07 April 2014
Tenant’s fixtures must remain until lease ends
Often, it takes a dispute over something that is worth a lot of money to produce a judgment that clarifies the law. This was the case with a recent case, Peel Land and Property (Ports No. 3) Ltd. v TS Sheerness Ltd, involving a disagreement over a lease that required the tenant to build and maintain a steel-making plant and rolling mill, was one such.
There was no dispute between the landlord and the tenant that the steel-making plant was a 'tenant's fixture'.
At issue was the tenant's wish to remove the steel-making facilities before the expiry of the lease, where the removal was not for the purpose of the replacement of or alteration to the plant.
The High Court ruled that in order to prevent the removal of the tenant's fixtures, the lease needed to have 'clear words' to that effect, and that whilst the lease required the installation of fixtures, it did not prevent their removal. The landlord appealed.
In the Court of Appeal, the decision was reversed. The Court ruled that a tenant's right to remove fixtures depends on the language of the lease. In the absence of clear words to the contrary, the tenant will normally retain the right. However, in this case, the reference to the premises in the lease clearly included the steel mill. The lease did not permit the premises to be used 'other than for the purposes of steel making, steel rolling and operations ancillary thereto' and removal of the plant would breach that obligation.
Accordingly, the steel-making plant must stay on site and be maintained until the end of the lease.