Very rarely in the legal world does a lone campaigning legal firm achieve a significant upset in the world of property but David Cooper & Co, which is one of the UK’s best-known planning practices, can now claim that.
This follows a landmark case, ‘S Franses vs The Cavendish Hotel (London) Ltd’, which it won in December in the Supreme Court on behalf of a client and that, particularly in hyper-expensive prime central London, is already having significant ramifications for the landlord/tenant relationship.
DealMakerz sat down with founder David Cooper, who played a leading role in the drama, to find out how he won such an unusual victory for his client, the internationally-famous West End St James antique tapestry dealer Simon Franses who has a gallery and storage facility within a building that adjoins the Cavendish Hotel on Jermyn Street .
In 2015 the hotel decided not to renew his lease on the basis that it wanted to carry out redevelopment, which did not need planning permission.
The Franses gallery has been at the address for over 30 years but the hotel’s new owners used Clause 31 (f) of the Landlord and Tenant Act 1954 to refuse Franses an extension and give him notice to quit.
This clause allows landlords to remove commercial tenants if they wish to substantially renovate or knock down a property and has become one of the key instruments that property owners employ to remove unwanted leaseholders.
A period of intense legal wrangling followed and, given location is everything in the arcane West End gallery world, Franses decided to take on the approximately £1 million financial risk of launching a legal challenge through the courts.
“Simon is a also man of principle – there was no particular financial reason for doing this,” says Cooper.
Such legal disputes between landlords and tenants are common in the UK and Cooper estimates there to be 100 similar cases under way in London alone.
But what piqued Cooper’s interest in this case was that it highlighted the manipulation of the 1954 Act, which the legal profession has relied on since its inauguration. The real complaint is the lax interpretation of the 1954 Act.
But what piqued Cooper’s interest in this case was that it highlighted the manipulation of the 1954 Act, which the legal profession has relied on, since its inauguration. The real complaint is the lax interpretation of the 1954 Act.
This has enabled landlords to use its provisions in order to remove troublesome or unwanted tenants and tipped the scales in the favour of landlords during disputes.
Most extraordinarily, no one had thought to contest this unspoken arrangement for nearly seven decades, although it’s unsurprising given that 90% of legal firms in the property world earn their fees from landlords, not tenants.
“The whole legal profession was in denial about the misuse of the 1954 Act and they all said we’d never win the case,” says Cooper.
“And then when we did win they set about trying to persuade their clients that it didn’t set a precedent.
“But it has – and last week there was a similar case ‘London Kendal Street No3 Limited v Daejan Investments’ and, although the landlords won, the judge spent ages looking through Franses vs Cavendish on the question of intention and motive.”
After the Franses case was leapfrogged to the Supreme Court from the lower courts, itself a highly unusual event, the justices ruled in favour of Franses in what was clearly a landmark win for Cooper.
This now means property owners, developers and landlords face a considerably higher legal and financial hurdle when seeking to remove a tenant by satisfying the 1954 act via the ‘redevelopment’ clause.
The legal argument, and the final decision, hinged on what ‘intent’ means because many landlords have until now been required only to provide light proof of their commitment to redevelop, usually just a ‘scheme of works’.
And, importantly for Cooper, this has included tacit agreement that the works will receive planning permission. The bar was low which was ‘ludicrous’ given that the property lay in a Conservation Area, close by very important listed buildings and was made a Special Planning Area by Westminster City Council .
“In the past landlords have had to show there was a reasonable prospect of obtaining planning permission, but this had descended into a ‘box ticking’ exercise,” says Cooper
“Now, landlords ought to enter into a building contract and show in planning terms that they have a proven, reasonable prospect of gaining it – preferable coming to Court with the actual consent. The undertaking is an important further hurdle, which now must be unconditional without reservation and must be backed up by proof of funds.
Also, Cooper says the proposed development must have a commercial reality and not be for the purpose of removing the tenant.
“As the justice said, there has to be another independent and free-standing intention other than a desire to remove the tenants.”
Cooper also says he was told the case had at best a 20% chance of success, so it’s reasonable to wonder why he decided to get involved.
What many reading the scholarly court reports about the case won’t realise is that Cooper has a passion for the West End, and is a bulwark against its takeover by smart watch shops, upmarket clothing boutiques and ‘hedge fund offices’.
Nothing raises his hackles more than the global elite who now grace much of the West End of London and how their shopping tastes are changing its character, slowly weeding out the niche shops that used to serve its traditional residents.
“For example, no one wants Dover Street packed out with expensive restaurants and pricey clothes shops,” says Cooper, who is part of a campaign that is trying to enliven the St James area in the evenings and the weekends.
One of the last bastions of this fading world are London’s art galleries, many of whom Cooper’s firm represents and, on their behalf, recently secured a voluntary rent discounting system to maintain the character of the area following negotiations with Westminster and the Crown Estate.
It is this desire to stop landlords rooting out tenants and replacing them with upmarket retail and office space that drove Cooper to take up the Franses case, the outcome of which clearly pleases him immensely as he sits in his Blackfriars office.
“Many law firms and commentators have been claiming in the media that the ‘Franses test’ won’t apply to cases on an individual basis, but that is monumental nonsense,” says Cooper.
“And the judgement will also apply to proposed break clauses in the lease and may affect rent review clauses as well.
If Cooper is correct then the balance of power between the landlords and the tenants, which for many years has been tipped in favour of the landlords, may now be more evenly balanced and the true intention of the 1954 Act will at last after 65 years be fulfilled.