05 August, 2021
S Franses Ltd leased premises on the ground floor of The Cavendish Hotel in London[HM1] . The Lease[HM2] benefitted from the security of tenure under the Landlord and Tenant Act 1954, which gives business tenants renewal rights.
Upon expiration of the lease, the Tenant requested a renewal lease from its Landlord, The Cavendish Hotel (London) Ltd, who opposed this on the grounds of redevelopment. The landlord accepted that the works were concocted with the sole purpose of refusing the renewal lease- which has been accepted practice in the past since landlords only need to prove their intention to carry out the works.
The Landlord proposed various works including new rental units and combining the premises with the local bar. The case was heard at the supreme court in 2018. The court made a ground-breaking decision that commercial landlords must provide details of their intentions to carry out the planned works of redevelopment independent of the tenant's renewal intentions[HM3] . The court ordered the landlord to grant the tenant a renewal lease.
Since the tenant was granted a new lease, the court sent the parties away to agree on terms and complete the documentation. When the terms could not be agreed upon, the parties ended up back in court.
The landlord wanted to impose a higher rent and interim rent but the tenant successfully argued a reduced rent due to the pandemic and the likelihood that any new incoming tenant would get the benefit of a 12-month rent-free period due to the reduced footfall.
This is a case that keeps on giving in terms of legal precedent. There has been a lot of speculation about how the courts would treat the temporary reduction in footfall when considering retail rents, so this case gives some helpful guidance.