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Case Study: S Franses Ltd - v - The Cavendish Hotel (London) Limited [2017] EWHC

 

 

A judgment has recently been handed down by Mr Justice Jay in an appeal from the County Court in Central London.

 

This case raises interesting questions regarding a landlord’s right to refuse a tenant a new tenancy, under the Landlord and Tenant Act 1954, particularly in cases where the landlord’s proposed works were created purely with the intention of depriving the tenant security of tenure.

 

Facts

 

The facts of the case are briefly as follows.

 

S Franses Ltd (the Tenant) is a textile dealership and consultancy, which specialises in antique tapestries and textile art. It occupies premises on the ground floor and basement of a building owned by the Cavendish Hotel (London) Limited (the Landlord). The Landlord occupies the rest of the building as a luxury hotel.

 

The Tenant occupies the premises under two leases, which expired in January 2016. Accordingly, the Tenant served notices to renew its leases, specifying a commencement date for a new tenancy as 3 January 2016. The Landlord opposed the Tenant’s requests and, at first instance, the Tenant’s claim was dismissed on the basis that the Landlord had made out its ground of opposition under ‘Ground F’. This provides as follows: “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 or construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding”.

 

Appeal

 

The Tenant appealed to the Queen’s Bench Division.

 

Interestingly, despite the fact that the County Court had found that the works 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” and the Landlord accepted in cross-examination that the works would not be undertaken if the Tenant left voluntarily, the Tenant’s appeal was rejected.

 

The Tenant argued that “it is inconceivable that it was Parliament’s intention to allow wealthy landlords to simply subvert the protection which it was conferring on business tenants, by promising to do works for the sole purpose of getting the court to make an order under the Act dismissing the tenant’s claim for a new tenancy, with the effect of sterilising buildings and rendering them unusable”.

 

However, the Court disagreed. The Court held that (in accordance with numerous well established authorities) the Landlord’s motive was irrelevant. The Landlord needed to show a genuine, fixed, settled and unconditional intention to redevelop. The Court was satisfied that the Landlord had done so and therefore this ground of appeal was dismissed.

 

What does this mean?

 

Mr Justice Jay’s decision may come as a surprise to some. His judgment appears to suggest that a landlord can create an artificial scheme for the sole purpose of evicting a tenant and to defeat a tenant’s right to a new tenancy.

 

As Counsel for the Tenant argued, this surely seems contrary to Parliament’s intention when drafting the Landlord and Tenant Act 1954. Nevertheless Mr Justice Jay disagreed; motive remains irrelevant.

 

Tenants should bear this important decision in mind when presented with an opposition to their new tenancy. It may not be as straight-forward as they may think, but nevertheless devising a cunning scheme of redevelopment is still an expensive method of achieving eviction.

 

Watch this space!

 

The Tenant has been granted a certificate for a leapfrog appeal to the Supreme Court and therefore there may be further updates to come…..

 

 

Catherine Burgess is a Solicitor at JPC Law.

For more information on property litigation, please contact her:

E: cburgess@jpclaw.co.uk

M: +44 (0) 7717 205 469

General Enquiries:

E: enquiries@jpclaw.co.uk

T: 020 7625 4424

 


 

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