A recent Court of Appeal case has questioned the validity of a break notice given by a tenant under a break clause in a commercial lease.
The Friends Life Ltd v Siemens Hearing Instruments Ltd case ruled that the tenant failed to exercise the break effectively because of an error in the notice.
The Court of Appeal overturned the initial decision of the lower court because it found that a break notice was invalid as it did not include wording specified by the lease.
The lease in question provided that the notice must be expressed to be given under section 24(2) of the Landlord and Tenant Act 1954. The notice served by the tenant’s solicitors referred to the clause in the lease but did not state that it was given under section 24(2) of the LTA 1954.
The Court of Appeal placed emphasis on the strict break requirements holding that a purported exercise of a break option either satisfies both the formal and substantive provisions of the break clause, or it does not. On the basis that the precise requirements were not adhered to, the court came to the conclusion that the notice was ineffective.
The decision has highlighted the importance of ensuring that break requirements are strictly complied with.
Daniel Long, Commercial Property Dispute Resolution Solicitor, at Woodcocks Haworth and Nuttall, commented: “I have come across a number of cases over the years which have revolved around whether or not a tenant wishing to exercise a break option has complied with all of the requirements stipulated in the lease.
“Often it is not as simple as serving a notice six months in advance and making sure that the rent is up to date. Some leases require payment of a premium, some require that there is no material breach of the lease and some require that the unit is left in vacant possession. It is clear from this latest case that some leases will require specific wording to be included.
“This is important for tenants to understand as there can be serious financial implications if a purported break is found to be invalid. Similarly, it is always worth landlords checking the terms of the lease in relation to break requirements, particularly in this economic climate.
“I can put it no better than Lord Justice Lewison who held that “if you want to avoid expensive litigation, and the possible loss of a valuable right to break, you must pay close attention to all the requirements of the clause, including the formal requirements, and follow them precisely.”
To find out more about this complex area of the law, call the experts on 0161 761 4611 or email Daniel Long at daniel.long@whnsolicitors.co.uk.
