Bella Italia loses dispute over terminating lease
The restaurant chain Bella Italia has lost a dispute about terminating a commercial lease.
The property in question was a new development of retail premises on a site owned by two groups of trustees.
In November 2014, Bella signed the agreement for lease, with the trustees as the named freeholder and landlord.
The other parties to the agreement were the developer and a company which guaranteed Bella's obligations under the agreement.
Clause 15 of the provided that the landlord “shall grant to the Tenant and the Tenant shall accept from the Landlord the Lease on the terms set out in this Agreement”.
Clause 28.1 provided that the landlord's obligations in the agreement were personal and binding only on the trustees.
In March 2017, the trustees transferred their interest in the property to Ropemaker Properties Ltd.
When completion was due to take place in 2018, Bella wanted to rescind the agreement on the basis that it was entitled to refuse to accept a lease from Ropemaker, as it was not the original contracting party.
The trustees and Ropemaker disputed that and asserted that the agreement had not been validly terminated.
The issue was whether the agreement required the lease to be granted by the trustees or whether the trustees' obligations could be performed by Ropemaker.
The High Court ruled against Bella. It held that the assertion in clause 28 that the landlord's obligations in the agreement were personal and binding did not mean that those obligations could not be transferred to Ropemaker as the transferee of the property.
Please contact Janice Young/Simeon Clipstone if you would like more information about the issues raised in this article or any aspect of commercial property law.