S Franses Ltd v The Cavendish Hotel (London) Ltd

For Landlord and Tenant Act 1954 ground (f), the landlord’s intention must be honest, genuine, fixed, settled and unconditional as assessed at the hearing. It must extend to carrying out the works on termination of the tenancy and within any reasonable period thereafter. A landlord’s motive is not itself determinative, although the commercial artificiality of the scheme may illuminate whether the stated intention is genuine.

A contractual right of entry must be construed consistently with the irreducible minimum implicit in the grant. Works capable of being carried out under that right do not satisfy ground (f), and the proposed works must therefore be apportioned. The appeal was allowed on the reasonable-time and apportionment issues.

The Tenant appealed against an order of HHJ Saggerson in the Central London County Court which dismissed its claim for a new tenancy of premises at 80 Jermyn Street. The Landlord relied on ground (f) under the Landlord and Tenant Act 1954, asserting an intention to carry out redevelopment works and that possession was reasonably necessary.

The proposed scheme included works which were partly contrived to secure possession under the Act. The principal issues were whether the Landlord’s conditional intention was legally sufficient, whether the works could be commenced within a reasonable time, whether the works would derogate from the grant or breach quiet enjoyment, and whether works capable of being performed under the contractual right of entry had to be excluded.

1. The appeal was allowed on grounds 4 and 7 and dismissed on the remaining grounds. The matter was to be remitted to the County Court for further consideration, including the appropriate form of order.
2. Under section 30(1)(f) of the Landlord and Tenant Act 1954, the landlord’s intention is assessed at the hearing. It must be honest, genuine, fixed, settled and unconditional. The relevant intention concerns the works to be carried out on termination of the tenancy, including any reasonable period thereafter. The fact that the landlord would not carry out the works if the tenant left voluntarily or if the landlord lost the case did not, in the circumstances, make the intention legally insufficient.
3. The court must examine what the landlord intends to do, rather than why it intends to do it. Motive is not an independent requirement under ground (f), although the commercial artificiality or lack of viability of a scheme may be relevant evidence when testing the genuineness of the professed intention. The undertaking to carry out the works was capable of compelling fixity of intention and was properly treated as significant evidence.
4. Section 31(2) did not directly limit the reasonable period which may be taken into account under ground (f). The periods contemplated by the two provisions are different, particularly because section 64 extends the tenancy after the contractual expiry. Nevertheless, the judge’s finding that 12 months was reasonable was inadequately explained in the unusual circumstances. Further findings were required concerning the objective practical obstacles and the period within which the works could reasonably begin.
5. A right of entry must be construed in the light of the grant and consistently with the irreducible minimum implicit in it. It cannot be given effect so broadly that the landlord derogates from the grant or breaches quiet enjoyment. The judge was entitled to find that the overall impact of the scheme would substantially alter the holding and make it substantially less fit for the purpose for which it had been let.
6. For ground (f), the proposed works must be divided or funnelled into those which can be performed under the right of entry and those which require possession. The judge had considered the entirety of the scheme and had failed to exclude works which could be carried out under the reservation. Ground 7 therefore succeeded.
7. Section 35 issues could not arise until the court was considering the terms of a new tenancy. Pumperninks of Piccadilly Ltd v Land Securities Ltd concerned section 31A(1)(a); any reference there to section 35 was not part of the Court of Appeal’s ratio.

• High Court (Queen’s Bench Division): appeal from the Central London County Court order of HHJ Saggerson dated 24 February 2017, which dismissed the Tenant’s claim for a new tenancy under the Landlord and Tenant Act 1954. The appeal was allowed on grounds 4 and 7, the remaining grounds were rejected, and the case was remitted for further consideration.