S Franses Ltd v The Cavendish Hotel – The Conclusion!
In October this year we left landlords and tenants around the country holding their breath for the outcome of the Supreme Court decision in S Franses Limited v The Cavendish Hotel (London) Ltd  UKSC 62. Well the waiting is now over as the Supreme Court has now handed down its judgement in one of the most anticipated 1954 Act cases in recent history. Landlords around the country breathed a sigh of relief as the Court confirmed that a landlord’s motives for carrying out works are irrelevant the Court did however make it clear that a landlord’s intention to carry out works must be unconditional.
A reminder of the facts
The appellant tenant served notice to renew a tenancy protected by the Landlord and Tenant Act 1954 (‘the Act’). The respondent landlord sought possession of the premises on one of the permitted grounds under s 30(1), namely that it intended to demolish or reconstruct them on the termination of the current tenancy (ground (f)). The landlord gave an undertaking that the works would be carried out if possession was granted. Both the County Court and the High Court held that the landlord had established the requisite intention even if it only intended to carry out the works if they were necessary to satisfy ground (f) (‘the demolish or reconstruct ground’) and the works had no other commercial objective.
The tenant was then given permission to appeal directly to the Supreme Court and argued that:
- when Parliament said that a landlord must intend to do works of demolition, reconstruction or construction in order to satisfy ground (f), what it meant was that such works had to have some commercial purpose beyond trying to get vacant possession from a tenant; and
- when the Act says that the landlord ‘intends’ to carry out works, that intention needs to be unconditional, i.e. the landlord does not have the necessary intention if it would not carry out the works if it could get possession of the premises by some other means (i.e. if the tenant leaves voluntarily).
Importantly, the Supreme Court made clear that a landlord’s intention to carry out works to satisfy ground (f) must be unconditional. Lord Sumption stated:
“The landlord’s intention to carry out the works cannot therefore be conditional on whether the tenant chooses to assert his claim to a new tenancy and to persist in that claim.”
In this case, the landlord had admitted that it would not have carried out the works if the tenant had left voluntarily. As a result, the landlord’s intention was not unconditional, and not enough to satisfy ground (f). In Lord Sumption’s view:
“The acid test is whether the landlord would intend to do the same works if the tenant left voluntarily.”
The good news for landlords however, and the reason that there is a collective sigh of relief, is that the Supreme Court was clear that a landlord did not have to show that the works were reasonable or had some commercial purpose to satisfy ground (f). The Court stated that that argument was “not only more radical in its implications but more difficult to reconcile with established authority on the Act of 1954.” Therefore, it remains the case that a landlord’s motive for carrying out the intended works is strictly irrelevant.
In the future when landlords are seeking to rely on redevelopment grounds to remove tenants, they will need to show that they will carry out the required works whether a tenant leaves voluntarily or not. This may not however be as simple as it seems and may at times be difficult to evidence, failure to properly evidence the intention will, naturally, provide tenants with further opportunity to seek to challenge a landlord’s intention to carry out works.
If you’re a landlord or tenant of business premises and would like to discuss your rights to possession or lease renewal, please contact Darryn Harris or Daniel Crate in our Dispute Resolution team on 01483 302 000 to discuss how we can help.