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23rd April 2014

Litigation as a reason not to renew lease?

A recent decision of the Court of Appeal has provided useful clarification on the circumstances in which a landlord can refuse to grant a new tenancy to a tenant under ground (c) of the Landlord and Tenant Act 1954.

Where a tenant has the protection of security of tenure, landlords can only refuse to grant a new tenancy if they are able to rely on one of the statutory grounds set out in section 30(1)(a)-(g) of the 1954 Act. Ground (c) provides that the landlord is entitled to oppose the grant of a new lease where "the tenant ought not be 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”. A refusal on ground (c) is favourable to landlords as it does not entitle a tenant to compensation on termination of the lease.

In the case of Horne & Meredith Properties v Cox and another [2014] the Court of Appeal considered the principles underlying ground (c). The history of the landlord and tenant relationship was not a happy one, the tenant having brought several claims against the landlord during a 16 year period in respect of alleged obstructions of rights of way. The landlord sought to rely on ground (c) claiming the litigation was a reason connected with the tenant’s use or management of the holding. The County Court agreed with the landlord and ordered the termination of the tenancy under ground (c). The tenant appealed. In its decision, the Court of Appeal ruled the landlord did not need to show the tenant had breached a lease obligation to rely on ground (c) as there are two limbs to ground (c): breaches of the lease “or” any other reason connected with the tenant’s use or management of the holding.

The Court held that on the facts of the case the history of litigation was a reason to allow the landlord to oppose the renewal.

The Court of Appeal stressed its decision was based on the facts of the case and litigation would not always lead to a refusal of a new tenancy. The Court considered the litigation in this case however was so extensive that the parties’ relationship had irretrievably broken down. The suggestion that the Courts may be prepared to consider ground (c) broadly will be welcome news for landlords.

For more information, please contact Ceri Riddell on 01223 461155 or click here to email Ceri.

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