Ground (F) - Eviction at All Costs?

26 Jul 2017

On 3 July 2017 in the High Court, Mr Justice Jay handed down a much awaited judgment in the dispute between The Cavendish Hotel (London) Limited (“Cavendish”) and its tenant, the art dealer S Frances Limited (“S Frances”), concerning the security of tenure provisions of the Landlord and Tenant Act 1954.

The case focused on section 30(1)(f) of the Act (“ground (f)”), which provides that a court must order the termination of a business tenancy if the landlord can show (at the date of the hearing) that it intends to demolish / destruct / carry out significant works of construction to its tenant’s premises.

Here, Cavendish had opposed S Frances’s request for a new lease, citing plans for the conversion of the art gallery premises into two separate retail units, which it said fell within the scope of ground (f). S Frances argued that Cavendish did not have the necessary intention to carry out these plans, which it said had been devised simply as a ruse to evict S Frances.

The case was first heard at the County Court, where a witness for Cavendish did not dispute that its plans had been designed “with the material intention of undertaking works that would lead to the eviction of the tenant regardless of the works’ commercial or practical utility and irrespective of the expense”. In finding for Cavendish, the County Court judge confirmed the current state of the law, which is that a landlord’s underlying motive for carrying out works is irrelevant, provided that the landlord has “a genuine and settled intention to proceed”.

S Frances appealed the County Court decision on a number of grounds, its key argument being that Cavendish’s intention was conditional on the works being necessary to satisfy ground (f). Cavendish accepted that the works would not be undertaken if S Frances left voluntarily and it also accepted that if the court ruled against Cavendish the works would not be undertaken. S Frances claimed that such conditional intention was not sufficient for the purposes of ground (f).

Refusing S Frances’s appeal, Mr Justice Jay found that Cavendish did have the necessary intention to carry out the works. The judge explained that when assessing a landlord’s intention, it was only necessary to examine “what the landlord intends to do and whether he intends to do it, not why he may intend to do it”. Regarding the question of whether Cavendish intended to do the works, the judge was persuaded by the undertaking given by one of Cavendish’s directors to do just that, if possession was ordered. Giving the undertaking was a serious and compelling step for the director to take, considering the consequences that there would be for failing to follow through.

This case will give rise to further discussion about what protection the Landlord and Tenant Act 1954 actually affords to tenants. S Frances would argue that the government cannot have intended for landlords to be able to exploit ground (f) in this way. Whether or not the position is fair for business tenants or will lead to the best use of property stock, the law is clear.  There is no “anti-avoidance” provision in the Landlord and Tenant Act 1954. As long as a landlord can show that it does intend to carry out its plans, its motive for doing so remains irrelevant. 

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