The Supreme Court has decided that a landlord cannot resist the exercise of a business tenant’s statutory right to a new tenancy on the basis that possession was required for redevelopment, where there is no intention to carry out the proposed works in the event of the tenant leaving the premises voluntarily.

In S Franses Limited v The Cavendish Hotel (London) Ltd [2018] UKSC 62, the tenant (T) applied for a renewal tenancy under Landlord and Tenant Act 1954 (the Act). The landlord (L) served a counter-notice opposing the grant, relying on s.30(1)(f) of the Act:

“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 ...”.

L openly admitted that the sole purpose of its proposed reconstruction works was to secure vacant possession of the premises; and the works were, from L’s perspective, of no practical utility. The High Court held that L was nevertheless entitled to rely on the redevelopment ground (f) to oppose a renewal tenancy. The statutory ground refers to “intention”, not “motive” – the High Court said that this required an examination of what L intended to do and the intention to carry this through, not L’s reasons for doing so.

The Supreme Court has now reversed the High Court’s decision. While agreeing with the High Court that L’s motive was indeed irrelevant, the Supreme Court decided that whether or not L had a sufficiently firm and settled intention to carry out the works in order to satisfy ground (f) was to be determined to some extent by the “nature and quality” of that intention.

The key point in this case was that L’s intention to carry out the works was in fact conditional – if T did not request a renewal tenancy and/or vacated the premises, L had no intention of undertaking the work. The relevant provisions in ss.30 and 31A of the Act, said the Supreme Court, showed that (1) L’s intention to carry out works had to exist independently of T’s claim to a renewal tenancy, and (2) T’s right to occupy under the new lease would obstruct the carrying out of those works.

On the facts, it could not be said that L’s intention to carry out the works existed independently, because L did not intend to carry out the works at all in the event that T gave up possession, or if it was found that the works could be carried out with T remaining in possession. The Supreme Court ruled that “…a conditional intention of this kind is not the fixed and settled intention that ground (f) requires”.

The Supreme Court concluded that neither the commonly-accepted practice of a landlord giving an undertaking to the court to undertake the relevant works, nor an examination of the “genuineness” of the landlord’s intention, would be adequate to establish whether or not the intention is of a conditional nature that does not qualify under ground (f).

In the present case, the genuineness of L’s intention to undertake the works, supported by an undertaking given to the court to undertake those works, did not change the fact that the purpose of “otherwise useless works” was solely to secure the tenant’s removal from the premises. It was that underlying purpose that demonstrated the conditionality of L’s intention.

The Supreme Court therefore decided that, on the facts, L did not intend to carry out the proposed works relied upon, within the meaning of ground (f).

The Supreme Court’s decision appears to have firmly closed the door on landlords seeking to rely on redevelopment ground (f) solely to oppose a renewal tenancy and secure possession of premises. Where a landlord is seeking to rely on ground (f), it will now need to be able to demonstrate clearly that the plans for the proposed work have been formulated independently of any claim by the tenant for a renewal lease and that such work cannot reasonably be carried out with the tenant in occupation.