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High Court Finds Removable Office Partitioning A Chattel Which Interferes With Vacant Posession

The High Court[1] recently decided that partitioning installed in office premises could interfere with vacant possession, frustrating a break notice.

In this case NHS Property Services Limited, the tenants, had attempted to exercise a break clause on the property. The terms of the break option required that the tenant gave vacant possession on the break date. Shortly after entering into the lease, the tenant carried out works on the premises, installing demountable partitions as well as the kitchen units and an intruder alarm.

On the break date these items remained in the premises. Riverside Park Ltd, the landlord, therefore argued that vacant possession had not been given and that the break notice was not valid. The tenant claimed that these items were fixtures which had been integrated into the premises and, even if they were chattels, that they did not at any rate prevent or interfere with the landlord’s enjoyment of the premises.

Considering the partitions, the court found firstly that, being removable, the degree of annexation in this case suggested that they were chattels. Secondly, their effect was to divide the premises into small offices, compared in evidence to a “rabbit warren”. As in the courts’ opinion this was not generally desirable to tenants, it was found that these amendments were made to benefit the tenant rather than to afford a lasting improvement to the premises. The partitions were therefore held to be chattels rather than fixtures, the latter consideration being the more decisive. The additional installations were found to be chattels by similar reasoning. The court further held that as it had been established that the partitioning would adversely affect the rental prospects of the property, it would interfere with the landlord’s enjoyment of the premises and that the break notice was not therefore valid.

This case is an important reminder of the importance, when exercising a break option in a lease, of complying fully with all conditions attached to it, in particular when dealing with a break option that is conditional on vacant possession being given by the tenant. The case also demonstrates the importance of taking a thorough approach to ensuring that none of the improvements made to a property could be considered chattels, reinforcing the principle that failure to do so may render the break ineffective.

[1] Riverside Park Ltd v NHS Property Services Ltd [2016] EWHC 1313

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