Sainsburys (the tenant) occupy supermarket premises on Kentish Town Road under a protected lease. Medley Assets (Sainsbury's landlord) served a section 25 notice to terminate Sainsbury's tenancy under the ground contained in section 30(f)of the Landlord and Tenant Act 1954(LTA 1954) (ground (f)), broadly that it intended to redevelop the premises.

The premises demised to Sainsbury's included the ground floor supermarket, a basement floor and upper floors. The basement and upper floors were vacant. The landlord originally obtained planning permission to convert the upper floors of the building into residential flats. However, by the time of trial the landlord's plans had changed and instead it was proposed to lower the basement floor and widen the staircase from the ground floor to the upper floors, so that the upper floors could eventually be redeveloped into office space. Sainsburys' demise would have been largely unaffected by the landlord's works, other than those which would affect a small stock room it used on the ground floor.

The landlord argued that the "holding" for the purposes of ground (f) should be the entire premises demised to the tenant so that the works it was proposing to the areas outside of Sainsbury's occupation could fall within ground (f).

A week before the trial Sainsburys vacated the stock room so that it only occupied space that would not be affected by the landlord's works. At trial, the judge found, in Sainsbury's favour, that the "holding" for the purposes of ground (f) should be limited to the areas actually occupied by the tenant. Therefore, as the landlord's intended works (primarily to the basement and stock room) would fall outside of the "holding," the landlord could not prove an intention to redevelop the holding itself and the landlord's ground (f) redevelopment claim was defeated.

Further, despite the landlord's assertions that it was well advanced in its plans to carry out the redevelopment, the Court found that there was insufficient factual evidence to demonstrate that the landlord had a genuine settled intention to carry out the landlord's works.

This case could be helpful for tenants facing an opposed lease renewal by a landlord on redevelopment grounds in circumstances that allow a tenant to reduce its "holding" to an area not affected by a landlord's development proposal. On the other hand, landlords may take comfort from the fact that, in the majority of cases, it won't be feasible for a tenant to vacate part of their demise to utilise this perceived loophole. The case also serves as a good reminder for landlords of what may be required to satisfy the Court that they have the necessary intention to redevelop.