provided that the court should not hold that ground (f) had been satisfied if the works could reasonably be carried out by exercising a right of entry that the tenant was willing to include in the terms of the new tenancy. Therefore, the landlord’s intention to carry out the works could not be conditional on whether the tenant chose to assert his claim to a new tenancy. The landlord’s intention to demolish or reconstruct the premises had to exist independently of the tenant’s statutory claim to a new tenancy.
On the facts, the appellant’s possession of the premises did not obstruct the respondent’s intended works and the respondent did not intend to carry them out if the appellant persuaded the court that the works could reasonably be carried out while it remained in possession. The entire value of the proposed scheme lay in removing the appellant and not in any benefit to be derived from reconstruction itself.
(4) Just as the landlord’s motive or purpose, although irrelevant in themselves, might be investigated as evidence of the genuineness of his professional intention to carry out the works, so also they might be relevant as evidence of the conditional character of that intention. In both cases, the landlord’s motive and purpose were being examined only because inferences might be drawn from them about his real intentions. Likewise, although the statutory test did not depend on the objective utility of the works, a lack of utility might be evidence from which the conditional character of the landlord’s intention might be inferred. On the facts found, the respondent did not intend, within the meaning of section 30(1)(f), to carry out the works specified in the scheme of works relied upon in opposition to the appellant’s application for a new tenancy.
(per Lord Briggs, Lady Black and Lord Kitchin agreeing) Nothing in the court’s judgment altered the rule laid down in Betty’s Cafés Ltd v Phillips Furnishing Stores Ltd (No 1) [1959] AC 20 that the question whether the landlord had the requisite intention to enable the grant of a new tenancy to be resisted under section 30(1)(f) had to be determined by reference to the landlord’s intention at the time of the hearing, not at any earlier date.
Joanne Wicks QC and Benjamin Faulkner (instructed by David Cooper & Co) appeared for the appellant; Guy Fetherstonhaugh QC and 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
