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When honesty was not the best policy

Service: Agency | Sector: London Offices | Contact: Annabel Godson

In the case of S Franses Limited v The Cavendish Hotel (London) Limited, the Landlord’s guileless admission to only undertake the proposed scheme of redevelopment works, if, the tenant remained in situ, ultimately led to the downfall of their opposition to granting the tenant a new lease.

Now that the Court needs to be satisfied that the works will be undertaken, even in the event of the tenant leaving voluntarily, how will Landlords (and perhaps crucially, Tenants) respond in the wake of this new ‘acid test’? And what impact will this have on the success of citing ‘ground F’?

With the bar having been raised for proving the intention to undertake redevelopment works, Landlords would be wise to prove the commercial benefit of undertaking such works, particularly where their motive for opposing a new lease is called into question.

In turn, Tenants are likely to unpick & scrutinise any proposed scheme in much closer detail than ever before.

This response is perhaps to be expected, but has the Court opened Pandora’s box with this ruling?

The effect of such a judgement has arguably placed an additional burden on Landlords to now not only demonstrate a clear and settled intention to redevelop but also to justify their motive. Will the additional scrutiny result in additional cost?

One thing that we can be sure of, this will not be the end of litigation concerning ‘ground F’ – Landlords & Tenants, stay tuned!

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