A recent case shows that the omission of wording which a lease stipulates should be included in a tenant’s break notice is not automatically fatal to the validity of the break notice. In an important decision, the High Court has held that there is no inflexible rule that break option requirements must be complied with strictly.
In this case, a tenant under a 25-year lease was granted a right to break the term on 23 August 2013. In addition to having to fulfil certain pre-conditions, the break option stated that a break notice ‘must be expressed to be given under section 24(2) of the Landlord and Tenant Act 1954’.
The tenant served its notice in September 2012, yet failed to mention section 24(2) as required. The landlord accordingly claimed that the tenant had failed to serve a valid notice to bring the lease to an end.
The Court found that using the ‘magic words’ that the notice was given under section 24(2) was not an indispensable condition and it would not be a sensible construction of the break option to hold that the use of these words was mandatory and that without them the break notice was invalid.
The Judge explained that the requirement to expressly refer to section 24(2) had been inserted into the break option as, at the time the lease was drafted in 1997, there was an unresolved issue as to whether a tenant could simultaneously exercise a break clause and request a new tenancy under section 26(2) of the Act.
Interestingly, the Judge rejected the tenant’s argument that the ‘magic words’ could be disregarded as a result of case law which had since clarified this issue, and disagreed that these words had therefore become pointless. Further, the Judge held that the tenant’s notice did not comply with the break option and that the mistake in the notice was not the type of mistake that could be corrected in accordance with the often-quoted ‘Mannai’ principle. In reaching this conclusion, he stated that it was clear that it was not simply the case that the person drafting the notice had mistakenly omitted the ‘magic words’.
Despite this, the Judge went on to hold that omitting the wording did not mean that the notice should be held to be invalid, commenting that it was relevant that the break option was silent on the consequences of a non-compliant form of notice. Where a break option does not provide that a non-compliant notice will be invalid, the Court must look at the intention of the parties objectively and explore the effect of non-compliance, if any. On the facts, the Judge found it was natural to conclude that it had been intended that the notice should survive non compliance.
The rationale behind this decision is clearly fact-specific. However, this case highlights that a landlord will not automatically be successful in challenging the validity of a break notice on the ground that a tenant has failed to include wording stipulated in the break option. Although provisions relating to the exercise of a break option are usually mandatory, such provisions are not inflexible. Nevertheless, tenants should always be cautious and seek to comply with break provisions as fully as possible.
A prudent approach might be for landlords to consider including wording in a break option which clearly states what will happen in the event of non-compliance (although tenants may refuse to agree to this). This will avoid future arguments over whether or not the parties had intended for the break notice to survive non-compliance and provide clarity into what is often a contentious area of law.