Landlords intention to redevelop – The long awaited decision from the Supreme Court is now available
The long awaited decision in the case of S Franses Limited (“tenant”) v. The Cavendish Hotel (London) Limited (“landlord”) has finally been handed down. As any practitioner in this area will tell you, there is little case law under the Landlord & Tenant Act 1954 (‘the 54 Act’). This is the decision which explores the right for a landlord to rely on the redevelopment ground in order to prevent a tenant’s right to renew its business lease.
The Supreme Court had to clarify the nature of ‘intention’.
Existing case law had established that a landlord must have a fixed and settled intention as at the date of trial to carry out works of redevelopment to satisfy ground (f) and that provided the landlord has this intention, the landlord’s motive for carrying out the works is irrelevant.
The Cavendish Hotel opposed the grant of a new lease to the art gallery S Franses relying on ground (f). S Franses occupies the ground and basement of 80 Jermyn Street, St James, London. The remainder of the building is a luxury hotel, The Cavendish.
The landlord admitted that the works would not be carried out if the tenant left the unit voluntarily or, put another way, that the only reason to undertake the work was to obtain possession from the tenant relying on ground (f).
In both the Central London County Court and the High Court, The Cavendish Hotel succeeded and the Judge agreed in both courts that The Cavendish Hotel had satisfied the ground (f) test. Its motives for carrying out the works was irrelevant. S Franses appealed and was given permission to leapfrog straight to the Supreme Court.
S Franses argued that:-
- When parliament said that a landlord had to intend to do works to satisfy ground (f) what it meant was that such works had to have some commercial purposes beyond trying to get vacant possession from a tenant; and
- That the intention needs to be unconditional.
The Supreme Court held that the landlord’s purpose or motive is immaterial except to test whether the landlord has the necessary unconditional intention to redevelop under ground (f).
If the landlord intends to carry out the works and the intention is unconditional the landlord’s motive is still irrelevant.
Accordingly, landlords need to be prepared to prove that they will carry out the required works whether or not the tenant leaves voluntarily. It is not enough for a landlord to use the ground (f) procedure solely as a means to get rid of a tenant.
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