Key Commercial Property Update — May 2014: two noteworthy judgments in commercial landlord and tenant law

By Richard Evans and Liam Bell

Recent weeks have seen two important decisions handed down in cases concerning commercial (and, in particular, retail) property. One relates to the developing relationship between user clauses and the Competition Act, and the other to the very common issue of refunds of rent claimed by a tenant when exercising a break clause.

Since April 2011, leases and other types of land agreement have been subject to the terms of the Competition Act 1998, which prohibits the prevention, restriction or distortion of competition within the UK. In what is the first major case on the subject, the Central London County Court has ruled that a proposed restrictive user clause in a retail lease breached this prohibition and did not meet the statutory criteria for exemption.

The tenant, Martin Retail Group (MRG), operated a newsagent’s as part of a retail parade of 11 shops in Crawley, East Sussex. Its landlord, Crawley Borough Council had established a letting scheme for the parade, whereby each lease restricted the user of the corresponding premises to a different type of trade. One of these shops was run as a grocery store…

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