Defendant tenant leasing premises from claimant — Premises becoming surplus to requirements — Clause 10 of lease enabling tenant to surrender surplus arrears — Tenant serving notice under clause 10 — Whether such notice valid
In 1997, the claimant bank leased premises to the defendant Secretary of State. Under clause 8 of the lease, the tenant had to give two years’ notice in writing to determine the lease. However, clause 10 provided that if any parts of the demised premises became surplus to the tenant’s requirements, the tenant could give the landlord six months’ notice to surrender the lease in respect of those areas, following which the rent would be reduced accordingly.
The defendant subsequently decided that he no longer wished to occupy the site. In June 2002, he served notice on the claimant that he wished to surrender the major part of the premises under the clause 10 provision, retaining only a storeroom and associated access in order to comply with the overall terms of the lease. In July 2002, the defendant served two years’ notice of his intention to determine the lease under the provisions of clause 8. In November 2002, he sent a second clause 10 notice of his intention to surrender the storeroom and a second clause 8 notice to terminate the lease of the entire premises.
The court was asked to determine which, if any, of these various notices, all expressed to be without prejudice to their predecessors, were valid. The issue before the court was whether the tenant had been entitled to serve a clause 10 notice in relation to part of the premises if, in reality, the whole of the premises were surplus to his requirements?
Held: The notice was valid.
The issue turned on the construction of the terms of the lease. Read together, clauses 8 and 10 gave rise to certain anomalies. However, the basic question was: what did the words of clause 10 convey to the reasonable reader? The clause 10 notice could be invoked only by the tenant. Those parts of the demised premises surplus to requirements could be greater than the parts specified in the notice. It was not necessary for the tenant to prove that part of the premises was not surplus to requirements. It therefore followed that the tenant was entitled to serve a clause 10 notice even though the entire premises had become surplus to his requirements.
Thomas Jefferies (instructed by Nabarro Nathanson, of Sheffield) appeared for the claimant; Wayne Clark (instructed by Simmons & Simmons) appeared for the defendant.
Vivienne Lane, barrister