Horne & Meredith Properties v Cox

A recent Court of Appeal decision has highlighted that landlords will not be compelled by the Court  to renew a business tenancy under the Landlord and Tenant Act 1954, when the tenant has engaged in  unreasonable conduct.

Facts

Mr Cox and Miss Billingsley had occupied the property for the retail sale of upmarket women’s  clothes under a renewed lease initially granted in 1981. The Landlord, Horne & Meredith Properties, sought to deny further renewal under two grounds of the Landlord and  Tenant Act 1954. The first ground under s.30(1)(f) for redevelopment was denied by the County Court  and the landlord’s opposition then revolved around s.30(1)(c) for “substantial breaches by [the  tenant] of his obligations under the tenancy or for any other reason connected with the use of  management of the holding”.

Horne & Meredith Properties maintained that the conduct of Mr Cox and Miss Billingsley was a  sufficient breach. The Court explored claims that Mr Cox and Miss Billingsley  had initiated  frequent litigation spanning sixteen years including “wholly baseless allegations” and a partial  restraining order. The County Court’s decision was that the relationship between Horne & Meredith  Properties, and Mr Cox and Miss Billingsley had “irretrievably broken down”, the ground had been  established and the tenancy was to terminate. Mr Cox and Miss Billingsley appealed that the matters  relied on by the Judge in coming to this decision were not reasons connected with the use or  management of the holding.

Court of Appeal Decision

The Court of Appeal considered the wording of s.30(1)(c) and declared that it consisted of two  separate limbs that stood alone:

  • Substantial breaches by [the tenant] of his obligations under the tenancy; OR
  • For any other reason connected with the use of management of the holding

Test

The case considered the second limb and determined that the questions to be answered were:

  • Are the matters relied upon reasons connected with the tenant’s use or management of the holding?
  • Are they such that the tenant ought not to be granted a new tenancy of the holding?

The judge affirmed the decision in Eichner v Midland Bank Executor and Trustee Co. Ltd [1970] 1  W.L.R. 1120 in finding that extensive litigation could amount to a reason connected with the tenant’s use and  management of the holding. The second test amounted to a value judgment with the suggestion that  there be some fault or culpability on the part of the tenant that rendered it unfair for the  landlord to be compelled to re-enter into legal relations with them. In this case Mr Cox and Miss  Billingsley had “grotesquely exceeded any reasonable balance” and so their appeal was dismissed.

Conclusion

An irretrievably broken down relationship between landlord and tenant may be sufficient grounds to  reasonably refuse a lease renewal under s.30(1)(c) Landlord and Tenant Act 1954 if it can be proved  that it would be unfair to compel the landlord to continue legal relations with the tenant.