Real Estate - Tip of the Week: S Franses Ltd v The Cavendish Hotel (London) Ltd - Cruel Intentions?

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Real Estate - Tip of the Week: S Franses Ltd v The Cavendish Hotel (London) Ltd - Cruel Intentions?

Published 10 December 2018

On Wednesday the Supreme Court handed down its eagerly awaited judgment in S Franses Ltd -v- The Cavendish Hotel (London) Ltd, providing important guidance as to the question of ground (f) intention under the Landlord and Tenant Act 1954 (the “1954 Act”).   

Section 30(1)(f) of the 1954 Act allows a landlord to oppose the grant of a new tenancy if, on the termination of the current tenancy, the landlord intends to demolish, reconstruct or carry out substantial works of construction to the whole or a substantial part of the premises.  In S Franses, the landlord sought to satisfy ground (f) by relying on a scheme of works which had been specifically designed to meet the necessary criteria within the 1954 Act and thus remove the tenant, but which otherwise had no commercial or practical purpose.  The judge at first instance found that the landlord genuinely intended to carry out the works if necessary to obtain possession, but not otherwise.  The works would not be carried out if the tenant agreed to leave voluntarily. 

The landlord argued that all it had to show was that it had a genuine intention to carry out works which qualified under ground (f), and that it was practically possible for it to do so.  Its motive for carrying out the works, or the reasonableness of its intention, were not relevant considerations. The tenant disagreed.

The Supreme Court confirmed that:-

  • The landlord's purpose or motive in carrying out the works does not matter.  The only relevance it may have is in testing whether the landlord really does have a "firm and settled intention" (on the basis that the landlord is less likely to truly intend to do the works if there is no commercial purpose behind them).  A landlord may therefore succeed on ground (f) even if it has designed the scheme of works for no other purpose than to remove the tenant.

  • However, the problem for the landlord in this case was the conditionality of its intention.  The court had found as a matter of fact that the landlord only intended to do the works if it had to do so in order to obtain possession.  There was no intention to do the works if the tenant agreed to leave.  This was not enough to satisfy ground (f) – the intention must be fixed and cannot be conditional in this way.

Landlords considering similar schemes should take care.  A scheme of works designed solely to remove the tenant may look attractive if there is no other way to obtain possession, but the Courts will scrutinise the landlord's true intentions closely.

Authors

Rachael Reynolds

Rachael Reynolds

Manchester

+44 (0)161 934 3103

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