In this recent lease renewal case involving a high-profile nightlife venue, the County Court agreed that the lease should contain a landlord's redevelopment break option.
Ministry of Sound Limited v The British and Foreign Wharf Company Limited and others was heard in the Central London County Court in September 2025. The eponymous London nightclub's 15-year lease of its Gaunt Street location expired in September 2024, and like many business tenants wishing to remain in their current premises, it requested a new tenancy, as it was entitled to do under Part II of the Landlord and Tenant Act 1954 (the Act).
Although the request itself was not opposed by the landlord, British and Foreign Wharf Company Limited and others (BFW) the parties disagreed on the terms for the new lease. Court proceedings were duly issued by the Ministry of Sound (MoS) for a ruling on proposed departures from the original lease and setting of the rent, but the issue described as "overarching" by the Court was whether the new lease should include a landlord's redevelopment break clause.
A break clause allows one or both parties to end a lease before the contractual end date, sometimes in certain circumstances and usually subject to conditions. BFW wanted the ability to terminate the new lease on nine months' notice to expire no earlier than June 2028 in the event that MoS' premises were needed for demolition, rebuilding or reconstruction. MoS, whose nightclub is the focal point for its international brand, was opposed to this.
MoS did not deny the development potential of the area but expressed doubt over how real the possibility of redevelopment really was. Regeneration in locations featuring night-time entertainment venues comes with challenges, and many projects to date have stalled due to difficulties with provision of alternative accommodation for the MoS and "agent of change principles" (where developers must take existing uses of land into account – and provide appropriate mitigation – in their development proposals).
MoS also focussed on the impact of a rolling break option on its commercial viability. It would, they said, create a "climate of instability" where MoS' negotiating position and chances for investment were undermined to the point of posing real existential problems for the business. This was even less justifiable given how slim (in their view) the chances of redevelopment were.
BFW's arguments on the other hand centred around there being a real possibility that MoS' premises would be redeveloped during the proposed 15-year term of the new lease. Set in the heart of the Elephant and Castle regeneration area, the MoS site lies in a zone "ripe for development" and has featured in redevelopment discussions with Southwark Council and other stakeholders for the best part of 10 years. MoS has often been part of such discussions.
HHJ Saggerson went on to carefully consider the expert planning evidence and noted that the joint experts had agreed that "a redevelopment of the site could be achieved if the parties use their best endeavours".
He also had regard to the case law on the subject and extracted the following relevant principles:
- A landlord must prove that there is a real possibility that the premises will be required for reconstruction during the term of the new tenancy and this is an objective test;
- Even if a real possibility is proved, the Court, must undertake a balancing exercise between the landlord's interest in development and the tenant's interest in security;
- If there is no countervailing major factor, focus shifts to the content of the break clause and making that as fair as possible;
- It is important not to adopt too rigid an approach; and
- Neither the interests of the landlord nor the tenant "trump" the other and the Court must look to strike a fair and reasonable balance.
In considering the various elements of the test, HHJ Saggerson concluded that there was a real possibility of redevelopment despite "formidable challenges" and that MoS' evidence on the prejudicial impact of the break on its business was misplaced (because a commercial tenant is always going to face commercial and operational decisions as its lease nears expiry) and unsupported by any detailed financial documentation. He decided that refusing a break clause would fail to fairly recognise the balance of competing commercial interests of the parties, stifle development and give MoS an unfair veto.
Interestingly, the case did not involve much evidence or argument on the terms of the proposed break option (i.e. the date when it could first be exercised, or the period of notice) and MoS had made no counter proposal. That is often a key focus of battle in this type of case, but here MoS had gone for an "all or nothing" approach. The Court decided that the terms of the proposed break option were fair and reasonable, so BFW was given its break option, and HHJ Saggerson also settled the other disputed lease terms and the rent (which he noted was a matter of valuation rather than discretion and discounted by 26% to account for the existence of the redevelopment break).
This case is a useful reminder of the how the Court will approach disputes over renewal lease terms and in particular, redevelopment breaks. A landlord does not have to establish that development is imminent, just that it is a real possibility which is more than just fanciful and whilst the case law shows that the Act is not to be used to prevent redevelopment, a balancing exercise between the competing interests of landlord and tenant will always be undertaken. It is important to remember that a landlord exercising a redevelopment break in such a lease will still have to comply with the provisions of the Act and in particular those set out in section 30(1)(f).
The case also casts a light on cities' evolving relationship with their high-profile nightlife venues and hints at the fact that with careful, considered planning and the potential for culturally significant tenants to be included in any new scheme, development does not have to come at the cost of the night-time economy.
