- A break clause which referred to a tenant by name could only be exercised by that particular tenant and not its successors in title
Facts of Gemini Press Ltd v Parsons
A lease was granted in 1996 to company S. In 2002, the landlord granted a licence for the assignment of the lease by S to a company called Ashdown Company UK Limited (Ashdown). The lease was duly assigned.
The licence to assign had also effected a variation of the lease, to insert a break clause into the lease as follows:
"If Ashdown Co UK Ltd shall be desirous of terminating the term hereby granted and shall give to the landlord notice ... then at the expiration of such notice this lease shall absolutely cease and determine".
Ashdown subsequently assigned the lease to the claimant, who attempted to exercise the break. The landlord challenged this on the ground that the break was personal to Ashdown.
The High Court ruled that the break right was personal to Ashdown. The language used in the break clause was deliberately different from that used elsewhere in the licence to assign. Elsewhere the expressions "tenant" and "assignee" had been used (and those terms were defined as including successors in title), but the break clause referred to Ashdown by name. The right was therefore limited to Ashdown and not capable of assignment to further assignees.
Things to consider
The claimant had tried to argue that because the clause didn't say "Ashdown Co UK Ltd only", then it wasn't personal to Ashdown. This argument was based on Linpac Mouldings Ltd v Aviva Life & Pensions UK Ltd where the "only" form of wording was used and the break was found to be personal. This argument was rejected by the court.
Although the court looked at the terms of the break clause in the context of the licence to assign within which it was physically contained, the effect of the variation was of course that the break clause was inserted into the lease. The clause must therefore be looked at within the context of the rest of the lease - rather than the licence. The same result would of course be produced because the break clause did not use the defined term "Tenant" (as one assumes was used throughout the lease) but rather refers to the name of a particular tenant.
Where defined terms are used in a document, it is important to ensure that those terms are used consistently. Where a document is being subsequently varied it is easy to overlook how the variation fits into the context of the document as a whole. In this case however there is no suggestion that the drafting was an error - presumably the intention was only ever that the break clause should be personal.