The Core Principle
Grantor cannot use retained land inconsistently with the purpose of the grant — cannot give and take away. Harmer v Jumbil (Nigeria) Tin Areas Ltd [1921] 1 Ch 200: landlord let land for explosives storage; allowed adjacent land to be used incompatibly with the explosives safety licence — derogation. Aldin v Latimer Clark [1894]: landlord let sawmill premises requiring ventilation; built on adjacent land obstructing ventilation — derogation. No need for physical trespass to the leased land; effect on the use of the leased land is what matters.
Derogation vs Quiet Enjoyment
Quiet enjoyment (LPA 1925 s.76; common law): protects against landlord's direct physical interference with tenant's possession of leased premises. Derogation from grant: protects against landlord using retained/adjacent land to undermine the purpose of the grant — indirect interference. Southwark LBC v Mills [2001] AC 1: noise from adjacent council flats was not breach of quiet enjoyment (arose from normal use, not acts against the tenant). Both can be breached simultaneously by a single act.
What Constitutes Derogation
Three requirements: (1) identified purpose of the grant (express or implied from circumstances); (2) landlord's use of retained land (or persons acting under landlord's authority); (3) substantially defeats that purpose. Platt v London Underground [2001]: ongoing noise/vibration from retained underground operations — potential derogation where landlord retained control. Planning restrictions by landlord; letting adjacent unit to directly competing business where original lease contemplated exclusivity — may all constitute derogation.
Remedies
Injunction: primary remedy for ongoing breach — court restrains landlord from continuing derogatory use of retained land. Senior Courts Act 1981 s.50: damages in lieu of injunction where conduct has ceased or injunction disproportionate. Rent set-off: Eller v Grovecrest Investments [1994] — tenant can set off equitable cross-claim for damages against landlord's rent claim; available as defence in possession proceedings. Repudiation: extreme cases where derogation goes to root of contract — tenant may treat lease as repudiated.
Practical Implications and Scotland
Before consenting to new use or development on retained land, consider impact on existing tenants' lease purposes. Review user clauses and implied purposes before making decisions about adjacent units. No obligation on landlord to maximise tenant's business success — but cannot actively undermine it through retained land. Scotland: similar common law obligation — landlord must give full and peaceful possession; not take back what was granted; MacCulloch & Wallis Ltd v Allan (1905) recognised the derogation principle in Scots law.