Don’t Lease Back in Anger – MVL Properties (2017) Ltd v The Leadmill Ltd [2025] EWHC 349 (Ch)

Given the consultation on reforming the Landlord and Tenant Act 1954, it seems appropriate to consider a recent case in which the landlord of a business tenancy successfully obtained possession on the basis that it intended to occupy the premises for the purposes of carrying out a business therein.

MVL Properties (2017) Ltd v The Leadmill Ltd [2025] EWHC 349 (Ch) provides useful guidance as to how courts will approach s.30(1)(g) LTA 1954 (‘Ground G’), and also includes an interesting discussion on the interplay between Ground G claims and a tenant’s ECHR rights in ‘adherent goodwill’.

Background

The Leadmill is a venue and nightclub in Sheffield, not just frequented by common people –Pulp performed their first ever gig there, and the venue has hosted countless bands including Oasis, The Killers and Arctic Monkeys (to name a few).

On 14 October 2003, the venue was leased to The Leadmill Ltd (‘Leadmill’) for a term of twenty years starting on 25 March 2003. The tenancy was a business tenancy which fell within the scope of Part II LTA 1954.

On 3 November 2017, the freehold reversion was acquired by MVL Properties (2017) Ltd (‘MVL’), a subsidiary of Electric Group Holdings Limited which runs music venues in historic buildings in several locations across the UK.

Prior to expiry, on 28 March 2022 MVL gave s.25 notice of termination of the tenancy and indicated that it would oppose the grant of a new tenancy based on ground G.

Section 30(1)(g) LTA 1954

The LTA 1954 provides commercial tenants with security of tenure, unless contracted out. As such, if the commercial landlord wants to take possession, and the tenant is unwilling to leave, the landlord must serve a section 25 notice specifying a ground for possession.

Section 30 LTA 1954 reads as follows:

“The grounds on which a landlord may oppose an application under section 24(1) of this Act, or make an application under section 29(2) of this Act, are such … (g) subject as hereinafter provided, that on the termination of the current tenancy the landlord intends to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him, or as his residence.”

Judge Norris provided a summary at paragraph 10 of what MVL had to prove to satisfy the Ground G test:

• The subjective test: MVL must demonstrate, at the date of the hearing, the relevant firm and settled intention to occupy the holding, on termination of the tenancy, for the purpose of carrying out a business therein. MVL must intend to so act within a reasonable time after termination of the current tenancy.
• The objective test: MVL must demonstrate a reasonable prospect of being able to bring about the fulfilment of that intention, being more than a fanciful chance.

If MVL satisfied those tests and established Ground G, then pursuant to section 29(4)(a) LTA 1954 the Court “shall make an order for the termination of the current tenancy in accordance with s.65 of [LTA 1954] without the grant of a new tenancy”.

More than a feeling – the subjective and objective tests

The subjective element was satisfied by the sole director of MVL offering an undertaking to the court (paragraph 13). Whilst the undertaking was considered perfectly decisive of the fixity of intention, Judge Norris considered that the undertaking was supported by other evidence, namely:

• Electric Group’s history of operating numerous music venues in Brixton, Bristol and Newcastle since 2013.
• MVL committing very substantial sums to the project.
• MVL registering the trademark “Electric Sheffield”.

Judge Norris also considered that MVL had proved the objective element of the test (paragraph 14).

Firstly, during his evidence, Mr Mills (sole director of Leadmill) indicated that if the Leadmill was denied a new tenancy, then all the fixtures and fittings would be removed from the premises to reduce it to its original state of dereliction. When questioned by Judge Norris as to the commercial logic of incurring costs to do that, he suggested that he could dispose of the dismantled dancefloor as souvenir mementos. On MVL’s suggestion, Judge Norris proceeded on the basis that this was the probable scenario that would occur on termination.

Secondly, and following on from the previous point, Leadmill argued that a landlord could not realise an intention to carry on the business at the property “on the termination of the current tenancy” if it first intended to carry out an extensive programme of works. However, Judge Norris disagreed:

• Occupying premises for the purpose of rendering those premises fit for the conduct of an intended business by refurbishment or fitting out is occupation for the purposes of a business.
• Leadmill could not reduce the Property to a state of dereliction, and then rely on that dereliction in arguing that, due to the extent of work required, it would be impossible for MVL to intend to occupy for the purposes of a business within a reasonable time. Judge Norris clearly didn’t think that the Leadmill looked good on the dancefloor (argument).

Thirdly, Judge Norris was satisfied that MVL had a realistic prospect of completing the works to enable it to operate the music venue as it could afford the anticipated expenditure. Both parties called expert evidence on the necessary works, the costs and how long they would take. Where opinions differed, Judge Norris preferred the evidence of Mr Tatlow, MVL’s witness, based on the quality of his report and willingness to compromise. In any event, Judge Norris confirmed that the court is not to police a landlord’s entitlement to recover possession of his own property by examining the financial wisdom of genuinely held plans.

You’ve got to fight for your right to property – s.30(1)(g) LTA 1954) and the ECHR

A large portion of the judgment dealt with interesting arguments in respect of goodwill and Article 1 Protocol 1 of the European Convention on Human Rights (A1P1). A1P1 paragraph 1 provides that “A natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to conditions provided for by law and by the general principles of international law.”

Leadmill’s main submission was that the LTA 1954 must be read and given effect to in a way that is compatible with A1P1. S.30(1)(g) LTA 1954 did not apply in cases where the landlord intends to carry on “essentially the same business” as that carried on by the tenant, since that would appropriate the tenant’s goodwill that had attached to the premises. The proposed conclusion was that this prevented a landlord from obtaining possession and expropriating the tenant’s goodwill and instead compelled the grant of a new tenancy.

The questions for the court to consider were (a) does goodwill constitute a possession for the purposes of A1P1; (b) did such goodwill exist in the present case; (c) was Leadmill deprived of any such goodwill; and (d) if so, was it justified in the public interest?

Whilst the court accepted that goodwill could constitute a “possession” pursuant to A1P1, it was not accepted that the tenant had proven that such goodwill existed in the present case. Judge Norris questioned how any “adherent goodwill” could exist in respect of a “derelict shell that used to be a cultural centre and music venue” (paragraph 50). The important takeaway is that the existence of goodwill must be proven.

Even if such goodwill existed, the court considered that Leadmill would not have been “deprived of that possession”. A1P1 did not confer or guarantee the contents of any rights in property but rather guaranteed the peaceful enjoyment of possessions already owned by a person. It followed that Leadmill could not be deprived of possession in respect of a contingent right to renewal, that right to renewal being contingent on the landlord’s opposition or intention to take possession.

Even if there was deprivation, the court considered that such deprivation would serve the public interest in respecting ownership rights, and that ground G struck a fair balance between Leadmill’s right of renewal and MVL’s right of repossession.

Commentary

Although Leadmill fought the law and the law won, there’s a lot to unpack from this decision:

• Firstly, a landlord can indicate the necessary intention by providing an undertaking to the Court, though they are advised to provide evidence supporting such a subjective intention. Not all commercial landlords can demonstrate the same history of running venues as MVL could; in such circumstances, clear evidence of a financial investment in the proposed business may go a long way in demonstrating such an intention.
• Secondly, clear evidence of a financial ability to run a business will also assist in demonstrating the objective intention. Whilst the court will not necessarily interrogate the financial wisdom of the landlord’s decision, there must be a basis upon which the landlord can show that their plan to run a business is more than fanciful.
• Thirdly, commercial tenants may struggle to argue that the period between a landlord renovating the property and commencing its business is unreasonable, particularly where the length of the delay is partly a result of the tenant’s proposed course of action.
• Finally, ECHR arguments may yet have a role to play in possession claims under the LTA 1954. Although Judge Norris found against Leadmill, it was accepted that goodwill can constitute a possession. It follows that, in the right circumstances, a commercial tenant may be able to argue that (a) adherent goodwill in its business exists; (b) the landlord’s possession would expropriate and deprive them of that goodwill; and (c) such deprivation would not be justified. However, it is hard to see how a tenant would satisfy that last point; Judge Norris attached weight to the legislature’s consideration of such goodwill arguments during a debate on 8 July 1954, and considered that a landlord’s inability to oppose renewal if they had acquired the reversion within five years prior to the termination date (s.30(2) LTA 1954) was a proportionate response.

Article by David Lipson