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Costly Mess For Failing To Give Vacant Possession - Partitions left by the tenant meant that break clause had not been complied with

In this case, the lease contained a ‘one-off’ break option which contained common express conditions. The relevant condition here was that ‘vacant possession’ of the premises was to be provided by the tenant on the break date.  

When the lease was granted, the premises were open plan. The tenant subsequently carried out various works, including the installation of partitions. These partitions were left in situ when the tenant handed back possession. The issue before the court was whether the works were chattels or were tenant's fixtures. The general principle was that if the partitions were chattels they should have been removed as they interfered with the property. If they were tenant's fixtures the tenant could remove them if it wished but was not obliged to do so. 

The High Court held that the partitions were chattels on the basis that the partitions were standard demountable partitions. Further, the configuration of the partitioning was unique. It resulted in a series of small offices, which was to benefit the tenant rather than being a lasting improvement to the premises. 

The partitions substantially prevented or interfered with the landlord's right of possession. This meant that the tenant had not given vacant possession. 

The court said that, even if it was wrong, and that the items were tenant's fixtures instead, the licence for alterations had ceased to have effect as the tenant had failed to comply with the conditions. The licence obliged the tenant to install the partitions in accordance with the landlord's specification, and to notify the insurers, failing which the licence was of no effect. The tenant was required to reinstate the premises if the licence was of no effect, or if the landlord so required at the end of the term. Failure to remove the partitions meant that the tenant had not given vacant possession. 

The court highlighted that, whilst cases may provide guidance on when an item is considered to be a chattel, each case turns on its facts. The case also reminds us that break conditions must be strictly adhered to. The tenant should check carefully the terms of the lease and any licence for alterations.   

Riverside Park Limited -v- NHS Property Services Limited (High Court; 27 July 2016)

 

Posted on 08/03/2016 by Ortolan

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