Mr Justice Kay handed down a judgment on appeal last week which confirms that for a landlord seeking to resist lease renewal on ground (f) (intention to demolish or reconstruct), it is intention not motive which the court must be satisfied of. A landlord which had apparently contrived a scheme of works with the sole purpose of evicting the tenant by proving ground f successfully resisted renewal.
The case, S Franses Limited v The Cavendish Hotel (London) Limited [2017] EWHC 1670 has sent reverberations around the commercial landlord and tenant sector. It concerned a textile dealership and consultancy situated in the ground floor and basement of the Cavendish Hotel in Westminster. The Landlord operated the hotel.
The Tenant occupied the premises under two commercial leases both of which benefitted from the security provided by the Landlord and Tenant Act 1954. Thus, it had a right to renew the lease which the landlord could only resist on the basis of one of the grounds in the Act.
The Landlord resisted renewal on the basis it intended to carry out works and that it could not do so without obtaining possession.
At first instance, the evidence heard by the court was that the scheme of works designed by the Landlord would not have been done had the tenant vacated voluntarily. In essence, the judge found that the landlord was intending to do the work purely to evict the tenant, regardless of the commercial or practical utility and irrespective of the expense. The court held that ground f requires proof of the intention to do the works but that the ground is about the what (ie what work) and the whether (is the intention genuine), not the why.
Whilst the landlord’s motives in doing the work are relevant to the assessment of whether the expressed intention is genuine or not, if the court finds a genuine intention to do the work then the ground is made out. On appeal the tenant went so far as to call the scheme of works a “charade”, but the judge had accepted that the landlord’s undertaking given to the court that it would do the work was compelling evidence that the intention was genuine.
The tenant’s appeal succeeded on two issues but failed on this central issue. The case has been remitted to the county court for further fact finding on the timescales within which work must be intended, and the extent to which the work could be done with the tenant in situ. However, it remains to be seen whether the intention question will be further appealed.
Does the case open the door to landlords devising clever schemes to bring themselves within ground f? Possibly so – although undoubtedly it is an expensive way to achieve an eviction. The scheme of works which is devised will need to involve work which cannot be done under the rights of entry in the lease and without obtaining possession, so will normally be substantial. The landlord will need to prove that it fully intends to carry out the work to be able to prove the ground and is likely to have to commit to doing the work in some shape or form.
