UK: Case Law Compendium

Last Updated: 11 April 2013
Article by Richard Flenley

The last few months have been particularly active in the property litigation sector.

It will come as no surprise for many to realise that the bulk of that activity has focussed heavily (although not exclusively) on the struggles faced both by individual business and the wider economy at large.

First in our tour of the recent cases features the aged old issue of the exercise of break options and the need to proceed with great caution when considering the exercise of such a right.

In HFI Farnborough Limited -v- Park Garage Group (2012), HFI were the owners of 4 petrol service stations. 25 year leases of these petrol stations had been granted to Park Garage Group Plc ("Park Group"). Separate overage agreements were also entered in respect of each lease. Each lease contained break options permitting HFI to terminate on 3 month's notice. The conditions of the break options were, amongst other things:

(i) that HFI could exercise the break option only if the "value of the Premises" on the date the break option was exercised exceeded the price HFI had paid for the freehold of the relevant site with vacant possession,

(ii) if the break options were exercised, HFI was required to pay overage to Park Group on completion of a sale of the petrol stations.

In April 2012, HFI served break notices on Park Garage accompanied by letters from a valuer alleging that the value of the petrol stations exceeded the prices referred to in the leases. HFI denied that it was obliged to sell the petrol stations in order exercise the break option. Park Garage claimed that the break notices were invalid and HFI brought proceedings claiming possession of the petrol stations.

The issues that arose for the High Court were whether:

  • HFI was permitted to exercise the break option if there was no agreed sale of the petrol stations; and
  • if HFI were entitled, should the leases should be rectified for mutual mistake.

The High Court ruled that the break conditions were linked and the break option could only be exercised on a sale. A reasonable person would understand that the term "value of the property" would mean the new price of the petrol stations with vacant possession. It was unlikely that the parties intended that there should be both a sale of the petrol stations and a valuation of the properties. As the Court held that HFI were not entitled to exercise the break options issues of rectification did not arise.

However, the Court did make obiter comments that a party seeking rectification for mutual mistake had to demonstrate a common continuing intention. Evidence of subjective intention was admissible and could be relevant where agreements had been based on oral exchanges/conduct.

Next we come to the Court of Appeal decision in John Grimes Partnership v Gubbins (2013).

This case revisited the issue of remoteness in the context of a fall in property values. G obtained planning for development of a field for residential premises and instructed JGP to design a road. JGP did not complete in the time agreed and G claimed for damages. G was successful in claiming that the delay resulted in a reduction of the market value of the private residences to be built, a reduction in an offer from a Housing Authority and an increase in building costs.

The Court of Appeal held that losses caused by a breach of contract and arising out of a fall in property values were not too remote and the fall in property prices at the start of the recession were "reasonably foreseeable".

In these times of increasing financial pressure on landlords and tenants alike, it is common for parties to seek to take advantage of alienation rights. This marks the next stop and was central to the case of Ansa Logistics Ltd -v- Towerbeg Ltd (2012).

In that case, Towerbeg let 42 acres of land in Liverpool to Ansa Logistics under two long leases. The leases contained a covenant "Not to assign, underlet or part with possession of the demised premises or any part thereof without the previous consent in writing of the [landlord] which consent shall not be unreasonably witheld".

Ansa used the site to store and marshal vehicles for Ford.

In August 2007, Ansa and Ford agreed heads of terms that allowed an "orderly transition" of Ansa's business to Ford, allowing Ford to take over the operations on the site. Ford occupied the site under licence agreements, paid a monthly facility fee and took on responsibility for some of the utilities. By November 2009, all Ansa employees had left the site however, Ansa continued to pay rates, insure the land and took the lead in rent renewal negotiations.

In April 2011, Towerbeg applied for planning permission to redevelop part of the land as a leisure park.

In November 2011 Ansa and Ford agreed on the grant of under-leases subject to Towerbeg's consent. However, Towerbeg refused consent stating that Ansa was in breach of the leases by parting with possession of the site to Ford, expressed concerns about Ford's financial stability and indicated that its application for planning permission would be prejudiced if Ford became under-tenant. Towerbeg also served a forfeiture notice on Ansa.

Ansa duly took the matter to the Court and the Court held that for the purposes of an alienation covenant, parting with possession had to be complete. Possession and occupation were two separate legal concepts. The acid test for possession, as opposed to mere occupation lay in the right of the person in occupation to exclude all others, including the tenant from the premises. In the present case, although Ford had exercised an increasing degree of control over the site since head of terms were agreed, Ansa had not been excluded from the site. Both Ansa and Ford recognised that their relationship had not changed since head of terms were agreed. Whilst Ford had the right to call for an under-lease, this made it clear that it had no right of possession. Further, Towerbeg did not have good reason to believe that Ansa had parted possession with the site. All that was evident was that Ford had occupational control of its business on the site.

The Court also ruled that landlords cannot refuse consent for an under-lease because the under-tenant is not bullet proof. Even if there had been a breach then the Court would have granted relief from forfeiture because if there had been a parting of possession, it was to a well established company which would be carrying on the same business at the site.

Accordingly, Towerbeg's consent to under-lease to Ford had been unreasonably withheld.

Moving on to the issue of insolvent tenants next and the case of RVB Investments Limited v Alastair Roderick Bibby (2013).

In that case, a corporate landlord of business premises (RVB) suffered the problem of an insolvent tenant.

Thankfully for the landlord, there was a valid surety for the now insolvent tenant and the landlord therefore attempted to rely on its underlying right to require the surety (Bibby) to complete a lease for the residue of the term. The landlord also sought to claim a reviewed rent from the surety as well as a payment in respect of the rates liability.

The surety refused and also argued that (i) as the rent review procedures in the lease had not been followed, the landlord could not claim an increase rent in any event and (ii) that a notice under section 17 of the Landlord and Tenant (Covenants) Act 1995 ("the 1995 Act") was needed in order for the landlord to be able to enforce the liabilities contended for.

The matter went to Court and it was determined as follows:

1 - The Landlord was entitled to an order for specific performance requiring its insolvent tenant's surety to execute and complete a new lease for the residue of the term;

2 - No notice under section 17 of the 1995 Act was needed to enforce such a liability and the surety would be liable for all rates liabilities accrued; and

3 - The landlord could not, however, charge a higher rent, as it had not followed the procedures in the lease for rent review. Finally, we end with the decision in Alan Wilkinson and 7 others -v- Kerdene Limited (2013).

In that case the principle that a positive covenant does not run with land when it is sold was revisited. As we are all aware, such a covenant can only be enforced against a successor in title by express agreement or if it falls within the "benefit and burden" principle established in Halsall -v- Brizell [1957] 1 Ch 169 namely that a party may not take the benefit of a covenant without also accepting the corresponding burden. In that case, the question to be decided was whether the owner of a holiday village was entitled to enforce positive covenants against bungalow owners in the village regarding the cost of maintaining the communal parts of the village (i.e. the roads, car parks and recreational facilities).

At first instance it was held that Kerdene could enforce payment from the bungalow owners on the basis that the obligation to pay correlated with the right to use the access road.

The bungalow owners appealed on the basis that they considered the payment obligations to attach to the repairing covenant rather than the rights of access and to use the facilities.

The Court of Appeal disagreed however and considered that, whilst some of the bungalow owners were successors in title to the covenants, the payments were related to the rights granted in their favour (i.e. the use of the communal facilities) which they continued to exercise. Although the continued exercise of those rights was not made expressly conditional upon payment, the payment was intended to ensure that they remained capable of being exercised. Indeed, the payment, at least in substantial part, was intended to provide a contribution to the cost of maintaining the roads and other facilities over which the owners of the bungalows were granted rights. Further, the covenant, by the original site owner, to carry out the repairs was not sufficient to sever any link between the payment covenant and the rights enjoyed by the bungalow owners. Therefore the first instance decision was upheld and the payment obligations continued.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Richard Flenley
In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions