Landlord and tenant–Problems of a shopping arcade–This case arose from a decision by Marks & Spencer, which held a small part of a large store on a lease from the plaintiffs, to close the entrance to that part of the store from an arcade–Protests from other shopkeepers and complaints to plaintiff landlords–Whether action could be taken by plaintiffs under covenants in lease–One covenant provided for observance of regulations made by landlords for the management of the arcade–Plaintiffs made regulation requiring tenants to keep all doors open on to the arcade during normal trading hours–Plaintiffs sought interlocutory injunction requiring Marks & Spencer to conform to new regulation–Cyanamid rules–Motion for injunction dismissed
building society owned shops on either side of part of an arcade–Defendants,
Marks & Spencer, owned the freehold of the greater part of the store in
question but had leased from the plaintiffs a small part with an entrance into
the arcade–The condition of the arcade had apparently deteriorated somewhat in
recent years and shops had been difficult to let–Defendants also complained
that the arcade had become frequented by undesirable people, tending to cause a
nuisance or embarrassment to customers coming in or out of their premises–They
therefore decided to keep the arcade doors permanently closed–This caused
protests from other shopkeepers and complaints to the plaintiff landlords
question for the judge to determine was whether the covenant relied on by the
plaintiffs gave them the power to make a regulation of this kind at all–He
decided, after a detailed examination of the lease, that the term ‘arcade,’ in
the words ‘the management of the said arcade’ in the relevant covenant, meant
not the whole development including the shops but only the right of way between
the shops–The regulatory power was concerned only with what the tenants did in
the exercise of the common right of way–It did not concern what the tenants did
in their own premises–It followed that the regulation made by the plaintiffs
was not within the regulation-making power–As it was ultra vires, the
plaintiffs could not show that there was a triable issue, thus failing to
surmount the first hurdle under the Cyanamid rules (American Cyanamid Co v Ethicon Ltd
[1975] AC 396)–The present motion must therefore fail
wrong on this point, the judge considered the application of the remaining
Cyanamid rules–The present case was, in his view, an application for a
mandatory order and not strictly within the Cyanamid rules at all–The court
ought not to grant a mandatory order unless it has a high degree of conviction
that the plaintiff is likely to succeed on the merits at the trial–In the
present case the judge thought that the plaintiffs would fail at the trial–On
the question of the balance of convenience, he concluded that the considerations
were evenly balanced–Accordingly, if he had decided that the plaintiffs had
surmounted the first hurdle, he would have been inclined to refuse the
injunction on the ground of the mandatory element in the order sought–As it
was, he refused it on the ground that the plaintiffs’ case was bound to
fail–Motion dismissed
No cases are referred to in this report.
This was a motion by the Bristol &
West Building Society for an interlocutory injunction to require the
defendants, Marks & Spencer plc, to conform with the regulation requiring
them as tenants in the Bristol and West Arcade in Reading to keep all doors
leading on to the arcade open during normal trading hours.
Martin Rodger (instructed by Blake
Lapthorn, agents for Burges Salmon, of Bristol) appeared on behalf of the
plaintiffs; Nicholas Patten QC (instructed by the legal department, Marks &
Spencer plc) represented the defendants.
Giving judgment, HOFFMANN J said:
Marks & Spencer have a large store in the middle of Reading. It occupies
the greater part of a block which is bounded by Friar Street on the south side,
Cross Street on the north side and Broad Street on the west side. On the
eastern boundary runs an arcade or passage which for part of its distance is
called the Market Arcade and Market Passage and for the remainder of its course
is called the Bristol & West Arcade. The shops on either side of the
Bristol & West Arcade belong to the plaintiffs, the Bristol & West
Building Society.
The arcade was refurbished sometime in
the late 1950s. Marks & Spencer at that time took a lease of shop premises
at the far end of the Bristol & West Arcade from its Friar Street entrance.
Those premises form a very small part of the whole of the Marks & Spencer
store, in the rest of which Marks & Spencer have the freehold.
The lease under which Marks & Spencer
hold the premises on the arcade was granted on January 25 1957. It gave them a
term of 50 years from Christmas 1956 at a fixed rent of £500 a year with no
rent reviews. There was, however, a variation in that lease in 1964, by which
the term was extended to the year 2063 and the rent increased by £1,200, still
without any rent reviews.
The premises on the arcade have, of
course, doors which give access on to the arcade. It is clear that at that time
when the plaintiffs let those premises to Marks & Spencer the latter were
regarded as being very desirable tenants whose presence in the arcade might
help them to attract other tenants to the other shops along its length. From
the late 1950s until very recently the entrance from the arcade was one of the
ways in which members of the public could come in and out of Marks &
Spencer and, no doubt as a result of their being able to do so, a certain
amount of passing traffic was generated which would not otherwise have been
there.
Marks & Spencer say that in recent
years the condition of the arcade has deteriorated and it certainly seems to be
the case that shops there nowadays are not easy to let. The plaintiffs have
three empty shops standing immediately opposite the entrance to Marks &
Spencer which have been unlet since the beginning of 1990. Marks & Spencer
also complain that the arcade tends to be frequented by undesirable people and
that this could cause nuisance or embarrassment to shoppers coming in and out
of their premises. In any event, the number of persons using the arcade
entrance as monitored by Marks & Spencer has fallen off and now on their
calculations represents less than 10% of the people coming into the store.
As a result of this development, Marks
& Spencer reviewed the question of whether that entrance should be kept
open at all. They came to the conclusion that it was not in their interests to
keep it open. In addition to the matters which I have so far mentioned, they
found that some thefts from within the store were occurring and they suspected
that the persons committing the thefts might have been using the arcade
entrance. That gave rise to the possible need for additional expenditure on
security. As a result of these considerations they decided to keep the doors
permanently closed. That decision was put into effect on October 4 1990.
There was an immediate and vigorous
protest from the other shopkeepers in the arcade. To them the presence of Marks
& Spencer and the presence of the entrance to Marks & Spencer was an
important matter in keeping up the flow of traffic past their shops. The closed
doors simply added to the existing gloom. I should add that a large shop, not
itself forming part of the arcade but closely abutting it, which had been occupied
by Next, is now also closed and dark. The shopkeepers in the arcade made their
protests to the landlords and, as a result, the landlords examined the lease to
see what could be done about the position.
The lease contains no covenant on the
part of the tenant to stay open for business. By clause 3(15)(b) the tenant
covenants ‘to use the premises for the sole purpose of a retail shop’, but it
is admitted that that means only that the premises must not be used for
anything other than a retail shop. It does not oblige the tenants actually to
keep the shop open.
Clause 3(16), however, is a covenant by
the tenant:
Not at any time to permit or suffer the
demised premises to be used for any immoral purpose; nor to do or permit or
suffer to be done in or upon the demised premises any act or thing which in the
opinion of the lessors shall or may be or become a nuisance, annoyance or
inconvenience to the lessors or any owners, lessees or occupiers of any
premises in the neighbourhood; and not to permit any sale by auction to be held
upon the demised premises and at all times to observe and conform to all rules
and regulations from time to time reasonably made by the lessors for the
management of the said arcade.
Nothing in the earlier part of that
clause appeared to be very promising. The landlords did at one stage suggest
that closing the doors might constitute a nuisance, annoyance or inconvenience
to the occupiers of premises in the neighbourhood, but that contention has not
been pursued.
The landlords, therefore, fastened upon
the last part of the clause giving them the power to make regulations for the
management of the arcade. No such regulations had ever been made in the past.
But to deal with the situation created by the closure of the Marks &
Spencer doors, the landlords proceeded to make one. The first attempt was (for
reasons which I need not go into) unsuccessful. It formed the basis of an
application to Harman J for an injunction. That application was refused and, as
a result, the landlords have chosen to make a new regulation dated December 6
1990 and to commence new proceedings to enforce that regulation. The regulation
is in the following terms:
1
All tenants in the arcade are required to keep all doors leading on to
the arcade open during normal trading hours of that tenant’s unit for access to
and egress from the unit by the public.
2
All tenants in the arcade are required to keep all doors and windows
leading on to the arcade fully illuminated and clear of all obstructions during
normal trading hours of that tenant’s unit.
The landlords say that those are
reasonable regulations for the management of the arcade. Evidence has been
sworn on behalf of the landlords to the effect that it is nowadays common, as
part of the estate management of developments such as the arcade, to provide
that the tenants shall positively trade in their shops, that they shall keep their
shops illuminated and attractive. It is obvious that this can have an effect
upon the general appearance of the arcade and therefore upon the letting value
of the other shops. On that footing, the landlords now move for an
interlocutory injunction requiring Marks & Spencer to conform to this new
regulation.
The first question is whether covenant
3(16) gives the landlords the power to make such regulation at all. Strictly
speaking, at this interlocutory stage the question is whether it is arguable,
so that the matter should go to trial, that such a power exists. But since the
question is entirely one of construction of the lease and it is hard to see how
evidence at a trial could assist the court in deciding that question one way or
the other, it is the kind of decision which can just as well be made at this
interlocutory stage as any other.
The first question, as it seems to me, is
whether, when the clause speaks of ‘the management of the said arcade’, the
term ‘arcade’ means the whole development including the shops or whether it
means the right of way between the shops?
For that purpose it is necessary to look at the way in which the term
‘arcade’ is used in the rest of the lease. It is difficult to tell exactly how
the premises are described because the lease as executed has blanks which were
apparently intended to be filled in and reads:
All that shop and premises known or
intended to be known as No. (blank) Arcade in the building known or intended to
be known as (blank) Friar Street in the county borough of Reading and having a
frontage to the said arcade of 27 feet.
In the term ‘to the said arcade’, the
word ‘arcade’ clearly means the passageway and does not include the demised
premises itself. Likewise, the parcels include ‘the grant of a right of way on
foot only over and along the arcade as shown and coloured yellow on the said
site plan’. There, too, it must mean the passageway.
In clause 3(5) the tenant covenants:
. . . to pay to the lessors on demand a
proportion as determined by the lessors’ surveyor, whose determination shall be
final and conclusive, of the expense of repairing, cleansing, maintaining and
mending and lighting the arcade.
Once again in that clause the ‘arcade’
can mean only the passageway.
Then in clause 3(23) there is a covenant:
. . . not to load or unload any goods
from carts, wagons or lorries and convey the same from or into the demised
premises except on foot only through the arcade from the direction of Friar
Street and to load or unload or convey as aforesaid in such manner so as not to
cause damage to the said arcade or to adjacent premises.
There, again, it refers to the right of
way.
Finally, in clause 3(26):
At all times in conjunction with all
other persons using or having the right to use the said arcade coloured yellow
on the said plan outside normal business hours during the term hereby granted
and from time to time at such other times as may be deemed necessary to lock
and cause and ensure to be properly securely locked the main gates of the
building.
There, again, the ‘arcade’ means the
right of way. There is, in fact, no other covenant in the lease in which the
term ‘arcade’ is used to mean anything other than the passageway between the
shops. That, it seems to me, is one indication that the regulatory power in clause
3(16) was not intended to deal with the conduct of the tenant within its own
premises.
Other indications may be gained from
those covenants which do deal with what the tenant does within its own premises
and which, if the landlords were right, would also be covered by the regulatory
power. So, for example, in clause 3(12) there is a specific covenant:
. . . not to affix upon any part of the
exterior of the demised premises or in any windows a signboard, poster, facia,
placard or advertisement except as may previously have been approved by the
lessors.
One can see that it may be desirable for
a landlord, in the interests of the management of the property as a whole, to
ensure that tenants do not put offensive notices or placards in their windows.
If the landlords’ construction is right, then the power to prevent that would
come under the general regulatory power relating to the arcade. But here we
have a specific covenant dealing with that specific matter and that, in my
judgment, tends to suggest that the regulatory power was not regarded as having
such a wide scope.
Similarly, in clause 20(b) the tenant
covenants:
. . . not to stop-up, darken or obstruct
or permit or suffer to be stopped-up, darkened or obstructed any windows or
lights belonging to the demised premises.
Again one can see why in the interests of
general estate management the landlords would not want the tenants to cover up
and darken their windows. But the existence of that specific covenant makes it,
in my judgment, improbable that the regulatory power was intended to cover not
only the same ground but a good deal more, in giving the landlords the power
which they are purported to exercise in the second part of the regulation by
requiring the tenants to keep their windows fully illuminated. In my judgment,
therefore, the regulatory power in clause 3(16) is concerned only with what the
tenants do in their use of the common right of way. It is not concerned with
what the tenants do within their own premises, and the term ‘arcade’ in clause
3(16) means the right of way and not the development as a whole.
Mr Rodger submitted that if the clause
were given so narrow a meaning it would be quite unnecessary because the
tenants have a right of way on foot only over the arcade and it is not
necessary for the landlords to have a regulatory power in order to prevent them
from doing other things there.
I think there are two answers to that
question. One is that this would not be the first time that a lease conferred
upon a landlord a right or power which turned out to be in practice
unnecessary. The landlords may well until recently have shared this view,
since, as I have said, no regulations have until now ever been made pursuant to
that power. But a second answer is that one can, in my view, envisage circumstances
in which one might have to resort to such a regulatory power. For example, a
tenant might so conduct himself within his premises so as to cause queues of
people or obstructions by others to form in the arcade. The tenant might then
not, strictly speaking, be himself liable either for trespass or for nuisance,
but the landlord might nevertheless wish to regulate the activities of the
tenant in order that such difficulties did not occur. Other examples may also
be constructed along similar lines.
It follows that, in my judgment, the
regulation upon which the landlords rely does not fall within the scope of the
regulation-making power and for that reason the motion must fail. The landlords
do not show that there is that triable issue which constitutes the first hurdle
under the Cyanamid rules.
If I am wrong about that, I should
briefly say something about what appears to me to be the application of the
remainder of the rules. This is, in my view, an application for a mandatory
order and not, strictly speaking, within the Cyanamid rules at all. The
general guidelines laid down by the Court of Appeal in the case of mandatory
orders are that the court should not grant them unless it has a high degree of
conviction that the plaintiff is likely to succeed on the merits at the trial.
As I have already made clear, I do not have such a high degree of conviction:
on the contrary, I think that the plaintiffs will fail at the trial. It is
perfectly true, as Mr Rodger pointed out, that the particular order which is
sought in this case, although mandatory both in form and effect, does not have
the consequences such as requiring irreversible steps to be taken which are
normally associated with mandatory orders. None the less, it is a positive
direction to the defendants as to how they are to carry on their own business,
rather than simply a prohibitory order requiring them not to do something. That
does, in my view, make it an order of a different quality from the ordinary
prohibitory injunction.
Apart from that, the balance of
convenience is by no means easy to judge. The balance of convenience must be
struck as between plaintiff and defendant and it is only indirectly that one
can take into account the effect upon the other tenants in the arcade. They
themselves do not have a cause of action, or at any rate they are not seeking
in these proceedings to assert one. The landlords can claim potential prejudice
only on account of the effect which the closure may have on their ability to
let premises in the future, on their ability to obtain higher rents at rent
reviews and on their ability to collect the existing rents from tenants.
As to the letting of premises, there is a
letter from the landlords’ estate agents in which they mention the closure of
the Marks & Spencer premises as one of the reasons why it has been
difficult for them to find tenants for the three units which are at present
vacant. On the other hand those units have been vacant since the beginning of
the year during a period in which the economy has not been improving, and even
the agents mention the closure only as one additional reason for their
difficulties. It is possible that the closure might be the last straw which
causes one of the tenants to close down and cease to pay the rent, but that is
at present entirely speculative. There is no rent review immediately in the
offing or, so far as I can see, due at a time before any trial of this action
could take place so that the issue can be finally determined.
The landlords therefore face the
difficulty that not only are their damages difficult to quantify but the causal
connection between the closure by Marks & Spencer and any loss which they
may suffer in respect of rent reviews or lettings is going to be extremely
difficult to establish. The tenants, on the other hand, if they were ordered to
keep the door open, may be put to a certain amount of additional expense by way
of security and so forth, but that would be a quantifiable expense. On the
other hand there are again matters which are not only unquantifiable but on
which questions of causation would be extremely difficult, such as the effect
upon the amenity and reputation of the store if anything unpleasant were to
happen to one of the customers, as the defendants apparently fear, while coming
into or going out of the arcade.
For my part, I would regard these
considerations on both sides as fairly evenly balanced. Accordingly, if I
regarded the matter as having surmounted the first hurdle, I would regard the
significant feature as being the mandatory element in the order which was being
sought, and on that ground I would not be inclined to grant the injunction. As
it is, I refuse it on the ground that the plaintiffs’ case is bound to fail.
The motion was dismissed with costs and
an order made for taxation.
