Ansa Logistics Ltd v Towerbeg Ltd [2012] EWHC 3651 (Ch)

Ansa was Towerbeg’s tenant of a large site used for the storage of motor vehicles. Ansa used the site for the storage and transportation of Ford vehicles under a contract with Ford. In 2007 Ford gave notice to terminate the contract and to take over the operation of the storage site itself. Ford and Ansa agreed heads of terms for the handing over of operations, which included provisions for Ford to occupy the site under licence from Ansa, with an ability to call for an underlease. In April 2011, Towerbeg applied for planning consent for the redevelopment of the site. Ford objected on the basis that it had an interest in the site for the purposes of its operations. Ford and Ansa agreed terms for the grant of underleases to Ford, subject to Towerbeg’s consent. Towerbeg refused consent, relying on the fact that Ansa was in breach of the lease, having parted with possession of the site to Ford. It then served a section 146 notice forfeiting the lease for the breach. Ansa denied that it was in breach and sought a declaration that Towerbeg had unreasonably withheld consent to the proposed underletting.

The court found in favour of Ansa. The relevant covenant referred only to parting with possession, not occupation. For there to be a breach, the parting with possession must be complete. The “acid test” for possession, as opposed to mere occupation, was the right to exclude others, including the tenant, from the premises. In this case, whilst Ford had exercised an increasing degree of control over the site since 2007, it had not excluded Ansa, who had continued to have access to the site. As such, there had been no parting with possession and Towerbeg was not entitled to forfeit the lease. In those circumstances, the refusal of consent to the underletting was also unreasonable. Even if there had been a breach, the right to forfeit had been waived by acceptance of rent by Towerbeg in full knowledge of Ford’s occupation of the site.