Lease of commercial premises – Tenant’s break clause – Notice to be sent to receiving party’s address as shown in lease or as otherwise notified from time to time – Defendant tenant erroneously sending break notice to former landlord – Whether lease validly terminated notwithstanding incorrect addressing of notice – Whether subsequent e-mail correspondence with managing agent of claimant landlords waiving defects in notice – Claim dismissed
The defendant held a lease of office premises for a term of 10 years from March 2005. When, the claimant pension trustees acquired the reversion to the lease in October 2008, the defendant was informed of the change of landlord. In 2009, it sought to exercise a tenant’s break clause that allowed it to terminate the lease in March 2010 on giving the landlord six months’ advance notice in writing. The clause specified that the notice would to be valid only if “sent by special delivery post or delivered by hand” to the relevant address. Where the recipient was a company, the address would be that of its registered office; otherwise, the notice was to be sent to the recipient’s address as shown in the lease or to such other address as it might give from time to time.
Although the defendant, as a company, knew of the change of freeholder, the individual officer who served the break notice was did not. In August 2009, she sent the notice by special delivery to the previous landlord, which redirected her to the claimants’ managing agent. She then e-mailed the second claimant informing that she had sent notice to the former landlord and asking about the steps necessary to terminate the lease; the second claimant forwarded that e-mail to the managing agent. On 17 August, the managing agent replied by e-mail, copied to the second claimant, stating: “We accept the attached letter and can confirm that we are happy for you to break the Lease” and asking the defendant to readdress its letter to that of the trust. The defendant prepared the replacement notice but it was either not sent or was lost in the post.
The claimants brought proceedings for a declaration that the defendant had not served a valid break notice and that the lease continued. The defendant contended that the lease had been broken because the managing agent, by its e-mail of 17 August, had waived any defects by representing that the claimants accepted the notice despite its defects and were content for it to be treated as a valid exercise of the break clause.
Held: The claim was dismissed.
A reasonable recipient of the notice would not have been misled as to the defendant’s intentions to terminate the lease simply because the notice had been addressed to the wrong party. On a proper construction of the lease, the form of the notice did not require it to be “addressed” to the landlord as opposed to being “sent” to it. Although the notice had to be served on the landlord, the lease did not specify that the landlord had to be referred to in the contents of that notice. In the instant case, the claimants had not been misled as to the defendant’s intention by the service of the notice. The claimants had known, by the service of the original notice and the sending of the same by e-mail in August 2009, that the defendant intended to terminate the lease. Furthermore, once the second claimant had referred the documentation to the managing agent for action, the managing agent had sent an e-mail acknowledging it. It had appreciated that the defendant intended to terminate the lease. The statement in its e-mail that it accepted the attached letter and confirmed that it was happy for the defendant to break the lease was not merely an acknowledgment of receipt. Viewed objectively and given the use of the word “accept”, the managing agent was accepting, on behalf of the claimants, that the documentation showed an intent on the part of the defendant to terminate the lease and that it had the effect of terminating the lease in March 2010. The e-mail showed that this was the claimants’ stance and, accordingly, they were either estopped from subsequently challenging the validity of the notice or were deemed to have waived the requirement for a notice to be served in the manner specified in the lease. The request for the service of a new document did not mean that the claimants were requiring re-service of the notice in order for the break to be exercised. The defendant had been entitled to conclude that the claimants had accepted the earlier documents as being effective to terminate the lease and had acted accordingly. It followed that the defendant had successfully terminated the lease: Mannai Investment Co Ltd v Eagle Star Life Insurance Co Ltd [1997] 1 EGLR 57; [1997] 24 EG 122; [1997] 25 EG 138 applied.
David Holland (instructed by Shoosmiths, of Reading) appeared for the claimants; Tom Weekes (instructed by Speechly Bircham LLP) appeared for the defendant.
Sally Dobson, barrister
