Legal Case Judgement Could Have Far-Reaching Repercussions for Landlords

A landmark case, S Franses Ltd v The Cavendish Hotel (London) Ltd, could have far-reaching repercussions for landlords.

The case revolves around a landlord’s refusal to renew the tenant’s tenancy agreement, on the grounds that they wanted to carry out renovation works.

At Section 30, 1, (f) of the Landlord and Tenant Act 1954, it says:

30 – Opposition by landlord to application for new tenancy

(1) The grounds on which a landlord may oppose an application under [section 24(1) of this Act, or make an application under section 29(2) of this Act] are such of the following grounds as may be stated in the landlord’s notice under section 25 of this Act or, as the case may be, under subsection (6) of section 26 thereof, that is to say:

(f) that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding;

What Does This Court Case Mean?

In layman’s terms, a landlord can refuse to renew a tenancy if he needs to carry out works to the property. In this instance, the landlord (The Cavendish Hotel) was refusing to renew the lease of S Franses Ltd, a textile store, which occupied the basement and ground floor of the hotel. The hotel claimed it needed to carry out redevelopment words, but the court found that these works were only designed to remove the tenant and served no legitimate purpose.

Supreme Court Decision

The Supreme Court had to consider (among other things), whether Parliament had intended to allow a landlord to propose works that he had zero intention of carrying out, purely with the purpose of evicting the tenant.

Prior to this case, a landlord’s motive for pursuing redevelopment works on the property, as per clause (f), were not relevant. The Supreme Court judgement handed down in the S Franses Ltd v The Cavendish Hotel (London) Ltd case, has redefined the nature of clause (f).

A judgement has just been handed down on the case. The notion of whether the landlord’s motive was relevant proved to be the point on which the whole case hinged.

The Tenant Wins

To the surprise of many, the Supreme Court ruled in favour of the tenant.

Lord Sumption said: “a conditional intention of this kind is not the fixed and settled intention that ground (f) requires.”  He added, “although the statutory test (in section 30(1) ground (f)) does not depend on the objective utility of the works, a lack of utility may be evidence from which the conditional character of the landlord’s intention may be inferred”.

Lord Briggs conceded that this judgement “may introduce an element of complexity and expense into proceedings in the County Court”.

It will be interesting to see how this landmark judgement filters through into the County Court system.

Watch this space!