Covenant for user — Factual matrix — Use for the business of specified traders — Main business carried on elsewhere — Whether breach — Whether premises can be used for specified trades or for purposes of specified trades carried on elsewhere — User clause to be construed contra proferentem — Whether “but will use” creates positive obligation — Claim by plaintiff lessors dismissed
By a lease dated September 12 1979 the defendants hold a 21-year term of 35 and 37 Park Lane, London W1. The plaintiffs are the owners of the reversion and, following the service of a notice under section 146 of the Law of Property Act 1925, claimed that the defendants are in breach of the user clause of the lease. The defendants run a high-class jewellery business in the Hilton hotel nearby and use no 35 for office and similar purposes in connection with that business.
By the user covenant of the lease the defendants covenant not to use the premises for a number of specified trades “but will use the demised premises either for the business of high-class retailers of jewellery and/or …” certain other specified uses. The plaintiffs claimed that the defendants were in breach of this covenant because (1) use of the premises for the benefit of the jewellery business elsewhere was not use for the business of high-class retailers of jewellery and (2) the covenant imposed a positive obligation to use all the premises accordingly.
Held The claim was dismissed.
1. At the time of the grant of the lease, the premises were unoccupied and the defendants were running their jewellery business elsewhere. Notwithstanding that factual matrix, the words of the covenant should be construed as they stand and, only as a last resort, checked against the factual background to avoid a conclusion inconsistent with the commercial realities. The words “for the business of” cannot be read as meaning “as”; the premises therefore can be used either as shop premises for the specified trades or for the purposes of the specified trades carried on elsewhere. If that interpretation is wrong, the interpretation is an open one to be construed contra proferentem as against the plaintiffs who were seeking forfeiture of the lease and would have to prove the breach.
2. Clear words are needed to impose or create a positive obligation as to user. The words “but will use” are to be construed as emphatic negative rather than positive in obligation. It follows that user of part of the demised premises is not a breach of the covenant. Even if the covenant had imposed a positive obligation, it did not require the whole of the premises to be used for the specified trades. Further, a relatively insignificant other user would not alter the character of the prime use.
David Neuberger QC and Judith Jackson (instructed by Lewis Silkin) appeared for the plaintiffs; and Nicholas Dowding (instructed by Rabin Leacock Lipman) appeared for the defendants.