Merger of lease by operation of law

Where a tenant acquires the reversion there is an equitable presumption against the termination of the lease by merger where this would be contrary to the wishes or duty of the tenant.

In EDF Energy Networks (EPN)  plc v Boh Ltd ([2010] 2 P & CR 3) EDF was the tenant of some land on which it had built an electricity sub-station. It acquired the reversion of part of this land and one question in this complex case was whether the lease had merged in the reversion. It was held that it did not because of the equitable presumption that there is no merger where this would be contrary to the interests or duty of the tenant (Capital and Counties Bank Ltd v Rhodes [1903] 1 Ch 631 at 652, CA (Eng)). In this case it would have been very harmful to EDF’s commercial interests if the lease were to come to an end. That would bring an end to certain easements it needed.

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