Chartered Trust plc v Davies

Chartered Trust plc v Davies (1997) 76 P&CR 396

Whether lease could be repudiated due to nuisance from adjoining premises

Facts

Chartered Trust (CT) were mortgagees in possession of the freehold interest in a shopping-centre and Davies a tenant of one of the units. CT later let the neighbouring unit to a pawnbroker. The pawnbroker darkened the windows and only allowed one customer at a time, resulting in queues congregating in the common parts and deterring custom. Davis complained for 18 months but CT took no action, and when Davis’ business failed, he returned the keys and sought repudiation of the lease. CT sued for arrears of rent.

Issues

Davis argued letting the adjacent unit to a pawnbroker and failing to prevent their creating a nuisance amounted to a breach of the landlord’s covenant not to derogate from his grant. The premises became materially less fit for the purpose for which it was let, and the lease was, therefore, repudiated. CT argued derogation from grant only arose where the landlord was responsible for some act which rendered the demised premises physically or legally impossible to use. Letting to the pawnbroker did not amount to so substantial an interference with Davis’ use of the premises as to amount to a derogation of grant. Further, the landlord was not obliged to enforce the contractual obligations of one tenant as against another.

Decision/Outcome

The lease was repudiated. Letting a unit to a pawnbroker did not necessarily amount to a derogation of grant in and of itself, but the manner in which the pawnbroker’s business was run, caused a nuisance to Davis. A derogation occurred when the landlord failed to take steps to stop the nuisance from continuing, thereby rendering the demised premises materially less fit for purpose than when the grant was made.