Landlord and tenant - right to use estate roads

A lease of a unit on an industrial estate granted the tenant a right of way over the roads on the estate, provided that the tenant observed all regulations that the landlord made relating to the parking or unloading of vehicles or the direction of traffic. The permitted use of the premises was as a café, and the lease contained the usual covenant by the landlord for quiet enjoyment.

An estate road led directly from the main road to the café. However, it was also possible to reach the café by a more circuitous route, from a different exit off the main road and via a road that went around the estate before reaching the café.

The landlord planned to sell off part of the estate to be developed as private housing. In order to shield the residential area from the industrial area, it erected a large wall across the road forming the main access to the café. This meant that the café could only be accessed via the longer route.

The tenant suffered loss of business at the café as a result, and issued proceedings against the landlord for breach of the covenant for quiet enjoyment and derogation from grant.

The landlord argued that the power to make regulations controlling the direction of traffic included a power to prevent access over one of estate roads. The Court of Appeal disagreed. It found that all that the landlord was entitled to do was direct which way traffic should circulate along the estate roads (e.g. clockwise or anti-clockwise). In any event, since the premises were let as a café, the landlord was in breach of its covenant for quiet enjoyment. Those who wished to use the café should be able to get to it without obstruction along the highway.

Things to consider

It appears that the landlord would have been within its rights if it had directed that traffic must enter the estate from the main road via the other, less convenient, entrance and exit it via the access point nearest the café. Although this would not have achieved the landlord's aim of screening off the industrial estate from the housing, it would have had a similar effect on the tenant's business, and the tenant would not have been able to prevent it. This case emphasises the importance for tenants of scrutinising the rights granted by a lease to check that they are sufficient for the purposes of their business. Landlords need to look to the future when granting leases, so that plans for redevelopment are not inhibited.

Hunte v E Bottomley & Sons Ltd

This analysis was written by Sarah Allen, associate in Wragge & Co's Real Estate group.

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