Property Law uk

Maintained by Gary Webber

Ground (f)

Relevant statutory provision

The ground set out in Landlord and Tenant Act 1954, s30(1)(f) provides:
    "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".
Material covered on this page includes:
  • Intention
  • Meaning of struture
  • Planning permission and intention
  • Substantial works of construction
  • Tenant's fixtures

Intention

Sole purpose of development to defeat tenant’s right to renew

S Franses Ltd v The Cavendish Hotel (London) Ltd
[2017] EWHC 1670 (QB)

Summary

A landlord’s proposal to redevelop for the purposes of opposing renewal under s30(1)(f) was successful even though the development’s sole purpose was to defeat the tenant’s right to a renewal lease. (Permission to appeal has been given by the Supreme Court: Permission to appeal)

Facts

A tenant (T) of ground floor and basement premises held under two leases both of which fell within the security of tenure provisions of the 1954 Act. T was a textile dealership and consultancy. The landlord (L) occupied the remainder of the building as a luxury hotel. The main lease contained a right:
    "At all reasonable times during the daytime (or forthwith in case of emergency) to permit the Landlord or its Surveyor or Agents or any person authorised by it with or without workmen or contractors to enter the demised premises for the purpose of examining the state of repair and condition thereof and also for the purpose of executing any improvement it may wish to execute or for the purpose of repairing, maintaining, cleansing, rebuilding, altering or examining the demised premises or any adjoining or neighbouring premises or the remainder of the said building …"
The lease also contained the usual landlord’s covenant for quiet enjoyment.

T served notices under s26 of the 1954 Act in relation to both leases requesting new leases. L served counter-notices of its intention to oppose any application for new tenancies under s30(1)(f).

Prior to the hearing L had put forward a number of different schemes superseding each other, ultimately proposing a scheme of readying the premises internally for conversion into two retail units (which removed the need for planning permission unlike earlier schemes). The latter was, L admitted, specifically designed to meet the vacant possession requirement under ground (f). The scheme was expensive and arguably had no commercial or practical utility and made little financial sense but it would have rendered the premises previously let to T unusable.

First instance

The Central London County Court held that L had made out its intention to carry out substantial works to the property at the end of the tenancies and that it would be impossible to do so without obtaining vacant possession, even though the scheme of works 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 [and] some aspects of the intended works have been contrived only for the purposes of ground (f).”
The Tenant appealed to the High Court.

Main issues
  • Whether L could succeed on ground (f) where it was only intending to do the works if T failed on its application for a new tenancy and would not do the works if e.g. T left the premises voluntarily.
  • Whether the wide ranging re-entry clause allowed L to carry out the work without having to obtain “possession of the holding”
Decision on appeal

The High Court dismissed the appeal in relation to these grounds. T argued that L’s intention under ground (f) was not properly made out because Parliament had not intended “to allow wealthy landlords to subvert the protection which it was conferring on business tenants, by promising to do works for the sole purpose of getting the court to make an order under the Act dismissing the tenant's claim for a new tenancy”.

In line with previous decisions on the relevance of the motivation of landlords, the High Court held that L had successfully established the requisite intention for the purposes of the Act: its motives for carrying out the works were wholly irrelevant. There may be a general assumption that redevelopment grounds under the Act will only tend to be relied upon where the scheme is commercially viable, but this is not a statutory pre-requisite.

The court went on to add that as L had undertaken to the Court to carry out these works in the event of succeeding on ground (f); that was sufficient for the court to agree that L had a “firm, settled and unconditional” intention to carry out the works. The court noted that “A breach of undertaking is a contempt…..an application can be made to the court for an order that the Landlord files evidence of its compliance with the undertaking.”

As to T’s arguments that vacant possession was not required, the High Court said that, even though wide ranging, L’s access right did not prevent the court from finding that the
test set out in ground (f) was met, as L was prevented from derogating from its grant and was required to provide quiet enjoyment to T. Nor did the court agree that section 31(2) of the Act had the effect of limiting a reasonable period in which L should commence the works under ground (f) to 12 months as the two provisions were concerned with different time periods.

Comment

Although this is not new case law, it is a salutary reminder that motive behind ground (f) is irrelevant. As the High Court said: “ground (f) mandates an examination of what the Landlord intends to do and whether he intends to do it, not of why he may intend to do it.”

A certificate has been granted for a ‘leapfrog’ appeal to the Supreme Court and that application has been made to the Court of Appeal.


Meaning of structure

Pumperninks of Piccadilly Ltd v Land Securities plc
[2002] EWCA Civ 621

Facts

Tenancy relating to a ground floor shop. It was an eggshell tenancy, i.e. the demise was confined to the internal skin of the shop and excluded any part of the structure of the building. L wanted to carry out substantial works so that every physical thing in the demise will be removed. L relied upon s30(1)(f); i.e. that it intends to demolish the premises comprised in the holding.

T argued that as there were no structural parts to the demise it was impossible to demolish the premises.

Held

The argument was rejected. The word premises can include an eggshell within a building. The property comprised in the tenancy was something that was capable of being demolished and reconstructed. The following words of the judge at first instance were approved:
    "The structure is the fabric which encloses the demise in so far as it is itself demised. The physical boundaries of the demise, be they constituted by walls, ceiling or floor, or only their surfaces, are premises within the meaning of the paragraph at least if they are of such physical quality as to be sensibly capable in ordinary language of being constructed or part of the construction, or of being demolished."

Planning

Intention - reasonable prospects of obtaining planning permission

Dogan v Semali Investments Ltd
[2005] EWCA Civ 1036

Summary

The question in this case was whether a landlord of business premises, on the trial of a preliminary issue, successfully established the ground of opposition to the tenant's application for a new tenancy which is specified in s.30(1)(f) of the Landlord and Tenant Act 1954, ie:
    "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."
As interpreted in the case law there are two elements to this requirement (i) intention to demolish and (ii) (by way of a judicial gloss) whether the landlord has a reasonable prospect of being able to bring about the desired result. In this case, that meant whether there was a reasonable prospect of obtaining planning permission for the landlords proposals. This case reminds us that the burden on the landlord is not a high one and that (contrary to popular belief) it is not necessary (although as a matter of tactics highly desirable) to have planning permission at the date of the hearing.

Citations

Sir Martin Nourse:
    "28. It was established by the decision in Gatwick Parking Services Ltd v Sargent [2000] 2 EGLR 45 that this court is entitled to take account of a planning permission, even though it had not been obtained by the date of the hearing before the judge.

    30. The judgment of Laws LJ is also of value for its demonstration of what is the planning hurdle that has to be surmounted by the landlord under section 30(1)(f) or (g). Towards the end of his judgment (page 49J) Laws LJ summarised the position thus:
      'I emphasise that the hurdle to be surmounted by the appellant under section 30(1)(g), in the light of the authorities on the subject, is by no means a high one. He does not have to demonstrate a balance of probability that permission will be granted. He has to show that there is a real, not merely a fanciful, chance.'"
And Mance LJ:
    "I add only this on the second ingredient. "Reasonable prospect" is a low threshold, not to be equated with probability: cf Gatwick Parking Services Ltd. v. Sargent [2000] 25 EG 141. The judge's treatment of this ingredient was, to say the least, sparse. He said that he respected [the landlords expert witnesss] expertise, but that "I not accept for one moment his enthusiasm for this scheme in that it is likely to be approved, nor do I accept his timing that it would all be done within an eight week period" The comments of the inspector speak for themselves". But likelihood, in the sense of probability, is not the test. Nor indeed is timing."
See also cases under s30(1)(g)).


Substantial works of reconstruction

In Global Grange Ltd v Marazzi [2002] EWHC 3010 (Ch); [2003] 34 EG 59 the issue was whether or not the works were substantial works of construction / reconstruction. Upgrading of a hotel. It was held by the county court judge that the installation of a new lift, new partition walls and improved bedroom facilities were not sufficient to establish L's ground of opposition even though the works were going to take 12 months and cost over 2m. The internal structure would remain virtually untouched. On appeal the High Court judge held that the county court judge's decision was within the range available to him.

However in Ivory Grove Ltd v Global Grange Ltd [2003] EWHC 1409 (Ch), on fairly similar facts in relation to a neighbouring property, Lawrence Collins J upheld a different county court judge's finding (in a case in which there was additional expert evidence) that s30(1)(f) was satisfied.
    "There is plainly nothing in the wording of section 30(1)(f) which requires the demolition or construction of structural or load bearing features as a condition of its applicability...It follows that whether the relevant parts of the premises are load-bearing is simply one of the factors to be taken into account in determining the jury question of whether there is a demolition or reconstruction, or demolition or construction of a substantial part, or substantial work of construction on the holding or part of it, and not a pre-condition of the applicability of section 30(1)(f)). It also follows that, where partitioning is concerned, it will be a matter of fact and degree whether their replacement and reconfiguration will be within either limb of section 30(1)(f).

    It was also open to him to find that view confirmed when there was taken into account the construction of a larger lift, the excavations and underpinning required, the construction of two steel beams, the openings made in some load bearing internal walls, and the amount of strengthening to the floors and laying of the new drains. ... In any event it was plainly open to him on the agreed evidence to find that there was a bedrock of work to the structure totalling over 450,000, which on any view was a "substantial work or construction". (Paragraphs 66-70).

Tenant's fixtures

Wessex Reserve Forces & Cadets Association v White
[2005] EWCA Civ 1744

Facts

Landlord relying upon s30(1)(f) as a ground of opposition, stating that it intended to demolish some huts on the land. However, the huts were tenants fixtures. These were the most substantial structures on the land and under the terms of the lease T was required to remove them upon termination of its tenancy.

Held

L could not therefore establish that it was going to demolish them. Chadwick LJ at para 23:
    "The landlords' intention, as it seems to me, has to be tested on the hypothesis that, when the tenancy comes to an end there will be no new tenancy. Testing the matter as the judge did - correctly in my view - by asking what will be the position in this case if, when the current tenancy comes to an end, there is no grant of a new tenancy, the answer is not in doubt. There will be no buildings on the land at the end of the current tenancy because the tenant will have complied with its obligation under clause 2(g) of the lease. It will have done so, not only because as an organ of the Ministry of Defence it may be expected to comply with its obligations and to be in a position to do so, but because, in this case, the tenant has an incentive to do so. The huts, the portacabin and the garden shed can be removed. On the evidence which the judge accepted, they would be of sufficient value if they were removed to make it worthwhile for the tenant to remove them and transport them to some other site. So that, on the evidence that was before the judge, the position was that - with the possible exception of the stone stall - there would be no buildings on the land in relation to which the landlord could give effect to their professed intention."

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