UK: Landlord's Intention To Redevelop A Business Tenancy
Hough v. Greathall Ltd [2015] EWCA Civ 23

The landlord served a s25 notice opposing the grant of a new tenancy, relying on s30(1)(f) of the Landlord and Tenant Act 1954 (LTA 54), the redevelopment ground.

The tenant argued a point based on a novel interpretation of the LTA 54 to the extent that the landlord must show the necessary intention to redevelop, not at the date of the hearing to determine the matter, but instead on the date that the landlord served the s25 notice. This was some 11 months before the hearing.

The Court found that the landlord did not have the requisite intention at the time that it served the s25 notice, but held that this was immaterial as the relevant date to ascertain its intention was the date of the hearing. On the facts, the landlord did have the requisite intention at this time. Accordingly, the Court dismissed the tenant's application for a new business tenancy and ordered the tenant to provide vacant possession.

The tenant appealed this decision, arguing that the Court had erred in finding that the requisite time for the landlord's intention to redevelop was the date of the hearing. The tenant's argument was based on the changes to s25 LTA 54 that were introduced by the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (RRO 2003).

The Court of Appeal unanimously dismissed the appeal, finding that the changes to s25 LTA 54 related to the abolition of the counter-notice procedure and that there was no evidence of an intention to alter the settled law on when a landlord must show its intent for the purpose of relying on s30(1)(f) LTA 54.

The position, therefore, remains the same. The key time for ascertaining the landlord's intention to redevelop is the date of the hearing. The change brought by the RRO 2003 made only a small statutory change.  However,  if the Court of Appeal had accepted the tenant's argument then it would have had severe consequences for current lease renewals and would have controversially changed settled law.

The case is also consistent with a relatively recent case where the Court refused to entertain a tenant's argument that it should be entitled to summary judgment in respect of a ground (f) claim if the landlord had not formed the requisite intention by the date of the summary judgment hearing. In this case, the Court held that the key date for ascertaining intention was the date of a full trial of the issue and the tenant could not seek to pull the rug from under the landlord by applying for summary judgment at a point when the landlord's intention had not fully crystallised.

Both cases illustrate the established understanding that a landlord's intention must be crystallised at the date of an ultimate hearing of the full dispute. This is no doubt of comfort to landlords who are piecing together complex redevelopments in reliance upon having the ability to finalise their plans and intention to redevelop after service of a s25 LTA 54 notice (or counter-notice) but before the date the trial of the dispute is listed for. From a landlord's perspective this period is often relied upon, so the certainty provided by the Court is to be welcomed. The position is less helpful to a tenant seeking to avoid its landlord recovering possession. However, the law in respect of timing of intention has not actually changed. The tenant would therefore be wise to get a short s26 notice in early, requesting a new tenancy, and then apply to Court at the earliest opportunity to try to get a hearing date in advance of the landlord being able to prove the requisite intention.

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