Over Taylor Biggs

The Lease was renewed in April 2008 for a further two years at a rent of £278,000 per annum.  The Tenant was given the right to determine the Lease on 3 April 2009 on six months' notice, provided that the rent was paid up to date and the Tenant had delivered vacant possession.

In September 2008, the Tenant gave notice to break in April 2009.  At the start of the year, the Landlord prepared a terminal Schedule of Dilapidations.  However, this was not carried out correctly.  That issue was not resolved until April 2009.  The parties agreed that on 1 April 2009, the Tenant had substantially complied with its repairing and redecorating obligations.  However, some outstanding items of repair were identified.

As it would not be possible to carry these repair works out before the break date (3 April 2009) the Tenant suggested that it could complete the works in the next week, continue its security cover over the premises in the meantime but return the keys on 3 April 2009.

There were further communications between the parties in connection with these issues and the return of the keys.  The repairs were completed by 9 April 2009.

The Landlord applied to the Court for a determination that the Lease had not been effectively determined.  This was because the Tenant had failed to give vacant possession on the break date. 

The High Court held that the Tenant had remained in possession for its own purposes after 3 April 2009 and had failed to give vacant possession.  Its workmen remained in possession of the premises.  The Landlord had done nothing to waive the Tenant's failure. 

The Tenant appealed, which the Court of Appeal has now rejected.  The Court of Appeal held that the property had to be empty of people to allow the Landlord immediate and exclusive possession, occupation and control.  The property had also to be empty of any remaining goods and effects that might substantially prevent or interfere with enjoyment of the right of possession.

The Tenant had not given vacant possession 3 April 2009.  Although the repair was a benefit to the Landlord, the Tenant did not have to carry them out as a condition of exercising its break.  It simply wanted to complete the works to avoid the prospect of a subsequent claim for damages exceeding the cost of doing the works themselves. 

The Tenant had done nothing by midnight on 3 April 2009 to show it was giving up possession.  Although it had offered to return the keys, it had not done so.  The Tenant had kept the same degree of control over the premises as it had prior to the break date on 3 April 2009. 

The Court commented that the Tenant had made a sensible proposal to give possession on 3 April 2009 and to make a brief return as the Licensee of the Landlord.  However, it had known that in order not to prejudice the operation of the break, it needed to obtain the Landlord's consent or agreement to that proposal before 3 April 2009. 

As it had not done so, it could not be said to have given up possession of the warehouse.  Although the Landlord's Property Manager had said that he would arrange for the keys of the unit to be collected, it had not done so.  The Court held that the Landlord could not by making that offer, simply extinguish the term of a formal Lease in the Tenant's favour. 

Ibrend Estates v NYK Logistics (UK) Limited 2011