Vanquish Properties (UK) Limited Partnership v. Brook Street (UK) Limited19th August 2016
If a partnership consists of more than four individuals and a break notice is served on the tenants it may not be valid.
The facts in Vanquish Properties (UK) Limited Partnership v. Brook Street (UK) Limited (2016)
Brook Street (UK) Limited was the tenant in this case, who occupied the lower ground floor of 108 Fenchurch Street (the “premises”). A lease entered into in 2011 between the tenant and the City of London Corporation demised the premises to Brook Street (UK) Limited for a term of ten years. The lease contained a break clause that allowed the landlord to terminate the lease on 27 September 2016, upon giving six months’ notice.
The Claimant landlord took an overriding lease of the premises from the City of London Corporation on 22 March 2016 and promptly served a break notice and a section 25 notice on the tenant. The new landlord was a Limited Partnership, which originally (in April 2011) had two partners. A further three partners joined shortly after the Partnership was formed in June of the same year.
The tenant disputed the validity of the break notice and the section 25 notice. The tenant disputed that Vanquish Properties (UK) Limited was the correct landlord for the purposes of serving the break notice as the legal estate could not be vested in the name of the partnership but rather had to be in the name of the partners.
The High Court considered the landlord’s application for a declaration that the break notice and section 25 was valid.
The Claimant’s application for a declaration was dismissed. It was held that the break notice and section 25 notice were invalid as the legal estate in land was not capable of being vested in the name of the partnership.
The Limited Partnerships Act 1907 (“the Act”) provides that land held by a partnership can be vested in no more than four partners. Should a partnership have more than four people named as trustees or grantees, the first four named will hold the estate as joint tenants, in trust for the partnership. In this case, it was not possible to determine who the “first four named” were in reference to documents filed in accordance with the Act. The lease could not, therefore, have been granted to the Claimant in this case, as it was not possible in law. This meant the Claimant was not entitled to serve the break notice (or the section 25 notice) on the tenant.
This case is a warning to both landlords and tenants when serving notices to determine. Both should note that it is always worth checking the number of members comprising the partnership to ensure compliance with the law.
For further information, please contact the Real Estate Disputes Team at Hamlins.