Lease or let die: navigating recent case law and the proposed reforms to the Landlord and Tenant Act 1954

The case dealt with a dispute between Mr Macey (the landlord) and Pizza Express (the tenant), whereby Mr Macey opposed Pizza Express’s request for a statutory lease renewal under section 30(1)(g) of the Act.  The central issue was whether Mr Macey could establish a genuine and settled intention to take over the premises to run his own restaurant and thereby justify the refusal.

The Court ruled in favour of Pizza Express concluding that Mr Macey had failed to demonstrate “that the project had moved out of the zone of contemplation into the valley of decision” in a matter where the burden of proof lies with the landlord, nor was the judge satisfied as to the objective element in that Mr Macey had failed to “[demonstrate] a real prospect of overcoming or surmounting the obstacles facing the hospitality industry…”.  While Mr Macey argued that he intended to operate his own restaurant, the court found that his plans were insufficiently concrete.  The evidence provided by Mr Macey (including his financial arrangement and business planning) was deemed speculative and lacking in detail.

The Court held that a landlord opposing a lease renewal under ground (g) must provide clear and credible evidence of their genuine intention to occupy the Premises, which Mr Macey had failed to do.

The decision underscores the rigorous evidential burden on landlords who wish to reclaim possession of leased premises under this provision, reinforcing the protection afforded to tenants under the Act when the landlord’s intentions are uncertain and/or unsubstantiated.

Landlords are well advised to give detailed consideration to the full extent of their plans and take advice as to whether they may/are likely to satisfy the legal evidential burden within the correct period of time.

The defendant owns the former County Hall opposite the Houses of Parliament on the South Bank, for which the Claimant had (until March 2019) a restaurant on part ground and basement floor of the building with 1954 Act protection.

The defendant opposed the lease renewal under ground (g) stating that it intended to occupy itself and open a Japanese bento restaurant. The defendant called two witnesses who attested to their plans and provided a business plan to evidence the same.

The Court initially ruled in favour of the landlord based on these representations and decided that it had a firm and settled intention to open the restaurant as noted.  However, after the judgment, the landlord did not follow through with the plan and instead explored several other restaurant concepts before eventually opening a different scheme (a restaurant in March 2020 and September 2020, then a different restaurant, a coffee shop and bakery in 2021).

McDonald’s argued that Shirayama had misrepresented its intentions at trial, seeking compensation under section 37A of the Act, which provides for compensation when a landlord misrepresents their intent to occupy the premises.

The Court found that the landlord had indeed misrepresented its intentions deliberately, rather than changing its mind post-judgment.

This case is significant because it sheds light on the application of section 37A of the Act, an area with little prior authority. The judgment highlights that landlords must present clear and honest intentions when seeking to terminate a tenancy under ground (g). It also provides guidance on the types of evidence landlords must provide and emphasises the risks of misrepresentation in tenancy termination cases. Moreover, this decision may influence how undertakings related to lease terminations are drafted, with the judge noting that implicit representations can lead to misrepresentation claims if not followed.

The property occupied by Sainsbury’s included a supermarket on the ground floor and upper floors previously used as offices and basement, which as at the time of the hearing was vacant.

The landlord claimed they wanted to redevelop the property. Sainsbury’s vacated the area of the ground floor included in the landlord’s proposed works before the hearing resulting in the Court considering whether the “holding” should be read as reference to the whole of the original demise (as argued by the landlord) or restricted to those parts of the demise that the tenant was occupying as at the time of the trial (as argued by the tenant).

The Court held in favour of the tenant. Even if it were the case that the new tenancy would (by virtue of s32 of the Act) be of a larger part, or of the whole, of the original demise, the Court also held that the landlord had failed to discharge their evidential burden that it intended to carry out the stated works (in particular the works had not been commenced despite funds and planning permission being in place).

This is a potentially significant decision for commercial tenants who wish to defeat ground (f) claims.  It is now feasible – on the face of it – that where a tenant can identify any part of the property which the landlord is not undertaking works to, then a tenant can move its operation into that part just before the trial of the preliminary issue to defeat the landlord’s claim under ground (f), with the court then making an order that a new tenancy should be granted.

The matter considered a landlord’s right to oppose a renewal lease under the Act, where the premises were in a serious state of disrepair as at the date the counter-notices were served under the Act, and where there was a persistent delay in paying rent by the tenant, but where the disrepair had been remedied by the date of the hearing and the delay in payment of rent was minor.

The Court of Appeal held that the facts to be considered in establishing a landlord’s opposition to a renewal tenancy under the Act should not be considered at only one point in time and should be reviewed by reference to the tenant’s conduct overall when deciding whether it “ought not” be granted a new lease (in particular where considering opposition grounds (a), (b), and (c)).

For example, when considering ground (a) the Court is not confined to the state of repair as at the date of the hearing, and factors throughout the term can – and should be – considered meaning that a landlord can oppose a new tenancy on ground (a) even where the disrepair has been remedied.

Furthermore, the Court held that disrepair to areas of the premises outside of the holding can also be considered for the purposes of (c).

Courts are to review a tenant’s conduct overall and not just as at date of the hearing, but the position as at the hearing is very important – and the overall question is whether it is fair to the landlord having regard to the tenant’s past behaviour to compel it to re-enter legal relations with the tenant – or whether as here, where the tenant has remedied the issues complained of, a new lease should be granted.

The Court was asked to consider, as a preliminary issue, whether the landlord had satisfied the intention to demolish or reconstruct as noted in their opposition to the tenant’s lease renewal.

The Court held that the landlord did not satisfy the subjective intention (i.e., that they had no firm and settled intention) and objective intention, nor had they evidenced that the proposed redevelopment could commence on/reasonably soon after termination.

On the issue of subjective intention, the landlord’s intention had fluctuated, nor had they obtained the relevant trustee resolution which one might expect to form part of their evidence.  Furthermore, the landlords did not have a planning permission in respect of the proposed plans, nor had they made a planning application.  At a very basic level, the landlord could not provide any evidence that they had obtained or sought permission for any kind of expert evidence on the planning prospects of the project.

As with all of these cases, this decision highlights the importance of evidencing in detail the necessary intention – and ability – to satisfy the opposition ground being relied on under the Act. Where that evidence is not forthcoming or is insufficient, the Court will likely hold that the opposition ground has not been satisfied, and will grant the tenant a renewal lease.