An individual landlord was forced to renew Pizza Express’s lease and delay his own business plans, in a recent case regarding an opposed business lease renewal.
Mr Macey, the landlord of a Pizza Express in Exeter, intended to use the premises himself to run a wine bar. He was not said to be lying about his proposed business venture, which he had the funds to pursue. Nevertheless, the court found his intention was not sufficiently ‘firm and settled’ to oppose the renewal of Pizza Express’s lease.
The decision was upheld on appeal.
Landlords can oppose renewal of a business lease on the grounds of redevelopment or own use, provided that they have the requisite intention required by the Landlord and Tenant Act (‘the 1954 Act’). In other words, a ‘firm and settled’ intention: where the idea has moved from the ‘zone of contemplation’ into the ‘valley of decision’, and is capable of being carried out.
This case shows that landlords cannot rely too heavily on their own evidence regarding their subjective intentions (their state of mind about the plans). Corroborating documentary and witness evidence should be obtained where possible.
It is also stark reminder that first impressions count. Unless the trial judge is ‘plainly wrong’ about factual issues, including whether the landlord has the relevant intention, it will be difficult to overturn the decision on appeal.
Mr Macey opposed renewal on the grounds that he intended to use the premises himself (under Section 30(1)(g) of the 1954 Act). There are subjective and objective elements to the intention test. The subjective test focuses on the landlord’s state of mind and whether the intention is ‘firm and settled’. The objective element is whether the intention is capable of being carried out.
Mr Macey was able to fund his proposed wine bar, irrespective of whether it was profitable, and gave witness evidence that he intended to use the premises for that purpose.
Nevertheless, the trial judge was not convinced that Mr Macey had the ‘firm and settled’ subjective intention required by the 1954 Act.
The judge considered that some of Mr Macey’s assertions and documents raised an ‘index of suspicion’, for example regarding his business plans, profit and loss projections, and the timing of documents being disclosed.
For those reasons, and others, the judge did ‘not accept’ Mr Macey’s evidence unless it was confirmed from other evidence or sources. Other factors were that no other witnesses were called to give corroborating evidence and Mr Macey had not incurred substantial costs on his proposals.
Mr Macey unsuccessfully appealed the decision to the High Court on various grounds, including surrounding the judge’s treatment of the evidence and his rejection of Mr Macey’s own evidence.
However, a trial judge’s findings of fact are rarely revisited on appeal unless the judge was ‘plainly wrong’, and this was not considered to be the case here.
The High Court noted that a judge can find that the intention test is not met without accusing the landlord of lying:
“It was not open to the Judge to find that Mr Macey was lying about his intentions, and the Judge did not do so. Rather the Judge concluded that, although Mr Macey was asserting that he had a "firm and settled" intention, considering the totality of the evidence, Mr Macey had (perfectly understandably and innocently) mischaracterised his state of mind. His "intention" was insufficiently firm and settled to constitute "subjective" intention for the purposes of section 30(1)(g).”
Landlords opposing business lease renewals on the grounds of redevelopment or own use should obtain corroborating evidence regarding their intentions.
Otherwise, the court might find, without expressly saying they are lying, that a landlord has ‘mischaracterised their state of mind’ and doesn’t have a sufficiently firm and settled intention, even where they say they do.
Tenants who are unconvinced about the landlord’s stated intentions, should test the evidence fully, all the way to trial if necessary.
If you would like to discuss any of the issues raised by this judgment, please contact a member of our Property law team.
