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APRIL 2011

Many people underestimate the possible implications of not serving a break notice validly. The recent case of MW Trustees Limited & others v Telular Corporation has highlighted once more how severe the penalties could be.

A valid break notice

There is both statute and case law covering service of a notice but most important is complying with the terms of the lease. It follows that when negotiating a lease at the outset close attention must be given to the break clause as it is these terms that will ultimately bind the parties.

The case of MW Trustees Limited

This recent case involved a ten year lease of a unit which allowed the tenant to terminate the lease on the “break date” by giving at least six months’ notice. Notice had to be served in writing and by special delivery. The lease specifically said that a break notice would only be valid if served in accordance with the terms within the lease.

The reversion had changed hands a few times and the break notice was sent not to the landlord, but to is immediate predecessor. The tenant was informed of this but subsequently served a notice by email (and not by special delivery) to the correct party. The landlord sought to argue that notice had not been given and so the tenants were not entitled to leave. The judge held that there had been “waiver by estoppel” because there was a clear intention to terminate the lease and the managing agents had responded to the tenant’s request saying that they accepted the service of the notice. There was further correspondence between the parties and this was held to be of relevance.

Although in this case the tenant was able to rely on their service of the notice they had to endure a costly court battle and risked having to stay in occupation for much longer than they wanted to.

Simon Catt
Partner

If you would like any further information about the issues raised in this article please contact Simon Catt (scatt@gdlaw.co.uk)  or any other member of Goodman Derrick LLP’s property department on 0207 404 0606.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice.