The implications of Sainsbury's Supermarkets Ltd v Medley Assets Ltd [2024]
Background
This recently reported case places back into focus the fact that the Landlord and Tenant Act 1954 has been drawing it’s pension for some years now and may be ready for an overhaul.
Calls for that review are heightened by the contention that the law is becoming too tenant orientated requiring a re-balance.
In this instance, the court specifically considered the question of “holding” and the extent to which a Landlord’s redevelopment works would still enable a tenant to remain in occupation and its impact on opposed lease renewal processes.
The Case
Sainsbury held a lease as tenant of a multi-storied property in London, having security of tenure under the Act, allowing it to remain in possession until the lease term expired. The Landlord, Medley Assets, sought to prevent any new tenancy being granted to Sainsbury by relying on a ‘Ground F’ notice. Under its terms, the Notice asserted the landlord sought to redevelop the property, requiring possession of the whole premises to be delivered up for that purpose. (The “holding”). In actuality the planned redevelopment works would primarily impact upon the unused basement and upper floors leased to Sainsbury, but affect an element of space used by the grocer on the ground floor.
The Court was tasked with determining whether the holding for Ground F purposes constituted the area the tenant was actually using, or the entirety of the demised premised, being the position adopted by the Landlord.
The Finding
The Judge found in favour of the Tenant. The Holding, was said to be purely the area the tenant was physically occupying/using at the point the judgment was handed down rather than the whole demise. This has wide ranging implications, as potentially a Tenant could deliver up a portion of the premises, but seek to retain the balance of it, if its business would remain operationally viable. A tenant could re-configure the area they used in the premises, only once they become aware of the Landlord’s intentions to rely on a Ground F Notice, jeopardising the feasibility of the Landlord’s re-development plans.
Tactically this decision would empower a tenant to vacate just an element of its demised premises to circumvent the Landlord’s Ground F Notice and associated proceedings. Once those proceedings were determined, the tenant could then reoccupy all of the demised premises, seeking to secure a fresh lease over the complete holding.
Evidence
Another consideration for Landlords, fell under the spotlight in this case. It reinforced the absolute need, for any landlord, to provide compelling evidence in support of their redevelopment plans. Simple plans alone are not enough and was perhaps a factor in the Judge’s findings in the Sainsbury Case.
What next?
Whilst at first glance the decision widens the tenant’s scope to thwart a Ground F Notice, each case should of course be determined on its own factual merits. It does suggest however that the courts are willing to find favour in tenant’s arguments.
In turn the calls for the prevailing legislation to be modernised have grown louder. A Law Commission consultation was announced by Government in March 2023, seeking to establish whether any power imbalances now existed between Landlords and Tenants under the Act and how they should be addressed. As is often the way, the date of publication of the anticipated Consultation Paper, has been delayed until this Autumn. With an election on the immediate horizon, (at the point of writing) and with a new government seemingly likely, it is difficult to foresee when any reforming legislation will be put before Parliament. It may have other priorities……..
Contact Us
Whether you are a Landlord or Tenant of commercial property and may be impacted by the findings in this case, or are involved in the lease renewal process, please do not hesitate to start the conversation by contacting Sally Oatridge via sjo@kingsfords.net or by telephone on 01233 648439.