Failure to Observe Agreement Terms Invalidates Break Notice

July 23, 2013

Failure to Observe Agreement Terms Invalidates Break Notice

A tenant wished to break its lease and served the appropriate notice on its landlord. However, the tenant had taken a supplemental lease on the adjacent premises after entering into the first lease, and the initial lease had been varied to require the tenant to give up vacant possession to the landlord on both premises at the same time. The tenant forgot to serve a notice on the landlord in respect of the second lease, so was unable to comply with its obligations.

As an alternative to giving up possession of both premises, the main lease allowed the tenant to separate them so that they could be let independently. However, this was not possible in the timescale necessary.

The landlord then agreed to accept that the break clause would be effective provided the tenant paid a sum in lieu of the separation works necessary and an amount to cover dilapidations. This was required to be paid before the break date.

Due to a mistake in the tenant’s accounts department, the payment was not made by the stipulated date and the landlord therefore refused to accept the break notice.

The court considered that the wording of the agreement made it clear that the applicable lease terms were essentially still those of the original lease, in which time was of the essence for determining compliance.

The tenant’s argument that strict adherence to the time of payment clause was not reasonable on the part of the landlord was rejected.

The result was that the tenant had failed to give a valid notice to break the lease and is therefore bound by it until the next opportunity to issue a break notice arises.