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Opposing lease renewal: intention to develop

Summary.  The High court has held that a landlord who opposed a lease renewal on the ground of his intention to redevelop the property had to show the requisite intention by the date of the substantive trial relating to the ground of opposition.

Background.  Tenants have a statutory right to renew a tenancy to which Part II of the Landlord and Tenant Act 1954 (1954 Act) applies at the end of its term.  The landlord can only oppose renewal on certain limited grounds, which are set out in section 30 of the 1954 Act.

The landlord can oppose renewal if, on the termination of the tenancy, the landlord intends to demolish or reconstruct the premises or to carry out substantial construction work on the premises that he could not reasonably do without obtaining possession (section 30(1)(f), 1954 Act) (section 30(1)(f)).

Facts.  The tenant (T) held three leases of a supermarket and adjoining land (the site), which expired in March 2008.  The landlord (L) had bought the site in 2006, intending to redevelop it.  L opposed T’s request for renewal of the tenancies on the ground set out in section 30(1)(f).  T applied for summary judgment dismissing L’s grounds of opposition.

The County Court held that T had to establish that L would not be able to make out the ground of opposition either at the date of the summary judgment hearing or within a reasonable time after the hearing, but T had failed to satisfy that test.  T appealed.

Decision.  The court dismissed the appeal, but for different reasons from those given by the County Court.  The court held that L had to show the requisite intention to redevelop at a date determined by reference to the date of the substantive trial of the ground of opposition, not by reference to the summary judgment hearing.

On a summary judgment, the court should ask itself whether the landlord has a real prospect of forming, and proving that it has formed, the requisite intention at an anticipated trial date.

Comments.  This decision will be welcomed by landlords, as it provides a clear authority on the timing of the landlord’s requisite intention, which was not previously available.  This decision also discourages tenants from making a tactical application for summary judgment simply to bring forward the date at which the landlord must show intent.

Case: Somerfield Stores Ltd v Spring (Sutton Coldfield) Ltd [2010] EWHC 2084 (CH)

PLC October 2010