Date of intention

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, 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. The tenant observed that, following the 2004 reforms, there was a change of wording in section 25, from saying that the landlord should serve a section 25 notice if it “would oppose” the grant of a new lease to saying that it “is opposed.” The tenant argued that the change was deliberate, such that the date for the landlord to prove its intention to redevelop was the same as the date that the landlord serves its notice.

The court explained that
the main purpose of the 2004 reforms was to remove the requirement for the tenant to serve a counter-notice to an opposed section 25 notice specifying 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.

No doubt driven and assisted by economic and political agendas, property owners
are considering the enhanced
value that can be gained by redeveloping their properties. This creates uncertainty for 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 if its business success stems from its very location.

Against that background,
it comes as no surprise that recently we have seen tenants 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 avoiding 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, which states that the tenant substantially breached the lease during the tenancy. SJ

Adam Gross is an associate at Hamlins

@HamlinsLLP