Section 30(1)(c) of the Landlord and Tenant Act 1954, so often neglected, might now become a landlord's best friend. This provision allows a landlord of a commercial letting to object to the grant of a new tenancy on the grounds of other substantial breaches of the lease or for any other reason connected to the tenant's use or management of the holding. It had become so underused that it was seriously argued by the tenant in Horne and Meredith Properties v Cox and Billingsley [2014] EWCA Civ 423 that it should be regarded as superfluous to the LTA 1954. The Court of Appeal disagreed and a further decision, Youssefi v Musselwhite [2014] EWCA Civ 885, has breathed even more life into this ground.

The legislation

The LTA 1954 gives statutory protection to commercial tenancies. A landlord of a tenancy protected by the Act can only recover possession of demised land in ways that are prescribed by the legislation. A landlord's section 25 notice, if it seeks to end the tenancy, must state a ground (or grounds) of opposition to the grant of a new tenancy. If a tenant applies for a new tenancy, again the landlord must establish grounds to show why it should not be granted.

Section 30(1) LTA 1954 contains the permissible grounds. These are listed under section 30(1) as subsections (a) to (g). Section 30(1)(a) is concerned with the tenant's breach of his or her repair obligations; section 30(1)(b) refers to a tenant's persistent delay in paying rent.

Section 30(1)(c) reads as follows:

(c) that the tenant ought not to be granted a new tenancy in view of other substantial breaches by him of his obligations under the current tenancy, or for any other reason connected with the tenant's use or management of the holding; ...

'Any other reason'

It was confirmed in Home and Meredith Properties that the 'or' separating the two parts of the subsection makes it clear that it is not necessary for the court to find a breach of an obligation of the tenancy to engage the subsection. 'Any other reason' need not be concerned with the relationship of the parties as landlord and tenant. The words are broad: the court can look at everything it regards as relevant in connection with the tenant's use and management of the holding.

In Horner and Meredith Properties the tenant had been engaged in protracted, expensive and unreasonable litigation over rights of way and a car park. This was not a 'substantial breach'. The Court of Appeal agreed with the trial judge that where the litigation is itself concerned with vindicating rights granted under the tenancy, that litigation is connected with the tenant's use and management of the holding.

InYoussefi the Court was concerned with the tenant's refusal on a number of occasions to allow the landlord access to inspect the property. These breaches were held to be substantial. Furthermore, the tenant failed to comply with the user clause. It was held  that there was a positive obligation on the tenant in this case to keep open a business that complied with this covenant.

'Ought'

The words 'the tenant ought not to be granted a new tenancy' appear in a number of the grounds. A number of cases had unfortunately thrown up a range of different ways to apply this test. Gloster LJ in Youssefi held that these differences are largely semantic. She made the following points:

  • It is not appropriate to burden these words with an 'exhaustive exposition'. The test is deliberately loosely stated;
  • The Judge is given a measure of discretion, albeit a narrow one;
  • The court will look forward and ask whether the proper interest of the landlord would be prejudiced by continuing in a landlordItenant relationship with this particular tenant;
  • This can be put in another way: would it be unfair to the landlord having regard to the tenant's past performance and behaviour, if the tenant were to be 'foisted on the landlord for a new term?;
  • Under section 30(1)(c) the approach is broader: the court is entitled to focus not only on 'other substantial breaches' but also, or alternatively, on 'any other reason connected with the tenant's use or management of the holding';
  • It is not necessary for the landlord to demonstrate that the relevant breach adversely affects his rental income or the value of the reversion when considering prejudice.

As a result of the unreasonable behaviour of the tenant in Horner and Meredith Properties the Court of Appeal upheld the decision not to grant a new tenancy.

Likewise, in Youssefi the Court of Appeal accepted that it would be unfair and prejudicial to the landlord to grant a new tenancy. It was not necessary for the landlord to prove a quantifiable loss to the value of the reversion to make out this ground.

Conclusion

These two decisions have made what used to be a lacklustre 'catch all' provision into a muscular ground of opposition. It is easy to see how a landlord can use this ground to get rid of a troublesome tenant. Furthermore, the revamped definition of 'prejudice' and 'fairness' to remove the need to show a quantifiable loss makes it more straightforward for a landlord to make out this ground. The author would note, of course, that if a financial loss to the reversion can be established this would no doubt assist in the 'ought not' test. It is likely that commercial landlords will pay section 30(l)(c) more interest than they have done in the past when considering grounds of opposition under the LTA 1954.