The case:
In the case of Fitzroy House Epworth Street (No. 1) Ltd v The Financial Times Ltd [2006] EG 112 the property was occupied under a 16 year lease with a break clause after 10 years. The tenant had a right to break conditional upon its having “materially complied” with its obligations under the lease up to the break date.
The tenant served a correct notice and took steps to agree with the landlord a programme to ensure compliance with the terms of the lease. It invited the landlord to take part in a joint surveyor’s inspection to agree a schedule of works. The invitation was not accepted.
Following professional advice, notwithstanding the lack of input from the landlord, the tenant spent nearly £1m repairing and redecorating the premises.
The tenant vacated on the due date. The landlord claimed that the material compliance condition had not been met so the break was ineffective.
The judge in the case held that the lease had been validly terminated since the tenant had materially complied with its lease obligations and had taken all reasonable steps to do so. All the defects that had been found at the break date were minor and even taken together would have required expenditure of less than £20,000 to be remedied.
The landlord had unreasonably declined to become involved in the steps taken to remedy the defects.
A breach of a repairing covenant would only be material if it adversely affected the landlord’s prospects or terms of re-letting.
[Note: The landlord in this case has been granted leave to appeal against this decision.]
Note for tenants
Check all compliance requirements under the terms of the lease before operating any break clause.
Who can help?
If you would like further advice about repairing obligations under leases of commercial premises please get in touch with your usual contact at plainlaw or Philip Horn on 01865 240202 or e-mail him at philip.horn@plainlaw.co.uk
This edition of “The Law made plain” is written to provide you with general information. It is recommended that you seek specific professional advice before taking any action.
© Copyright plainlaw 2006
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