Date of Intention

Adam Gross considers recent case law regarding the date of a landlord’s intention to redevelop a property.

The date of a landlord’s intention to redevelop, reconstruct or carry out a substantial work of construction to premises, pursuant to section 30(1)(f) (“ground (f)”) of the Landlord and Tenant Act 1954 (the “Act”) is the date of trial. That position has, since the famous 1959 case of Betty’s Cafés, been understood to be the relevant date for a landlord to prove it has the requisite intention. In the case of Hough –v- Greathall Limited [2015] EWCA Civ 23, the Court of Appeal had to say whether that was still the case in light of the reforms made to the Act in 2004.

On 16 June 2013, the landlord served on the tenant a notice pursuant to section 25 of the Act and opposed the grant of a new lease on the basis of ground (f). On 29 May 2014, the court found that the landlord had, by the date of trial, satisfied that ground.

The tenant appealed on the basis that, since 2004, the date for a landlord to prove its intention to redevelop was the service date of its opposed section 25 notice. If the tenant was right, in this case, it would have stopped the landlord from carrying out its redevelopment who would be obliged, by the Act, to offer the tenant a new lease.

The tenant argued that, following the 2004 reforms, there was a change of wording in section 25 from saying that the landlord needs to serve a section 25 notice if it “would oppose” to saying that it “is opposed” to the grant of a new lease. The tenant argued that such change was deliberate such that, since 2004 (and therefore seeking to distinguish its case from Betty’s Cafés), the date for the landlord to prove its intention to redevelop is the same that the landlord serves its notice.

The court explained that the main purpose of the 2004 reforms was predominantly to remove the requirement for the tenant to serve a counter-notice to an opposed section 25 notice to specify its unwillingness to give back possession, However, there was nothing in the 2004 reforms to indicate that Parliament intended to revise the position settled by Betty’s Cafés. The appeal was unsuccessful and therefore, the relevant date for a landlord to prove its intention to redevelop remains the date of trial.

Comment

No doubt driven and assisted by economic and political agendas, property owners considering the enhanced value that can be gained by redeveloping their properties. This gives uncertainty to business tenants whose leases are contractually due to expire. There may be further problems if a business tenant has acquired a substantial amount of goodwill, and whose business success, has been created from its very location.

Against that background, it comes as no surprise that recently we have seen tenants, as with the above (albeit unsuccessfully), trying to find ways to keep their premises. Equally, as demonstrated by the recent case of Youssefi v Musselwhite [2014] EWCA Civ 885, landlords are finding more creative ways of seeking possession or to avoid having to pay statutory compensation under the Act. In that case, the landlord resisted the tenant’s claim for a new lease on the basis of the rarely used section 30(1)(c) of the Act, in that the tenant substantially breached the lease during the tenancy and for other reasons connected with the tenant’s use and management of the holding.
This article first appeared in Solicitors Journal on 10 March 2015.