Business tenancy — Tenant applying for new tenancy — Landlords opposing new tenancy — Landlords intending to demolish substantial part of premises — Preliminary issue — Whether landlords establishing reasonable prospect of demolishing tenant’s fixtures — Ruling in favour of claimant
The claimant occupied land under a business tenancy for the purposes of the Landlord and Tenant Act 1954. It applied for a new tenancy under Part II of the Act. The defendant landlords opposed the application under section 30(1)(f) on the ground that they intended to demolish either the entire premises comprised in the holding or a substantial part of them upon the termination of the tenancy, and that they could not do so without obtaining possession of the holding.
All the structures on the site, including two large huts, but excluding a small stone shed, had been introduced by the claimant. It contended that those structures were chattels and that the defendants could not found a ground of opposition to a new tenancy upon an asserted intention to demolish the claimant’s chattels. The defendants argued that the objects in question were tenant’s fixtures and that they formed part of the land, even though the claimant had a right to remove them upon the termination of the tenancy.
The county court ordered the question as to whether the defendants satisfied the ground of opposition in section 30(1)(f)be tried as a preliminary issue. The questions for determination were, inter alia, whether: (i) the structures on the land remained chattels or were annexed to the land; and (ii) the defendants could establish an intention to demolish the premises that were comprised in the holding.
The claimant argued that, in so far as any of the objects on the land were tenant’s fixtures, they were “premises comprised in the holding” within section 30(1)(f). It submitted that even though the defendants might have a genuine intention to demolish the structures, they could not show any reasonable prospect of doing so for the purposes of the test in Gregson v Cyril Lord Ltd (1962) 184 EG 789; the structures would not be present at the termination of the lease (assuming that a new tenancy was not granted) since the claimant would have removed them.
Held: The court ruled in favour of the claimant.
(1) The question of whether an item had become part of the land had to be distinguished from a tenant’s right to remove it, and was a matter of common sense depending upon degree and the purpose of its annexation to the land. The parties’ subjective intention was irrelevant. The huts in the present case were the tenant’s fixtures: Elitestone Ltd v Morris [1997] 2 EGLR 115; [1997] 27 EG 116 applied.
(2) The defendants had failed to establish the necessary intention under section 30(1)(f). The “premises comprised in the holding” in that section referred to the physical premises comprised in the tenancy at the date of the hearing, although this was restricted to premises or property that could be demolished. Where a tenant’s fixtures were involved, the necessary hypothetical question was whether the landlord intended to demolish them. A landlord would generally be unable to establish a reasonable prospect of demolishing a tenant’s fixtures, since the tenant would usually remove its fixtures upon the termination of the tenancy.
In the present case, the huts were the most substantial structures on the land and the evidence was that the claimant intended to remove them. The defendants would not have removed them of their own volition as required by Gregson. A landlord could not acquire a ground of opposition to a new tenancy based upon the tenant exercising its own right of severance: Gilman Caterers v St Bartholomew’s Hospital Governors [1956] 1 QB 387 and New Zealand Government Corporation v HM&S Ltd [1982] 1 QB 1145 considered.
Malcolm Warner (instructed by Stones, of Exeter) appeared for the claimant; Leslie Blohm (instructed by Clarke Willmott, of Bristol) appeared for the defendants.
Eileen O’Grady, barrister
