The defendant tenants, anticipating that the landlord might delay or refuse consent to a subletting entered into a ‘virtual assignment’ of the lease, an assignment in everything but the deed and with no registration. The lease contained a standard form prohibition against assignments or sub-letting. The defendants now appealed against a finding that they were in breach of the covenant against parting with possession, but not that against alienation.
Held: The appeal succeeded. NatWest did not, by entering into the virtual assignment share possession or part with possession of the demised premises or any part of it. ‘New Liberty does not, when it collects rent as agent of NatWest, receive that rent itself in the sense of putting it into possession of the demised premises. Nor, prior to collection, does it have the right to receive rent in that sense.’
The virtual assignment was neither a form of trust, but rather purely contractual: ‘virtual assignments are strange new beasts in the forest; that one must circle around them suspiciously and cautiously; but the moment one gets close and has a good sniff, the overwhelming smell is of contract, not of trust.’
The lease explicitly proscribed several forms of alienation. The use of a list suggested that forms of alienation not listed were not prohibited. The form used was not listed.
Ward LJ, Jacob LJ, Warren LJ
 EWCA Civ 1311
Law of Property Act 1925 205(1)(xix)
England and Wales
Cited – Lyell v Kennedy HL 1-Aug-1889
The true owner may recover money which was rightfully his from a person to whom the money in question had been wrongly paid by the collector of the money. A fiduciary is one who has undertaken, whether on request or without request, of his own . .
Appeal From – Clarence House Ltd v National Westminster Bank Plc ChD 23-Jan-2009
The claimant landlord alleged that the defendant tenant had transferred the lease under a ‘virtual assignment’ and that this was in breach of its lease.
Held: The Abbey National case was not helpful. However, the arrangement was not a breach . .
Cited – Revenue and Customs v Abbey National Plc CA 29-Jun-2006
The court considered the effect in VAT on a ‘virtual assignment’ of a lease. . .
Cited – Akici v LR Butlin Ltd CA 2-Nov-2005
The tenant appealed against forfeiture of his lease for breach of a qualified covenant against assignment. It was said that the tenant had attempted to hide from the landlord the assignment of the premises to his company or its shared occupation. . .
Cited – Mirror Group plc v Commissioners of Customs and Excise, Cantor Fitzgerald International v Same ECJ 9-Oct-2001
A potential lessee who did not have an interest in immovable property agreed to take a lease in return for money paid by the landlord. The transaction was not exempt from value-added tax under article 13(B)(b) as ‘the leasing or letting of immovable . .
Cited – Stening v Abrahams ChD 1931
The landlord complained that the tenant was in breach of his covenant not to part with possession of any part of the premises where the tenant had so organised things that he had effectively excluded himself from part of the demised premises.
Cited – Lam Kee Ying Sdn. Bhd v Lam Shes Tong PC 1975
The Board considered an alleged breach of a covenant against assignment in a lease.
Held: The transfer to a newly formed company of the partnership business being conducted on the premises was a parting with possession. ‘A covenant which . .
Cited – Kataria v Safeland Plc CA 4-Nov-1997
A landlord retained the right to forfeit a lease for non-payment of rent even though had re-assigned the benefit of the arrears to the previous landlord on the purchase. A landlord may assign the right to receive the rent without assigning the . .
Cited – J A Pye (Oxford) Ltd and Others v Graham and Another HL 4-Jul-2002
The claimants sought ownership by adverse possession of land. Once the paper owner had been found, they indicated a readiness to purchase their interest. The court had found that this letter contradicted an animus possidendi. The claimant had . .
Cited – Manchester Airport Plc v Dutton; Longmire; Stoddard; Maile and Persons Unknown CA 4-Mar-1999
The claimant wished to construct a new runway on its own land, and it was necessary to carry out works, namely, that trees on nearby land should be lopped or felled so that they would not constitute an obstruction to the flight path. The claimant . .
Cited – Saunders v Vautier 7-May-1841
A direction in a will stated that the income from certain shares was to be accumulated and invested until the beneficiary attained the age of 25. On attaining his majority at 21 years, the beneficiary sought termination of the trust, and transfer of . .
Cited – Westdeutsche Landesbank Girozentrale v Islington London Borough Council HL 22-May-1996
Simple interest only on rate swap damages
The bank had paid money to the local authority under a contract which turned out to be ultra vires and void. The question was whether, in addition to ordering the repayment of the money to the bank on unjust enrichment principles, the court could . .
Cited – Richards v Delbridge CA 16-Apr-1874
The donor purported to make a voluntary gift of leasehold premises and stock in trade by endorsing on the lease ‘This deed and all thereto belonging I give to E from this time forth, and all the stock in trade.’ This document was delivered to E’s . .
Cited – Howard v Miller 1915
The trusteeship which arises as between a vendor and purchaser of land depends on the availability of specific performance. Lord Parker of Waddington said: ‘It is sometimes said that under a contract for the sale of an interest in land the vendor . .
Cited – Gentle v Faulkner CA 1900
A declaration of trust of a lease had been executed by the tenant. The landlord complained that this was a breach of the covenant against assignment.
Held: In the absence of any context showing that the covenant is to have an extended meaning, . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant
Updated: 20 January 2022; Ref: scu.383666