Iceland Foods Ltd v Aldi Stores Ltd (Rev 1)

A lease will not ordinarily be construed as prohibiting a landlord’s alteration of adjoining premises merely because a plan identifies an existing building by coloured edging. The description identifies the land to which the relevant rights relate; it does not necessarily impose a permanent limit on the building’s footprint.

A term may be implied into a detailed commercial contract only where it is necessary for commercial or practical coherence, or is sufficiently obvious, and can be clearly expressed without contradicting the express terms. A court should address any actionable interference with granted rights directly. It should not imply a blanket prohibition on a category of activity where narrower contractual remedies are available.

Iceland Foods occupied a unit adjoining Aldi’s store under a 25-year underlease. Aldi proposed extending its store, including by altering its frontage and rear building line, and began preparatory works involving hoardings and safety scaffolding.

Iceland sought injunctive relief, arguing that the extension was prohibited either by the proper construction of the lease or by an implied term. An interim application had previously been adjourned by Warren J. The parties invited Mann J to determine the principal issue finally on Aldi’s summary judgment application. The subsidiary complaints concerning particular interference with access, signage and related rights were not fully argued.

1. Construction. The references in the underlease to the land edged blue identified the land in respect of which rights were created. They did not mean that Aldi’s unit had to remain permanently within its existing physical footprint. The head lease itself contemplated alterations and additions with the landlord’s approval, which was inconsistent with Iceland’s proposed construction.

2. Maintenance contributions. The provisions requiring Iceland to contribute 36 per cent of certain costs did not require the footprint to remain unchanged. If an extension generated costs outside the repairing obligations relating to the original units, those additional costs would not necessarily be recoverable. The provision could therefore operate sensibly without the proposed restriction.

3. Car parking and access rights. Aldi could not use an extension, together with its power to regulate the car park, to cause an actionable interference with Iceland’s rights. The appropriate remedy would address the particular infringement. A blanket prohibition on increasing the footprint was unnecessary and went beyond what the rights required.

4. Implied term. Applying the principles summarised in Marks & Spencer v BNP Paribas [2015] UKSC 72, the proposed term was neither necessary for business efficacy or commercial coherence nor obvious, reasonable or capable of clear expression. The officious bystander would not have received an answer equivalent to “of course”.

5. The claim that the extension was prohibited by construction or implication therefore failed. The court invited the parties to draw up an order containing any appropriate declarations or other orders. The subsidiary claims were not determined.

The judgment was a first-instance determination. An interim application had previously been adjourned by Warren J on 25 April 2016. Mann J then determined the principal construction and implied-term issue finally on Aldi’s summary judgment application.