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England and Wales High Court (Queen's Bench Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> S Franses Ltd v The Cavendish Hotel (London) Ltd [2017] EWHC 1670 (QB) (03 July 2017) URL: https://www.bailii.org/ew/cases/EWHC/QB/2017/1670.html Cite as: [2017] WLR(D) 503, [2017] EWHC 1670 (QB), [2017] Bus LR 1941 |
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QUEEN'S BENCH DIVISION
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
HHJ SAGGERSON
Strand, London, WC2A 2LL |
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B e f o r e :
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S FRANSES LIMITED |
Appellant |
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- and |
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THE CAVENDISH HOTEL (LONDON) LIMITED |
Respondent |
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Mr Nicholas Taggart (instructed by Maples Teesdale LLP) for the Respondent
Hearing dates: 19th and 20th June 2017
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Crown Copyright ©
MR JUSTICE JAY:
Introduction
"(f) 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 or construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding."
Essential Factual Background
"At all reasonable times during the daytime (or forthwith in case of emergency) to permit the Landlord or its Surveyor or Agents or any person authorised by it with or without workmen or contractors to enter the demised premises for the purpose of examining the state of repair and condition thereof and also for the purpose of executing any improvement it may wish to execute or for the purpose of repairing, maintaining, cleansing, rebuilding, altering or examining the demised premises or any adjoining or neighbouring premises or the remainder of the said building "
The user covenant at clause 2.10.1 reflects the nature of the Tenant's business. Clause 4.1 contains a standard covenant of quiet enjoyment which it is unnecessary to set out.
"In broad terms, Scheme 3 comprises works to ready the premises for conversion into two units, described as "Retail Units 1 and 2". It involves the demolition of the current single staircase and the creation of two new staircases/lift shafts, the building of a wall dividing the two new units; the removal of a wall (and the building of a new wall) so as to incorporate part of the hotel's bar into Retail Unit 2 at ground floor and the removal of a wall (and the building of a new wall) so as to incorporate part of the premises into the hotel's car park at basement level. The services are to be divided between the two new units."
The Grounds of Appeal
Ground 1
"Mrs Hollants Van Loocke has been transparently candid about the Landlord's motives in devising Scheme 3 which she accepts has been designed with the material intention of undertaking works that would lead to the eviction of the Tenant regardless of the works' commercial or practical utility and irrespective of the expense. However, the underlying motive is irrelevant unless it be such that it undermines the protestation of the Landlord that it has a genuine and settled intention to proceed."
and
"The Landlord's current intention is in one sense conditional. It is conditional on the termination of the current tenancy. Mrs Hollants Van Loocke accepted in her oral evidence that had the Landlord obtained vacant possession from the Tenant voluntarily, then Scheme 3 would not have been adopted; neither will it be adopted if the application for a new tenancy succeeds. This, it is submitted, suggests that the Landlord's intentions are at best "inherently conditional" and the proposed undertaking at best "neutral" and of little, if any, impact in the context of what the landlord is really intending. The whole project of Scheme 3, it is submitted, is an elaborate charade. I do not accept those submissions. I do not regard the fact that in other non-applicable circumstances, or on a counterfactual landscape, the Landlord would have made different decisions as vitiating its present intention." [judge's emphasis]
"It is submitted that, by enacting ground (f), Parliament intended that the protection of business tenants should not be a barrier to buildings and land being improved and modernised, so as to be put to their most beneficial and efficient use, which is in the public interest. However, it is inconceivable that it was Parliament's intention to allow wealthy landlords to simply subvert the protection which it was conferring on business tenants, by promising to do works for the sole purpose of getting the court to make an order under the Act dismissing the tenant's claim for a new tenancy, with the effect of sterilising buildings and rendering them unusable."
I do not understand Ms Wicks to be submitting that the court should be examining as a matter of fact and evaluation whether proposed works secure the most beneficial and efficient use of land, as a precondition to the fulfilment of ground (f). She was making the more limited point that the policy and objects of the 1954 Act militate against contrived schemes serving no useful or commercial purpose being within the scope of ground (f).
"An "intention" to my mind connotes a state of affairs which the party "intending" I will call him X does more than merely contemplate: it connotes a state of affairs which, on the contrary, he decides, so far as in him lies, to bring about, and which, in point of possibility, he has a reasonable prospect of being able to bring about, by his own act of volition.
X cannot, with any due regard to the English language, be said to "intend" a result which is wholly beyond the control of his will If there is a sufficiently formidable succession of fences to be surmounted before the result at which X aims can be achieved, it may well be unmeaning to say that X "intended" that result.
Not merely is the term "intention" unsatisfied if the person professing it has too many hurdles to overcome, or too little control of events: it is equally inappropriate if at the material time that person is in effect not deciding to proceed but feeling his way and reserving his decision until he shall be in possession of financial data sufficient to enable him to determine whether the project will be commercially worth while.
...
In the case of neither scheme did she form a settled intention to proceed. Neither project moved out of the zone of contemplation out of the sphere of the tentative, the provisional and the exploratory into the valley of decision."
"A further argument submitted on behalf of the appellants was stated by Mr. Russell somewhat as follows: Even if the requirements of the Act are satisfied by an "intention" formed just before judgment is given, these requirements are not satisfied if the landlord's only intention is to carry out works necessary to enable him to occupy the premises. Counsel referred to certain cases bearing upon this matter, in particular Atkinson v Bettison and Fisher v Taylors Furnishing Stores. I need only say that I can find no ground for this submission in the Act of 1954 and I would adopt the language of Parker L.J. in the latter case. After referring to the relevant sections of the Act of 1954, Parker L.J. continued as follows: "From the scheme of the Act as there laid down I should have thought that it was clear, apart from authority, that if any of those grounds of objection is established, the tenant's application for a new lease must fail. Each ground is entirely separate and independent, and each, if proved, entitles the landlord to succeed. Thus, if ground (f) is proved to the satisfaction of the court, it matters not to what use the landlord ultimately intends to put the holding. He may intend to let it when the work is done to a third party. He may intend ultimately to occupy it himself for his own business; or he may not have made up his mind at all. To suggest that, if his intention is ultimately to occupy it himself and he cannot by reason of subsection (2) of section 30 rely on ground (g), he is thereby debarred from relying on ground (f), is to apply a proviso to the operation of ground (f) which is not there and for which there is no warrant. Of course, if he finds himself debarred from relying on ground (g) and is forced to rely on ground (f), his task will not be an easy one; it will at once be suspected that his alleged intention is not genuine, and that it is merely put forward to circumvent his inability to rely on ground (g). But assuming that he satisfies the court that the intention is genuine I can see no reason why he should be debarred from relying on ground (f).""
I do not read Lord Morton as addressing the same conditional intention argument relied on by Ms Wicks in the instant case. In Betty's Cafι, the intention was said to be conditional because at some later date the landlord wished to occupy the premises for its own commercial purposes. The argument was being run on the basis that the landlord could not rely on ground (f) because it was precluded from relying on ground (g). Lord Morton was merely stating that, providing that the requisite intention was honest, genuine and existed as at the date of the hearing, the fact that a case could not be brought within (g) did not remove it from the ambit of (f).
"It was an undertaking which the judge was prepared to accept, and which he did accept; and in regard to such an undertaking I would only quote a passage from the second Betty's Cafιs case, in which [Dankwerts J] said: "The undertaking seems to me to compel fixity of intention". I know of no better way of describing it it is perfectly decisive of the fixity of intention which I agree is a requisite element."
Ground 2
Ground 3
"I do not regard the fact that there were discussions (as I find in June 2016) with Mr Edgecliffe-Johnson and a little later Scheme 2 was produced (which envisaged a single larger retail unit in the Tenant's premises as opposed to the two retail units that are intended as part of Scheme 3) as being any indication that the Landlord (by opting in Scheme 3 for two smaller units) is not genuinely intending to proceed with Scheme 3."
Against "Scheme 2" the judge footnoted that this scheme was annexed to the Amended Defence, and that a planning application had been lodged in respect of it in November 2015.
Ground 4
"I am satisfied that the Landlord has proved that it has, in good faith, a firm, settled and unconditional intention to proceed immediately on the termination of each tenancy with the works described in Scheme 3 (as qualified) and I am satisfied that the Landlord can reasonably expect to do so within a reasonable time (12 months) of obtaining vacant possession, with real prospects of overcoming such modest planning and licence problems as there are."
"Where the landlord opposes an application under section 24(1) of this Act, or makes an application under section 29(2) of this Act, on one or more of the grounds specified in section 30(1)(d) to (f) of this Act but establishes none of those grounds, and none of the other grounds specified in section 30(1) of this Act, to the satisfaction of the court, then if the court would have been satisfied on any of the grounds specified in section 30(1)(d) to (f) of this Act if the date of termination specified in the landlord's notice or, as the case may be, the date specified in the tenant's request for a new tenancy as the date from which the new tenancy is to begin, had been such later date as the court may determine, being a date not more than one year later than the date so specified
(a) the court shall make a declaration to that effect, stating of which of the said grounds the court would have been satisfied as aforesaid and specifying the date determined by the court as aforesaid, but shall not make an order for the grant of a new tenancy;
(b) "
Ground 5
(1) derogation is a matter of objective fact in no way contingent on what the Tenant was prepared to put up with (viz. almost anything).
(2) the end result here is that different holdings will be created.
(3) the right of entry is not wide enough in these circumstances: in the light of (2) above and the fact that the premises will be substantially less fit for the purpose for which they were originally let.
" the evidence reflects the almost heroic lengths he is prepared to go to minimise the impact and effect of the Scheme. I found his evidence in this respect unrealistic and indeed suggestive of the fact that the impact of Scheme 3 on the Tenancy and the business will be extreme such that the premises will be substantially less fit for the purpose that was intended before. In my judgment, by the implementation of Scheme 3, the Tenant's rights are reduced below the irreducible minimum implicit in the original grants themselves."
"My conclusions are based on the fact that Scheme 3 will (amongst other things) "
and then itemised four categories of work on which he placed reliance. Mr Taggart accepted before me that some of the works the judge itemised could be carried out within the ambit of the right of entry. Ms Wicks' submission was that all the Scheme 3 works bar the removal of two party walls (namely, the wall separating the premises from the hotel bar at first floor level, and the wall separating the premises from the car park at basement level, to the east side of the premises) were within the right of entry. Mr Taggart agreed with Ms Wicks about the party walls, and ultimately the contest between the parties on this topic focused on paragraph 19.2 of the judgment. The provision of a new fire escape is agreed to be an improvement, but Mr Taggart's position was that the removal and reconstruction of staircases could not be so characterised. Ms Wicks' riposte was that these should be envisaged as works of alteration or rebuilding, and I would agree.
(1) he mischaracterised the Tenant's case in relation to the right of entry.
(2) his paragraph 19 reasons are substantially incorrect, because the majority of the works he has itemised are within the reservation.
(3) his paragraph 19(5) reason is also incorrect, because it ignores relevant authority.
(4) in the result, the judge has denuded the right of entry of any effect.
"The existence of a right of entry in a lease is a reduction in the scope of the grant, rendering lawful incursions onto the demised premises which would be a derogation, but for the reservation."
"5. The terms of the lease will inevitably impinge on the extent of the obligation not to derogate. Express terms will obviously play a part, possibly a decisive part, in determining whether a particular act or omission constitutes a derogation. An express term should, if possible, be construed so as to be consistent with what Hart J. called "the irreducible minimum" implicit in the grant itself. However, as he went on to say, a covenant relied on by the landlord "if construed as ousting the doctrine in its entirety is repugnant and should itself be rejected in its entirety" see Petra Investments Ltd. v. Jeffrey Rogers plc (2000) Landlord and Tenant Reports 451 at 471.
7. One test which is often helpful to apply where the act complained of is the landlord's act or omission on adjoining land is whether the act or omission has caused the demised premises to become unfit or substantially less fit than the purpose for which they were let see Brown v. Flower (1911) 1 Ch 219 at 225, as per Parker J., and also Aldin v. Latimer Clark Muirhead & Company (1894) 2Ch 437.
9. The circumstances as they were at the date of the grant of the lease are very important. Thus, in Southwark [2001] 1 AC 1, the claim failed because it was based on an alleged defect in the demised premises which existed as at the date of the grant see, for instance, at pages 455 to 456 per Lord Hoffman, and at 467 to 468 per Lord Millett.
10. However, given that a lease is essentially prospective in operation, the central issue, where the complaint is of activities on the neighbouring premises owned by the landlord, is not merely "the use to which the adjoining premises are put at the date of the tenancy", but also "the use to which they may reasonably be expected to be put in the future", per Lord Millett at 468J in Southwark. See also per Lord Hoffmann to the same effect at 456C, who, like Lord Millett, relied on Lyttleton Times Company Ltd v. Warners Ltd (1907) AC 436."
Ground 6
Ground 7
Ground 8
Ground 9
Conclusion