HLS Leisure Limited v Darville and Son Limited

Mr Justice Adam Johnson: The Issue and the Outcome

1. The central issue in this case is about whether a landlord should be liable for noise and hygiene nuisance caused by ventilation ducting running from premises occupied by a tenant and used as a fast food takeaway.

2. HHJ Melissa Clarke (“ the Judge ”) thought not. She concluded that the ventilation ducting was part of a larger fixture forming part of the demise to the tenant under its lease. That being so, the landlord could not be liable without some evidence of active or direct participation in the nuisance, and there was no such evidence.

3. The claimant now seeks to appeal that outcome, and argues that the Judge was wrong to consider that the ventilation ducting was part of the demise to the tenant. It argues that it was not part of the demise, and so the landlord should be liable directly in nuisance as the occupier and/or manager of the ducting.

4. For the reasons which appear below, I have come to the view that the Judge was correct that the ventilation ducting formed part of the demise to the tenant, so that the landlord has no liability in nuisance. The appeal must therefore be dismissed. The Background

5. The landlord referred to is a company called Darville and Son Limited. The tenant is called the Gourmet Grill. The premises occupied by the Gourmet Grill are part of a much larger, mixed use building in Windsor, Berkshire called Darville House. Darville and Son are the freeholder.

6. Gourmet Grill is not in fact a party to the present proceedings. Instead, the proceedings are between another tenant of Darville House, HLS Leisure Limited (as Claimant), and Darville and Son (as Defendant). They had a dispute about unpaid rent which resulted in Darville and Son effecting a re-entry to HLS Leisure’s premises and forfeiting their lease. HLS Leisure countered with the proceedings in which (amongst other things) they made a damages claim for nuisance against Darville & Son, including damages for lost profits.

7. I should say more about the claim in nuisance.

8. HLS Leisure run a business called Pinks Gentlemen’s Club. This is also based in Darville House. Unusually, the entrance to Pinks is not at street level but instead is via a covered loading bay at the back of Darville House. The ventilation ducting I have mentioned, which forms part of the kitchen extract system from the Gourmet Grill, runs through the loading bay. HLS Leisure’s nuisance claim was brought on the basis that the ventilation ducting was unacceptably noisy and was also leaking grease into the loading bay. This was said to be a problem for HLS Leisure, because it created an uncomfortable environment for Pinks’ customers and staff. The Judge agreed there was a nuisance in law, caused both by noise from the ventilation ducting and from the leaking of grease. But as I have said, she did not think that Darville & Son, the landlord, was responsible for it.

9. The Judge made certain findings which it is useful to note. As regards the premises occupied by Pinks, HLS Leisure had first entered into a lease as long ago as 2001. It entered into a new lease for 10 years in June 2017, with effect from 1 January 2017. Under the terms of that lease, the loading bay was treated as among the common parts of Darville House, falling within the responsibility of the landlord.

10. As to the premises occupied by the Gourmet Grill, this had originally been used as a hairdressers, but appears to have been vacated in about 2007, and following a long void period Darville & Son made a planning application for a change of use in 2015. This was granted shortly afterwards and a change of use approved to allow the premises to operate as a restaurant/takeaway (Classes A3/A5), but subject to certain conditions including as to noise levels and as to the installation of ventilation and filtration equipment in the commercial cooking area.

11. Gourmet Grill entered into a 20 year lease on 3 October 2016. Consistent with the planning permission by then obtained, this described the “ Permitted Use ” as use within Class A3 or A5. At trial, there was some dispute about who had installed the ventilation ducting. HLS Leisure said that the landlord, Darville & Son, must have done it, after obtaining the authorisation for change of use, so as to attract a new tenant like Gourmet Grill. The Judge disagreed. She thought it more likely that the Gourmet Grill had installed the ventilation ducting as part of their fit-out after taking their lease, and likely had run it through the loading bay without seeking formal consent from Darville & Son (see at [35]). She noted that those fitting out fast food places often take a pragmatic approach to such things, without worrying too much about the legal niceties.

12. At [4] of her Judgment, the Judge noted the route taken by the ventilation ducting: “The extract system has been ducted out of the unit now occupied by the Gourmet Grill so that it runs horizontally through the loading bay which provides access to [Pinks], and terminates at the end of the loading bay, without a vertical return”. The Judge’s Decision

13. The Judge dealt with the issue of the ventilation ducting at [57]-[64] of her Judgment. Her reasons for concluding that it fell within the demise to the Gourmet Grill, such that Darville & Son had no responsibility for it in law, were in summary as follows (Judgment at [64]): i. The premises demised to the Gourmet Grill under its lease were defined as “ the Property ”, comprising at its core the Ground Floor and Basement of 14 Oxford Road East, Windsor (which the Judge referred to as “ that land ”, in order to resolve an internal inconsistency in the drafting – Judgment at [61]). ii. The demise however also included “ fixtures of every kind that are from time to time in or on that land ” (my emphasis added), except “ any fixtures installed by the Tenant [Gourmet Grill] ... that can be removed from that land without defacing it .” iii. The ventilation ducting was a fixture. Moreover, it was a fixture at least in part “ in or on that land ” – i.e., it was at least in part in or on the Ground Floor and Basement of 14 Oxford Road East, and necessarily so because it was part of the kitchen extract system designed to vent fumes from the Gourmet Grill’s cooking area. iv. Given that, the ventilation ducting on the face of it fell within the demise to the Gourmet Grill. v. It did not fall within the exception which would take it outside the demise. That was because, although no doubt capable of removal, there was evidence to suggest that removal of the ventilation ducting would result in “ that land ” being defaced, “ not least because its removal will leave a large hole in the wall into the loading [bay] which appears to have been made without formal consent of [Darville & Son] ... ”. Conversely, there was no evidence to suggest that removal could be achieved without defacing “ that land ”. The Present Appeal

14. For the Appellant, HLS Leisure, Mr Warwick KC argued as follows: i. the ventilation ducting his clients were complaining about was not part of what the Judge called “ that land ”, because it was in the loading bay, which was part of the common parts of Darville House and was some way away from the Ground Floor and Basement of 14 Oxford Road East, Windsor; ii. neither was the ventilation ducting a fixture “ in or on that land ” – Mr Warwick KC said this point was not explored in evidence, and in any event it is wrong to regard the ventilation ducting (which in reality comprises a fan and associated duct work) as a single continuous item, or as being “ in or on ” the relevant land in any meaningful sense when only a small part of it is; and iii. the Judge was wrong to conclude that removal of the ventilation ducting would result in defacement of “ that land ”, because defacing something involves spoiling or disfiguring its appearance permanently, and any damage in this case, such as leaving a hole, could easily be blocked and repaired. Discussion and Analysis The Relevant Provisions

15. I should start by setting out the relevant provisions of the Gourmet Grill lease.

16. Clause 2.1 provides that “ The Landlord [Darville & Son] with full title guarantee lets (sic) the Property to the Tenant [Gourmet Grill] for the Contractual Term ”. “ Property ” is defined in clause 1.1 as follows (so far as relevant): “Property: The Ground Floor and Basement of 14 Oxford Road East, Windsor, and internal stairs leading from the ground floor of the Building to the Basement (the floor plan of which is shown edged red on Plan 1) bounded by and including: ... (f) all the Landlord’s fixtures and fittings and fixtures of every kind that are from time to time in or on the Property whether originally fixed or fastened to or on the Premises or otherwise except any fixtures installed by the Tenant or any predecessors in title that can be removed from the Property without defacing it”.

17. Looking at this language, the Judge was plainly correct to note some anomalies in the drafting: there is a circularity in the definition of “ Property ” itself including two references to the term being defined, and the reference in the same sub-paragraph to “ the Premises ” is clearly a mistake since that is not a defined term at all under the Gourmet Grill lease. So I think the Judge was correct to construe sub-paragraph (f) by replacing the internal references to “ the Property ” and to “ the Premises ” with references to “ that land ”, being a reference back to the Ground Floor and Basement of 14 Oxford Road East, Windsor mentioned in the main part of the definition. That results in the following reading of the definition (the Judge’s interpolations are underlined): “Property: The Ground Floor and Basement of 14 Oxford Road East, Windsor, and internal stairs leading from the ground floor of the Building to the Basement (the floor plan of which is shown edged red on Plan 1) bounded by and including: ... (f) all the Landlord’s fixtures and fittings and fixtures of every kind that are from time to time in or on that land whether originally fixed or fastened to or on that land or otherwise except any fixtures installed by the Tenant or any predecessors in title that can be removed from that land without defacing it”. On the face of it, does the ventilation ducting fall within the definition of “ Property ”?

18. Next, I think it useful to consider the question of the ventilation ducting under the definition, but leaving aside for the moment the possible effect of the exception.

19. To begin with, it is clear that embraced within the definition, and therefore within the scope of the demise, are the fixtures and fittings referenced in sub-paragraph (f). That seems obvious enough, but I mention it because one of Mr Warwick KC’s points was to emphasise the words “ bounded by ” in the introductory wording of the definition, which he said led to the conclusion that the ventilation ducting could not be part of the demise, because it was outside the boundary of the Ground Floor and Basement of 14 Oxford Road East as marked on Plan 1 – instead, it was in the loading bay area.

20. I do not think this interpretation can be correct, however. It ignores the words which follow “ bounded by ”, namely “ and including ”. To my mind, the latter words make it clear that the items which are then set out – including those described at sub-paragraph (f) – are intended to be within the scope of the demise. They are expressly included within it. That follows as a straightforward matter of language.

21. It is also logical under the scheme of the lease, which amongst other things imposes an obligation on the Gourmet Grill to keep the Property demised to it clean and tidy and in good repair (clause 26.1). It makes good sense to think that the scope of that obligation was intended to include proper maintenance by the Gourmet Grill of the ventilation ducting, running from its premises, which was such an integral part of its day to day business.

22. I do not think there is anything in Mr Warwick KC’s further point that the ventilation ducting did not exist at the date of the lease – bearing in mind the Judge’s conclusion that it was constructed afterwards by the Gourmet Grill itself, as part of its fit-out. As I read the words of the definition, they are agnostic as to precisely when fixtures may come to be added: “ ... fixtures of every kind that are from time to time in or on that land whether originally fixed or fastened to or on that land ...” (my emphasis).

23. The next point is as to the physical connection between what I have called the ventilation ducting and what the Judge called “ that land. ”

24. Assuming the ventilation ducting is one single unit or system, it seems to me the Judge was correct to regard it as being a fixture “ in or on that land ”. In the Judge’s terminology, “ that land ” was effectively the restaurant/takeaway unit occupied by the Gourmet Grill, including the commercial cooking area. If that is correct, then the ventilation ducting was plainly “ in or on that land ”. It had to be, in order to perform the required function of providing ventilation and filtration from the cooking area. It does not seem to me to matter at all that only part of it was actually “ in or on that land ” in the physical sense. If it was, in fact, a single unit or system, then it is entirely natural to speak of it being in the unit occupied by the Gourmet Grill, even if only part of it was actually inside the unit, and the remainder of it outside and stretching into the loading bay area.

25. In my opinion, that conclusion is consistent with the general view taken by the law as to when something becomes part of the land demised to a tenant. In Legal & General Assurance Society Limited v. Expeditors International (UK) Ltd [2006] EWHC 1008, Lewison LJ said at [32] (my emphasis added): “ ... in my judgment the premises will include anything which in law has become part of the premises by annexation . A fixture installed by the tenant for the purposes of his trade becomes part of the premises as soon as it is installed, although the tenant retains a right to sever the fixture on termination of the tenancy.”

26. These statements of principle suggest it is entirely possible for an item which is partly in or on the relevant premises, but partly external to it, nonetheless to be regarded as part of those premises, and therefore part of the demise to the tenant. That was the view taken by the Judge as regards the ventilation ducting, and I agree with it.

27. As to the question whether the ventilation ducting was in fact a single unit or system, this is the sort of assessment which involves an evaluation. In my opinion, there was sufficient evidence to allow the Judge to come to the conclusion she arrived at. It is true that the evidence on the point is limited, but what evidence there is firmly supports the Judge’s view. Mr Warwick KC’s main argument was that the parties’ single joint expert Mr Gosling, whose focus was on the alleged noise nuisance, referred in his Report at para. 3.5 to “... a fan and associated duct work .” Mr Warwick’s point was that HLS Leisure’s complaint was only ever about the ducting in the loading bay, and Mr Gosling’s report showed that it was wrong to regard this as part of a single item stretching back to the Gourmet Grill.

28. In fact, the relevant section of para. 3.5 of Mr Gosling’s Report reads as follows (emphasis added): “ The kitchen extract system serving Gourmet Grill contains a fan and associated ductwork , which vents to the underside of the service yard. The fan is located externally ...”.

29. Read as a whole, this appears to me to be describing a single unit or item – a kitchen extract system – of which the ventilation ducting forms an integral part. The Judge thought so too: at [48] of her Judgment she referred to “ the Gourmet Grill’s extract equipment ”. At [64], in the section setting out her main reasoning on the issue now under appeal, she referred to “ the extractor and duct ”, and said: “ I am satisfied that the extractor and duct is a fixture, which must at least in part be in and on the land . ..”. In approaching things in that way, she was clearly regarding the kitchen extract system including the ventilation ducting as one indivisible whole. That seems to me to be correct in principle. At any rate, the Judge’s conclusion involved an evaluation she was entitled to come to on the evidence before her. Mr Warwick KC said the point was not tested in evidence, but it does not seem seriously to have been contested. HLS Leisure’s own Particulars of Claim, at para. 8, referred to “ The Duct, and a fan associated with it ”, and so acknowledged a degree of association between the elements described, consistent with them forming parts of an integrated whole. Is the ventilation ducting excluded by means of the exception?

30. The threshold criterion required to engage the exception is satisfied: that is that the relevant fixture must have been installed by the Tenant. The Judge found that it was (see above at [11]).

31. The remaining issue then is whether it is a fixture which can be removed from what the Judge called “ that land ” without “ defacing it ”. If it can, then it falls outside the demise to the Gourmet Grill.

32. On this point, Mr Warwick KC submitted that defacing something requires a degree of permanent damage or disfigurement, which cannot be remediated. He argued that if it is correct to regard the kitchen extract system as a fixture , it must follow that it is capable of being removed without defacing anything, because it is in the nature of a fixture that it must be possible to “ remove the article without causing undue damage to the premises ” (Dowding & Reynolds, Dilapidations in Modern Law and Practice , 7 th Edn. At para. 25-20). Thus, said Mr Warwick KC, the meaning of “ deface ” must be construed in light of the law relating to fixtures, and in the context of the present case, that means construing the word so that it catches only the more “ fixed ” type of fixtures.

33. Part of the problem with this point is that the Judge’s reasoning was quite compressed. She said only the following, at [64]: “Although I have found that it has been installed by Gourmet Grill as tenant, there is no evidence before me to suggest that it ‘can be removed from that land without defacing it’, and some evidence to suggest that it cannot, not least because its removal will leave a large hole in the wall into the loading [bay] which appears to have been made without formal consent of the Defendant, and so I cannot find that the exclusion applies, in my judgment.”

34. Although shortly expressed, it seems to me that this conclusion was justified, on the facts as found. Once again, the Judge was carrying out an evaluation, which an appeal court should be slow to interfere with: see FAGE UK Limited v. Chobani UK Limited [2014] EWCA Civ. 5 , per Lewison LJ at [114]-[115]. By the time the Judge came to deal with the exception in sub-clause (f), she had already determined that the whole kitchen extract system, including the ventilation ducting, had to be regarded as a single fixture, forming part of the unit operated by the Gourmet Grill, to which it had been added in order to comply with planning conditions in order to allow that unit to operate as a Class A3/A5 restaurant/takeaway.

35. In my opinion, the question whether removal would cause defacement should be looked at in that overall practical context. I think this is what the Judge meant when she referred obliquely to “ some evidence ”, without spelling it out – this was a reference back to the earlier parts of para. [64] and to her Judgment as a whole. Mr Warwick KC emphasised the Judge’s point about any removal being likely to leave a large hole, but even for the Judge that was not the whole picture, only part of it (“ not least because its removal will leave a large hole ... ”). The wider picture more than justifies the conclusion she came to. It is an entirely fair conclusion to say that it would deface what the Judge called “ that land ”, which was a commercial unit let for use as a restaurant/takeaway, to remove from it the whole of a kitchen extract system necessary to allow that user to occur lawfully. Viewed in this way, the extract system seems to me to be just the kind of “ fixed ” type of fixture Mr Warwick KC himself conceded could not be removed without causing serious problems. I therefore agree with the Judge’s conclusion on the question of the exception. Conclusion and Disposal

36. In light of the above, the Appeal must be dismissed. I am hopeful that the parties can agree all relevant consequential matters following circulation of the draft of this Judgment, and submit an agreed Order accordingly. If not, any outstanding matters can be resolved when the Judgment is handed down.