A laundrette by any other name smells less sweet

This Q&A deals with user clauses in commercial leases.  What is permitted by a covenant permitting use solely as a laundrette?  Does such a clause permit the provision of dry-cleaning services? 

Is there a breach?

The question is, of course, one of construction of the lease.  Recently there has been, if not a sea-change, a shift in emphasis in the Court’s approach to the construction of contracts (including leases).  In construing a contract, the court is concerned to identify the intention of the parties by reference to what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean.  See Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38 at [14].  In Arnold v Britton [2015] UKSC 36 (concerning leisure park chalet leases) the Supreme Court re-emphasised the importance of the words used by the parties.  Contrary to a perceived trend in some recent cases, the Court’s view of the business common sense behind the agreement is not to be used to undervalue the importance of the language of the provision in question.   

There are no particular rules that apply to the interpretation of user covenants but  it has been held that if a covenant restrictive of use is ambiguous, it will be interpreted so as to impose lesser restraints on the tenant rather than greater.  See Skillion v Keltec Industrial Research [1992] 1 EGLR 123.  That, however, is no more than an example of the court interpreting a document against the grantor in the case of ambiguity.  There is no such rule if there is no ambiguity.

“Laundrette” is an ordinary English word without any special technical meaning.  The Oxford English Dictionary defines a laundrette as, “An establishment providing automatic washing machines for the use of customers”.  Laundrettes are generally self-service although often with an option of having the wash carried out by an attendant.  Dry-cleaners are different from laundrettes in that they do not allow self-service and they use a different process for cleaning clothes, involving a solvent rather than water and detergent.  There are environmental and health and safety considerations applying to the use of solvents in the dry-cleaning process that do not arise with a bank of washing machines.

The Court is likely to take the view that if the parties to the lease intended to permit use of the shop for the provision of dry-cleaning services instead of as laundrette in the normal meaning of that word, they would have said so.  If, on the other hand, the tenant is using the shop as a laundrette and also to provide dry-cleaning services, there may be no breach if the provision of the dry-cleaning services can be characterised as merely incidental to the main use as a laundrette.  So if clothes can be left for dry-cleaning offsite as one of the services offered at the laundrette, there may not be a breach.  Ultimately, the question is one of interpretation of the particular covenant in the context of the particular lease.

A continuing or a once-and-for-all breach?

Assuming that there is a breach of the user covenant, it will be treated as a continuing breach, arising anew each day when the prohibited use occurs.  See Doe d. Amber v Woodbridge (1829) 9 B & C 376 and, more recently Cooper v Henderson [1982] 2 EGLR 42.  So the acceptance of rent with knowledge of the breach, for example, will not (without more) waive the right to forfeit the lease in respect of a use that continues after the last payment has been accepted.