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S Franses Limited v. The Cavendish Hotel (London) Ltd
Smart Summary
Case Summary (Fully Anonymized)
Factual and Procedural Background
The dispute concerns commercial premises comprising the ground floor and basement of
a building at [Number] Main Street in The City.
The freehold is owned by Company A; the immediate
landlord is the head-lessee (Landlord).
The under-tenant (Tenant)—a textile dealership and consultancy—
has occupied the premises under a 25-year underlease commencing
2 January 1989, using them as a retail art gallery, showroom and archive.
On 16 March 2015 the Tenant served statutory notices requesting a new business
tenancy under Part II of the Landlord and Tenant Act 1954 (“the 1954 Act”).
On 15 May 2015 the Landlord served a counter-notice opposing renewal under
section 30(1)(f) (the “ground (f)”)—i.e. intention to demolish or reconstruct.
The Tenant issued proceedings in the Central London County Court on 8 June 2015.
A preliminary issue was directed to decide whether ground (f) was made out.
The Landlord produced three successive “schemes of works”. Each was deliberately
designed (a) to be sufficiently substantial to qualify under ground (f),
(b) to be impossible to carry out while the Tenant remained,
and (c) to avoid the need for planning permission that might be refused.
The final iteration involved extensive internal alterations—including objectively
useless works such as lowering part of the basement slab, relocating smoke vents
without purpose, and demolishing then rebuilding an internal wall—at an estimated
cost of £776,707 (plus statutory compensation of £324,000).
Both sides accepted these works had no commercial or practical utility and would
not be pursued if the Tenant left voluntarily.
The County Court (Judge Saggerson) concluded that the Landlord genuinely intended
to perform the works and therefore satisfied ground (f); a new tenancy was
refused. The High Court (Judge Jay) upheld that decision but granted a
leap-frog appeal. The instant judgment reverses those findings.
Legal Issues Presented
- Whether, under section 30(1)(f) of the 1954 Act, a landlord may
legitimately oppose the grant of a new tenancy when the proposed works
are designed solely to remove the tenant and would not be undertaken if
the tenant vacated voluntarily.
- Whether the statutory requirement that the landlord “intends” to
demolish or reconstruct is satisfied when that intention is
conditional on the tenant remaining in occupation.
- To what extent, if at all, the landlord’s motive or purpose is
relevant in assessing the genuineness and quality of the requisite
intention.
Arguments of the Parties
Landlord’s Arguments
- Relied on a long line of authority establishing a two-part test
(Cunliffe v Goodman and successors):
(i) a genuine intention to carry out qualifying works and
(ii) a reasonable prospect of doing so.
Nothing further—such as motive, utility or reasonableness—was relevant
except as evidence of genuineness.
- Provided a written undertaking to the court to perform the works,
asserting this demonstrated a firm and settled intention.
- Contended that statutory tenant protection is only a qualified
interference with proprietary rights and should not be extended
beyond the language of ground (f).
Tenant’s Arguments
- The works lacked any practical utility and were contemplated purely
to defeat the Tenant’s statutory right to renewal.
- The Landlord’s intention was conditional—i.e. it would execute the
scheme only if necessary to obtain possession—so ground (f) was not
engaged.
- The purpose and conditional nature of the Landlord’s intention are
legally relevant factors when assessing whether the statutory test is
met.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Cunliffe v Goodman [1950] 2 KB 237 |
Definition of “intention” as
a firm, settled decision with a reasonable prospect of achievement. |
Cited as the origin of the two-part test; distinguished because it
does not address conditional intentions devised solely to oust a
tenant. |
| Marquess of Salisbury v Gilmore [1942] 2 KB 38 |
Focus on landlord’s intention at tenancy termination. |
Background reference to development of “intention” jurisprudence. |
| Atkinson v Bettison [1955] 1 WLR 1127 |
Earlier “primary purpose” test for ground (f). |
Shown to have been overtaken by
later authority rejecting motive-based tests. |
| Fisher v Taylors Furnishing Stores Ltd [1956] 2 QB 78 |
Confirmed that genuine intention suffices even if landlord also
wishes to occupy premises. |
Explained but distinguished; supports need for firm intention but
does not validate conditional schemes. |
| Betty’s Cafés Ltd v Phillips Furnishing Stores Ltd [1959] AC 20 |
Relevant intention assessed at hearing date; grounds (f) and (g)
are distinct. |
Affirmed but interpreted consistently with the requirement that
intention must be independent of tenant’s stance. |
| Housleys Ltd v Bloomer-Holt Ltd [1966] 1 WLR 1244 |
Rejected need to investigate landlord’s
“primary purpose.” |
Considered in tracing evolution of case law on motive. |
| Turner v Wandsworth BC [1994] 69 P & CR 433 |
Stated that motive is generally irrelevant if intention is
genuine. |
Cited as prevailing approach before the present clarification. |
| Majorstake Ltd v Curtis [2008] AC 787 |
Landlord chooses the works; court assesses genuineness, not
reasonableness. |
Referenced to show established limits on court scrutiny of
reasonableness. |
| Decca Navigator Co Ltd v Greater London Council [1974] 1 WLR 748 |
Similar point to Majorstake on landlord autonomy. |
Background authority only. |
| Blackburn v Hussain [1988] 1 EGLR 77 |
Re-affirmed that genuineness, not motive, is key. |
Discussed in historical survey. |
| Al-Malik Carpets (P) Ltd v London Buildings (Highgate) Ltd [1999] All ER (D) 971 |
Dictum suggesting conditionality satisfied if condition met by
trial. |
Explicitly disagreed with by the present court. |
| W.T. Ramsay Ltd v IRC [1982] AC 300 |
Tax avoidance principle (invoked by Tenant by analogy). |
Deemed unnecessary to resolve main issue; not adopted. |
Court’s Reasoning and Analysis
The Court held that ground (f) requires a “fixed and settled”
intention to carry out the specified works independently of the tenant’s
statutory claim. If the landlord would not undertake the works were
the tenant to leave voluntarily, the requisite intention is absent.
Key points in the analysis were:
- While motive is generally irrelevant, it is admissible as evidence
of whether the intention is genuine and unconditional.
- The statutory language assumes the tenant’s occupation is an
obstacle to works the landlord already intends to perform;
therefore the landlord’s plan must pre-exist and survive the
tenant’s departure.
- The Landlord’s own evidence confirmed the works would not proceed
if possession were obtained without litigation, demonstrating a
conditional intention insufficient for ground (f).
- Earlier authority focused on genuineness but did not authorise
contrived or “spurious” schemes whose only value is vacant
possession.
- Undertakings to the court, while probative of genuineness, cannot
cure a conditional intention that fails the statutory test.
Holding and Implications
HOLDING: APPEAL ALLOWED. The Court declared that,
on the facts found, the Landlord does not intend,
within the meaning of section 30(1)(f) of the 1954 Act,
to carry out the proposed works; accordingly the Landlord cannot
oppose the grant of a new tenancy on that ground.
Implications:
The decision clarifies that a landlord cannot defeat
a business tenant’s right to renewal by formulating works that would
be undertaken only to secure possession.
The requisite intention must be
unconditional and independent of the tenant’s stance.
Future litigation may entail closer scrutiny of landlords’ stated
intentions and underlying purposes, potentially increasing the
evidential burden on landlords who rely on ground (f), but the ruling
does not otherwise alter the established need for genuineness.
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