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Iceland Foods Ltd v Aldi Stores Ltd [2016] EWHC 1134 (Ch)

The claimant and the defendant food stores, Aldi and Iceland respectively, occupied adjoining buildings in Cambridge. The lease (Aldi’s lease), under which Aldi held its land (the blue land), dated 24 May 1996, provided, at clause 5.6.1.2, that the tenant covenanted not to ‘build, erect or construct or place any new or additional building or structure on the premises’.
In July, Aldi leased unit two to Iceland. In clause 7.6 of Iceland’s lease, Aldi covenanted to observe the head lease. A dispute arose when Aldi sought to extend its building. The work required partitioning off of areas around its store with hoarding and the erection of safety scaffolding platform over the entrance to Iceland. Iceland brought a claim, seeking to stop Aldi from carrying out the proposed extension.
Iceland submitted, first, that, on the true construction of its lease, it prohibited the extension of the blue land by further building. It contended that references to the blue land in clauses 7.6 and 7.8 of the Iceland lease demonstrated a unit whose entrance was not to be moved, that the parties had to have assumed that the blue land meant blue land forever, and that it could not be extended.
Secondly, if that construction was not correct, Iceland submitted that such a term was to be implied. It contended that a combination of clause 7.6 of Iceland’s lease (landlord’s covenant to observe the covenants in Aldi’s lease), and clause 5.6.1.2 of Aldi’s lease (prohibition on erecting new buildings) meant that the latter clause was incorporated into Iceland’s lease so that Iceland could enforce it to stop the proposed building works.
The claim would be dismissed.
The court did not agree with Iceland’s submissions in respect of construction of its lease. The purpose of describing the relevant area in Iceland’s lease as being the land edged blue was to describe the land in respect of which rights had been created. It had not, by some process of construction, imported an indication that that unit was always to be the same and it would not frustrate those rights if the building was extended. Iceland’s attempt to construe a restriction out of the lease was completely unsustainable. There was nothing in Iceland’s lease which amounted to an express prohibition on Aldi’s proposed extension. Further, Iceland’s proposed implication failed all the tests in authority. Looking at the matter in the round, there was nothing in the proposed implied term which satisfied those tests.
For further advice contact Tom Warrender, Head of Commercial Property, or John Gordon Head of Commercial Litigation.