419-1587-Clerksroom-RRD-Stephen-Pritchett

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www.clerksroom.com Administration: Equity House Blackbrook Park Avenue Taunton Somerset TA1 2PX DX: 97188 Taunton Blackbrook FiXTurES, FiTTingS, AlTErATionS AnD SuccESSivE lEASES The second in a trilogy of commentaries by Stephen J Pritchett, Barrister at clerksroom on issues of interest in particular to retail tenants. (7 January 2013) Clerksroom is a trading name of European Administration Limited Registered Office: Equity House, Blackbrook Park Avenue, Taunton TA1 2PX. Registered in England: 04207276 T: 0845 083 3000 F: 0845 083 3001 mail@clerksroom.com www.clerksroom.com Long-standing retail occupants are, for diverse reasons, abandoning the high street. The decisionmaking process which takes place beforehand should involve a careful analysis of the benefits of staying compared to the benefits of relocating or closing down the store altogether – the “shall I stay or shall I go” decision assisted by lawyer and surveyor. EXEcuTivE SummAry > Tenants have a right to remove tenant’s fixtures which have been added to demised premises during an old lease and also during any statutory continuance of that lease up to the date upon which a second lease is granted > If the tenant surrenders the first lease and vacates the premises without removing the tenant’s fixtures, then he is held to have abandoned them. > If the tenant surrenders his lease and remains in possession under a new lease, absent express words, the common law rule applies and he retains his right to remove the fixtures so long as he is in possession as a tenant > The lease may state what is to happen to tenant’s fixtures and fittings and may create an obligation to remove them breach of which may sound in damages represented by the cost of removal; such an obligation would prima facie apply to fixtures and fittings installed by the same tenant of the same premises under a previous lease > Tenant’s fixtures and fittings left in the premises will accrue to the landlord and may become subject to the general repairing obligations > A reinstatement obligation may be limited to alterations carried out “during the term” or it may incorporate an extended obligation to reinstate alterations made during any prior term or period of the tenant’s occupation. If the obligation is extended in this way then the schedule of dilapidations following expiry of a second or third lease will properly specify alterations made under a prior lease.
In more usual circumstances where the reinstatement obligation is limited to alterations carried out “during the term”, the landlord will, at the end of the second or third lease not be able to enforce the reinstatement obligation under that lease in respect of historic alterations but will potentially have a cause of action under the old lease [subject to issues of limitations] for damages for breach. > Although section 18 does not apply to covenants for reinstatement, a similar end result can be achieved by the tenant arguing that at the date of the historic breach there was no loss because the landlord did not actually reinstate and the landlord retained a tenant paying the same rent under the successor lease. AnAlySiS One of the, often underestimated and therefore under analysed, issues within this process is the potential liability which the tenant may have to the landlord under its lease covenants relating to repair, reinstatement, alterations and fixtures and fittings. In this paper I would like to concentrate on the aspect of this analysis which is, in my experience, frequently arising in circumstances where tenants have held a particular unit for a substantial number of years under a succession of leases and have, during the earlier leases installed often substantial and expensive to remove fixtures and fittings or carried out a substantial alterations. The particular lease has come to an end and following negotiations between the parties or proceedings under the 1954 Act, a new lease has been entered into for a further term. At the time of the grant of the new lease no thought was given to the question of tenant’s fixtures and fittings installed during the first lease or to the question alterations made by the tenant during the period of the first lease. The second or third successive lease then comes to an end and the tenant elects to vacate. What is the position then with regard to the tenant’s fixtures and fittings? What is the responsibility of the tenant in relation to alterations made during one of the earlier leases? FiXTurES AnD FiTTingS In terms of fixtures and fittings installed by a tenant for the purposes of its business the position is now relatively settled at least to the level of the Court of Appeal. Prior to 1981 the position appeared to be substantially confused and there was a substantial body of judicial comment to the effect that a tenant lost his right to remove his fixtures at the end of the original lease unless the right was expressly reserved in the new lease. In Leschallas v Woolf [1908] 1 Ch 641 @ 652 Mr Justice Parker commented that; “If the tenant upon the surrender of his lease in order that a new lease may be granted makes no stipulation to the contrary, he does lose his right to remove tenant’s fixtures”. Mr Justice Scrutton held likewise in the context of surrender by operation of law. See Slough Picture Hall Co Limited v Wade (1916) 32 T.L.R. 542 Clerksroom is a trading name of European Administration Limited Registered Office: Equity House, Blackbrook Park Avenue, Taunton TA1 2PX. Registered in England: 04207276
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419-1587-Clerksroom-RRD-Stephen-Pritchett

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