What constitutes “occupation” of property?
This seemingly innocuous question was recently put before the Court of Appeal in a case called Mean Fiddler Holdings Ltd v Islington London Borough Council [2003] EWCA Civ 160; [2003] 19 EG 120.
Mean Fiddler operated a nightclub in Islington, London. It offered the club to external promoters who paid a hire fee and ran their own events. Mean Fiddler’s lease contained a tenant’s covenant not to, inter alia, “share the possession or occupation of part only of the Property”. The question was whether the arrangement with the promoters amounted to a sharing of occupation.
The Court of Appeal had little case law to turn to and, unfortunately, although unanimously dismissing Islington’s appeal, offered slightly different answers: Carnwath LJ held that it was a matter of fact and law – if a landlord wanted a clear prohibition, he could insist upon it in the lease. Sir Christopher Staughton believed that the question involved interpreting the contract and was therefore a question of law. He proposed the following test: if a person is operating a separate business from that carried on by the tenant, they would be sharing occupation. In his view, the promoters were participating in Mean Fiddler’s business under its supervision and control.
Whatever view you take, however, the message for landlords is clear: the standard form of alienation covenant, which appears in many leases, may not provide landlords with the protection they think it does.
What constitutes “occupation” of property?
This seemingly innocuous question was recently put before the Court of Appeal in a case called Mean Fiddler Holdings Ltd v Islington London Borough Council [2003] EWCA Civ 160; [2003] 19 EG 120.
Mean Fiddler operated a nightclub in Islington, London. It offered the club to external promoters who paid a hire fee and ran their own events. Mean Fiddler’s lease contained a tenant’s covenant not to, inter alia, “share the possession or occupation of part only of the Property”. The question was whether the arrangement with the promoters amounted to a sharing of occupation.
The Court of Appeal had little case law to turn to and, unfortunately, although unanimously dismissing Islington’s appeal, offered slightly different answers: Carnwath LJ held that it was a matter of fact and law – if a landlord wanted a clear prohibition, he could insist upon it in the lease. Sir Christopher Staughton believed that the question involved interpreting the contract and was therefore a question of law. He proposed the following test: if a person is operating a separate business from that carried on by the tenant, they would be sharing occupation. In his view, the promoters were participating in Mean Fiddler’s business under its supervision and control.
Whatever view you take, however, the message for landlords is clear: the standard form of alienation covenant, which appears in many leases, may not provide landlords with the protection they think it does.
