In the recent High Court case of S’Franses Ltd v The Cavendish Hotel (London) Ltd it was held that a landlord can show sufficient intention to carry out works even though he has only resolved to do those works to comply with Ground (f), that is to say, Section 30(1)(f) of the Landlord and Tenant Act 1954.

Termination of business tenancies

If a lease is protected under the Landlord and Tenant Act 1954, the tenant has a right to a renewal lease; this right is subject to the landlord’s ability to terminate the lease if he can prove that one or more of the specified grounds apply.

One of the most frequently used grounds is Ground (f): that the Landlord has an intention to demolish or reconstruct the premises on the termination of the current tenancy or intends to carry out substantial works of construction on the holding and could not reasonably do so without obtaining possession.

The Landlord must be able to show that he has a genuine intention and a reasonable prospect of carrying out the work; evidence of this may include preparation and approval of plans, a successful application for planning permission and evidence of the necessary financial ability. The landlord must prove that he has this intention at the date of the hearing and must be able to show that he intends to start work at the end of the current tenancy (or within a reasonable time thereafter).

The decision in S’Franses Ltd v The Cavendish Hotel (London) Ltd

The tenant in this case occupied the ground floor and basement of a building otherwise occupied and managed by the landlord as a luxury hotel. The tenant wished to renew its lease and served a notice on the landlord to this effect. However, the landlord served a counter-notice opposing the renewal on Ground (f).

The landlord admitted that the redevelopment works would not be undertaken if the tenant left of its own accord and would not be undertaken at all if the court ordered that a new lease be granted. However, the landlord undertook to the court that, if vacant possession on Ground (f) were ordered, the works would be commenced immediately and would be completed. It was apparent that the landlord’s motive for planning the redevelopment works was purely to obtain vacant possession.

The tenant argued that the landlord’s intention to carry out the redevelopment works was conditional upon the works being necessary to satisfy Ground (f) and that this conditionality meant that the landlord did not have sufficient intention.

The Court held that, as at the date of the hearing, the landlord’s intention to carry out the redevelopment works was not truly conditional as its only option was to succeed on Ground (f). The judge acknowledged that the landlord had put together the plan for the redevelopment works for the purposes of establishing this Ground but was clear that this did not prevent the intention from being genuine and settled.

Commentary

This case provides an interesting illustration of the issues that can arise when seeking to terminate a business tenancy under Ground (f). In particular, it shows that a well advised and determined landlord can always defeat a claim for a new business tenancy if it’s willing to carry out redevelopment works which meet the Ground (f) criteria. The fact that the works are planned purely to satisfy Ground (f) is irrelevant.

For more information about termination of business tenancies see our note on 1954 Act Renewal and Termination – Ending the Lease.