Introduction
Section 30(1)(g) provides the following as a ground entitling the landlord to resist an order for a new lease: that on termination of the current tenancy the landlord intends to occupy the holding for the purposes of a business carried on by him
Judicial gloss: However, the courts have put a gloss on this simple statement. For example: A man cannot properly be said to intend to do a work when he has not got the means to carry it out. He may hope to do so: he will not have the intention to do so. (Roehorn v Barry Corporation, Lord Denning). Or "The question whether the landlords intend to occupy the premises is primarily one of fact, but the authorities establish that, to prove such an intention, the landlord must prove two things. First, a genuine bona fide intention on the part of the landlords that they intend to occupy the premise for their own purposes. Second, the landlords must prove that, in point of possibility, they have a reasonable prospect of being able to bring this occupation by their own act of volition". (Gregson v Cyril Lord Ltd [1962] 3 All ER 907).
The test (including the judicial gloss) therefore has two limbs to it. Does the landlord have:
A bona fide intention to occupy the holding for the purposes of the business (a subjective element)?
A real possibility of starting the business (an objective element)?
Two recent cases
There are two recent cases that remind us that the purpose of the judicial gloss is only to ensure that the landlord satisfies the court as to intention and that the burden is not a particularly heavy one:
Dolgellau Golf Club v Hett [1998] 2 EGLR 76 intention to take over and run a golf course no schemes, no indication of likely cost, no real idea of finances. Yet application for new lease refused.
Gatwick Parking Services Ltd v Sargent [2000] 2 EGLR 45 dont overdo the planning requirement. A collateral mother of all battles over planning did not stop the landlord from successfully relying upon s30(1)(g).
the function of the judicial gloss on the statutory test of intention is to determine the reality of a landlords intention to start a business, not the probability of his achieving its start or, even less, its ultimate success. .. The test is whether the landlord has a reasonable prospect of achieving his genuine intention of occupying the demised property for the purpose of conducting a business there within a short or reasonable time after termination of the tenancy The wisdom or long term viability of the project are not, in my judgment, candidates for further judicial gloss on that provision. (Dolgellau Golf Club, Auld LJ at 79E).
A third recent case the landlord lost!
As stated above there are two limbs to the test: (i) does the landlord have a bona fide intention to do so (a subjective element) and (ii) does the landlord have a real possibility of starting the business (an objective element). In this case it was held that the judge could decide whichever of those limbs is most appropriate to decide first. On the facts of this case the trial judge was entitled to find that the prospects of borrowing the necessary funds to start the business were "sufficiently unrealistic as not to be, genuine in all the circumstances of the case". There is simply too much money that will have to be borrowed in order to get the business up and running..". That is he dealt with the second limb first and that was sufficient to deal with the case. The judge was not required to go on and determine whether or not the landlord's subjective intention was bona fide.
Zarvos v Pradhan [2003] EWCA Civ 208; [2003] 26 EG 180
Article: "Pie in sky for restauranteur" by Sandi Murdoch - Explanation of the case. (Estates Gazette, 3 May 2003, p112).
Section 30(1)(g) - own business - company
Where the landlord is an individual and the business is going to be run by a company, the landlord may rely upon s30(1)(g) so long as he has a controlling interest in the company. One of the ways in which he may have a controlling interest is where he holds more than one-half of its equity share capital (s30(3)(b)).
In this case the company was a family business but the landlord produced no evidence as to his interest in the company. During closing submissions the tenant argued that the landlord had failed to show that he had a controlling interest in the company and asked for an order for a new lease. It was then time for lunch and during the adjournment the landlords wife transferred her shares to him so that he obtained a controlling interest. After lunch the landlord asked for an adjournment and permission to call further evidence to prove that he now had that interest. The judge agreed and subsequently dismissed the tenants claim for a new lease. The mortified tenant appealed.
The CA dismissed the appeal. Parties to proceedings are required to assist the court in doing justice in the case. If the tenant wished to raise the issue he should have done so at an early stage in the proceedings. Had he done so the landlord could easily have met the point by effecting a transfer of the shares at an earlier stage. The fact that the tenant might not have thought of the point until the hearing did not affect the position.
Ambrose v Kaye [2002] EWCA Civ 91; [2002] 15 EG 134.
Article: Litigation and business tenancies: no room for Russian Roulette by Janet Bignall and Martin Dray, Falcon Chambers Considers the case. (New Law Journal, 10 May 2002, p701).
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