Business lease renewal dispute | who is right?

It was held in the recently decided High Court Case of MVL Properties (2017) Limited vs The Leadmill Limited [2025] EWHC 349 (Ch) that an order opposing renewal of a business lease pursuant to ground s.30 (1)(g) (landlord’s intention to occupy premises) of the Landlord and Tenant Act 1954) (the “1954 Act”) did not breach article 1 “Right to Property” in the European Convention on Human Rights (“A1P1”). It was held that the argument that s.30(1)(g) of Part II of the 1954 Act cannot apply where the landlord intends to continue “essentially the same business” thereby depriving the tenant of any goodwill attached to the premises was in contravention of the tenant’s right to property under article of the First Protocol of the European Convention on Human Rights (“A1P1”).
The case concerned the renowned Leadmill music venue in Sheffield, which has operated as a live music venue since circa 1982. The Leadmill held the lease from 2003 which had the protection of the security of tenure provisions in the 1954 Act. The landlord in March 2022 served a hostile notice under Section 25 of the 1954 Act citing ground (g) (Landlord’s intention to occupy the demise for its own business purposes) as its ground of opposition.

The tenant issued proceedings at court and a trial of the preliminary issue of whether the landlord had satisfied ground (g) took place. The landlord provided evidence that it intended to carry on the same type of business at the premises i.e. a music and entertainment venue under the brand “Electric”.

The tenant raised challenges to the landlord’s evidence on the grounds that the length of the landlord’s refurbishment programme would be a break in continuity of trading and therefore the landlord would not be able to carry on the business “on the termination of the tenancy” and secondly that the landlord could not fund the refurbishment works according to the liabilities demonstrated in the business accounts which had been disclosed. The judge dismissed both of these grounds summarily following which the tenant sought to argue that the landlord intended to carry on “essentially the same business” which would essentially mean that the landlord’s business would be unlawful as it would constitute “passing off” (an infringement of the tenant’s trademarks) and secondly, the order would be incompatible with the tenant’s human rights (i.e. the A1P1 argument below). The passing off argument was dismissed summarily, but the court did consider the A1P1 argument in further detail.

The A1P1 in the Convention provides:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one should be deprived of his possessions except in the public interest and subject to the conditions provided by law and the general principles of international law. The preceding provisions shall not, however, in any way impair the right of the state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure payment of taxes or other contributions or penalties”.

The court found that although in principle goodwill can be a “possession” the tenant did not adequately explain where its goodwill valuation had come from because it had only provided a schedule of predicted earnings based on fixed rent and the judge rejected the assertion in evidence that the “Leadmill name” and the “building” “were indivisible”. The court could not identify the value that the tenant had alleged to be “adherent goodwill”. The court also held that if there was some notion of goodwill, the tenant would not be unlawfully deprived of it because the right of renewal under the 1954 Act is always subject to the landlord’s ability to oppose renewal on any of the grounds contained in Section 30 (1) of the 1954 Act. Accordingly, the landlord had established that the relevant contingency had occurred, notably that it wanted the premises back and met the test in ground (g). Finally, the court held that even if the court was wrong in that view and “deprivation” or “interference” had happened, it happened in the public interest and as provided for by law.

Key points:

• taking a property back as a landlord for its own business remains a reasonably clear and settled area, notwithstanding this Human Rights challenge
• the court emphasised that the words “on termination” in section 30(1)(g) are to be read as including “or within a reasonable time thereafter”. What amounts to a reasonable time here will depend upon the condition of the premises at the end of the lease
• a landlord does not need to show that his business may be viable
• goodwill could, in principle, be considered a “possession” under A1P1, provided it was an asset with monetary value
• goodwill must be proven and not merely asserted, with the burden on the tenant to demonstrate its existence. Evidence demonstrating a future income stream does not constitute a present “possession” for the purposes of A1P1
• even if the tenant is deprived of any goodwill, it would have been interfered with in a way that is proportionate and which balances the competing property interests

The Property Litigation team regularly acts for both landlords and tenants in connection with opposed and unopposed business lease renewals under the 1954 Act. This case clearly restates that the burden of proof in an opposed renewal remains firmly on the landlord and it is for the tenant to raise challenges for the landlord to answer. This case also highlights that tenants are looking for increasingly unusual arguments to challenge a landlord’s evidence and ability to oppose a renewal.

If you are considering taking back premises and operating from them yourself or if you are faced with a landlord opposing your right for a new lease, get in touch with a member of the Property Litigation team for advice.

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