Do retailers have any control over landlords' proposed schemes?

Retailers are finding increasingly that their landlords are looking to maximise returns on retail investments by extending existing units or constructing new retail space in what were previously common areas. Retailers often do not share their landlords' enthusiasm for the particular proposals.

The planning process provides only limited protection for retailers who want to object to landlords' proposed schemes. However, the recent case of B&Q -v- Liverpool & Lancashire Properties Limited has shown that retailers should not simply give up without a fight. Their existing leases may contain sufficient rights to enable them to prevent the landlord creating additional retail space.

In that case, B&Q were the tenant of Unit 1 at the Bidston Moss Retail Park near Liverpool. The adjoining unit, Unit 2, was 10,000 sq ft and the landlord decided to extend this by a further 3,500 sq ft. The landlord successfully obtained planning permission despite B&Q's objections.

B&Q were concerned about the potential effect of the extension on their use of Unit 1. Although the B&Q unit had its own service yard, the service road which passed at the rear of Unit 2 was the sole access to the B&Q unit and B&Q's delivery vehicles regularly used the service yard at the rear of Unit 2 in accordance with the rights granted under the lease.

The landlords' proposals would mean that the overall area of the Unit 2 service yard would be reduced by 26 per cent with the turning area being reduced from 28.5 metres in diameter to 21 metres.

B&Q successfully applied to the court for an injunction to prevent the works being carried out. The basis of the claim was that the proposed extension would interfere with the right of B&Q under the lease to use the service yard at the rear of Unit 2.

The court decided that the test to be applied was that interference with a right of way will only be actionable if the interference is substantial; and it is substantial where it interferes with the reasonable use of a right of way.

It was wrong to focus on whether what the tenant is left with after the works have been carried out is reasonable. The correct test is whether it is reasonable for the tenant to continue to insist on the use of the whole area over which the lease originally granted rights.

The court's approach was that a tenant should be able to exercise the rights which it has bargained for in the lease. Even if those rights are more extensive than reasonably needed (for example a right of way over a road which is 10 metres in width when the tenant only really needs to use 4 metres) the landlord should not be able to turn around at a later date and say that 4 metres is all that is reasonably needed and therefore the landlord can do what it likes with the remaining 20 ft of road. If the tenant has contracted for "relative luxury" it should get it.

Here the proposed works, based on the evidence relating to traffic movements and turning circles, would have a substantial impact on B&Q. The fact that B&Q had its own service yard which it could use instead was irrelevant.

B&Q's delivery vehicles would not be able to substantially exercise the right of way over the Unit 2 service yard as conveniently after the extension had been carried out as currently existed. Accordingly B&Q were entitled to prevent the works being undertaken.

A good result for B&Q and for retailers generally. No doubt retailers will look more closely at their leases in the future to see what protection they have to prevent these types of schemes.