S Franses Ltd v The Cavendish Hotel (London) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Jay |
| Judgment Date | 03 July 2017 |
| Neutral Citation | [2017] EWHC 1670 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Appeal Refs: QB/2017/00064 & QB/2017/00134 |
| Date | 03 July 2017 |
[2017] EWHC 1670 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
HHJ SAGGERSON
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Jay
Appeal Refs: QB/2017/00064 & QB/2017/00134
Case No: B01CL386
Ms Joanne Wicks QC (instructed by David Cooper & Co) for the Appellant
Mr Nicholas Taggart (instructed by Maples Teesdale LLP) for the Respondent
Hearing dates: 19 th and 20 th June 2017
Introduction
The Appellant ("the Tenant") appeals with the permission of Nicol J against the Order of HHJ Saggerson dated 24 th February 2017 on a determination of a preliminary issue, dismissing the Tenant's claim under the Landlord and Tenant Act 1954 ("the 1954 Act") for a new tenancy of premises at 80 Jermyn Street, London W1 ("the premises") on the basis that the Respondent ("the Landlord") had made out its ground of opposition under s.30(1)(f). This provides:
"(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."
The Appellant relies on nine grounds of appeal. The Respondent resists the appeal on the reasoning set out in the judgment below, and has filed a Respondent's Notice relying on different and additional grounds.
The parties have been represented both here and below by Ms Joanne Wicks QC for the Tenant and Mr Nicholas Taggart for the Landlord. I am grateful for their detailed and careful submissions.
Essential Factual Background
Most of the essential facts I can derive from the judgment.
80 Jermyn Street lies at the corner of Duke Street and opposite Fortnum & Masons. Westminster City Council, the local planning authority, has designated St James' as a "Special Policy Area" in which it seeks to protect and promote private members' clubs, art galleries and niche retail outlets. The Tenant is a textile dealership and consultancy, with specialisms in antique tapestries and textile art. It occupies premises on the ground floor and basement of 80 Jermyn Street as a retail art gallery, showroom and archive for materials relating to its core business. The remainder of the building is occupied and managed by the Landlord as a luxury hotel, including car parks at basement and sub-basement levels, as well as retail outlets. For planning purposes the subject premises are recognised as having a specific sui generis use, namely "mixed use comprising retail, depository, research centre, archive library, consultancy, publishing and conservation for historic tapestries, textile art and carpets". Plainly, planning permission would be required for any change of use; and all relevant applications would fall to be considered in line with the designation as a Special Policy Area.
The Tenant's occupation is pursuant to two underleases: (i) a principal underlease of most of the ground floor and basement areas dated 2 nd January 1991 (for a fixed term expiring on 2 nd January 2016), and (ii) a supplemental underlease of a storage area in the ground floor and basement dated 19 th January 1998 (for the residue of the principal term).
Clause 2.6 of the principal underlease contains a right of re-entry in very wide terms:
"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.
On the same date as the principal underlease, the then landlord granted a licence to the Tenant to carry out certain alterations and works at the premises, including enlargement of shop frontages, removal of internal partitioning etc. The underlease and the licence must have been part and parcel of the same commercial package; for example, the underlease plan assumes that the works of demolition permitted in the licence will have taken place.
Ms Wicks drew my attention to various provisions in the underleases and licence, including relevant plans and drawings. The principal purpose of her doing so was to set the scene for her first appeal ground, in particular the lack of commercial viability inherent in the Landlord's current scheme to redevelop the premises, and the vacillation which has accompanied its proposals. I bear these points in mind but it is unnecessary for the purposes of this judgment to examine all the minutiae, and I summarise the position as follows.
On 16 th March 2015 the Tenant served notices under section 26 of the 1954 Act in relation to both holdings, specifying a commencement date for a new tenancy as 3 rd January 2016. On 15 th May 2015 the Landlord served counter-notices. Proceedings were instituted in the Central London County Court, and in its Defence served on 29 th July 2015 the Landlord averred that it intended to implement a scheme ("Scheme 1") which involved incorporating the former bar of the hotel into the ground floor of the premises to create an enlarged single retail unit.
In November 2015 the Landlord abandoned Scheme 1 and put forward (in the form of a planning application to Westminster City Council) a new scheme ("Scheme 2") entailing subdivision of the premises into two new retail units, incorporating part of the hotel, and related external works. The witness statement of Mrs Hollants Van Loocke for the Landlord addressed the merits of this scheme. In November 2016 the Landlord withdrew its planning application for Scheme 2 after the local planning authority had recommended it for refusal.
Before this happened, in September 2016 the Landlord sent to the Tenant its first version of what became known as Scheme 3. This was revised on a number of occasions, the last being on the final day of the hearing in January 2017. Scheme 3, having been the subject-matter of a board resolution on 23 rd November 2016, was relied on by the Landlord in its Amended Defence and in the second witness statement of Mrs Hollants Van Loocke. The essential feature of Scheme 3 was that it removed from scope the external works which were located within Scheme 2 (for which planning permission was required), and – as Ms Wicks put it – "beefed up" the internal works in a number of respects. A useful description of Scheme 3 may be borrowed from paragraph 4 of the judgment, which was itself based on Ms Wicks' narrative summary:
"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."
Planning permission was not required for these internal works as such, but if they were to have any practical utility such permission would be required for the material change of use: i.e. from hotel use to sui generis use (or, possibly, such other use that the local planning authority were to allow, in line with its policies); and vice versa. Further, the development could not be used unless additional external works were carried out (Scheme 4), for which planning permission was also required. This had been applied for on 7 th November 2016, the application had not been determined by the date of the hearing, and expert evidence was before the court as to the prospects of success. That said, the Landlord's resolve to carry out Scheme 3 was not dependent on obtaining planning permission for Scheme 4.
Ms Wicks also mentioned Scheme 5, which was the Landlord's plan conceived as early as 2012 to expand the hotel by constructing new bedrooms.
The judge noted that it was the Tenant's case that "some aspects of the intended works have been contrived only for the purposes of ground (f)". In my view, it was clear on the evidence that this was so; and also tolerably clear that the judge accepted the Tenant's case in this regard. The judge listed these elements in his judgment, and Ms Wicks took me through the plans to ensure that I too understood the position: they comprised the artificial lowering of part of the basement floor slab; the repositioning of smoke vents; the demolition of an internal wall at ground floor level and immediately replacing it with a similar wall. I have already touched on the planning issues, but I should add that the factitious character of Scheme 3 was compounded by the fact that the new central wall dividing the two units would stop 2 metres short of the shopfront at ground floor level (to avoid the need for planning permission), and there would be no lawful access to Unit 2 from the street other than through Unit 1.
Mrs Hollants Van Loocke accepted in cross-examination that the Scheme 3 works would...
To continue reading
Request your trial
-
S Franses Ltd v The Cavendish Hotel (London) Ltd
...UKSC 62 Before Lady Hale, President Lord Sumption Lady Black Lord Briggs Lord Kitchin Supreme Court Michaelmas Term On appeal from: [2017] EWHC 1670 (QB) Appellant Joanne Wicks Benjamin Faulkner (Instructed by David Cooper & Co) Respondent Guy Fetherstonhaugh QC Nicholas Taggart (Instructed......
-
The Meaning Of Intent'
...Franses Ltd (Appellant) v The Cavendish Hotel (London) Ltd (Respondent) [2018] UKSC 62 On appeal from: [2017] EWHC 1670 (QB) Business tenants have the protection of security of tenure. When their business tenancy ends they are generally entitled to a protected renewal tenancy at an open mar......
-
How Secure Is A Protected Tenancy Under The Landlord And Tenant Act 1954?
...and Tenant Act 1954 ("the 1954 Act") was handed down by Mr Justice Jay. The case of S Franses Ltd v The Cavendish Hotel (London) Ltd [2017] EWHC 1670 QB was an appeal from the County Court in Central London and it raises interesting issues about the landlord's ability to get around the 1954......
-
S Franses Ltd (Appellant) v The Cavendish Hotel (London) Ltd (Respondent) [2018] UKSC 62
...appeal from: [2017] EWHC 1670 (QB). Business tenants have the protection of security of tenure. When their business tenancy ends they are generally entitled to a protected renewal tenancy at an open market rent. However a landlord can oppose a renewal tenancy if it intends to substantially ......