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Ground (f)

Relevant statutory provision

The ground set out in Landlord and Tenant Act 1954, s30(1)(f) provides:
    "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 of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding".
Material covered on this page includes:
  • Intention and motive
  • Meaning of structure
  • Planning permission and intention
  • Substantial works of construction
  • Tenant's fixtures

Intention and motive

Sole purpose of development to defeat tenant’s right to renew

S Franses Ltd v Cavendish Hotel (London) Ltd
[2018] UKSC 62

Summary

Where a landlord’s only purpose in carrying out works is to obtain possession from the tenant, the landlord does not satisfy the test in s30(1)(f) that would allow it to oppose a new lease.

Facts

The tenant occupied premises under two leases on the corner of Jermyn Street and Duke Street. It occupied the premises for the purposes of its business – dealing in antique tapestries and textiles. The bulk of the rest of the building was a hotel run by the landlord.

The landlord wanted the tenant out. It relied upon s30(1)(f), namely that it intended to carry out works of reconstruction at the premises. The proposed works had no practical utility and would in fact make them unusable. The sole purpose in carrying out the works was to obtain vacant possession. It asserted that it had a genuine intention to do the works and was even prepared to give an undertaking to that effect. However, the landlord’s intention was conditional upon the works being necessary to obtain possession. If the tenant vacated voluntarily the landlord would not carry out the works.


Issue

Whether it was open to the landlord to oppose the grant of a new tenancy under s.30(1)(f) if the works which it intended to undertake had no purpose other than to obtain vacant possession and would not be undertaken if the tenant were to leave voluntarily?

Held

The Supreme Court held that the landlord had not satisfied the test in s30(1)(f). For a landlord to succeed the landlord’s intention must exist independently of the tenant’s claim for a new tenancy. Lord Sumption at para 19:
    “… the landlord’s intention to demolish or reconstruct the premises must exist independently of the tenant’s statutory claim to a new tenancy, so that the tenant’s right of occupation under a new lease would serve to obstruct it. The landlord’s intention to carry out the works cannot therefore be conditional on whether the tenant chooses to assert his claim to a new tenancy and to persist in that claim. The acid test is whether the landlord would intend to do the same works if the tenant left voluntarily. On the facts found by Judge Saggerson, the tenant’s possession of the premises did not obstruct the landlord’s intended works, for if the tenant gave up possession the landlord had no intention of carrying them out. Likewise, the landlord did not intend to carry them out if the tenant persuaded the court that the works could reasonably be carried out while it remained in possession. In my judgment, a conditional intention of this kind is not the fixed and settled intention that ground (f) requires. The answer would be the same if what the landlord proposed was a demolition, conditionally on its being necessary to obtain possession from the court.”
Comment

The facts in this case were extraordinary so it is going to be interesting to see whether the decision will have a widespread effect on other cases. The test is still essentially the same: Does the landlord intend to carry out the proposed works? However, it is likely that the courts will take an even closer look at a landlord’s motive; not because motive is of itself a test but because evidentially it can shine a light on real intention. Lord Sumption at para 21:
    “Just as the landlord’s motive or purpose, although irrelevant in themselves, may be investigated at trial as evidence for the genuineness of his professed intention to carry out the works, so also they may be relevant as evidence of the conditional character of that intention. In both cases, the landlord’s motive and purpose are being examined only because inferences may be drawn from them about his real intentions. Likewise, although the statutory test does not depend on the objective utility of the works, a lack of utility may be evidence from which the conditional character of the landlord’s intention may be inferred.”

Meaning of structure

Pumperninks of Piccadilly Ltd v Land Securities plc
[2002] EWCA Civ 621

Facts

Tenancy relating to a ground floor shop. It was an eggshell tenancy, i.e. the demise was confined to the internal skin of the shop and excluded any part of the structure of the building. L wanted to carry out substantial works so that every physical thing in the demise will be removed. L relied upon s30(1)(f); i.e. that it intends to demolish the premises comprised in the holding.

T argued that as there were no structural parts to the demise it was impossible to demolish the premises.

Held

The argument was rejected. The word premises can include an eggshell within a building. The property comprised in the tenancy was something that was capable of being demolished and reconstructed. The following words of the judge at first instance were approved:
    "The structure is the fabric which encloses the demise in so far as it is itself demised. The physical boundaries of the demise, be they constituted by walls, ceiling or floor, or only their surfaces, are premises within the meaning of the paragraph at least if they are of such physical quality as to be sensibly capable in ordinary language of being constructed or part of the construction, or of being demolished."

Planning

Intention - reasonable prospects of obtaining planning permission

Dogan v Semali Investments Ltd
[2005] EWCA Civ 1036

Summary

The question in this case was whether a landlord of business premises, on the trial of a preliminary issue, successfully established the ground of opposition to the tenant's application for a new tenancy which is specified in s.30(1)(f) of the Landlord and Tenant Act 1954, ie:
    "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 of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding."
As interpreted in the case law there are two elements to this requirement (i) intention to demolish and (ii) (by way of a judicial gloss) whether the landlord has a reasonable prospect of being able to bring about the desired result. In this case, that meant whether there was a reasonable prospect of obtaining planning permission for the landlords proposals. This case reminds us that the burden on the landlord is not a high one and that (contrary to popular belief) it is not necessary (although as a matter of tactics highly desirable) to have planning permission at the date of the hearing.

Citations

Sir Martin Nourse:
    "28. It was established by the decision in Gatwick Parking Services Ltd v Sargent [2000] 2 EGLR 45 that this court is entitled to take account of a planning permission, even though it had not been obtained by the date of the hearing before the judge.

    30. The judgment of Laws LJ is also of value for its demonstration of what is the planning hurdle that has to be surmounted by the landlord under section 30(1)(f) or (g). Towards the end of his judgment (page 49J) Laws LJ summarised the position thus:
      'I emphasise that the hurdle to be surmounted by the appellant under section 30(1)(g), in the light of the authorities on the subject, is by no means a high one. He does not have to demonstrate a balance of probability that permission will be granted. He has to show that there is a real, not merely a fanciful, chance.'"
And Mance LJ:
    "I add only this on the second ingredient. "Reasonable prospect" is a low threshold, not to be equated with probability: cf Gatwick Parking Services Ltd. v. Sargent [2000] 25 EG 141. The judge's treatment of this ingredient was, to say the least, sparse. He said that he respected [the landlords expert witnesss] expertise, but that "I not accept for one moment his enthusiasm for this scheme in that it is likely to be approved, nor do I accept his timing that it would all be done within an eight week period" The comments of the inspector speak for themselves". But likelihood, in the sense of probability, is not the test. Nor indeed is timing."
See also cases under s30(1)(g)).


Substantial works of reconstruction

In Global Grange Ltd v Marazzi [2002] EWHC 3010 (Ch); [2003] 34 EG 59 the issue was whether or not the works were substantial works of construction / reconstruction. Upgrading of a hotel. It was held by the county court judge that the installation of a new lift, new partition walls and improved bedroom facilities were not sufficient to establish L's ground of opposition even though the works were going to take 12 months and cost over 2m. The internal structure would remain virtually untouched. On appeal the High Court judge held that the county court judge's decision was within the range available to him.

However in Ivory Grove Ltd v Global Grange Ltd [2003] EWHC 1409 (Ch), on fairly similar facts in relation to a neighbouring property, Lawrence Collins J upheld a different county court judge's finding (in a case in which there was additional expert evidence) that s30(1)(f) was satisfied.
    "There is plainly nothing in the wording of section 30(1)(f) which requires the demolition or construction of structural or load bearing features as a condition of its applicability...It follows that whether the relevant parts of the premises are load-bearing is simply one of the factors to be taken into account in determining the jury question of whether there is a demolition or reconstruction, or demolition or construction of a substantial part, or substantial work of construction on the holding or part of it, and not a pre-condition of the applicability of section 30(1)(f)). It also follows that, where partitioning is concerned, it will be a matter of fact and degree whether their replacement and reconfiguration will be within either limb of section 30(1)(f).

    It was also open to him to find that view confirmed when there was taken into account the construction of a larger lift, the excavations and underpinning required, the construction of two steel beams, the openings made in some load bearing internal walls, and the amount of strengthening to the floors and laying of the new drains. ... In any event it was plainly open to him on the agreed evidence to find that there was a bedrock of work to the structure totalling over 450,000, which on any view was a "substantial work or construction". (Paragraphs 66-70).

Tenant's fixtures

Wessex Reserve Forces & Cadets Association v White
[2005] EWCA Civ 1744

Facts

Landlord relying upon s30(1)(f) as a ground of opposition, stating that it intended to demolish some huts on the land. However, the huts were tenants fixtures. These were the most substantial structures on the land and under the terms of the lease T was required to remove them upon termination of its tenancy.

Held

L could not therefore establish that it was going to demolish them. Chadwick LJ at para 23:
    "The landlords' intention, as it seems to me, has to be tested on the hypothesis that, when the tenancy comes to an end there will be no new tenancy. Testing the matter as the judge did - correctly in my view - by asking what will be the position in this case if, when the current tenancy comes to an end, there is no grant of a new tenancy, the answer is not in doubt. There will be no buildings on the land at the end of the current tenancy because the tenant will have complied with its obligation under clause 2(g) of the lease. It will have done so, not only because as an organ of the Ministry of Defence it may be expected to comply with its obligations and to be in a position to do so, but because, in this case, the tenant has an incentive to do so. The huts, the portacabin and the garden shed can be removed. On the evidence which the judge accepted, they would be of sufficient value if they were removed to make it worthwhile for the tenant to remove them and transport them to some other site. So that, on the evidence that was before the judge, the position was that - with the possible exception of the stone stall - there would be no buildings on the land in relation to which the landlord could give effect to their professed intention."

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