• Home
  • Latest
  • Tribunal modifies lease covenant to allow new private members' club in Berkeley Square

Tribunal modifies lease covenant to allow new private members' club in Berkeley Square

Posted on 21 January 2020

In Berkeley Square Investments Limited – v - Berkeley Square Holdings Limited [2019] UKUT 0384 (LC) a tenant successfully widened the user provision in its lease, by satisfying two of the statutory grounds under S.84 of the Law of Property Act 1925, to allow use of the premises as a private members club.

Facts

The applicant is the tenant of 45 Berkeley Square & 45 Hays Mews under a lease acquired in 2004, which expires in 2070. The permitted use of the premises was offices with ancillary residential use. The respondent is the landlord and freehold owner of the premises and the wider Berkeley Square estate.

No. 45 has not been substantially used as offices since around 2008 and, in 2013, the tenant decided that the premises would be suitable for use as a private members' club. In February 2014 the tenant made a planning application to convert the premises.

The planning permission was granted on 7 March 2016. In the meantime, in 2015, the landlord granted a lease of neighbouring no. 46 to Caprice Holdings, to be used as the new Annabels club.

The landlord opposed any change of use under the lease to permit the operation of a club at no.45.

Grounds

The tenant sought permission from the Tribunal to modify the user clause under three grounds:

  1. the "reasonable user" ground- planning consent and a premises licence for 45 and 46 Berkeley Square demonstrated that private members' club use was reasonable;
  2. "obsolescence" - there was no demand for office space in Grade 1 listed buildings; and
  3. "no injury" to the landlord - the rent for a private members club would be higher than the current rent.

Landlord's response

The landlord's principal objection was made on "estate management" grounds as the landlord required a balanced portfolio of assets.

Decision

The Tribunal did not accept that there would be any effect on the landlord's wider estate and found in the tenant's favour on grounds (a) and (c), allowing the lease modification subject to the inclusion of certain additional restrictions in the lease. It was relevant that the lease term did not expire until 2070 and the tenant only sought to modify the user clause. The Tribunal also found that the Landlord suffered no injury.

Final Thoughts

The key point here is that a landlord's refusal to consent to a tenant's plans will not always be the final word. Landlords should be prepared to explain why a restriction is beneficial if they are to successfully defeat an application to modify or discharge it.

How can we help you?

How can we help you?

Subscribe: I'd like to keep in touch

If your enquiry is urgent please call +44 20 3321 7000

I'm a client

Please enter your first name
Please enter your last name
Please enter your enquiry
Please enter a value

I'm looking for advice

Please enter your first name
Please enter your last name
Please enter your enquiry
Please select a department
Please select a contact method

Something else

Please enter your first name
Please enter your last name
Please enter your enquiry
Please select your contact method of choice