Motive seems irrelevant when it comes to landlords and the courts

Business tenants can be refused a new lease if their landlord wants to redevelop the property.  Keith Songhurst examines a recent case that appears to strengthen the hand of the landlord.

Business tenants are usually entitled to renew their leases unless the landlord can establish one of the grounds for opposition set out in the Landlord and Tenant Act 1954.  One of the grounds most commonly relied upon by landlords is that they intend to demolish, reconstruct or carry out substantial works of construction to the premises, and cannot reasonably do so without obtaining possession.

Disputes can arise where the landlord relies on this ground but the tenant does not believe that the landlord genuinely intends to do the work, or that they would be able to get the necessary planning permission or funding.  But in the recent case of S Franses Ltd v The Cavendish Hotel Ltd, the issue before the court was rather different.  

The hotel, opposing its tenant’s claim for a new lease, openly admitted that the scheme of work it was relying on had been devised purely to satisfy the requirements in the Landlord and Tenant Act and therefore gain possession of the property.  The work, if completed, was of no commercial or practical benefit to the landlord, whose sole motivation was to get rid of its tenant.  The landlord admitted that it would not carry out the work if the tenant left voluntarily.

Rather surprisingly, the court decided that the landlord’s motive was irrelevant and that, as long as it genuinely intended to carry out the work - even if for the sole purpose of recovering possession from its tenant - the law was satisfied.  

This decision has serious implications for the property sector, as the protection afforded to tenants by the Act would seem to be completely undermined if the landlord can simply devise a scheme of work purely to defeat the tenant’s claim.  We understand that this decision may yet be the subject of a further appeal, and there will no doubt be many business tenants keeping their fingers crossed that it succeeds!  In the meantime, however, the position of landlords wishing to obtain possession from their business tenants is strengthened.

Please contact on of our specialist lawyers if you would like to discuss this matter further on 01245 453821 or email on keith.songhurst@birkettlong.co.uk.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.