A somewhat harsh decision in a recent case reminds tenants that pre-conditions to a break clause require strict compliance, not substantial compliance.

The case looked at two of the pre-conditions to the break, which required compliance before expiry of the break notice:  

  • That a sum equal to six months' annual rent had been paid to the landlord. This payment was rendered by cheque the day before the break date. In general, debts have to be settled by legal currency (which does not include a cheque), unless this presumption can be displaced by a previous course of dealings. In this case, acceptance by the landlord of rent by cheque in the first three years of the term was sufficient to amount to an established course of dealings.
  • That any payments under the lease due on or before the break date had been paid. The landlord successfully claimed that the tenant had not paid default interest in the sum of £130, which had accrued before the break date on late payments under the lease. Itwas no defence that this was only discovered after the termination date, no demand for these sums had been made, the break notice had been served correctly nor that the tenant had written to the landlord in advance of the break date to confirm it had complied with the pre-conditions to which no response had been received. The tenant now finds itself liable for £300,000 of additional rent.  

Avocet Industrial Estates LLP v Merol Limited and another (2011)