Zafiris & Anor v Liu

For opposition to a business tenant’s new tenancy under section 30(1)(g) of the Landlord and Tenant Act 1954, the landlord must prove a genuine and bona fide intention to occupy the premises for the specified business or as a residence. The intention must be firm and settled at the hearing, with a reasonable prospect that the landlord can bring about the occupation by his own volition. Occupation may be shared through a legally recognised partnership, but a spouse’s separate business does not by itself qualify as the landlord’s business. Whether the intention is established is a question of fact and degree. An appellate court should be slow to interfere with findings based on the trial judge’s assessment of witnesses and primary facts.

Mr and Mrs Zafiris, tenants of business premises, applied for a new tenancy. Mr Liu, their landlord, opposed the application under section 30(1)(g) of the Landlord and Tenant Act 1954, asserting an intention to occupy the premises for his own business, potentially in partnership with his wife.

After a preliminary-issue trial, His Honour Judge Cracknell held that Mr Liu had not proved the required intention. He found that the proposed arrangement substantially replicated the existing arrangement under which Mrs Liu operated her takeaway business while Mr Liu acted as landlord, and that any restaurant plan remained insufficiently settled. The Court of Appeal considered whether those findings were open to the judge and whether the evidence established occupation for a business carried on by Mr Liu.

1. Appeal dismissed. The landlord failed to discharge the burden of proving that he intended to occupy the premises for the purposes of a business to be carried on by him within section 30(1) (g) of the Landlord and Tenant Act 1954.
2. The relevant intention must be genuine and bona fide. The landlord must have a reasonable prospect, as a matter of possibility, of bringing about the occupation by his own act of volition. The intention must be firm and settled, unlikely to change, and must exist at the time of the hearing. These are objective requirements.
3. Occupation can be shared with others. A landlord may occupy for the purposes of a partnership business where the partnership is legally recognised. A spouse’s separate business does not, without more, constitute a business carried on by the landlord.
4. It was open to the trial judge to treat the proposed arrangement as one in which Mrs Liu would carry on her own business and Mr Liu would remain her landlord. The evidence did not establish a legally recognised partnership or a settled restaurant intention. The question was one of fact and degree, and the judge’s conclusions depended materially on his assessment of the witnesses.
5. The appellate court was not in as good a position as the trial judge merely because it had witness statements and a transcript. It should not interfere with primary factual findings based on observation of witnesses and should be cautious before rejecting inferences drawn from those findings. This approach was supported by Biogen Inc v Medeva Plc [1997] RPC 1.
6. The appeal was dismissed with costs agreed at £4,935.29 inclusive of VAT.

• Court of Appeal (Civil Division): appeal dismissed: [2005] EWCA Civ 1698.
• Sheffield County Court: on 3 August 2004, His Honour Judge Cracknell decided the preliminary issue against the landlord and upheld the tenants’ entitlement to a new business tenancy.