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S Franses Ltd is a textile dealership and consultancy and occupied the ground floor and basement of premises, the rest of which was occupied and managed by the Respondent as a hotel.
The tenant's 25-year lease was coming to an end and it served a Section 26 Notice requesting the grant of a new tenancy.
The landlord served a statutory Counter-Notice opposing the grant of a new tenancy under Section 30(1)(f) of the LTA 54 claiming that "it intended to demolish or reconstruct the premises...; or to carry out substantial work on the construction of the building or part thereof... he could not reasonably do so without obtaining possession of the holding".
The issue to be determined at the Central London County Court had been whether the landlord could successfully oppose on this ground.
The landlord's defence was unusual, they put forward successive schemes reflecting the works they proposed to carry out but accepted that the scheme of works was "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".
The initial Court hearing
The Supreme Court unanimously allowed the Appeal.
A Court of Appeal, consisting of Lady Hale (President), Lord Sumption, Lady Black, Lord Briggs and Lord Kitchin, gave a weighty judgement dealing with the following matters:
The reasons the Supreme Court gave are very instructive as to how these matters will be dealt with in the future.
The Court made the following statements of law:
Applying the above, on the facts of this case, the tenant's possession of the premises did not obstruct the landlords intended works and the landlord did not intend to carry them out if the tenant persuaded the Court that the works could reasonably carried out while he remained in possession. The Court found that the entire value of the proposed scheme proposed by the hotel lay in removing the tenant and not in any benefit to be derived from the reconstruction itself. The Judge also found that Section 18 of the Estate Agents Act 1979 had not been complied with, but held it would be just to permit Mr Divani to enforce the agreement. However, he also held that Mr Wells should be compensated by a reduction in the fee that he was required to pay by one third.
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