Breaking Up Is Hard To Do!

This January saw yet another case on break notices reminding all of us how careful both landlords and tenants need to be when leases are being brought to an end. In this case the landlord’s managing agents will be wishing that they had said less.

The case is MW Trustees Limited and others v Telular Corporation and Telular were the tenant and had a right to break their lease on 1 March 2010 as long as they had given the landlord six months’ notice in writing (and paid rent and other sums due up to the break date).

In October 2008, the original landlord transferred its interest in the property to MW Trustees who held the property on trust for two pension funds. The tenant was informed of the change and there was no dispute at the trial on this point.

In error, the tenant served the break notice on the previous landlord. However, it clearly reached the current landlord whose managing agent emailed the tenant saying they accepted the break notice served on the former landlord and confirming that they were happy for the tenant to break the Lease. They went on to ask for a new break notice to be served on the current landlord. No new notice was served.

The landlord’s case was that the managing agent’s email required a further notice to be sent in order to trigger the break and that, since that was never served, the break was never exercised. The tenant, however, argued that the requirement for a further notice was only a formality and that the break had already been accepted by the wording used in the managing agent’s email.

The Judge found that the managing agent’s email had the effect of accepting that the original notice had terminated the Lease and that the landlord had no further right to argue that defective service prevented the break operating or, alternatively, was prevented from denying the validity of the notice.

The Judge also commented that there is no duty upon a landlord to tell a tenant that he believes a notice has not been validly served and so the landlord would have been best advised to have simply acknowledged receipt of the notice and said nothing further. That would have preserved its right to contest the validity of the notice at a later date had it so wished. In this case, the landlord was left with a void so it decided to re-visit the issue of the break notice but unfortunately, its managing agent’s enthusiasm in the email put paid to that.