HLS Leisure Limited v Darville and Son Limited

Where a lease defines the demised property to include fixtures from time to time in or on specified land, an integrated fixture may fall within the demise even though part of it extends beyond the physical boundary of that land. The relevant item may be assessed as a single functional system rather than by separating its components. An exception for tenant-installed fixtures removable without defacing the land requires a practical assessment of the consequences of removal. Removing a kitchen extraction system necessary for the lawful use of commercial premises may deface the demised land. Where the nuisance is caused by a fixture forming part of the tenant’s demise, the landlord is not liable absent active or direct participation.

HLS Leisure Limited occupied premises in Darville House, where it operated Pinks Gentlemen’s Club. Darville and Son Limited was the freeholder and landlord. A neighbouring tenant, Gourmet Grill, operated a restaurant and takeaway under a 20-year lease.

Gourmet Grill’s kitchen extraction system included ventilation ducting running through a loading bay used to access Pinks. HLS Leisure alleged that the ducting caused excessive noise and leaked grease, creating a nuisance. The trial judge accepted that there was a nuisance but held that the landlord was not liable because the extraction system formed part of Gourmet Grill’s demise and there was no evidence of active or direct participation by the landlord.

HLS Leisure appealed, challenging the construction of Gourmet Grill’s lease and the conclusion that the ducting was within the demise.

1. Appeal dismissed. The ventilation ducting formed part of the premises demised to Gourmet Grill. Darville and Son therefore had no liability in nuisance on the facts found.
2. The lease definition included the Ground Floor and Basement of 14 Oxford Road East and fixtures of every kind from time to time in or on that land. The words “bounded by and including” expressly brought the listed fixtures within the demise. The defective internal references in the definition were properly read as referring to the specified land.
3. The extraction system was properly treated as one integrated fixture. It was sufficient that part of the system was in or on the restaurant unit. A system extending into the loading bay could still naturally be described as being in or on the tenant’s premises because it served the tenant’s commercial cooking area. That approach was consistent with the principle stated in Legal & General Assurance Society Limited v Expeditors International (UK) Ltd [2006] EWHC 1008.
4. The tenant-installed fixture exception did not apply. Whether removal would deface the land required a practical assessment of the whole extraction system and its lawful restaurant/takeaway use. Removal would leave a substantial hole and would remove equipment necessary for the permitted use. The trial judge was entitled to reach that evaluative conclusion.
5. An appellate court should be slow to interfere with such an evaluation: FAGE UK Limited v Chobani UK Limited [2014] EWCA Civ 5, per Lewison LJ at [114]-[115].

The parties were invited to submit an agreed order dealing with consequential matters; otherwise outstanding matters were to be resolved on handing down.

• High Court, Chancery Appeals: HLS Leisure appealed from the trial judge’s conclusion that the extraction system formed part of Gourmet Grill’s demise and that the landlord was not liable in nuisance. The appeal was dismissed.