The Landlord and Tenant Act 1954 regulates the way in which business tenancies can be terminated. Importantly, it gives business tenants security of tenure. However, that security has been called into question recently in the case of S Franses Ltd v The Cavendish Hotel (London) Limited  EWHC 1670 (QB). In July 2017, judgment was handed down after an appeal from the County Court that denied a tenant their security of tenure.
S Franses Ltd v The Cavendish Hotel (London) Limited
The tenant was a textile dealership and consultancy. It occupied the premises on the ground floor and basement as a retail art gallery, showroom and archive for materials relating to its core business. The remainder of the building was occupied and managed by the landlord as hotel. The tenant benefitted from the security provided by the Landlord and Tenant Act 1954 that allows a right to renew the lease. The landlord could only resist on the basis of one of the statutory grounds. The landlord relied upon S30 (1) (f) of the Act, which enables a landlord to oppose a lease renewal, it provides:
“That on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding”.
The tenant issued proceedings seeking the grant of a new tenancy. In the County Court the judge found that the scheme “had been designed with the material intention of undertaking works that would lead to the eviction of the tenant regardless of the works’ commercial or practical utility and irrespective of the expense”. Crucially whilst the landlord intended to carry out such a scheme of works, they did so purely as a means to an end. They did not have any purpose for wishing to complete the works. Indeed the works were contrived as a way of invoking ground (f) nonetheless, the judge found in the landlord’s favour. The tenant appealed to the High Court. The key argument for the tenant was that if a landlord could provide an undertaking to perform work, regardless of their intention for doing so, this would undermine the security provided to them under the Act.
In the case of S Franses Ltd v The Cavendish Hotel (London) Limited, the High Court held that a landlord is entitled to refuse the grant of a protected business tenancy on redevelopment grounds. This is so even in scenarios where the proposed work appears to be devised for the purpose of evicting the tenant and has no other benefit for the landlord.
With a view to the future, it now appears that when a Court is considering whether a landlord can resist a lease renewal on ground (f), it is merely intention, which the court must be satisfied of, and not the landlord’s true motive. Whilst the case may prove beneficial to landlords, time will tell the impact on business tenants.