Leftover partitioning invalidated company’s break clause

A business tenant has failed to exercise a break clause correctly because it left some partitioning behind when it vacated its commercial premises.

The premises were on a 10-year lease with the option of exercising a break clause after five years on condition that proper notice was served and vacant possession was given on or before the break date.

The tenant served notice on the landlord exercising the option to break and ceased paying rent shortly after the break date. It vacated the premises within the allotted time but left behind a large amount of partitioning which had been brought in following the granting of a licence for alterations.

That licence obliged the tenant to reinstate the premises to their original condition at the end of the tenancy.

It was undisputed that the tenant had not obtained prior approval for the works from insurers or given notice to the landlord of their commencement and completion, as required by the licence.

The landlord claimed that the notice to break the lease was not effective because the presence of the partitioning after the break date resulted in the tenant’s failure to give up the premises with vacant possession.

The court ruled in favour of the landlord. It held that the partitioning deprived the landlord of the “physical enjoyment of the premises” and meant that vacant possession had not been given.

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