How relevant are a landlord’s motives where it plans to carry out work that will sterilise premises in order to prevent the renewal of a business lease?

The Franses Gallery occupies premises on the ground floor of the Cavendish Hotel, from which it carries on a business specialising in antique tapestries and textile art. When its lease ended, the landlord opposed its application for a new business tenancy on the ground that it intended to carry out substantial work to the premises and that it would be impossible to do so without obtaining possession of the gallery: section 30(1) Landlord and Tenant Act 1954 (ground (f)). The county court noted that the work would be expensive, and commercially and practically useless. Indeed, the landlord confirmed that there would be no need for the scheme if the tenant had agreed to vacate at the end of the lease. But the tenant was not willing to move elsewhere and the landlord gave the court an undertaking that it would carry out the work when the lease ended. The undertaking convinced the court that the landlord had a firm, settled and unconditional intention to proceed with the work, and the judge dismissed the tenant’s application for a new business tenancy. The tenant attacked the decision in the High Court in S Franses Ltd v The Cavendish Hotel (London) Ltd [2017] EWHC 1670 (QB); [2017] PLSCS 145. It argued that parliament had not intended to allow wealthy landlords to subvert the 1954 Act by promising to carry out work solely in order to evict tenants, especially if the work that was being proposed would sterilise premises by rendering them unusable. The judge sent the case back to the county court for further findings of fact on other points, but agreed that ground (f) requires the court to examine what the landlord intends and whether it intends to do the work – as opposed to why. The legislation was not enacted to secure the most efficient use of land – and the landlord’s motives for carrying out work are irrelevant, unless they indicate that it does not have a genuine and settled intention to proceed. The courts may be sceptical about the genuineness of a landlord’s intentions to carry out work if it admits that its only motive is to obtain vacant possession. But, in this case, any scepticism about the artificiality of the landlord’s scheme was allayed by its undertaking to do the work when the lease ended. The judgment will provoke debate, but it is worth noting that previous authorities have confirmed that the courts are not concerned with the wisdom or long-term viability of projects. In addition, ground (f) enables landlords to oppose applications for new business leases if they intend to demolish or reconstruct premises. As a result, demolition alone will satisfy ground (f), even if this would render premises unusable. And, although it concerned a completely different point of law, arising from an agreement to settle contested 1954 Act proceedings, the court in Saturn Leisure Ltd v Havering London Borough Council [2014] EWHC 3717 (Ch); [2014] PLSCS 321 seemed quite unfazed by a landlord’s decision to demolish premises if such action were needed to satisfy ground (f) and obtain vacant possession from an occupier, but to leave the premises standing if the occupier agreed to go. Why should a landlord’s motives be material in cases involving one of limb of ground (f), but not the other?   Allyson Colby is a property law consultant