Free of things, people and interests?

It is amazingly 10 years since we reported (in July 2011) on the Court of Appeal case of NYK Logistics (UK) Limited v Ibrend Estates BV [2011] EWCA Civ 683 in which Lord Justice Rimer said that at the moment ‘vacant possession’ is to be given, “the property is empty of people and that the purchaser is able to assume and enjoy immediate and exclusive possession, occupation and control of it. It must also be empty of chattels” although this latter obligation is only breached if the chattels “subsequently prevent or interfere with the enjoyment of the right of possession or a substantial part of the property.”

This July, the Court of Appeal was again faced with a break clause exercisable by the tenant. It was conditional upon, inter alia, the tenant giving vacant possession of ‘the Premises’ to the landlord on the relevant break date. Mindful of the obligation re the premises must be empty of chattels, the tenant stripped out many items but included some which had formed part of the original base build specification. Hence they were landlord’s fixtures or even part of the building itself. The landlord claimed the tenant had not, therefore, given up vacant possession of ‘the Premises’ as described in the lease. The judge at first instance agreed. The tenant appealed.

The question asked of the Court of Appeal was whether or not the removal of the landlord’s fixtures meant the tenant failed to give up ‘the Premises’ to the landlord. Counsel for the tenant said the break clause was not concerned with the physical state of the Premises “but with whether the landlord is recovering it free of things, people and interests” (thus effectively paraphrasing Nugee J in Goldman Sachs International v Procession House Trustee Ltd [2018] EWHC 1523 (Ch)). The Court of Appeal agreed pointing out that the landlord could pursue the tenant for compensation for the damage done to the building under the covenants in the lease. It held, therefore, that the break clause had been successfully operated.

If you wish to hear more about break clauses, why not contact Hatherleigh Training?

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