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56: How (not) to serve a break notice in a commercial lease

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56: How (not) to serve a break notice in a commercial lease
Leave your thoughts Jennifer Chappell

By Jennifer Chappell

Do tenants deserve a break? Not according to the Court of Appeal when looking an invalid break notice earlier this year.

In Friends Life v Siemens Instruments, even where the formal requirements of a break clause were seen to be “pointless” they still needed to be followed by the tenant to the letter. Otherwise the break notice would be void.

The break clause stated that the tenant’s break notice had to given under a particular section of the Landlord & Tenant Act 1954 (the “Act”). Siemens, as tenant, served a break notice but did not refer to the section of the Act. The landlord argued that the notice was invalid.

In an odd decision last year, the High Court agreed with the tenant. It held the condition in the break clause could be ignored as meaningless. This ruling created uncertainty because previous law had always stated that formal conditions in a lease must be complied with absolutely.

Earlier this year, the Court of Appeal overturned this ruling and re-established principles of clarity and certainty for service of break notices. Any conditions agreed by the parties and contained in a break clause must be strictly complied with, regardless of how pointless or trivial they may seem.

Where the lease said the break notice had to be given under the Act, then the break notice should have referred to the Act. This is reminiscent of the famous 1997 ruling in Mannai v Eagle Star Life Assurance where the Court of Appeal said:-

“if the clause had said the notice had to be on blue paper it would have been no good serving a notice on pink paper, however clear it might have been that the tenant wanted to terminate”

Tenants will feel this decision is a harsh one. Lawyers will feel it is fair. Landlords may remind tenants to pay close attention to the wording of a break right or suffer the consequences.

Friends Life v Siemens Instruments [2014] EWCA 382

7 August 2014

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