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Supreme Court Hands Down Judgment in Lease Renewal Claim

on Tuesday, 08 January 2019.

This case clarifies the relevance of a landlord's intention and motives for carrying out works when opposing lease renewals under ground (f) of the Landlord and Tenant Act 1954 (LTA 1954).

S Franses Ltd v The Cavendish Hotel (London) Ltd Lease Renewal

In this case, the tenant sought to renew a tenancy protected by the LTA 1954. The landlord opposed the new tenancy, citing ground (f). Ground (f) allows a landlord to oppose a new tenancy where the landlord intends to carry out works affecting the tenant's premises which the landlord could not reasonably do if the tenant were to be allowed to remain in possession.

The landlord came up with a scheme of works designed solely to satisfy the ground (f) test. The Supreme Court was asked to decide whether the landlord could still rely on ground (f).

In order to satisfy ground (f), the landlord must at the date of the hearing have a "firm and settled intention" to carry out the works. The Supreme Court held that this intention must be unconditional. Therefore, a landlord cannot rely on ground (f) if its intention is conditional on the tenant claiming a new lease and not vacating.

The Supreme Court held that the reasonableness, economic viability and utility of the works, and the landlord's motives for carrying them out, are not directly relevant but may be used to establish whether the landlord's intention is genuine and settled.

As long as the landlord has the relevant intention, its motives for carrying out the works would not prevent it from relying on ground (f).

In this case, the Supreme Court found that the landlord did not have the relevant intention, as - despite an undertaking to the Court that the works would be carried out in any event - the landlord had previously admitted that it would not carry out the works if the tenant did not claim a new lease. This prevented it from forming a settled intention.

This Supreme Court's decision does not substantially change the way that ground (f) operates. A determined landlord with the resources to carry out substantial works will often still be able to oppose a new lease by devising a suitable scheme of works. However, landlords should expect much greater scrutiny from their tenants and from the courts as to their intentions.

If you're a landlord or tenant of business premises and would like to discuss your rights to possession, please contact Philip Sheppard in our Property Litigation team on 0117 314 5621 to discuss how we can help. 

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