Can a landlord over-rule rights given to a tenant in a lease?

A review of a dispute between Marks & Spencer and Gyle Shopping Centre over plans to build a new Primark Store.

A recent case has looked at the rights granted to a tenant in terms of their Lease to use common areas and what power a landlord has to alter what are common or shared areas partially used by a tenant.

In this case, Marks & Spencer lease a unit in The Gyle in Edinburgh. Marks & Spencer subsequently ended up in legal dispute with their Landlords (The Gyle) over their rights to use shared areas of the shopping centre for parking. The Gyle were planning to build a new Primark Store in the shopping centre and to do so would take away some of the parking spaces. These spaces were identified as shared areas in the Marks & Spencer Lease.

The Gyle had argued it was entitled to construct the building and would not be acting unlawfully or in breach of Marks & Spencer’s Lease in doing so. They claimed that any interest held by Marks & Spencer in terms of the Lease did not include a right to prevent The Gyle from granting a Lease to Primark and permitting the construction of a store on an area of ground presently forming part of car parking areas.

Within the Lease, there was provision for a management committee to be appointed to manage areas used in common the parking areas fell within this. Marks & Spencer were represented on the management committee and the management committee approved The Gyle’s proposed plans for expansion. The Gyle tried to argue that, as Marks & Spencer were represented on the committee, that they had in fact consented to this.

The Court ruled that, as Marks & Spencer had been given right to use the car parking areas within their Lease, any proposal by The Gyle to alter these provisions would in effect affect and interfere with Marks & Spencer’s right as tenants in terms of the Lease. The Court ruled that the management committee did not have the ability to permit construction on these shared areas as the Lease entitled Marks & Spencer to use them. This right could not be varied by the management committee without Marks & Spencer’s specific approval or consent and signed by them.

Arguably, Marks & Spencer probably had an ulterior motive to try and prevent Primark opening within the same shopping centre but it is interesting to consider (a) how far a Landlord would go to try and secure a variation of the rights contained within the Lease and (b) how the Court interpreted who had the rights to vary the use of these shared areas.

 

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July 15, 2014