Don't Take your Eye off the Mall

Published 11 February 2016

You may be familiar with the expression 'Derogation from Grant'. The underlying principle is that what is given by one hand cannot be taken away by the other. Courts often imply a covenant on a landlord not to derogate from what it has granted in a lease.

The principle was famously applied against a landlord of a small retail arcade. One unit was let as a café and another was let to a pawnbrokers. The combined effect of the café's external seating and the queues for the pawnbroker disrupted the business of another tenant. The court held that the landlord had become obliged to take steps to mitigate the disruption in order to protect the commercial interests of that tenant, which he had failed to do.

It was crucial in that case the landlord had retained the common parts and a rule-making power for the better management of the mall. His lack of action to respond to the concerns raised by one of his tenants was held to constitute a derogation from grant, the usual remedy for which is damages.

Landlords therefore need to be alert to the conduct of their tenants and whether that conduct might materially affect another. Where landlords have the ability to step in to control such conduct, they must act reasonably and responsibly to avoid the risk of litigation against them.

So there is a real benefit in any multi-let environment of knowing your powers reserved under the leases and ensuring you monitor what is happening 'on the ground'.