Tenant strategically succeeds in defeating a Landlord’s opposition to a new lease being granted under Ground (f) of section 30 Landlord and Tenant Act 1954.

Background

On 25th March 2024, the County Court at Central London handed down a judgment on the case of Sainsbury’s Supermarkets Limited v. Medley Assets Limited [2024]. Sainsbury’s is the commercial tenant of a property on Kentish Town Road and Medley are its landlord. The property comprises of a basement, ground floor and two upper floors which were all included in the defined demise of Sainsbury’s lease, although Sainsbury’s did not make use of either the basement or the upper floors, which remained vacant for a number of years.

Medley served notice on Sainsbury’s to bring its lease to an end and opposed the grant of a new lease in reliance upon ground (f) of section 30(1) of the Landlord and Tenant Act 1954, being that the landlord intends to redevelop the premises comprised in the “holding” and could not reasonably do this without first obtaining possession from the tenant.

Medley’s initial plans for redevelopment included the conversion of the upper floors of the property into flats. This, however, was subsequently abandoned and Medley’s plans for development then included lowering the floor in the basement, widening the staircase from the ground floor to the upper floors and refurbishing the upper floors so that they could be used as office space. These proposed works would encroach upon areas used by Sainsbury’s for storage on the ground floor of the property.

Sainsbury’s wished to continue occupying the property and therefore issued proceedings for a new lease.

Defeating Ground (f)

A week before the trial of the preliminary issue to determine whether Medley had successfully established that it was entitled to rely on ground (f), Sainsbury’s took steps to vacate the area of the ground floor which was subject to Medley’s proposed works.

At the trial, Sainsbury’s challenged the intention of Medley to carry out the works but also argued that the “holding” for the purpose of ground (f) should be interpreted to mean only the areas of the building which the tenant was occupying at the time of the trial.

Medley counter-argued that the reference to “holding” should include the entire premises demised under the terms of the lease.

In his Judgment, HHJ Roberts agreed with Sainbury’s and determined that the “holding” meant that parts of the property that the tenant was occupying at that time. In circumstances where the scope of Medley’s proposed works no longer affected the parts of the property Sainsbury’s were occupying at the time of the trial, this meant that Sainsbury’s successfully defeated Medley’s ground of opposition.

Interestingly, this did not impact upon Sainsbury’s ability to continue with its application for a new lease of the whole demise at the trial of the terms of the tenancy.

The Judge further held that Medley would have failed to establish ground (f) in any event on the basis that it did not have a firm and settled intention to carry out the works. Despite having undertaken

surveys and applied for planning permission, there was doubt cast upon the feasibility of completing the works and there being a considerable delay in commencement of the works undermined Medley’s case.

Commentary

This case is good news for tenants who are faced with the threat of the end of their tenancy on the grounds of redevelopment. If they are able to rearrange their occupation of the property to the extent that they will not be affected by their landlord’s proposed works, even it if it is simply a temporary measure, then this gives them a strong defence to the opposition and a better footing for succeeding in an application for a new lease.

It also serves as a stark warning to landlords to be aware of the routes to defeating the grounds for opposition and the high threshold needed to meet those grounds of opposition. Whilst it is, of course, persuasive to have planning permission in place, this will not necessarily be enough to prove their case and more care needs to be taken to ensure that the proposed plans are realistically feasible and that more than simply preparatory steps are taken towards achieving the proposed redevelopment.

If you would like further advice in relation to commercial lease renewal proceedings, please contact Louise Palmer on 01543 267231 or by email at lpalmer@ansons.law.