More useful than you'd think

The recent interpretation by the Court of Appeal of s.30 of the Landlord and Tenant Act strengthens the position of landlords of business premises who wish to oppose renewal of a tenancy.

Paragraph (c) of s.30(1)(c) of the Landlord and Tenant Act 1954 ('the Act') entitles a landlord to oppose the grant of a new tenancy on the following ground:

'That the tenant ought not to be granted a new tenancy in view of other substantial breaches by him of his obligations under the current tenancy, or for any other reason connected with the tenant's use or management of the holding.'

If the facts alleged to support the ground are proved, the court then enjoys a discretion over whether or not to order the grant of a new tenancy. If it declines to exercise that discretion, the tenant has no right to compensation for disturbance in that respect.

Not matters of obligation

The first limb of the ground clearly refers to breaches other than any relating to an obligation in respect of the repair and maintenance of the holding and any involving persistent delay in paying rent (these breaches are covered respectively by paras (a) and (b) of s.30(1) of the Act). Equally clearly, the second limb must therefore refer to reasons that are not matters of obligation on the part of the tenant and so it is less restricted. As such, it can provide the landlord with a range of possible circumstances in which a successful case for opposition can be made.

While 'any other reason' must be a reason relating to the tenant's use or management of the holding, the wording of para.(c) does not suggest that any acts complained of must necessarily have taken place on the holding. In the 1986 case Beard v Williams [1986] 1 EGLR 148 the Court of Appeal held that the tenant's somewhat unorthodox off-site living arrangements '“ he was sleeping in an unlawfully stationed van some distance away from the holding '“ could constitute a reason 'connected with the tenant's use or management of the holding' given that if he was required to move from that situation, his business as a dog breeder would deteriorate rapidly to the obvious disadvantage of the landlord.

Now to the recent Court of Appeal case, Fowles v Heathrow Airport Ltd [2008] EWCA Civ 1270, which has emphasised the usefulness of the second limb of para.(c). Here, the tenant had occupied a five-hectare site situated in the green belt to the southwest of Heathrow Airport since 1978. The business that he carried on included haulage, the crushing and recycling of concrete waste, skip and bin hire and demolition. His tenancy had been terminated by a hostile s.25 notice, and he applied for a new one. None of the activities carried on by the tenant had ever enjoyed permanent planning permission, and he had failed to comply with both an enforcement notice and a breach of condition notice. Accordingly, he was guilty of continuing criminal offences.

Use of premises for an unlawful purpose

The trial judge noted that the Court of Appeal in Turner & Bell v Searles (Stanford-le-Hope) Ltd [1977] 2 EGLR 58 had held that the final 15 words of s.30(1)(c) include the tenant's use of the holding for an unlawful purpose. He found, on the evidence, that the tenant would continue to commit criminal offences if he were granted a new tenancy. The judge therefore dismissed the application for a new tenancy on the para.(c) ground, and made an order for possession in the landlord's favour. The tenant appealed, his principal contention being that it was only if renewal of the tenancy necessarily involved a criminal offence in the use of the land that his continuing to commit criminal offences was a material factor.

The Court of Appeal dismissed his appeal, stating that this submission was virtually unarguable; it was contrary to common sense, given the broad language of s.30(1)(c), and it was contrary to the Turner & Bell decision. The trial judge had exercised his discretion correctly. In fact, it would have been perverse for him to have ordered the grant of a new tenancy.

The clear advantages for a landlord of the second limb of the para.(c) ground of opposition are that no breach of the tenants' obligations in the lease needs to have occurred, and the matters complained of do not have to have taken place on the holding. In particular, when the landlord's principal ground of opposition is one of the three grounds that entitle a tenant to compensation under s.37 of the Act, and as a separate matter the tenant has committed no obvious breaches of covenant, the landlord should always consider whether he can argue bona fide that some 'other reason connected with the tenant's use or management of the holding' exists. If, on an application to the court, the para.(c) ground is upheld in addition to the landlord's principal ground of opposition, the tenant's claim to compensation is defeated. This is because the tenant's entitlement arises only where one of the three compensation grounds is established and no other ground is.