Lease — Break clause — Assignment of lease — Whether benefit of break clause personal or touching and concerning land — Whether benefit passing to assignee — Claim dismissed
The claimant was the landlord of premises, the lease of which had been assigned to the defendant by its predecessor with the consent of the claimant’s predecessor. The reversion immediately expectant on the lease was subsequently transferred to the claimant. The lease was for a term running from June 1993 to December 2013, and included an unusual break clause that entitled a lessee who had the benefit of the clause to end the term upon the giving of due notice. In December 2003, the defendant sent a notice of determination to the claimant’s solicitor, purporting to terminate the lease in June 2004. The claimant argued that the defendant was not entitled to do so because the benefit of the break clause had not expressly passed to the defendant on the assignment of the lease. The defendant contended that the benefit had passed to it automatically, as assignee, from the original lessee, as assignor. Alternatively, if the benefit had not passed automatically, the defendant sought rectification of the assignment.
Section 63 of the Law of Property Act 1925 provided: “(1) Every conveyance is effectual to pass all the estate, right, title, interest, claim and demand which the conveying parties respectively have in, to, or on the same. (2) This section applies only if and so far as a contrary intention is not expressed in the conveyance, and has effect subject to the terms of the conveyance and to the provisions contained therein.”
The claimant argued that section 63 passed only those rights that, in the technical sense, touched and concerned, or were appurtenants of or annexed to the land. An issue arose as to whether the benefit of the clause in the present case met those criteria.
Held: The claim was dismissed.
The defendant had validly exercised the break clause. The object of section 63 was to avoid express mentions of ancillaries and sweepings-up that had become the standard language of conveyancers, in order to ensure that everything that could pass with the conveyance did pass. The standard language was to be read into every conveyance (including a written assignment of a lease), unless a contrary intention was expressed. Such standard words could not carry a separate hereditament, but one looked to see what, in terms of estates and interests, was the main corpus intended to be transferred.
On the face of it, section 63 required no investigation beyond ascertaining whether the right was “in, to or on” the land conveyed. It specified no examination as to whether the particular right or claim was appurtenant or annexed to or enjoyed with the main corpus or whether it touched or concerned that main subject matter or even referred to it.
The easiest way to establish whether section 63 applied was to ask whether the transferor had power to convey the right in, to or on the property along with the property conveyed.
In the present case, it was plain that the break clause was not wholly personal and, on balance, it was open to the court to regard it as “touching or concerning”, or as having reference to the subject matter of the lease. Thus, its benefit passed with the term on assignment, even though it had not been expressly mentioned.
Guy Featherstonhaugh QC (instructed by Davenport Lyons) appeared for the claimant; John Male QC (instructed by Denton Wilde Sapte) appeared for the defendant.
Eileen O’Grady, barrister
