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Supreme Court stops landlord from circumventing business tenant’s right of renewal with scheme of works designed solely to enable eviction

6 December 2018

Business tenants can breathe a sigh of relief...

We previously reported on the High Court decision of S Franses Ltd v The Cavendish Hotel (London) Ltd [2017] EWHC 1670 (QB) in which it was held that a landlord’s motive could not prevent it from successfully utilising ‘ground (f)’1 under s30(1) of the Landlord and Tenant Act 1954 to oppose a lease renewal. The extensive internal works the landlord declared it would carry out in this case were (by the landlord’s own admission) designed solely to enable eviction of the tenant. From a tenant’s perspective, the cause for concern is this would seemingly give wealthy landlords the green light to engineer a programme of substantial works (even if it reduces the property value) to simply oppose a lease renewal.

However, on appeal the Supreme Court2 has sensationally overturned the High Court by a unanimous decision. Under the ruling the landlord’s motive behind the works or reasonableness of them remains immaterial except to test whether the landlord has a reasonable intention. The Supreme Court concentrated on 2 points - the conditionality of the intention and the nature of that condition:

  1. Ground (f) permits a landlord to oppose a renewal where it intends to carry out work within that section and cannot “reasonably do so without obtaining possession” of the property.

    As a matter of fact the tenant’s possession of the property did not obstruct the intended works;

  2. Furthermore, the landlord did not intend to carry out the works if the tenant vacated the premises voluntarily, nor did it intend to do so were it to be held that the tenant could remain in possession whilst the landlord re-entered and worked around it.

    The court held that a Ground (f) intention could not be conditional on whether the tenant was exercising its right of renewal as in this case the “entire value of the proposed scheme [lay] in removing the tenant as opposed to any benefit from the reconstruction itself”.

On the face of it, this is a decision that tenants have been crying out for to reaffirm faith in the security of tenure regime - landlords should not be permitted to fabricate works to circumvent a tenant’s right of renewal. However a note of caution; this ruling was based on firm evidence that the intention to carry out works was conditional on whether the landlord could evict the tenant and the fact that the tenant’s occupation would not cause an obstruction to the works being carried out.

Whilst this saga has established that the 1954 Act does not question a landlord’s motive or the reasonableness behind its decision to carry out works, tenants may wish to examine such purpose or motive as a way of exposing any conditionality behind the landlord’s intention.

Ground (f) enables a landlord to oppose a lease renewal when it intends to demolish or reconstruct the premises.

2 [2018] UKSC 62

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