Commercial leases: Vesting leasehold interest in an occupier where the original lease was deemed to be void

Vesting leasehold interest in an occupier where the original lease was deemed to be void

The background

In Panton and others v Brophy and another [2019], the claimant rowing club occupied a local authority boathouse under a lease from the local authority. Following a joint venture agreement with a local hockey club, Hounslow Hockey Club Limited, the local authority granted a licence to assign the lease to the hockey club and the rowing club as joint tenants. The hockey club was later dissolved, but the rowing club continued to pay rent for its occupation of the boathouse albeit the original lease was found to be void, leading the local authority to take possession of the property.

The rowing club applied for a vesting order to vest the property in them for the remainder of the lease’s term. The claim was not served on the local authority, but it applied to be joined into the action. The rowing club stated that this was not necessary, stating that the issue in question was whether the club could be held a suitable trustee for the purposes of the Trustee Act 1925.

The decision

The High Court vested the boathouse in the rowing club for the remainder of the lease’s term. Further, the local authority could be joined into the action as a defendant as it held an interest in the issue of the existence of the lease.

In making its vesting order, the court found that all parties had agreed to the lease’s terms by virtue of their agreement to the assignment, licence and a deed of variation. The lease had been granted to the hockey club. For an effective grant, the rowing club must hold the leasehold estate on trust for its members; the court found that the grant of lease to the hockey club and the terms of the joint venture were sufficient to meet this requirement. It was not possible for the rowing club to claim a legal title to the lease, and the court therefore concluded that the clubs were beneficial joint tenants.

Advice and action for landlords

This case considers not only the effect of an organisation’s beneficial entitlement to occupation as a tenant where it cannot claim legal title, but also highlights how a court will refer to the original intentions of the parties when reaching its decision.

Here, the court looked at the actions of the parties in joining into various pieces of documentation, finding that this indicated their agreement to the lease’s terms. Creating a trust relationship, and with clear intention that the rowing club take occupation of the boathouse as a tenant, the court found that a vesting order was justified.