This case arises out of a tenant’s application for a new tenancy under section of The Railway Bell Public House, Southwood, London, comprising a pub on the ground floor, function/storage space and staff rooms above, and residential accommodation for the licensee or their staff on the second floor, with a large beer garden outside, pursuant to Part II of the Landlord and Tenant Act 1954 (“the 1954 Act”).
Some few months before the trial the tenant refused the Landlords request to access the Premises to carry out intrusive survey works to prepare a planning application for the proposed redevelopment. The tenant refused on the basis the landlord had no right of access for such works.
His Honour Judge Hellman, sitting in the Mayor’s and City of London Court, who held that the appellant, Pridewell Properties (London) Limited (“the Landlord”) had failed to establish its ground of opposition to the grant of a new tenancy under the ground of opposition set out in Section 30 Ground (f) of the LTA 1954 on the failure of the Landlord to show by evidence that there was a real chance of securing funding for the redevelopment.
The Landlord appealed the judgement in respect of the funding issue, and, on appeal, the Tenant sought to rely on additional points, raised at first instance, including:
- A delay of 10-14 months from obtaining possession was not a reasonable time within which to start the works.
What was the legal issue under examination
The question for the Appeal was whether the Landlord had established a statutory ground of opposition to the grant of a new lease. Paragraph (f) of s.30(1) of the 1954 Act (“ground (f)”), states:
“… 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.”
To make out Ground (f), the landlord must show that it has the requisite subjective and objective intention to carry out its works “on the termination of the current tenancy”. Assuming Ground (f) is made out at trial, the tenant’s current tenancy will terminate three months and 21 days later pursuant to s.64 of the LTA 1954.
Judge HHJ Hellman found that the Landlord’s works might not commence until 14 months after the current tenancy terminated under s.64 and that it would count as works undertaken upon the determination of the tenancy. The Judge acknowledges that this was an exceptionally long period to count as “reasonable time”, but the Landlord had “done everything that can reasonably be expected of it to progress the Development”. Part of his reasoning was because the Tenant had declined to provide the Landlord access the premises to carry out the necessary surveys to begin the planning application.
Appeal decision
Mr Justice Fancourt found that Judge HHJ address a subtly different question from the question that the LTA 1954 requires and that his evaluation was therefore flawed. He stated that the question is not whether the estimation of the length of the delay is reasonable, on the evidence, but whether, given that a delay of that length is likely, the landlord could be said to intent to carry out the works “on the termination of the current tenancy” i.e., by a reasonable time after termination.
Mr Justice Fancourt also drew on the distinction set out in Edwards v Thompson, where there was something else the Landlord had to achieve first before they could set about the works. He notes that this does not mean the Landlords ground of opposition will necessarily fail if it does not have planning permission in place at the hearing; the question is whether there is real prospect of obtaining it in time to start the works within a reasonably short time of termination. In this case, where the Landlord is intending to apply for a contentious planning permission six to seven months after possession, and the planning application was dependant on the results of prior surveys and pre-application consultations, the Landlord does not intend to do the works at the termination of the tenancy.
Mr Justice Fancourt expressed that the fact the Landlord was unable to progress the planning process because the Tenant would not permit entry is neither here nor there, those were the consequences of the terms of the parties’ bargain. Whilst it does explain the reasonable time required to start the works of 10-14 months after possession, it did not mean the Landlord intended to carry out the works at the termination of the tenancy.
The judge concluded that the policy of the LTA 1954 is to facilitate redevelopment while providing reasonable security of tenure for tenants. Thus, when the terms of a new tenancy are to be determined, the landlord can argue for a 1-year (or shorter) term and include the rights to carry out the necessary surveys or include a break option. The judge considered that in this case, at worst the landlord will need to wait two years for possession, but in any event, the landlord was unable to start the works for up to 14 months after the possession date.
What does this mean for Landlords
What this case has determined, is how judges in Ground (f) cases should approach the question of timing of the commencement of the work. Given the length of the delay to starting the works, can the Landlord be said to intent to start the works “on the termination of the current tenancy”, and judges should not be considering whether the circumstance for the period of delay to the works are reasonable, but whether the works were to be commenced within a reasonable period of time.
What is clear is that a modest delay in starting the works does not affect the fact that the landlord intends to set about them. However, if the landlord cannot yet set about the works because there is something else that needs to be done first, then it does not intend to do the works on the termination of the tenancy within the meaning of the statue.
This outcome is likely to make it increasingly challenging for landlords to meet the statutory requirements of Ground (f) outright, which means potentially raising the threshold for successful reliance on Ground (f) in such cases.
Instead, Landlords should focus attention not on securing immediate possession of premises when it is acknowledged works will not commence within a reasonable period of time of termination rather, using the existing statutory framework, to secure an ability to carry out preparatory work (ie surveys and preparation of planning applications) under a new shorter lease to the tenant. This way the tenant continues to enjoy occupation under an albeit shorter lease term or subject to a Landlord’s redevelopment break clause, and the underlying policy to facilitate redevelopment being preserved.