S Franses Ltd v The Cavendish Hotel, a landmark commercial landlord and tenant battle about property in Jermyn Street, has come back. And in the latest ruling, the tenant’s rent has been more than halved.
The dispute, which has been running since 2015, is between S Franses Ltd, which runs a ground-floor and basement gallery on Jermyn Street, and the Cavendish Hotel, which owns the building.
In a ruling handed down on Friday (18 June), Central London County Court judge HH Judge Parfitt set the rental value of the property at £102,000 per year, down from a previous rent of £220,000.
During the trial, experts for the hotel had suggested a rent of £175,000, while experts for the gallery had suggested £96,500 per year.
One reason the case is interesting is that it provides guidance on the impact of the coronavirus pandemic on rents in central London.
“The property market is eager to know how Covid-19 has impacted on West End rental values, and the lack of comparables has made it difficult to see what is happening,” said Joanne Wicks QC, who represented the gallery.
She added: “The court here accepted evidence which showed that rental levels have dramatically fallen on Jermyn Street, on which a large number of units have fallen vacant during the pandemic.
“The judgment is also interesting because of the court’s assessment of interim rent and how it took into consideration the various different factors which pull the amount of interim rent in opposing directions, particularly in a case like this one where interim rent is payable over a long period of time.”
Another reason the case is interesting is that it is the continuation of a landmark legal dispute that made legal history in 2018.
That dispute started in May 2015, when the hotel refused to grant the gallery a new tenancy, saying it planned “substantial work” on the building. The work, according to the Supreme Court judgment of 2018 ([2019] EGLR 4), was planned “regardless” of “commercial or practical utility and irrespective of the expense”, and was done with the intention of getting rid of the tenant.
The case became an important test of the section of the Landlord and Tenant Act 1954 that allows a landlord to refuse a new lease on the grounds of redevelopment plans.
The Supreme Court decided the case in 2018 and found in favour of the tenant, because the hotel’s plans to carry out the works were “conditional” on the gallery choosing to assert its right of tenancy.
S Franses Ltd v The Cavendish Hotel (London) Ltd
Central London County Court (HHJ Parfitt) 18 June 2021
Joanne Wicks QC (instructed by David Cooper & Co) appeared for the claimant; Wayne Clark (instructed by Maples Teesdale LLP) appeared for the defendant
See also: All change at the Cavendish Hotel?
