Ground (f) Landlord & Tenant Act 1954

Conditional intentions do not satisfy Ground (f)

In my January 2018 article "Sending in the Builders", I discussed Ground (f) of Section 30(1) Landlord & Tenant Act 1954, making particular reference to the 2017 case of S Franses Limited v The Cavendish Hotel (London) [2017]. In that case, the High Court held that a Landlord's motive was irrelevant when determining whether Ground (f) had been satisfied, and that Ground (f) simply required the Landlord to have an intention to carry out works, even if that intention was conditional.

That decision has now been overturned by the Supreme Court, with the Supreme Court making clear that a Landlord will not satisfy Ground (f) unless it has an unconditional intention to carry out the works.

The background to the case is as follows. The property comprised 2 floors of a building in Jermyn Street, London, that was let to the Tenant for a 25 year term from 2 January 1989. On 16 March 2015, the Tenant served a section 26 notice upon its Landlord requesting a new lease. On 15 May 2015, the Landlord served a counter-notice opposing the grant of a new lease, citing Ground (f) of Section 30(1) Landlord & Tenant Act 1954.

On 8 June 2015, the Tenant filed a claim at Court, pursuant to which it applied for a new lease of the property. As is standard procedure in circumstances such as this, whether the Landlord could satisfy Ground (f) was determined as a preliminary issue.

In its defence to the claim for a new lease , the Landlord put forward several schemes of work which it stated it intended to carry out to the property, those works being designed in such a way to ensure it satisfied Ground (f). The Landlord also, as is common practice, gave the Court an undertaking that it would carry out the works if the Tenant's application for a new tenancy was refused.

The Landlord submitted that "the works are thoroughly intended because they are a way of obtaining possession. That is all there is to it", with the Landlord's principal witness at the trial of the preliminary issue stating that a scheme put forward by the Landlord was "designed purely for the purpose of satisfying Ground (f)".

By way of a reminder, under Ground (f) of Section 30(1) Landlord and Tenant Act 1954, a Landlord can oppose the grant of new commercial lease on the ground that, on the termination of the current tenancy, it intends to demolish or reconstruct the premises in the holding (or a substantial part of those premises), or carry out substantial work on the holding and could not do so without obtaining possession of the holding.

At first instance, HHJ Saggerson determined that Ground (f) had been made out and refused the Tenant's application for a new lease, finding that Ground (f) deals with the Landlord's intention and not motives; he found that the Landlord genuinely intended to carry out works to the property if it was necessary to carry them out to secure the removal of the Tenant.

On appeal to the High Court, Mr Justice Jay agreed with HHJ Saggerson, but gave permission to the Tenant to appeal directly to the Supreme Court, by-passing the Court of Appeal.

The issue to be determined by the 5 Lord Justices of the Supreme Court who considered the appeal was whether the Landlord could successfully rely on Ground (f) to oppose a Tenant's application for a new lease if the works the Landlord was relying upon had been devised for no other purpose than to satisfy Ground (f), and which would not be undertaken if the Tenant vacated voluntarily i.e. the Landlord's intention to do the works were conditional.

On 5 December 2018, the Supreme Court's judgment upon the Tenant's appeal was handed down. Allowing the appeal, the Supreme Court noted that

• the Tenant's possession of the property did not obstruct the Landlord's intended works as if the Tenant gave up possession, the Landlord had no intention of carrying out the works; and
• if the Tenant persuaded the Court that the works could reasonably be carried out while it remained in possession, the Landlord did not intend to carry out the works.

Giving the leading judgment of the Supreme Court, Lord Sumption made clear that "a conditional intention of this kind is not the fixed and settled intention that Ground (f) requires" .

It remains open for Landlords to produce schemes of work that have no other purpose than satisfying Ground (f), but Landlords will need to satisfy the Court that it has an unconditional intention to carry out the works, regardless of whether the Tenant voluntarily vacates the property or otherwise.

As Lord Sumption explained, "the Landlord's purpose or motives are irrelevant save as material for testing whether such a firm and settled intention exists….The acid test is whether the Landlord would intend to do the same works if the Tenant left voluntarily"

If you have any queries arising from this article, or wish to discuss any contentious property related matter, contact Chris Drinkall, Rollits' Head of Property Dispute Resolution, on 01482 337367 or by email at moc.s1735230529tillo1735230529r@lla1735230529knird1735230529.rehp1735230529otsir1735230529hc1735230529.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.