Lease of unit in shopping centre – Breach of covenant to keep window display – Plaintiffs erecting window display – Plaintiffs claiming rent arrears – Whether lessee having consented to plaintiffs’ actions – Whether lease forfeited or surrendered by operation of law – Judgment for plaintiffs
The plaintiffs owned a shopping centre, The Grove Centre, Witham, Essex, comprising 26 units, unit 6 of which was leased to the defendant. The lease dated October 31 1988 was for a term of 25 years at a yearly rent of £20,000 payable quarterly. In clause 3.38(b) the defendant covenanted to keep the windows suitably dressed at all times and illuminated during such hours as the plaintiffs might require. The centre was afflicted by the recession and the defendant, having taken a policy decision to close nationally its high street retail outlets, ceased trading in Unit 6 on February 25 1991 although a set of keys was held on site by the plaintiffs in case of necessity. While continuing to pay rent under the lease, the defendant in breach of clause 3.38(b) did not maintain a window display.
The plaintiffs complained to the defendant about the absence of a window display and in October 1994, a carpenter acting on the plaintiffs’ instructions, erected two free-standing platforms with display panels in the window. The plaintiffs claimed to have received the consent of the defendant by a letter dated October 27 1994 but only after the window display had been erected.
The defendant contended that consent had not been given and that the rent due on December 24 1994 had been paid in ignorance of what had occurred. The defendant paid no rent after March 25 1995 and the plaintiffs claimed £42, 650.22 plus interest for rent and insurance charges, contending that the defendant had consented to the actions of the plaintiffs complained of, alternatively that such actions did not support a case either of forfeiture or of surrender by operation of law. The defendant disputed its liability to pay any of the sums claimed alleging (1) that the plaintiffs forfeited the lease prior to December 25 1994, alternatively March 25 1995 (2) and/or that the lease was surrendered by operation of law
Held The plaintiffs’ claim succeeded.
1. The plaintiffs, although relying upon a breach of covenant other than non-payment of rent, had not served a notice on the defendant as required by section 146 of the Law of Property Act 1925 the effect of which, in the circumstances, was that an unequivocal intention to forfeit had not been shown.
2. The plaintiffs as landlords had entered unit 6 to erect the window display without informing the defendant as tenant nor obtaining its consent. When the defendants discovered in February 1995 what had been done and attempted to assert then that the lease had terminated, the plaintiffs had made it clear that the lease was continuing. Considering the limited nature of the entry to unit 6, the fact that the keys were kept on site with the consent of the defendant and that the defendant was in clear breach of clause 3.38, a case of surrender by operation of law had not been made out.
James Dingemans (instructed by Orchard) appeared for the plaintiffs; Katharine Holland (instructed by Clifford Chance) appeared for the defendant.
