Vanquish Properties (UK) Ltd Partnership v Brook Street (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Chief Master Marsh |
| Judgment Date | 23 June 2016 |
| Neutral Citation | [2016] EWHC 1508 (Ch) |
| Docket Number | Case No: HC-2016-001551 |
| Court | Chancery Division |
| Date | 23 June 2016 |
[2016] EWHC 1508 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Chief Master Marsh
Case No: HC-2016-001551
Mark Warwick QC (instructed by K & L Gates LLP) for the Claimant
Guy Fetherstonhaugh QC and James Tipler (instructed by Taylor Walton LLP) for the Defendant
Hearing date: 20 June 2016
This judgment concerns premises on the lower ground floor of 108 Fenchurch Street, London EC3 ("the Premises") which is part of a seven-storey building. By a lease dated 17 October 2011 ("the Lease") the Mayor and Commonalty and Citizens of the City of London ("the City Corporation") demised the Premises to the Defendant for a term of ten years commencing on 28 October 2011. Clause 7 of the Lease contains a break clause and the principal issue in the claim is whether the break clause has been operated to bring the Lease to an end on 27 September 2016. The second issue concerns whether a notice under section 25 of the Landlord and Tenant Act 1954, served at the same time as the break notice, is valid. However, a decision as to the validity of the break notice will, in effect, determine the second issue.
108 Fenchurch Street forms part of a larger site which will be the subject of a major redevelopment to be carried out by the Claimant. On 29 May 2014 planning permission was granted for the larger site which permits demolition of 108 Fenchurch Street and the construction of a number of new buildings, including a 34-storey building.
The Lease
The relevant provisions of the Lease are as follows:
i) The City Corporation is defined as the "Lessors" and that expression includes the estate owner or estate owners for the time being of the reversion of the premises granted by the Lease.
ii) Clause 7 contains the break clause and provides:
"If the Lessors … shall be desirous of determining this Lease on the twenty seventh day of September 2016 two thousand and sixteen and of such desire shall give to the other not less than six months previous notice in writing then upon the expiry of such notice this Lease and the term shall cease and determine but without prejudice to the rights and remedies which either party may have against the other in respect of any antecedent breach of any of the covenants herein contained."
iii) Clause 8(a) contains provisions relating to the service of notices. There is no issue about service in this case, but the clause specifies that:
"A notice under this Lease must be in writing and signed by or on behalf of the party giving such notice …".
The Claimant
The Claimant is a limited partnership established under the Limited Partnerships Act 1907. It was created on 11 April 2011 and initially had two partners, Vanquish Properties Initial GP Limited and Vanquish Properties LP Limited. The former was the general partner to the partnership and the latter a limited partner. The following day, Vanquish Properties GP Limited ("Vanquish GP") became the general partner in place of Vanquish Properties Initial GP Limited. On 17 June 2011 three new limited partners became partners.
The Limited Partnerships Act 1907 amends the general law of partnership, under the Partnership Act 1890, at common law and in equity, but the general law remains applicable to a limited partnership save to the extent it is inconsistent with the 1907 Act (section 7). The 1907 Act creates two special classes of partner, general partners and limited partners. The essence of the regime created by the 1907 Act is contained in sections 4(2) and 6(1):
"4(2) A limited partnership … must consist of one or more persons called general partners, who shall be liable for all debts and obligations of the firm, and one or more persons to be called limited partners, who shall at the time of entering into such partnership contribute thereto a sum or sums as capital or property valued at a stated amount, and who shall not be liable for the debts or obligations of the firm beyond the amount so contributed."
"6(1) A limited partner shall not take part in the management of the partnership business, and shall not have power to bind the firm:"
There are two further important parts of the regime created by the 1907 Act. First, the partnership must include either "limited partnership" or "LP" at the end of the business name of the partnership (section 8B) and, secondly, details of the limited partnership are registered with the Registrar of Companies (section 5). In the case of the Claimant, the register reveals:
a) the certificate of registration dated 11 April 2011;
b) the identity of the initial partners in Form LP5 which lists the general partner first and limited partner second;
c) the deed constituting the Claimant;
d) changes to the identity of the partners registered on 17 June 2011 that I have summarised above which are made on Form LP6. Section h. of the form names the new limited partners in the following way:
"BNP Paribas Jersey Trust Corporation Limited and Anley Trustees Limited (as trustees of the Vanquish I Unit Trust)
BNP Paribas Jersey Corporation Limited and Anley Trustees Limited (as the trustees of the Vanquish II Unit Trust)
Aimco LH (Jersey) Trustee Limited (as Trustee of the Leadenhall Unit Trust"
A limited partnership, like a partnership under the Partnership Act 1890, has no distinct identity and is "… merely a combination of persons for the purposes of carrying on a particular trade or trades": Re Barnard [1932] 1 Ch 269 at 272; Lindley and Banks on Partnership at 29–01. This truism is emphasised in clause 2.2 of the partnership deed. After having made provision for the role of the general partner and the limited partner it concludes by stating:
"The Partnership shall have no legal personality of its own and all Partnership Assets shall be the undivided joint property of the Partners."
The expression "Partnership Assets is a widely defined in the deed.
Clause 5.1 of the deed sets out the general purposes for which the partnership was set up, which was to investigate and, if appropriate, make property investments. Clause 9.2 provides that third parties dealing with the partnership were not required to enquire into the authority of the general partner, to take any action or make any decision on behalf of the partnership. It goes on to say that the general partner has the power to bind the partnership in every manner to any agreement or any document.
The Claim
This claim is brought in the name of the Claimant as a limited partnership, as is required by CPR 7.2A and Practice Direction 7A paragraph 5A.3.
The Claimant seeks declarations that both the break notice and the section 25 notice are valid. The Claimant's case is that the Overriding Lease dated 22 March 2016 was granted to the Claimant, as a limited partnership, acting by its general partner Vanquish GP. The alternative case relied upon is that Vanquish GP became the lessee under the Overriding Lease and thereby became the Defendant's lessor.
The Overriding Lease and the Notices
On 22 March 2016 the City Corporation granted a lease of 108 Fenchurch Street to "Vanquish Properties (UK) Limited Partnership acting by its general partner Vanquish Properties GP Limited". The Overriding Lease was for a term of six years and two months from 22 March 2016 and, therefore, it was not subject to compulsory registration with the Land Registry.
On the same day as the Overriding Lease was granted, K & L Gates LLP sent two letters to the Defendant. One letter contained two notices; the other letter gave notice that the Claimant (defined in the letter as "the Partnership") had been granted a lease of 108 Fenchurch Street and had become the Defendant's landlord. Notification was given requiring the payment of rent to an account in the name of the partnership.
The letter containing the two notices is in the following terms:
"We are instructed by Vanquish Properties (UK) Limited Partnership, the landlord of the above property of which you are the tenant under a lease dated 17 October 2011.
We enclose a rent authority letter following our client being granted a lease of 108 Fenchurch Street by the City of London.
We now enclose by way of service Notice of Termination pursuant to clause 7 of your lease along with Notice pursuant to section 25 of the Landlord and Tenant Act 1954.
Please acknowledge safe receipt."
The clause 7 notice referred to in the letter is a single-page document headed "Notice of Termination" and addressed to the Defendant. It is dated 22 March 2016, signed by K & L Gates LLP who are described as "Solicitors for the Landlord". The operative part of the notice is in the following terms:
"We, K & L Gates LLP, of One New Change, London, EC4M 9AF, solicitors and agents for Vanquish Properties (UK) Limited Partnership, the landlord under the Lease ("the Landlord"), notify you as follows:
The Landlord hereby gives you notice pursuant to clause 7 of the Lease that the Lease will determine on 27 September 2016."
The letter also contained a notice under section 25 of the Landlord and Tenant Act 1954 giving notice to end the Defendant's tenancy on 27 September 2016. It stated that the Claimant was opposed to the grant of a new tenancy and, if the Defendant asked for a new tenancy, it would oppose the application on the ground specified in section 30(1)(f) of the 1954 Act. It is common ground that the section 25 notice can only be effective if the notice under the break clause is effective.
At the date the notices were served, the Claimant was a limited partnership comprising one general partner, Vanquish GP, and four limited partners.
The parties' respective cases
The Claimant's primary case is that both notices are valid on the basis...
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