Breaking up is hard to do
The area of property law regularly throws up examples of traps for the unwary. That has proved to be the case once again.
The recent decision in question this time is Vanquish Properties (UK) Limited Partnership v Brook Street (UK) Limited. It involves the often problematic issue of break clauses and adds to the mix the involvement of a limited partnership (a common investment vehicle in the UK).
A lease was granted to “Vanquish Properties (UK) Limited Partnership acting by its general partner Vanquish Properties GP Limited”. The Defendant was an undertenant under an earlier lease. The problem arose when a break notice was served on behalf of “Vanquish Properties (UK) Limited Partnership” (“the Partnership”). It was an important notice too: the Partnership needed to bring the underlease to an end to undertake major redevelopment works.
The Defendant did not accept the validity of the notice so the Claimant issued proceedings to obtain a declaration that it was valid.
The most relevant parts of law in this case are that a limited partnership has no legal identity, and that where land is conveyed to more than one person as joint tenants in undivided shares (as can be the case when land is conveyed to a partnership) the maximum number of grantees there can be is four.
The Defendant argued that the notice could not be valid because it was given by the Partnership which could not be the owner of the lease as it was not a legal entity. The Claimant accepted that but said that if the Partnership was not the owner then four of its five partners were and the notice was served by them. It said that it was possible to identify who those four partners were. It also said that as the same solicitors acted for the general partner company it would have been obvious to the Defendant that a mistake had been made and that a different entity should have been named in the notice.
The Court did not agree on either count. It decided that there were no documents which showed any intention of the partners as to which of them would hold the legal estate and that in the absence of that information, the legal owner was the general partner, Vanquish Properties GP Limited (“VPGP”). VPGP had not served the notice, therefore it was invalid. It also held that there was no reason for the Defendant to believe that the solicitors involved were also instructed by the general partner company.
The Claimant now faces the possibility of major redevelopment plans being delayed by a considerable period of time. The decision provides a further warning, if one were indeed needed, that the content and service of break notices, whatever the circumstances, needs to be very carefully considered.
If you are involved in any disputes concerning a lease then Blacks Solicitors can assist. Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@LawBlacks.com”.