A couple of recent legal cases provide a useful reminder to landlords about what evidence they will need to oppose a business lease renewal under the Landlord and Tenant Act 1954 on redevelopment grounds.
Among other things, a landlord needs to show both a subjective and an objective intention to undertake the proposed redevelopment. That intention will need to be demonstrated at trial.
The subjective element means showing a fixed and settled intention to do what they say they will do. The intention must have moved “out of the zone of contemplation” and into the “valley of decision”.
One would expect a well-advised landlord to have board minutes (if it is a company), plans and drawings for its proposals, and perhaps have gone out to tender on a building contract in order to evidence their settled intention.
The objective element requires showing that they have a realistic prospect of implementing their plans on a practical level within a reasonable time after termination of the tenancy. This usually requires evidence that planning permission has, or is likely to be, granted, financing can be obtained (if required) and there are no other roadblocks to the proposals (such as occupation of other units within a multi-let block, for example).
Change of plan
In the case of GT Motoring Solutions v Williams 2023, the landlord failed to satisfy the court of both their subjective and objective intention to redevelop. The landlord’s plans had changed from an initial intention to demolish and rebuild the premises, to a plan to demolish and sell to a developer, to an intention to redevelop themselves, to floating the possibility that they would enter into a joint venture (by the time of the trial).
The landlord’s intention was, therefore, wavering rather than firm and settled. In respect of objective intention, their plans were at a very early stage and there was insufficient evidence to show that they would obtain planning permission. The landlord failed to produce expert evidence on this question. There was also no cash available to the landlord and no evidence about any ability to otherwise finance the project.
Likewise, the landlord in the case of Man v Back Inn Time Diner 2023 had issues proving their objective intention to redevelop. The landlord could show that they intended to carry out the development, but they failed to convince the court that they had any real prospect of obtaining planning permission or financing to carry out their plans.
Various (failed) planning applications had been made, and at the time of trial there was an appeal outstanding for one application. The landlord said they did not intend to implement that permission but hoped to use a successful appeal as a springboard to make a further application.
The judge found the landlord had not demonstrated that the planning appeal had a real prospect of success and, even if they were successful, it was unlikely that planning permission on any future application would be obtained within the necessary timeframe.
The landlord’s main witness tried to introduce bank statements to evidence available funds during the trial. The court refused to allow these in evidence because they were submitted so late.
The landlord also tried to show that they had some other properties that could be used to secure funding, but the court was not convinced they had identified any particular property to fund the development.
These cases show the importance of being well prepared and having the right evidence to support a claim opposing a business lease renewal on redevelopment grounds. Far better to front load preparations than be underprepared and risk having a renewal lease imposed by the court and being exposed to an adverse costs order.
Georgina Muskett is a senior associate and Karin Mouhon is a trainee solicitor at law firm Charles Russell Speechlys