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Yielding up


Yielding up - vacant possession

John Laing Construction Ltd v Amber Pass Ltd
[2004] 17 EG 128 (Deputy High Court Judge).

T operated a break clause in the lease and went out of occupation. However, T retained security guards and protective barriers at the premises for security purposes. L argued that T had failed to yield up the premises and so argued that the break clause had not been effectively terminated. The argument was rejected. Looking at the matter objectively T had done all that was necessary to make it clear that it was terminating the tenancy. Relvok Properties Ltd v Dixon (1972) 224 EG 1401 applied.


NYK Logistics (UK) Ltd v Ibrend Estates BV
[2011] EWCA Civ 683

Summary

Where a break clause is conditional, failure to comply with all of the conditions by the break date may well mean that the lease has not been broken. This case examines the meaning of ‘vacant possession’: at the moment that vacant possession is required to be given, the property must be empty of people and chattels and the landlord must be able to enjoy exclusive occupation and control.

Facts

This case concerned a tenant’s break notice which expired on 3 April 2009. The break clause was conditional upon payment of rent; and delivery up of vacant possession by the break date.

After service of the break notice, discussions took place between the tenant and the landlord as to the carrying out of works pursuant to a terminal schedule of dilapidations served by L two days before the break date. It was not a condition of the break that the works be carried out in order for the lease to come to an end on the break date.

Realising that it would not be able to complete all the works before 3 April, T suggested that it be allowed a further week beyond the break date to complete the works. It offered to hand the keys back (so that L could have access) and to continue to pay for security guards until the works were complete. L did not respond conclusively to these suggestions, and Ts contractors entered the property after the break date in order to carry out the necessary repairs, which took four days to complete.

Issue

Had T complied with the conditions for operating the break clause i.e. delivering up vacant possession?

Decision

The court reviewed earlier decisions on ‘vacant possession’ and held that in order for vacant possession to be delivered up:
  • No-one must be in the property;
  • The landlord must be able to take immediate and exclusive occupation and control of the property;
  • The property must also be largely empty of chattels (i.e. any items left must not substantially interfere with the landlord's possession of a substantial part of the property)
The court concluded that because T had continued to use the premises for its own purposes (to complete repairs and so avoid a damages claim that might exceed the cost of the works) beyond the break date, it had failed to hand back vacant possession. Although T’s approach had seemed logical and sensible, it required the landlord’s consent which had not been forthcoming; the safest course would have been for T to move everyone out of the property (including the security guard) and deliver the keys to the agents.

The court also held that discussions as to the handing back of the keys did not lead to a waiver of the need to deliver up vacant possession; had the keys in fact been accepted by L there might have been a surrender, but that had not happened here.

Citation

Rimer LJ at para 44:
    "If NYK was to satisfy the vacant possession condition in the break option, it had to give such possession to Ibrend by midnight on 3 April and by not a minute later. What, to that end, did it need to do? The concept of 'vacant possession' in the present context is not, I consider, complicated. It means what it does in every domestic and commercial sale in which there is an obligation to give 'vacant possession' on completion. It means that at the moment that 'vacant possession' is required 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 the obligation in this respect is likely only to be breached if any chattels left in the property substantially prevent or interfere with the enjoyment of the right of possession of a substantial part of the property."


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