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Supreme Court Decides Landmark Case in Favour of Tenants

Summary: The Supreme Court held[1] that a landlord could not rely on Section 30(1)(f) of the Landlord and Tenant Act 1954 (“ground (f)”) to evict a tenant if they didn’t have a settled intention to carry out the reconstruction of a premises.

Parties: The claimant was S Franses, an art dealer (The Tenant). The defendant was the Cavendish Hotel (The Landlord).

The Facts: The tenant rented space from the landlord. When The Tenant requested a new lease, The Landlord opposed this under Section 30(1)(f) of the Landlord and Tenant Act 1954 (“ground (f)”), which allows a landlord to oppose the grant of a new business tenancy where it can be demonstrated that they intend to reconstruct, demolish, or carry out substantial works of construction on the premises. This only applies if the landlord could not reasonably do the work without obtaining possession of the building.

The landlord argued that it was planning to develop the gallery into two retail units and was therefore not required to grant a new tenancy. The tenant argued that there was no actual intention to carry out the development and that the plans were being used as a pretext to evict them. The landlord conceded that, although they intended to undertake the work, the proposed scheme of works was designed to lead to the eviction of the tenant under ground f regardless of the cost and practical utilities.

Both the County Court and the High Court held that the landlord intended to carry out the works and therefore had satisfied ground (f).

The decision of the Supreme Court: The Supreme Court unanimously found that ground (f) could not be invoked in this case.

They found that ground (f) requires a firm and settled intention to carry out the scheme of works. The landlord’s purpose or motive is immaterial. The “acid test” (as described by Lord Sumpton) when assessing intention is whether the landlord would intend to do the same works if the tenant left voluntarily. The Court concluded that the entire value of the proposed scheme lay in removing the tenant and not in any benefit to be derived from reconstruction itself, and as such ground (f) could not be invoked. The Court went on to say that although the test in ground (f) does not depend on the objective usefulness of the works, it may be evidence of the landlord’s intention behind it.

Comments: Landlords are understandably concerned about the additional burden they face after this judgment. The Court recognised that this decision may introduce more complexity and expense into proceedings in the County Courts. However, they could see no other way of giving effect to the intention of Parliament, that a tenant has a statutory right to review and this right should not, they said, be prevented by proposed works that would not have been undertaken by the landlord had they left voluntarily. Landlords and their surveyors would be wise to disclose the intended works only when they have actually finalised their plans for works. This will reduce the risks that the tenant could attempt to use this defence.

[1] S Franses Ltd (Appellant) v The Cavendish Hotel (London)Ltd(Respondent) [2018] UKSC62

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