Archive for the ‘Vacant possession’ Category

There is an implied term that a sale of land is with vacant possession

March 30, 2016

In Wong Yuk Ying v Chan Pui Shan May ([2016] HKEC 537, CA) S1 agreed to sell a workshop to S2. S2 entered into a sub-sale agreement with P. The workshop was divided into three units and each unit was subject to a separate tenancy. Details of the tenancies were contained in the sale and purchase agreements (both the head contract and the sub-sale). Two of the tenancies would determine by effluxion of time by the time of the completion date, the third would not. The tenants of the units whose leases expired did not vacate the property at the end of the term and were still in possession at the completion date specified in the sale and purchase agreements. P argued that the failure to give vacant possession on completion amounted to a failure to give good title and sought a declaration that S2 was in breach of contract and the return of the deposit paid to S2.

S2 argued that there was no express or implied term to the effect that sale was with vacant possession. Yuen JA disagreed: there is an implied term that sale is with vacant possession in the absence of agreement to the contrary ([22.1]). The fact that the sale was subject to and with the benefit of the tenancies did not amount to an expression of a contrary intention given that the tenancies would have expired by the completion date. In the absence of a contrary intention, the seller bore the risk that the tenants would remain in possession at the end of their leases ([30]); P’s knowledge of the existence of the tenancies and that the tenants might not vacate did not mean that there was any such contrary intention.

Michael Lower

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No vacant possession if the seller leaves lots of rubbish behind him

October 3, 2011

Vacant possession includes the right to actual unimpeded physical enjoyment. It does not refer only to the absence of a claim to possession by a third party. A seller does not give vacant possession if he leaves a large amount of property or rubbish behind him (subject to the rule de minimis).

In Cumberland Consolidated Holdings Ltd v Ireland ([1946] KB 264, CA (Eng)) a seller had agreed to sell property with vacant possession. On completion, the buyer found that the seller had left behind a lot of rubbish including bags of hardened concrete. The English Court of Appeal held that this was a breach of the contractual obligation to give vacant possession. Vacant possession includes the right to actual unimpeded physical enjoyment. It does not refer only to the absence of a claim to possession by a third party. A seller does not give vacant possession if he leaves a large amount of property or rubbish behind him (subject to the rule de minimis).

Weekly review: 8 – 12 August

August 13, 2011

Land covenants: abandonment

Land covenants often impose restrictions on what can be built on land and the uses to which it can be put. Should a covenant created in the nineteenth century still govern the use of land today? This gives great weight to the intentions of the long-dead parties to the deed. The character of the area and the pressures on the use of the land may have changed greatly. Thus in Attorney-General of Hong Kong v Fairfax Ltd, the Crown sought to enforce a restriction in an 1862 Crown Lease of land near the centre of Hong Kong (Hing Hon Road and Bonham Road). Since the 1950s high-rise, high-density development had been the norm in the area. Nevertheless, in the 1990s, the Crown still sought to enforce a covenant that allowed only the building of ‘villa residences’, The Crown’s acquiescence over many years in other obvious breaches of the same covenant persuaded the Privy Council that it had abandoned the covenant and was no longer entitled to enforce it.

Gray and Gray point out that although the Upper Tribunal (Lands Chamber) (formerly the Lands Tribunal) in England has the power to discharge or modify restrictive covenants (Law of Property Act 1925, s. 84) it is often reluctant to do so. The covenants can often play a useful part in protecting ‘environmental amenity’ (Elements of Land Law, pp. 255 – 256). Property Prof Blog has a number of posts about the use of conservation easements in the US.

Land Covenants: who can benefit?

Privity of contract means that only the parties to a contract can enforce it. Section 26 of the Conveyancing and Property Ordinance provides a way of extending the range of parties to land covenants:

‘A person may take an immediate or other interest granted to him in respect of land or the benefit of any condition, right of entry, covenant or agreement granted to him over or in respect of land, although he may not be named as a party to the instrument.’

One practical use of this is as a way of passing the benefit of land covenants onto the owners of identified parcels of land (as one element of a building scheme). White v Bijou Mansions shows that the person relying on section 26 must show that he falls within ‘the scope and benefit’ of the covenant and not merely that enforcement would be useful to him. Section 26 does not abolish the law on privity and applies only to land (Beswick v Beswick).

Promissory estoppel

It is usually said that promissory estoppel is a sword and not a shield. The Australian High Court allowed it to be used as a cause of action in Walton’s Stores (Interstate) Ltd v Maher. More recently, the Hong Kong Court of Final Appeal seems to have done the same in Luo Xing Juan v Estate of Hui Shui See.

Proprietary estoppel

Sometimes the relevant promise or representation in a proprietary estoppel claim stands out a mile; there have been frequent public assurances. On other occasions, however, the evidence is not overwhelming but is sufficient. Suggitt v Suggitt is an example of the latter.

Vacant possession

A seller of land often agrees to sell with vacant possession. At the end of a lease, a tenant has to give back possession. The meaning of ‘vacant possession’ was considered again in NYK Logitics (UK) Ltd v Ibrend Estates BV.

The meaning of ‘vacant possession’

August 9, 2011

In NYK Logistics (UK) Ltd v Ibrend Estates BV ([2011] EWCA Civ 683, CA (Eng)) the English Court of Appeal had to consider whether a tenant had given vacant possession of property to the landlord. The lease contained a break clause allowing the tenant to give notice to terminate the lease. One of the conditions for the valid exercise of the break right was that the tenant had to give vacant possession of the property to the landlord on the date when the lease was to come to an end. The tenant served the notice under the break clause. Its workmen and security guards remained on the property for several days after the date specified in the notice. They did so in order to finish off the repairs that the landlord and tenant had agreed were necessary.

It was held that the tenant had not given vacant possession (and that it had not effectively brought the lease to and end). Rimer LJ explained that:

‘[Vacant possession] means that, at the moment that “vacant possession” is to be given, the property is empty of people and that the purchaser is able to assume and enjoy immediate and exclusive possession, occupation and control of it. It must also be empty of chattels, although the obligation in this regard is likely only to be breached if any chattels left on the property substantially prevent or interfere with the enjoyment of the right of possession of a substantial part of the property.’ (at para. 44)

The presence of NYK’s workers meant that vacant possession had not been given.