Since COVID-19 hit these shores last year, the government has implemented temporary measures to protect commercial tenants from having their leases forfeited or being forced into insolvency where they have been unable to pay rent as result of the pandemic on...
Taking too much away - A tenant's failure to deliver vacant possession
There are numerous cases concerning a tenant failing to deliver vacant possession due to leaving behind fixtures and fittings. In contrast, the High Court’s recent decision in Capitol Park Leeds Plc v Global Radio Services Limited  EWHC 2750 (Ch) concerns a tenant who took the opposite approach, taking too much from the premises.
Global Radio Services Limited (‘Global’) was the tenant of a three storey commercial unit in Leeds. Having decided they no longer required the unit, Global served notice to exercise the break clause under their lease. The break was conditional on the tenant giving vacant possession of the premises at the break date, with the premises being defined to include, ‘all fixtures and fitting at the Premises whenever fixed, except those which are generally regarded as tenant’s or trade fixtures and fittings’.
In the period between serving notice and the break date, Global began remedial works to the premises as part of their reinstatement obligation under the lease. This involved stripping out seventeen of the landlord’s original fixtures and fittings, including radiators, fan coil units, ventilation duct work and window sills. Global’s intention was to replace these items however they later stopped the works to pursue a financial settlement with the landlord, in lieu of the outstanding works.
Unfortunately, negotiations broke down, time ran out and when the break date arrived, the removed items had not been replaced.
The case centred on whether the removal of the landlord’s fixtures and fittings resulted in Global failing to deliver vacant possession of the premises. The landlord argued what the tenant gave back was substantially less of the premises, as defined in the lease.
The tenant acknowledged the removal of the fixtures and fittings was a breach of their repair obligation but argued this was separate to the break clause requirements and should be dealt with as a dilapidations claim.
The court decided there had been no vacant possession. The decision largely rested on the definition of the premises under the lease. The inclusion of the words ‘all fixtures and fittings at the Premises’ was a way of ensuring, at the break date, the premises was not handed back as an empty shell that was both ‘dysfunctional and unoccupiable’.
The physical condition Global handed back the premises in, without the essential fixtures and fittings, had created a substantial interference with the landlord’s use and enjoyment of the premises that did not meet the requirements of vacant possession.
Implications for tenants
While this is an exceptional case, it demonstrates the need to ensure strict compliance with break conditions and the difficulties that can arise when exercising a break clause conditional on vacant possession.
As a precaution, tenants may wish to consider the following prior to entering a lease: