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In previous blogs we have looked at the usual conditions attached to the effective exercise of a break clause in a lease and common mistakes made by tenants in exercising their breaks.

The Courts have reiterated the principle that the terms of break clauses must be strictly complied with if the notices served under them are to be effective.

Even minor failures to comply with the conditions will mean that the break clause is ineffective, as is well-illustrated by a number of high profile cases:

  • The presence of a tenant’s building contractors in the property a few days after the break date meant that they had not complied with a break condition requiring vacant possession. The court wasn’t interested in the fact that the contractors were only there to ensure that the tenant complied with another break condition! (That the property be handed back in repair.) They were simply concerned with the fact that, without total compliance, there had been no valid exercise of the break clause. [1]
  • A tenant’s failure to pay £130 in interest on late rent meant that the tenant had not complied with its obligation to pay all of the rent due up to the break date, rendering its attempt to exercise the break invalid. [2]
  • A tenant’s failure to mirror the wording set out in the lease meant that the notice was ineffective. Tenants can’t afford to ignore the landlord’s requirements, whether they agree with them or not.[3]

The message is crystal clear – 100% compliance or no effective break. And not only will Courts strictly interpret break conditions but they also continue to interpret lease provisions strictly even after the effective exercise of the break by the tenant – just when they thought they were home free: Marks & Spencer [4] did effectively exercise its break option and paid all rent due under the lease up to the break date. To be absolutely sure that the break would be effective, they included rent in respect of the period after the break date to the next quarter day.They subsequently demanded a refund in respect of the rent relating to the period after the break date but there was no provision in the break clause requiring the landlord to comply with such a request. The Court of Appeal reversed the High Court’s attempt to imply such a provision into the lease and the landlord was laughing all the way to the bank.

Break clauses are valuable – make sure that they are clear, properly negotiated and fully complied with to ensure that they’re not wasted.

This post was edited by Rachel Baker. For more information, email blogs@gateleyuk.com.

[1] NYK Logistics (UK) Limited v Ibrend Estates BV [2011] EWCA Civ 683

[2] Avocet Industrial Estates LLP v Merol Ltd & Anor [2011] EWHC 3422 (Ch)

[3] Friends Life Ltd v Siemens Hearing Instruments Ltd [2014] EWCA Civ 382

[4] Marks and Spencer plc v BNP Paribas Securities Trust Company (Jersey) Limited and another [2014] EWCA Civ 603


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.