Landmark Chambers


Franses v The Cavendish Hotel – In Other News...

DATE: 17 Oct 2017

The recent appeal decision of Jay J on the Landlord and Tenant Act 1954, section 30(1)(f), S. Franses Ltd. v. The Cavendish Hotel (London) Ltd. [2017] EWHC 1670 (QB), [2017] EGLR 34, has attracted some media discussion in respect of the tenant’s arguments on the meaning of “intention” in “Ground (f)”: see, for instance, the Estates Gazette on 22nd August 2017 and a Lexis PSL article, of 26th September 2017. 

The Cavendish Hotel (London) Ltd., is the long-lessee of a hotel in Jermyn Street, London. S. Franses Ltd. is its subtenant, occupying a retail unit on the ground floor and basement under two leases. The landlord made no attempt to hide the fact that it wished to regain possession from the tenant under Ground (f) to give itself a freer hand should it decide to undertake a more extensive redevelopment of the hotel as a whole in the future. Disarmingly, the landlord’s evidence accepted that much of the scheme of works it relied on for the refusing the tenant a new tenancy under Ground (f) was being undertaken to satisfy that ground and had no other commercial purpose. 

Before the County Court and the High Court, the tenant argued that the landlord’s intention was “conditional”, in the sense that the landlord would not do the works if they were not necessary to obtain an order under Ground (f). Both HH Judge Saggerson at trial and Jay J on appeal rejected this: in the real world, there was no doubt that the tenant would rely on its rights under the Act, so the landlord’s intention was “settled”, not “conditional”. 

The tenant next argued that Parliament had not intended to allow landlords to subvert the legislation by carrying out work solely in order to evict tenants: thus, an intention to undertake such work was not an “intention” within the meaning of Ground (f). Both Judges rejected this, too; they regarded intention and motive as different concepts and that Ground (f) directed the court to ask “what” a landlord was going to do, not “why”. 

Despite not calling on the landlord’s Counsel, Jay J gave the tenant permission to make a “leapfrog” appeal direct to the Supreme Court under the Administration of Justice Act 1969, section 12 on those points: hence all the excitement. The Supreme Court has yet to decide whether to accept the reference. 

What has received much less attention is two other decisions Jay J made on disposing of the appeal before him. These raise rather more interesting (and rather more technical) issues. 

First, the landlord failed to uphold the trial judge’s decision on two issues. Jay J decided to remit those issues alone back to the County Court and to a different judge. The landlord contends that this is wrong in principle, because Ground (f) directs that there should be a trial of a single, statutory question, namely whether the landlord “intends” to undertake works of the kind specified in section 30(1)(f) to the premises comprised in the holding. As was established by the decision of the House of Lords in Betty’s Cafés Ltd. v. Phillips Furnishing Stores Ltd. (Nº.1) [1959] AC 20, this question is to be answered “at the trial” of the landlord’s grounds of opposition. The effect of Jay J’s decision is that there will be no single “trial”, nor will a single judge try the landlord’s case. 

Moreover, the decision in Betty’s Cafés interpreted Ground (f) as permitting the landlord to prove its case at trial, even if that involves advancing fresh evidence on the day. By failing to remit the whole of the landlord’s grounds of opposition to the grant of the new tenancy back to the County Court, Jay J prevented the landlord from exercising that right to advance fresh evidence.  The landlord contends that this is contrary to the substantive law of Ground (f), as decided in Betty’s Cafés

Secondly, Jay J’s one of the issues remitted to the County Court relating to the operation of the rights of entry to undertake works granted to the landlord in the tenant’s leases. The trial judge accepted that even the widest rights of entry have their limits and that the landlord’s proposed works were so extensive that undertaking them would be a derogation from grant and a breach of the covenant for quiet enjoyment, notwithstanding the rights of entry. On this point, Jay J upheld the trial judge. The trial judge then considered that the works which would constitute the derogation from grant were also within Ground (f). On this, Jay J declined to uphold him, essentially on the basis that he did not consider it sufficiently clear that the judge had only considered works which fell within Ground (f), rather than the totality of the works he considered to be a derogation. 

However, the tenant persuaded Jay J to remit the matter to the County Court as a series of prescriptive questions in a particular order, effectively directing the County Court to accept the trial judge’s finding that the landlord’s proposed works, when considered as a whole, would constitute a derogation from grant but then asking itself whether each item of work, considered individually could be undertaken under the right of entry. 

If this approach is right, it would be open to the County Court to find that the works, considered as a whole, could not be undertaken “without obtaining possession of the holding”, but the very same package of works, if each step was considered separately, could be undertaken “without obtaining possession of the holding”. Given that the landlord’s intention was to undertake all of the works as a single programme, it might be though unreal to approach the question in this way. It amounts to this: even if it is a derogation from grant for the landlord to demolish the holding with a ball and chain, it is not a derogation if the landlord does so gently, brick by brick. This point was put to Jay J, but he held that the point did not arise. 

The landlord contends that Jay J’s order asks the questions in the wrong order: the correct approach is to first identify the works which the landlord intends to undertake which satisfy all the elements of Ground (f), apart from the requirement relating to possession. Having extracted from the landlord’s proposals all work that lies outside the scope of Ground (f), the court should then ask itself whether the remaining works, if undertaken as part of a single programme, could be undertaken under the right of entry without there being a derogation from grant. 

On Friday 13th October 2017, the Court of Appeal (Patten LJ) granted the landlord permission to appeal on both points, the appeal to be adjourned pending the decision of the Supreme Court on whether to entertain the tenant’s leapfrog appeal. Whether that Friday 13th will prove to be unlucky, and from whom, remains to be seen... 

Nic Taggart has acted throughout for the landlord, The Cavendish Hotel (London) Ltd.