Tenant wins dispute with landlords over exercising break clause

A commercial tenant has won a dispute over exercising a break clause even though it served notice to an out-of-date address.

The case involved four landlords who were the trustees of a retirement scheme that owned the freehold of a large building. Three floors in the building were let to a commercial tenant on a 10-year lease from July 2010. After three years, the tenant exercised a break clause by serving notices by recorded delivery on each of the individual landlords at the business address given for them in the lease.

Only one landlord had retained any connection with the address and he had transferred his interest in the property in 2011.

The landlords submitted that the notices were ineffective because the address in the lease was not the “”place of abode or business”” of any of the current landlords.

The tenant argued that the Landlord and Tenant Act 1927 stated that service to a landlord’s original address was acceptable unless the tenant had been informed of a change.

The court found in favour of the tenant. It held that it was within the landlords’ power to inform the tenant of a change of address and, if they failed to do so, they bore the risk of documents not reaching them.

The tenant was therefore entitled to a declaration that the leases had been terminated at the break point.

Please contact Santokh Singh if you would like more information about the issues raised in this article or any aspect of commercial property law.