Business leases: ground (f) in the spotlight

Where a business tenant enjoys security of tenure under the Landlord and Tenant Act 1954 (the 1954 Act), the landlord can only oppose the tenant’s claim for a new tenancy at the expiry of the contractual term on specific grounds.

These are set out in s.30(1) of the 1954 Act. The ground in s.30(1)(f) is: “that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises….or a substantial part of those premises or to carry out substantial work of construction…and that he could not reasonably do so without obtaining possession of the [premises]”.

The issue in S Franses Limited v The Cavendish Hotel (London) Limited [2017] EWHC 1670 (QB) was whether a landlord has the requisite “intention” if its only objective in carrying out works is to satisfy ground (f) in order to get rid of the tenant.

The tenant had served notice to renew its tenancy which was protected by the 1954 Act. The landlord sought possession of the premises on ground (f). The landlord gave an undertaking that the proposed reconstruction works would be carried out if possession was granted. However it also admitted that it only intended to carry out works if they were necessary to satisfy ground (f) and that its sole motive was to obtain vacant possession.

The court held that the landlord had established the requisite intention even though the works had no other commercial objective. The general trend of the authorities is that questions of motive are irrelevant in the context of ground (f) – this refers to “intention” not “motive” and the law traditionally recognises a distinction between the two.

A controversial decision? It would appear so, as the case has been allowed to leapfrog direct to the Supreme Court where it is to be heard on October 17, 2018. Given the widespread use of ground (f) we await the judgment of the Supreme Court with interest.