The Supreme Court will rule next week in a landmark appeal that could have a major impact on the ability of landlords to refuse commercial tenants’ applications for lease renewals.
The court will give one of the most eagerly anticipated property law decisions of the year on 5 December. It is being asked to decide what intention a landlord is required to show in order to refuse a new lease on grounds of redevelopment plans, under ground (f) of section 30(1) of the Landlord and Tenant Act 1954.
Unusually, the landlord in this case, the Cavendish Hotel at Jermyn Street, London W1, has made clear all along that its sole motive for carrying out the planned redevelopment work necessary to satisfy ground (f) is to get rid of its tenant of part of the hotel premises, S Franses Ltd, which operates an art gallery and showroom there.
The Cavendish Hotel has offered an undertaking that the works will be carried out. In the High Court decision under challenge, a judge found that this was enough for the landlord to rely on ground (f).
The case involves a dispute between landlord, the Cavendish Hotel, and its tenant of premises at 80 Jermyn Street, S Franses, which carries on business as a textile dealership and consultancy, specialising in antique tapestries and textile art.
The tenant applied under the 1954 Act for a new tenancy, but the landlord opposed this application under section 30(1)(f).
A landlord is entitled to refuse a new lease under ground (f) if it “intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work or construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding”.
Both the Central London County Court and the High Court sided with the landlord on the key preliminary issue of whether the landlord had made out its ground of opposition under ground (f).
Mr Justice Jay at the High Court found that the requisite intention under ground (f) was demonstrated, even though the evidence was that the landlord’s motive for redevelopment was to get rid of the tenant.
Unusually, permission was granted for a “leapfrog” appeal straight to the Supreme Court to decide the important matter.
Other issues in the complex proceedings may subsequently fall to be decided by the county court, High Court and Court of Appeal.
The Supreme Court is being asked to decide two key questions:
■ Whether a landlord which intends to carry out works if, and only if, those works are necessary to satisfy s 30(1)(f), and which offers an undertaking to carry out those works (as the landlord in this case has done ) has the requisite intention for the purposes of ground (f).
■ Whether a landlord whose sole or predominant commercial objective is to undertake works in order to fulfil ground (f) and thereby avoid the grant of a new lease to the tenant, and which offers an undertaking to carry out those works, has the requisite intention for the purposes of ground (f).
To send feedback, e-mail jess.harrold@egi.co.uk or tweet @estatesgazette
