Breach of covenant — Covenant to keep premises open for retail trade — Trading failure of shopping centre — “Anchor” tenant closing unit — Damages for breach — Measurement of damages
By an underlease dated June 7 1972 the defendant company became the original tenant of a supermarket unit in a shopping centre called the Centreway, High Road, Ilford. By clause 2(14) of the underlease the defendants covenanted “to keep the demised premises open for retail trade during the usual hours of business of the Tenant in the locality”. Because the centre was not a trading success, the defendants eventually closed their unit on November 9 1985 and, as the defendants were regarded as “anchor” tenants, this brought about an immediate and sharp reduction in the trade of the shops in the area and affected rent review negotiations at the time. The plaintiffs were obliged to grant a number of rent concessions to the remaining tenants.
The closure of the defendants’ unit was a breach of clause 2(14) of the underlease and judgment for damages to be assessed was obtained by the plaintiffs on March 21 1986. The defendants ceased to be in breach when a bathroom centre opened in the unit in July 1986.
Held Judgment was given for damages of £110,027.90.
1. Short-term losses. A total of £17,077.35 was allowed for the value of the rent concessions and the professional fees involved. A claim was allowed in respect of delay in repairing a fire damaged unit as the delay was attributable to the defendants’ closure. However, claims in respect of voids were not allowed as the defendants were not the cause of the voids claimed for. A claim for loss of rentals as a result of rent reviews following the closure was allowed to the extent of £91,980.
2. Long-term losses. This claim failed. There was no causal link between the closure of the unit by the defendants between November 1985 and and July 1986 and a second closure at a later date; the level of trade had the defendants’ continued to trade would not have been significantly greater than that of the bathroom centre; and the effect of the defendants’ breach had evaporated by the time of the second closure.
Jonathan Gaunt (instructed by Reynolds Porter Chamberlain) appeared for the plaintiffs; and Derek Wood QC and Erica Foggin (instructed by Denton Hall Burgin & Warrens) appeared for the defendant.