Can a landlord oppose the renewal of a business tenancy on behalf of a developer/ potential buyer?

This article was first published in Lexis PSL Property.

Where a landlord wishes to oppose the renewal of a tenancy using section 30(f) of the Landlord and Tenant Act 1954 (LTA 1954) but it is not the landlord who is going to carry out the works but rather a developer that the landlord wishes to sell to, is this allowed under LTA 1954? Can the landlord join the developer as a third party to the action?

A landlord may oppose the grant of a new tenancy to a business tenant on grounds set out in section 30(1) of the Landlord and Tenant Act 1954 (LTA 1954). These grounds are explained in Halsbury’s Laws of England: 16. BUSINESS AND AGRICULTURAL TENANCIES > (1) PROTECTION OF BUSINESS TENANCIES > (i) Scope of Protection; Continuation and Termination of Tenancies > F. RENEWAL OF TENANCIES > (C) Landlord's Opposition > (a) Landlord's Opposition; in general.

The LTA 1954, s30(1)(f) ground of opposition is that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part of it and that he could not reasonably do so without obtaining possession of the holding.

Time of intention

The landlord will be required to prove its case at the date of the hearing: Betty's Cafés Ltd v Phillips Furnishing Stores Ltd. In that case, the House of Lords also suggested that the relevant state of affairs must have existed at the date of the giving of the landlord’s notice as well as the date of the hearing. Lord Denning stated at page 50 that the landlord must honestly and truthfully state his ground in his notice and establish it as existing at the time of the hearing: "I am of opinion that they must be given honestly and truthfully. They are not to be regarded merely as pleadings preparatory to a trial—in which parties, I regret to say, sometimes deny the truth, or refuse to admit it, if it suits their plan of campaign. These notices are intended to be acted upon before there is a trial at all".

In Hough v Greathall Ltd, another case concerned with LTA 1954, s30(1)(f), the Court of Appeal held that a landlord is not required to have in place at the date of the notice all the elements that would enable him to prove his intention at such time. The key date at which he must prove his intention is the date of the hearing. The landlord is not required to also prove that he had the requisite intention at the date of serving the notice.

In Turner v Wandsworth LBC, LTA 1954, s30(1)(f) was established when the landlord entered into a three-year tenancy with a company with the condition that that company would first demolish the buildings on the land and convert the area into a car park. It was held that it was not necessary for the landlord to carry out the work himself. Further, the fact that the landlord’s motive was to sell the freehold of the land when market conditions were more favourable was also irrelevant.

Where the landlord is unable to establish LTA 1954, s30(1)(f) at the date of the hearing but can satisfy the court that the ground will be established at some future date which is not later than 12 months after the termination date in the section 25 notice or section 26 request, then the court may not make an order for a new tenancy. Under LTA 1954, s31(2) however, the court would however be able to extend the date for termination.

Conclusions

The section 25 notice must be served by the competent landlord at the time of service of the notice. The competent landlord is not necessarily the immediate landlord. Competent landlord is defined in LTA 1954, s44(1). See Halsbury’s Law of England: 16. BUSINESS AND AGRICULTURAL TENANCIES > (1) PROTECTION OF BUSINESS TENANCIES > (i) Scope of Protection; Continuation and Termination of Tenancies > E. CONTINUATION AND TERMINATION OF TENANCIES > 831. Meaning of ‘the landlord’

The LTA 1954 requires that the person who serves the section 25 notice is at that time, the landlord. In XL Fisheries Ltd v Leeds Corpn at 646, the former landlord sold the premises following a request for the grant of a new tenancy. The new landlord was entitled to serve a notice opposing the grant of the new tenancy, within the statutory period. Where following service of the notice, there is a change of landlord, the new landlord becomes the person to act as such for the purposes of all further steps under the Act. See Piper v Muggleton at 578.

The developer will only be entitled to join or continue the proceedings, if he becomes a competent landlord during the course of the proceedings. The competent landlord may wish to enter into a similar agreement to that entered into by the landlord in the Turner v Wandsworth LBC case.