Section 30(1)(f) of the Landlord and Tenant Act 1954 has received a lot of commentary and attention over the past year following the Supreme Court’s decision in S Franses Ltd v Cavendish Hotel (London) Ltd [2018] UKSC 62.
Part II of the Landlord and Tenant Act 1954 (the “Act”) provides security of tenure for business tenants. If the Act applies to a tenancy, the tenancy will not automatically terminate at the end of the contractual term, but continue on the same terms. The Act also provides a tenant with a statutory right to a new lease at the end of the contractual term.
Unless a tenant agrees to surrender its lease, or vacates the premises voluntarily, the only way in which a landlord can bring such a tenancy to an end, and prevent the grant of a new lease, is by relying on one or more of the grounds of opposition set out in section 30(1) of the Act.
Section 30(1)(f) is one of the more frequently used grounds of opposition. It applies when the landlord intends to redevelop (whether by construction or demolition) the whole or part of the premises and cannot reasonably and practically do so without recovering possession from the tenant.
A lot of the court cases on section 30(1)(f) concern the meaning of intention and what a landlord has to do to prove that it has a ‘firm and settled intention’ to redevelop a premises.
In Franses, the Supreme Court confirmed that proving a landlord’s firm and settled intention involved a two part test: (a) the landlord must have a genuine, unconditional intention to redevelop (a subjective test); and (b) the landlord must be practically able to redevelop (an objective test).
The requirement in the first part of the test for the landlord’s subjective intention to be unconditional has been regarded as an important development in the law on section 30(1)(f). It means that a landlord’s intention to do the works must exist independently of the tenant’s statutory rights under the Act; if the tenant decided to leave voluntarily (as opposed to remaining in possession and seeking a new lease under the Act) would the landlord still carry out the works? If the answer to that question is yes, then the landlord has the necessary quality of intention. If the answer is no, then the landlord will not. The landlord cannot just create a scheme of works solely to try and obtain vacant possession – the landlord has to show that it would actually carry out those works once the tenant has gone.
In Franses the landlord was found not to have the necessary quality of intention and failed in its opposition to the grant of a new tenancy. The landlord frankly admitted that if the tenant left voluntarily, it would not carry out the works. The landlord had designed a scheme of works with the sole purpose of achieving the eviction of the tenant, and without any regard to their practical utility or expense.
London Kendal Street No 3 Limited v Deajan Investments Limited [July 2019] was the first decision on section 30(1)(f) and proving a landlords ‘firm and settled intention’ to redevelop since Franses. The case was decided on the second part of the test confirmed in Franses.
The tenant was part of a group of companies that occupied part of the ground floor of a building in London. The landlord had granted four leases, of four different suites on the ground floor (A, B, C1 and C2), to individual companies within the group. Suites C1 and C2 were leased to the tenant.
The landlord wanted to redevelop just suite C2 so as to create a new entrance to the building and new access to the basement.
The landlord’s satisfaction of the subjective test was not in issue. The parties agreed that the landlord had a genuine, unconditional intention to carry out the works which existed independently of the tenant’s right to a new lease under the Act.
In respect of the objective test, the parties also agreed that the landlord had the necessary funding and permissions to do the work. However, the tenant challenged whether the landlord would practically be able to redevelop on the basis that it and the other companies within the group would immediately apply for an injunction to stop the works on the basis of the intolerable noise and disturbance that they would create to their continued use of suites A, B and C1. The works would constitute an unlawful interference with the use of those other suites. In the leases of the other suites the landlord had covenanted not to do anything to adversely affect the tenant’s business. The landlord would also be in breach of its covenants for quiet enjoyment and derogating from its grant.
Whilst the court accepted that there was a very real risk of such an injunction being applied for, it considered that that would not necessarily prevent the works from continuing. The court thought it likely that the injunction proceedings would be resolved in a manner that allowed the works to continue but subject to various conditions that would limit the disruption. Accordingly, the court found that the landlord still had the necessary intention.
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