How secure is a protected tenancy under the Landlord and Tenant Act 1954?

Earlier this summer, an important judgment concerning the security of tenure provisions of the Landlord and Tenant Act 1954 (“the 1954 Act”) was handed down by Mr Justice Jay. The case of S Franses Ltd v The Cavendish Hotel (London) Ltd [2017] EWHC 1670 QB was an appeal from the County Court in Central London and it raises interesting issues about the landlord’s ability to get around the 1954 Act and in essence deprive a tenant of its protection. If you are a landlord proposing to redevelop or a business tenant then this article is definitely worth reading.

In order for a landlord to succeed in opposing the grant of a new tenancy under the redevelopment ground contained within the 1954 Act (known as “ground (f)”) it must be able to show (at the date of the hearing) that it “intends” to demolish/reconstruct/carry out significant works of construction to the tenant’s premises.

The Facts

Cavendish Hotel (London) Limited (the landlord), let the ground floor of its premises to S Franses Limited (the tenant), an art gallery specialising in textile art with a showroom and art facility. The landlord occupied the rest of the building as a luxury hotel. The tenant occupied its premises under a lease which had the benefit of security of tenure under the 1954 Act and in accordance with its statutory right, served notice on the landlord to renew its lease. The landlord opposed this request (seeking to rely upon ground (f)) on the basis that it intended to redevelop the premises.

The landlord produced a scheme of works for the conversion of the tenant’s premises into two retail units. This scheme was specifically designed to meet the requirements under ground (f) (for the sole purpose of evicting the tenant) and had no commercial purpose. The tenant argued that the landlord did not have the necessary intention to carry out the works and 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”. Even the landlord’s witness admitted that some of the proposed works would not be undertaken if the tenant left voluntarily and the entirety of the works would only be undertaken if the court ordered vacant possession under the 1954 Act.

Despite the fact that the landlord had clearly devised a scheme of works in order to satisfy the ground (f) criteria, the County Court judge confirmed the well established law which states that a landlord must be able prove a fixed, genuine, settled and unconditional intention to redevelop. The landlord’s motive for carrying out the works is irrelevant.

Appeal to the High Court

The tenant appealed the County Court’s decision, its key argument being that the landlord’s intention was conditional on the works being necessary to satisfy ground (f) and that conditional intention was not sufficient to succeed on the redevelopment ground. Mr Justice Jay held that the court’s examination should be of “what” the landlord intends to do and “whether” it intends to do it rather than the reasons “why”.  The court was satisfied of the landlord intention and this was demonstrated by its written undertaking to the court to carry out the works when the lease ended.

Comment

This is worrying news for tenants and the case illustrates that there is no “anti-avoidance” provision in the 1954 Act. Counsel acting on behalf of the tenant argued that Parliament (when enacting the 1954 Act) cannot have intended to allow wealthy landlords to subvert the Act’s protection by carrying out works solely to evict tenants. However, this case shows that provided the landlord has a firm and settled intention to carry out the works, its motives for doing those works is irrelevant, even if the works have been contrived specifically to fall within ground (f).

There may be further updates to come as the tenant has been granted a certificate by Mr Justice Jay for a “leapfrog” appeal to the Supreme Court so watch this space.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.