Break Notices - When is a defect not a defect?

Is the omission of wording in a tenant’s break notice fatal to the validity of that notice? That was the question for the court in Tyco Fire & Integrated Solutions (UK) Limited v Regent Quay Development Company Limited.

The facts

The landlord, Regent Quay, was the owner of commercial premises known as the Glover Pavilion in Aberdeen Science and Technology Park. It granted a lease of Units 3 and 4 in the Glover Pavilion to Tyco. The lease was for a period of ten years, expiring on 5 February 2014. The parties subsequently agreed to vary the terms of the lease. The effect of the variation was that the subjects let were amended to include Unit 1 in addition to Units 3 and 4, and the term of the lease was extended to 30 August 2021, but with an option in clause 4.2 of the lease for the tenant to terminate it on 31 August 2016.

On 11 January 2016, the tenant’s agents served a notice on the landlord for the purpose of exercising the break option. The heading of the letter containing the notice erroneously referred only to Units 3 and 4 and not to Unit 1, and defined this as “the Premises”. The issue between the parties was whether the notice was an effective exercise of the break option. The landlord contended that, as there was no provision in the lease for exercise of the break clause in respect of only part of the subjects let, the notice purported to do something that the tenant was not entitled to do, and was therefore invalid.

“Clear and unambiguous”

Following the House of Lords decision in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd, the court applied the "reasonable recipient" test for determining the validity of the notice.

Lord Tyre was satisfied that “the reasonable recipient would not have been perplexed in any way by the error in the letter heading. The operative element of the notice is sufficiently clear and unambiguous to avoid any such perplexity, and the fact that the ingenuity of lawyers can suggest theoretical ambiguities is not to the point.”

Comment

The rationale behind this decision is clearly fact-specific. However, the case highlights that a landlord will not automatically be successful in challenging the validity of a break notice on the basis of a clerical error where the intention of the notice is clear. This case is, however, being appealed. Although this type of issue has arisen on many occasions, the case serves as a reminder of the importance of accuracy when serving notices under leases.