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Peel Appeal 19 February 2014

In my blog article last week, “Five important landlord and tenant appeal decisions awaited”, I rashly included my (admittedly off-the-cuff) predictions of how the cases would be decided. Now, mixing my metaphors somewhat, the chickens are coming home to roost.

The Court of Appeal has given its decision in the appeal in Peel Land and Property (Ports No 3) Ltd v TS Sheerness Steel Ltd and, to my surprise, it reversed part of the first instance decision (click here for the transcript). Admittedly, my prediction last week that the first instance decision would be upheld was based on the major part of the judgment, in which the judge had had to decide whether large pieces of plant within a steelworks comprised chattels or fixtures and, if fixtures, whether they were landlord’s fixtures or tenant’s fixtures. It turned out that that part of the judgment was not appealed.  The subject of the appeal was whether the tenant was prohibited from removing tenant’s fixtures by the terms of the lease.

On a strict construction of the lease, the Court of Appeal decided unanimously that the lease did prohibit the tenant from removing tenant’s fixtures.  It rejected the tenant’s argument that an express provision to that effect would be required (see below for more on that argument).  The court interpreted the prohibition on alterations in the lease as extending to prohibiting removal of tenant’s fixtures during the term.  (A separate covenant provided that the tenant was allowed to remove tenant’s fixtures at the end of the term.)

Woodfall found wanting

This decision means that part of the relevant section in Woodfall is going to need rewriting. Woodfall currently includes an extract from Lambourn v McLellon [1903] 2 Ch 268, in which Vaughan Williams LJ had said:

“If the landlord wishes to restrict his tenant’s ordinary right to remove trade machinery or fixtures attached to the demised premises … the landlord must say so in plain language.  If the language used leaves matters doubtful, the ordinary right of the tenant to remove trade fixtures will not be affected.”

Morgan J, at first instance, had quoted the statement in Woodfall with approval on this point. However, after considering the decision in Lambourn v McLellon in detail, Rimer LJ in this case observed:

“I do not regard [the statement above], uttered only by one Lord Justice, and not expressly embraced by the others, as establishing any principle of a binding nature.  That said, I certainly do not disagree with it.  I do not, however, consider that it can be elevated to the status of a proposition that, for example, nothing but language expressly imposing a restriction on the removal of tenant’s fixtures … will be effective to impose such a restriction.”

It must be extremely unusual for a proposition set out in Woodfall in this way to be disapproved of in this manner.

Coming soon

Four more Court of Appeal decisions (mentioned in my earlier blog article) are now awaited – with some trepidation.

My thanks go to John Anderson and Mark Shelton for assistance in preparing this blog article.

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