Zarvos v Pradhan & Anor

To oppose the renewal of a business tenancy because the landlord intends to occupy the premises for a business, the landlord must show both a genuine, settled commitment to the project and an objectively real possibility of carrying it into effect. A merely fanciful prospect is insufficient.

The two elements need not be considered sequentially. A court may decide the case on the absence of a reasonable prospect without determining whether the professed intention is genuine. Financial evidence may be examined to decide whether the business can realistically be started, although the court does not assess the wisdom, durability or likely commercial success of the proposed venture.

The landlord appealed against the West London County Court's determination that he could not oppose the tenants' application for a new business tenancy under Section 30(1)(g) of the Landlord and Tenant Act 1954. He proposed to recover restaurant premises and establish a new restaurant and wine bar.

The county court found that the landlord had not shown a reasonable prospect of raising the finance required to establish the proposed business. The appeal concerned the proper relationship between the genuineness of the landlord's intention and the objective possibility of implementing it, whether the county court's factual conclusion could stand, and whether a post-trial bank offer should be admitted as fresh evidence.

1. Appeal dismissed unanimously. Section 30(1)(g) of the Landlord and Tenant Act 1954 poses a single ultimate question: whether the landlord intends, when the current tenancy ends, to occupy the holding for a business carried on there by the landlord. That concept contains two elements. There must be a genuine, settled commitment to the project, and there must objectively be a real possibility of bringing it into effect.

2. Per Ward LJ, with whom Clarke and Longmore LJJ agreed, the elements need not be examined sequentially. If the professed intention is a colourable device, failure on genuineness ends the inquiry. Conversely, a court may assume subjective good faith and decide the case because the proposed project has no real prospect of implementation. Accordingly, the county court could concentrate on practical feasibility without first deciding credibility.

3. The court does not police the financial wisdom, durability or likely success of the proposed business. It may, however, examine finances where they determine whether there is a real, rather than fanciful, prospect of starting the business. The landlord's case concerned the proposed new restaurant and required substantial borrowing. The judge was therefore entitled to concentrate on the availability of finance rather than an alternative, less costly resurrection of the former restaurant.

4. The absence of reliable evidence that a bank would advance the required funds, the weaknesses in the financial projections and the existing secured borrowing entitled the judge to find that the prospect of finance was speculative. Despite the property's substantial equity and the landlord's experience, that factual conclusion was within the range of reasonable views open on the evidence. The Court of Appeal therefore could not interfere.

5. The later bank offer was potentially influential and apparently credible, but it could have been obtained with reasonable diligence before trial. The principles in Ladd v Marshall remained a useful starting point under Rule 52.11 of the Civil Procedure Rules 1998, while the overriding objective supplied the final assessment. Fairness, expense and finality weighed against giving the landlord an opportunity to repair his evidential case and subjecting the tenants to a retrial. The application to admit fresh evidence was refused.

6. The county court had not made a positive finding on the genuineness of the landlord's subjective intention. That issue was unnecessary once the finding on practical feasibility was upheld. The appeal was dismissed with costs.

1. Court of Appeal (Civil Division): The landlord's appeal was dismissed unanimously, and the application to admit fresh evidence was refused: [2003] EWCA Civ 208.
2. West London County Court: His Honour Judge Cowell determined on 9 May 2002 that the landlord was not entitled to oppose the grant of a new tenancy under Section 30(1)(g) of the Landlord and Tenant Act 1954. The judge refused permission to appeal.