Q&A: The qualifying criteria explained

What do landlords need to prove to satisfy ground (g) of section 30(1) of the 1954 Act for the purposes of a new tenancy? Hope Wilson and Toby Watkin QC provide the answer.

Question

I am the landlord of restaurant premises. The term of the lease, which is protected by the Landlord and Tenant Act 1954, is due to expire and I intend to serve a notice on the tenant under section 25 of the 1954 Act opposing the grant of a new tenancy on ground (g) (in section 30(1) of the 1954 Act) because I intend to occupy and run my own restaurant business from the premises. What will I have to do in order to ensure that ground (g) is made out if the tenant seeks a new tenancy?

Answer

You will need to prove at trial that you have a firm and settled intention to carry out your plans (regardless of whether the tenant is willing to vacate voluntarily), and that there are reasonable prospects of you being able to carry them into effect within a reasonable time after the current tenancy comes to an end.

Explanation

To satisfy ground (g) at trial, a landlord must show that, on the termination of the current tenancy, it “intends” to occupy the holding for the purposes of a business carried on by it at the premises (or as a residence). The required “intention” has a subjective and an objective element.

Subjectively, a landlord must show that its intention to proceed with its plans is sufficiently “firm and settled” (Fleet Electrics v Jacey Investments [1956] 1 WLR 1027). In Cunliffe v Goodman [1950] 2 KB 237 at 254, Asquith LJ colourfully described this as a requirement to show that the project had moved “out of the zone of contemplation – out of the sphere of the tentative, the provisional and the exploratory – into the valley of decision”. If the landlord is a company, the best evidence of this may be a board resolution to proceed. The requisite intention must not be conditional, in the sense that the plans will only be implemented if they are still necessary in order to remove the tenant: S Franses Ltd v Cavendish Hotel (London) Ltd [2018] UKSC 62; [2019] EGLR 4.

However, in order to intend something to happen, one must realistically be able to bring it about – you cannot “intend” to win the lottery, you can only hope to do so. So, the second element of intention identified in Cunliffe, is that the landlord must also show that there is a “reasonable prospect of being able to bring [the project] about by [its] own act of volition”. That does not mean that, by the trial date, the landlord must already have undertaken all the necessary steps to bring about its plans and be “ready and able” to implement them. So, for example, it is not necessary to show that you already have any planning permission necessary for your project, only that you have a reasonable prospect of obtaining permission within the requisite time frame.

Although the subjective and the objective elements of the necessary “intention” are distinct, difficulties in demonstrating the objective element may also suggest that the landlord’s intention is insufficiently “firm and settled”. Conversely, the steps taken by a landlord to ensure that its plans are reasonably practicable may also serve to demonstrate its settled commitment to the project.

The recent case of Macey v Pizza Express (Restaurants) Ltd [2021] EWHC 2847 (Ch); [2021] PLSCS 182 is a reminder of the need for robust and reliable evidence that both elements of the test are met, and of how the same evidence may be relevant to both issues. Macey resisted the grant of a new tenancy to Pizza Express of a restaurant unit in Exeter. He asserted that he intended to run a wine bar in the unit. Pizza Express contended that neither the subjective nor the objective elements of intention were proved, and that Macey’s professed intention was also conditional.

The trial judge did not regard Macey as a satisfactory witness and criticised him for making factual assertions or expressing opinions for which no independent evidence or corroboration was provided; for making bald assertions with a lack of particularity, analysis or explanation, and for being unable to explain elements of his own business plan, or the assumptions on which it was based. Overall, the judge was not satisfied that Macey had proved the necessary intention to satisfy ground (g).

Macey appealed on a number of grounds, including that the judge had misapplied the law in relation to objective intention and in relation to whether the intention was conditional. However, on appeal Marcus Smith J concluded that, although the judge had commented adversely on many aspects of Macey’s evidence going to objective intention, the judge’s core finding was in fact that Macey lacked the necessary “firm and settled” intention to proceed. Those findings had merely demonstrated that Macey lacked the necessary subjective element.

This decision is a salutary warning for landlords that, in order to succeed on ground (g), it is necessary to produce cogent evidence of worked-up plans and that any future necessary steps are reasonably practicable. Not only is this needed in order to prove the objective element of intention, but a failure to provide such evidence could lead the court to conclude that plans are insufficiently firm and settled.

This article was first posted on the Estates Gazette on 9 May 2022. 

Hope Barton is an Associate in the Real Estate Disputes team at Charles Russell Speechlys LLP and Toby Watkin QC is a barrister at Landmark Chambers.