MVL Properties (2017) Ltd v The Leadmill Ltd [2025] EWHC 349 (Ch)

Thomas Roe KC and Anna Gatrell (both of Counsel) for the Defendant (instructed by SBP Law.

Mr Justice Norris:

• “The Leadmill” is a music venue and nightclub at 6/7 Leadmill Rd, Sheffield. Its origins lie in a community project that started in April 1980 to convert a derelict Victorian flour mill into a cultural centre. The building was in an extremely poor state of repair, had no utility supplies and indeed in part lacked foundations. Leases were granted to The Leadmill Ltd (as the incorporated community project was known) and extensive refurbishment work was undertaken. The project opened to the public in late September 1982.

• A leading member of the project was Mr Philip Mills (“Mr Mills”): in his evidence he says that he made some critical interventions “without which The Leadmill would have ceased to exist.” One of them was to stand surety (alongside others) for the tenant under the original leases. Over time the leases came to be vested in The Leadmill Ltd (a private company) (“Leadmill”) and Mr Mills came to be the sole director and proprietor of that company, running the venue as a commercial operation. Leadmill operated a successful performance space for live music, dance, comedy and theatre, and as an exhibition space under the name “The Leadmill.” It developed distinctive signage (a vertical black sign sticking out from the front of the building with “THE LEADMILL” in red neon lettering), a distinctive logo (two irregular overlapping pentagons) painted on the gable-end of the building and portrayed on a projecting sign, and a distinctively coloured “get-up”, elements of which it registered as trademarks in 2002 and 2005 (in particular the sign “THE LEADMILL”).

• The most recent lease of the venue (“the Lease”) is dated 14 October 2003 and created a term of 20 years starting on 25 March 2003 in favour of Leadmill. Its terms reflect the circumstances in which The Leadmill came into being as a cultural venue.

• First, the Sixth Schedule contains a list of “improvements.” These include such matters as the construction of a toilet block with drainage, the provision of foundations to one elevation of the property, the creation of a second bar area, the sandblasting of inner structural walls and their repointing, and the building of a new wall and roof to incorporate an outside area into the main building. Clause 5.10.1 of the Lease provides that at the end of the lease period the Tenant should be entitled to compensation in respect of those improvements. Clause 5.10.2 provides (in summary) that the compensation should equal the estimated aggregated costs of carrying out each of the individual improvements assessed as at the date of the Lease, that sum being indexed; but if any of the improvements should have been removed by the Tenant then the Tenant should not be entitled to any compensation in respect of the improvements that had been so removed. The compensation (i.e. the estimated aggregated cost of the improvements as at 2003) was assessed by an expert in accordance with a variation to the Lease made in July 2004. Leadmill’s present expert (Mr Christopher Sullivan BSc MRICS) (to whose evidence I will return) estimates an updated Q2 2025 assessment to be of the order of £665,000. For the purposes of this case, I accept that as a working figure (but expressly not holding that to be the correct figure if the compensation exercise has to be undertaken).

• Second, the Seventh Schedule contains a list of the fixtures and fittings installed by “the Tenant” (no distinction being drawn between those installed as part of the original community project and those installed by the successor commercial enterprise). In the Lease the expression “Tenant’s Fixtures and Fittings” means the items so listed together with “any fixtures and fittings installed by the Tenant after the date of [the] Lease.” The Seventh Schedule is very lengthy: it includes cloakrooms, dressing rooms, workshops, offices, toilets, bar and café counters, performance equipment, all equipment in beer cellars, all flooring (including a kiln fired (sic) prime grade Canadian maple sprung dance floor with sub-structures), suspended ceilings, acoustic insulation to windows in the main bar, all fire doors, all electrical services (including all distribution boards and control gear, meters, fuse boxes and surface mounted wiring), water services and sanitary equipment, all gas services, equipment and surface mounted pipes, and all heating and ventilation systems (including gas-fired, warm air exchange heating units, boilers and ducting system, ventilation systems and related ductwork and control gear throughout the whole of the premises). Clause 3.29 of the Lease provides that the Tenant might remove the Tenant’s Fixtures and Fitting when the lease period ends (subject to making good any damage caused by such removal to the reasonable satisfaction of the landlord), but the Tenant was not obliged to do so.

• Third, clause 3.6 of the Lease contains the repairing obligation. This requires the Tenant throughout the lease period to put and keep the property both exterior and interior in good and substantial repair and condition. But this obligation did not extend to a specified area of the roof (referred to as “the Excluded Roof”). Nor did it require the Tenant to put or keep the property in a better state of repair than was recorded in a Schedule of Condition attached to the Lease.

• The freehold of the venue was put up for sale by auction in 2013 and 2014 by a property developer who had acquired it with the intention of redeveloping the site as residential apartments. It failed to sell at two auctions. The developer offered the property to Leadmill which made an offer of £150,000. But this was not acceptable to the vendor. On 3 November 2017, the freehold reversion was acquired by MVL Properties (2017) Ltd (“MVL17”). MVL17 is a wholly owned subsidiary of Electric Group Holdings Limited (“Electric”). Electric was formed in 2013 and runs music venues in historic buildings in several locations across the UK through its operating subsidiary Music Venues Ltd (“MVL”). Electric has two shareholders: Dominic Madden (“Mr Madden”) and Jacob Lewis (“Mr Lewis”). Mr Madden is the sole director of MVL17. Mr Lewis is the majority shareholder and also the principal limited partner of Orpheus Investment Holdings LP (“Orpheus”) which historically has provided loan finance to Electric to acquire and refurbish music venues at Brixton, Bristol and Newcastle.

• The Lease falls within the scope of Part II of the Landlord and Tenant Act 1954 (“the 1954 Act”). The term created by the Lease was due to end on 25 March 2023 (subject to continuation of the tenancy under the provisions of the 1954 Act). On 28 March 2022 MVL17 gave notice under s.25 of the 1954 Act terminating the tenancy on 26 March 2023 and saying that it would oppose the grant of a new tenancy on the ground specified in s.30(1)(g) of the 1954 Act viz. that on the termination of the current tenancy MVL17 intended to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by it therein. (Paragraph (g) also refers to the use of the holding as a residence for the landlord; but that is not material in the present case). If MVL17 establishes this ground to the satisfaction of the Court, then “the Court shall make an order for the termination of the current tenancy in accordance with s.64 of [the 1954 Act] without the grant of a new tenancy”: see s.29(4)(a) of the 1954 Act.

• On 27 July 2022 MVL17 issued a County Court Claim form seeking to establish ground (g) to the satisfaction of the Court. In its Particulars MVL17 stated:-

“The Claimant’s intention is to undertake a minor refurbishment of the existing Leadmill premises to improve its backstage facilities. Once the refurbishment is completed the Leadmill premises will be operated and managed by the Claimant and form part of the Electric’s touring circuit. It will therefore continue to host and promote a range of live music, clubs and arts events within the premises.”

In accordance with established practice, the Claim Form also contained MVL17’s proposals for the terms of a new tenancy in the event that its claim for the determination of the tenancy failed. The claim was first transferred to the County Court at Sheffield (where District Judge Baddeley ordered the trial as a preliminary issue of the question whether MVL17 “satisfied the ground of opposition to a new tenancy” set out in s.30(1)(g) of the 1954 Act): and then it was transferred to the Business and Property Courts at Leeds. It was this preliminary issue that I heard at Leeds from 16-20 December 2024.