Landlord and Tenant Act 1954 – Ground (g) and Human Rights

The recent judgment in MVL Properties (2017) Limited v The Leadmill Limited provides an interesting discussion on the extent to which (if at all) Article 1 Protocol 1 (A1P1) of the European Convention on Human Rights (right to enjoyment of possessions) can help a tenant resist a landlord's application to terminate a business tenancy under ground (g) of s30(1)of the Landlord and Tenant Act 1954 (intended use for own business).

Background

The facts in MVL Properties were straightforward: the defendant tenant had run The Leadmill Nightclub in Sheffield for many years but the claimant, its landlord (an operator of other nightclubs), wished upon expiry of the tenant's lease to take over the nightclub and run it. The landlord sought to bring itself within the ambit of ground (g), namely that on the termination of the current tenancy it intended to occupy the nightclub for the purposes of a business to be carried on by it therein. The tenant was concerned that the Leadmill was an iconic venue that carried a lot of goodwill built up over the years which would be lost if forced to vacate

The court had little difficulty in finding that the landlord both had the requisite settled intention to occupy the premises to run its own nightclub, and the financial wherewithal to achieve that. That, as the judge recognised, gave the tenant's counsel "very little room for manoeuvre". However, the tenant's challenge to the landlord's position under A1P1 did require the court to give careful analysis to human rights considerations. 

A1P1 and Ground (g)

A1P1 provides that "a natural or legal person is entitled to the peaceful enjoyment of is possessions. No one shall be deprived of its possessions except in the public interest and subject to conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest…"

These provisions led the court to consider three key questions in connection with the potential loss of the tenant's goodwill built up in the nightclub over the years :

1. Could the tenant establish that it had goodwill in the nightclub that could count as a possession? The judge concluded that although, in some cases, goodwill was capable of amounting to a possession, nonetheless, the tenant had failed in this case to establish that it had any "adherent goodwill" that it would lose if forced to move out.
2. If this was wrong, and the tenant did have goodwill, would it be deprived of a possession by a ground (g) termination order? The judge concluded it would not be; such goodwill as the tenant might have possessed was always contingent upon being able to renew its lease under the 1954 Act, and thus, if the renewal did not go ahead, the contingency was not fulfilled so no "possession" was deprived.
3. If that was wrong, was any such deprivation in the general public interest? Parliament, in providing that a landlord cannot use ground (g) unless it has first owned the property for five years (thereby preventing the practice of landlords buying up premises so as to immediately turf out tenants), should be taken as having established a fair balance between a landlord's right to take its premises back at the end of the term for its own use, and the tenant's interest in being able to renew.

As a result of this analysis, the judge concluded that A1P1 did not avail the tenant, that its human rights were not contravened and an order terminating its lease should be made against the tenant so as to allow the landlord to run its own nightclub from the venue.

Comment

It might be said to be a little surprising that that the judge found that the tenant (who had run the Leadmill for decades) had no relevant goodwill and it was not being deprived of such goodwill as it might have by the landlord taking back the premises and running the club itself . However, the judge's analysis of how the provisions of the 1954 Act appropriately balance the competing interests of landlord and tenant expertly illuminates how the balancing act required by A1P1 should be carried out in a landlord and tenant context. 

So the 1954 Act, as interpreted by the courts, continues to appropriately balance the respective rights of landlords and tenant so that there is no infringement of the ECHR. It may be that the Law Commission's expected second consultation paper on specific reforms to the 1954 Act might seek to recalibrate that balancing exercise (e.g. so as to make it easier for landlords to recover possession on lease expiry), but it seems unlikely that any such proposed recalibration would face the same sorts of ECHR challenges as are currently being mounted against the Leasehold and Freehold Reform Act 2024.