Iconic Mayfair restaurant Hush has won a High Court battle with its landlord over an option to extend its lease. The case centred on whether the option to extend the lease could be reinstated by the court after it was terminated by the freeholder during the COVID-19 pandemic.
Hush held a lease of restaurant premises at 8 Lancashire Court in Mayfair, central London. On 24 March 2011, its landlord granted an option for Hush to call for a further lease when the existing lease expired in 2024. This further lease would allow Hush to continue trading from the property until 2030. The option included a termination provision entitling the landlord to terminate the option if Hush fell into arrears of rent. That termination provision mirrored the wording of the forfeiture clause in Hush's lease.
In 2020 and 2021, Hush fell into arrears of rent as a result of the restrictions on restaurant trade imposed as a result of the pandemic. Hush and its landlord negotiated and agreed a number of concession agreements in relation to the period Hush was unable to trade from the property. They were negotiating a further concession agreement and terms had been agreed but before completion of this, the landlord terminated the option in reliance on the rent arrears. The landlord did not, however, seek to forfeit the lease.
Hush settled the outstanding arrears after the option had been terminated and sought relief from forfeiture of the option. The main issue in the case was whether Hush satisfied the relevant pre-conditions for being able to seek relief from forfeiture and, if it did, whether relief should be granted. The pre-conditions that Hush needed to satisfy were:
- That the option created a proprietary interest. The landlord sought to argue a novel point, that not only did the interest have to be of a proprietary nature, but that it also had to be "sufficiently proprietary"; and
- That the termination provision in the option agreement represented a security for the performance of Hush's obligations.
HHJ Klein held that both of these pre-conditions had been satisfied and that relief from forfeiture of the option should be granted. It had been agreed by the landlord that if relief was to be granted then such relief was to be on an unconditional basis, so this was the nature of the relief granted by the court. The net effect of this judgment is that Hush can continue to trade successfully from the property until 2030 and that the landlord is unable to recover possession of the property following expiry of the existing lease in 2024.
The landlord intends to seek permission to appeal the decision, on the basis that Hush did not satisfy either of the pre-conditions for making an application for relief from forfeiture. We will keep you updated on any further developments in relation to this case, as they arise.