DEAR CLAIRE – June 2020

18 / 06 / 2020

Perplexed by property law? Relax, Solicitor Claire Haynes is here to answer your most pressing questions…

Dear Claire

Q:  I run a designer clothing boutique. The boutique is located in a small arcade alongside other high end retailers. The Government rules required us to close the store at the start of lockdown. During lockdown the landlord has permitted a takeaway to open in the neighbouring unit which was temporarily vacant. I understand the takeaway has been successful and it is to remain in the longer term as the previous plans for the unit fell through. Due to social distancing guidelines, the takeaway offers a “one in, one out” service and there are often queues outside the front of the boutique blocking my window displays. This is definitely not the type of setting I envisaged for my luxury boutique and I am worried it will put off both potential and existing customers. What can I do?

A:  The first thing I would encourage you to do is to speak to both your landlord and the owner of the takeaway to see what can be done to improve the current situation for your business. For example, is there another place the customers could queue during your trading hours, or could the landlord cordon off a separate section of the arcade for waiting customers? Keep a written record of all of your communications and conversations. If the landlord fails to make any changes to the current state of affairs you are likely to have a stronger case in any future action against them.

On the legal side, there is an implied obligation in a lease that a landlord will give a tenant quiet and uninterrupted use of the premises, known as “quiet enjoyment” of the premises. This is the case even where there is no express clause in the lease which contains the obligation. Landlords must also ensure that they do not do anything which is inconsistent with the grant of the lease of the property to the tenant. This is known as the principle of “non-derogation from grant”. For example, if your unit was let for the particular purpose of a luxury clothing boutique, the landlord must not do anything to stop or deprive you from using the premises for that purpose.

A case will always turn on its particular facts. In this area there is case law both in support of your position and where the courts have decided for the landlord. The case of Chartered Trust PLC v Davis [1997] EWCA Civ 2256 supports any claim you might wish to pursue if the situation is not resolved satisfactorily. The tenant had a specialist shop selling puzzles and executive toys from a small shopping mall. The mall was marketed as a “high class development” with a policy of only letting to “high class retail” outlets. The tenant paid a service charge to the landlord for management of the shopping mall. The landlord permitted a pawnbroker to open in neighbouring premises which caused a nuisance to the tenant and acted as a deterrent to potential customers of the tenant. Customers of the pawnbroker queued outside the tenant’s premises. Despite its power to do so, the landlord did nothing to stop these behaviours. The judge concluded that the landlord derogated from grant as it had made the premises materially less fit for the purpose for which they were let, entitling the lease to be terminated.

In contrast, the case of Petra Investments Limited v Jeffrey Rogers PLC [2000] 5 WLUK 640 concluded that the opening of a Virgin megastore in a shopping centre marketed for “high fashion retail” did not derogate from grant. Ailing retailer Jeffrey Rogers experienced a further decline in trade following the opening of the Virgin Megastore, but the Virgin Megastore was ruled not to be the main reason for the poor trading of the fashion store. The doctrine of non-derogation from grant did not mean that the landlord of a shopping mall had assumed a general responsibility not to do anything on the common parts that might harm the business of its tenants.

In the above examples, the conduct of the parties was key to the decisions reached by the court. Where the conduct of the landlord makes premises materially less fit for the purpose for which they were let, the tenant may have a case against the landlord. The case of the pawnbroker turned on the conduct of the parties and not the nature of the business. Hopefully your situation doesn’t reach the point of litigation, but it is a reason to keep records of all of your dealings with the landlord on the matter.