The High Court has recently confirmed the validity of a tenant’s break notice despite the notice not strictly complying with the break clause in the lease.
The ruling in Siemens Hearing Instruments v Friends Life [2013] confirms that the requirements of a break clause do not necessarily need to be strictly observed but tenants should treat it with caution.
Background to Siemens Hearing Instruments v Friends Life [2013]
In 1994, Friends Life (the landlord) leased commercial premises to Siemens Hearing Instruments (the tenant) for 25 years; the tenancy was protected under the Landlord and Tenant Act 1954 (the Act).
A break option was contained within the lease, giving the tenant the ability to end the lease on 23rd August 2013. This notice had to be expressed as ‘given under section 24(2) of the 1954 Act’. There was a risk in 1994 that the tenant could end the tenancy on the break date and then request a new tenancy under section 26 of the 1954 Act, forcing the landlord to renegotiate the lease. This risk no longer existed at the time of the break notice so reference to section 24(2) held no meaning at that time.
The notice given by the tenant did not include any reference to section 24(2), which the landlord argued made it invalid. The High Court was therefore asked to consider whether its validity given the omission of reference to 24(2), as required by the lease.
Break Notice Compliance and Validity
In the High Court the tenant argued that the words, given their context, were meaningless. There was no provision for serving notice under section 24(2) and, given this, the break notice should be valid. The landlord argued that the words did serve a purpose; to prevent a subsequent application made by the tenant for a renewal.
The Court first considered the compliance aspect of the break notice, and found it not compliant with the break clause. This is because the omission could not be corrected as it was not a simple clerical error. There was no doubt as to the meaning of ‘must be expressed to be given under Section 24(2)’ so even if it was meaningless, it was still a requirement of the lease and as such could not be disregarded by the tenant.
The Court then moved on to consider the validity of the notice, given it was non-compliant. It was found to still be effective as the lease was well drafted. If the lease intended a failure to mention section 24(2) to be fatal, the break clause would have said so. The tenant’s failure to include the wording made ‘no difference at all’ as the words did not provide the landlord with any additional protection.
Comment
Break clauses and break notices in commercial leases remain a breeding ground for litigation. Landlords should ensure that if non-compliance with a break clause is fatal to the notice, then it is explicitly written into the lease and not implied. Tenants should seek to ensure that notices comply with the terms of the lease and should seek legal advice when dealing with break clauses.
For specialist advice contact Peter Gourri today by email PGourri@rollingsons.co.uk or telephone 0207 611 4848.
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