Clarence House Limited v National Westminster Bank Plc

8 December 2009

The Court of Appeal this morning overturned a High Court judgment made against our client, National Westminster Bank Plc, in January this year. This was the first occasion upon which the Court of Appeal had considered whether an agreement called a "Virtual Assignment" resulted in a breach of the usual covenants in a lease which prevent the tenant from alienating the property.

The decision is  of great interest to commercial property lawyers all over the City who have developed and utilised these "Virtual Assignments" quite widely over the last ten years.  The judge in the High Court had decided that the "Virtual Assignment" entered into by our client was a breach of such covenants and the decision had caused much consternation as a result because it raised the threat that hundreds of these agreements had been concluded in breach of covenant both by our client and others.  We have now successfully overturned the decision and commercial property lawyers all over the City will breathe a sigh of relief as a result.

Christopher Nugee QC and Julian Greenhill (Wiberforce) instructed by Linklaters LLP.

Link to Judgment