Vacant possession and Demountable partitions

Vacant possession and Demountable partitions

In Riverside Park Ltd v. NHS Property Services Ltd [2016] a tenant's break notice was held to be ineffective because the tenant had failed to remove demountable partitioning from the premises and consequently had not complied with the obligation to give vacant possession.

Facts

In 2013 NHS Property Services Ltd, as tenant, exercised a break right in a lease of premises at Riverside Park, Bromborough.  The landlord (Riverside Park Ltd) claimed that the notice exercising the break right was ineffective as the tenant had failed to comply with the obligation in the lease to give vacant possession on the break date. The landlord based its claim on the fact that the tenant had not removed certain works from the premises, including demountable partitioning. The tenant counter-argued that the relevant works constituted tenant's fixtures and fittings, and therefore it was not obliged to remove them in order to give vacant possession.

The court had to consider the following

Firstly the degree of annexation. With the exception of one panel, the partitions were not attached to the structure of the property and, in the view of the joint expert, they were easily removable (the fixings being to the raised floor and the suspended ceiling). The presence of electrical installations within the partitions did not alter this conclusion.

Secondly the court acknowledged that "what is likely to be more decisive is the object and purpose of annexation" and found that the installation of the demountable partitioning had been for the benefit of the tenant rather than the lasting improvement of the premises. Accordingly, the court held that the partitions were chattels.

Had the tenant failed to deliver vacant possession due to the existence of remaining chattels

The court applied the test of whether or not the presence of the partitioning substantially prevented or interfered with the enjoyment of the landlord's right to possession. Ultimately the court concluded that it did – the break notice was therefore ineffective.

Conclusion

The conclusion that the partitioning was a chattel rather than a tenant fixture is debatable but the lesson here is that if there is a condition in the break clause that requires vacant possession, it is only too easy to breach it by leaving items in the premises, including items that might not look like chattels at first sight.