[2023] UKUT 153 (LC)

The reference property was a ground floor shop unit in the Charter Place shopping centre.    Floor plans and photographs provided by the claimant at the hearing show that it had a glass ‘arcade’ frontage some 6.35 metres in width with the claimant's corporate signage above.   The arcade is a glass corridor at right angles to the shop front about 1.6 metres wide and 2.85 metres deep, the purpose of which is to create additional window display space.   The plans show that the reference property had a shutter at the inner end of the arcade and another across the full width of the frontage.   It occupied a corner position and had a return frontage to Meeting Alley, the glazed parts of which extended to about 9.6 metres.   Internally, most of the floorspace was used for sales although a small workroom was created by partitioning an area at the rear of the unit.   A remote store room extending to about 25.5 m² was located to the rear of the property, as were kitchen and toilet facilities shared with another retailer.

The respondent provided, as part of its valuation evidence, some photographs of the interior. These showed the claimant’s shop fittings in what we assume to be their usual corporate style. The walls were either plastered or panelled, the floor was carpeted, and the ceilings were either plastered or comprised of suspended acoustic tiles. Air conditioning cassettes were installed in at least part of the premises. The photographs were labelled ‘pre- possession’ and were taken in November 2015. The interior fittings appeared to be in good condition, but we have no information about their age. We were also provided with a ‘shopfit plan’ dated 8 May 2012 but it is unclear what shop fitting took place at that point although it would seem likely that having commissioned an architectural practice to produce plans, some work was undertaken.

Mr Lightowler explained that Warren James had been contemplating opening a shop in Watford for about 15 years before finally doing so in 2002. The company found the occupational costs of locating in Intu Watford were disproportionately high relative to the anticipated turnover. He explained that in addition to the usual overheads of rent, rates and service charges, locating in the centre would mean that the company would incur additional costs in complying with Intu’s rules relating to longer opening hours, fitout specifications, mandatory tenants’ association membership and marketing fees.

Ultimately the company decided to locate in Charter Place, some 42 metres from the doors to Intu Watford. The shop was in a position that Mr Lightowler described as a ‘clever pitch’ meaning that it benefitted from high footfall, but the occupational costs were said to be less than half of those for an equivalent unit in Intu Watford and the projected turnover not much different. He recounted that this assessment of profitability turned out to be correct and the shop was a ‘resounding success’.

The reference property was occupied under a 15 year lease from 9 September 2002 on full repairing and insuring terms. The landlord was Watford Borough Council. The lease contained no break clause and was not contracted out of Part II of the Landlord and Tenant Act 1954. We understand that the rent had never altered from its initial level. The occupational costs for the year ending 31 March 2015 were as follows: