Can Fire Safety Frustrate a Commercial Lease? Into Nominee 1 v Study Group
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What is commercial lease frustration and why does it rarely succeed?
Hello and welcome to a Newsflash episode of Unpacking the Case, the podcast by David Jones-Bould, the Real Estate Law Specialist. As always, I'm joined by our Head of Legal Training, Richard Snape. Hello and welcome back to Unpacking the Case. There has been a long line of cases where someone argues that a commercial lease has been frustrated. That means an unexpected event has changed things so dramatically that the lease should simply come to an end. It's an argument that captures plenty of attention, but it's one that almost never succeeds. This week we're looking into Nominee One Limited and Study Group, UK Limited, a recent High Court decision that revisits the doctrine of frustration in the context of commercial property.
Frustration is a familiar concept in contract law, but leases have always been treated rather differently. The courts are reluctant to allow parties to walk away from long-term property interests simply because the circumstances have changed. In this episode, we'll explore what the decision tells us about the very limited circumstances in which a commercial lease might ever be frustrated. Let's unpack the case.
Hi Richard.
Hello Lizzie.
Hello. We're here to talk about a case, as per usual. That is what we usually convene to do. And this time it's a case from the High Court from the 21st of May called Into Nominee 1 Limited and Study Group UK Limited. And it's the latest in a long line of cases arguing that leases have become frustrated by some intervening act.
How did the post‑Grenfell fire safety issues trigger a frustration claim in the Nominee 1 case?
And it also brings in some post-Grenfell legislation on fire safety matters. So, do you want to give us the background facts for this one, please?
Yeah, I'll sort of, let's say they were arguing frustration of the common purpose. And if you remember your studies, frustration is a contractual principle. But it creeps into leaseholds on occasion. It's where there's an unforeseen intervening event which renders substantial performance of the contract impossible. And if it's frustration of the common venture, it's basically, physically, the activity is still possible. But it makes no commercial sense. The commercial reality has disappeared because of someone foreseeing the event. And it's got to be for the common purpose. was a summary judgment but the background facts it all took place in brighton study group uk have uh quite a few of these places up and down you know the country where it's a sort of residential training school it was a new build property and they entered into this lease there was an agreement for lease and then the lease for 25 years was entered into in 2007 it was in brighton and
The basic idea is that they take overseas students and sort of give them foundation basis and the like so they can then apply for universities and this kind of thing. And the premises, as it was a residential training college, it seems to comprise two separate buildings and a glazed corridor between the two. One was the kind of academic part where the training would occur and the other was residential, which is where the problems arise. So they had this 25-year lease in 2021 post-Gremphil. It wasn't what was considered a higher-risk building, but it was over 11 metres in height. And post-Grenfell in 2017, a few years later, they checked the property in relation to fire safety and the likes and found that there were severe fire safety problems in the external cladding, as is so often the case, but also cavity barriers, which, you know, retard the spread of fire, hadn't been...
installed and experts also said it breached then building regulations 2007 building regs and if it breaches 2007 building regs massively breaches them today
Which historic cases illustrate the courts’ reluctance to accept lease frustration?
But they, again, the sort of experts said, you know, there's going to have to be remedial work. And they said that the remedial work probably wouldn't be completed until after the lease had come to an end in 2032. And so they basically refused to pay the rent and argued the contracts had been frustrated. And that's some of the background to it.
And has there been any previous case law on this?
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Chapters
8 chapters
1
What is commercial lease frustration and why does it rarely succeed?
0:00–1:40
2
How did the post‑Grenfell fire safety issues trigger a frustration claim in the Nominee 1 case?
1:40–4:08
3
Which historic cases illustrate the courts’ reluctance to accept lease frustration?
4:08–5:55
4
What were the key facts of the Into Nominee 1 Ltd v Study Group UK Ltd dispute?
5:55–7:22
5
How did the 2021 Fire Safety Act and Building Safety Act affect the parties’ obligations?
7:22–9:14
6
Why did the judge conclude that the tenant’s frustration argument failed?
9:14–10:44
7
What financial consequences did the tenant face after losing the frustration claim?
10:44–13:14
8
What practical lessons can landlords and tenants take from this case for future leases?
13:14–14:14
Speakers
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