A condition sometimes seen in break clauses is that the option to terminate the lease is personal to the original tenant. A recent case highlights an unusual situation where this caused problems.
In this case the tenant applied for landlord’s consent to reassign the lease to the original tenant, Linpac. The lease contained a break right which was personal to Linpac. The landlord refused consent on the ground that the assignment would create a risk that Linpac would seek to exercise the break, to the landlord’s disadvantage.
Several issues were considered, but of principal interest is the court’s finding that it did not accord with commercial common sense to allow a personal break option to be revived if the lease is subsequently reassigned to the original tenant (unless there is express wording to that effect). If Linpac had wished to retain the right to break it could have sub-let rather than assign the lease.
There was some legal basis for Linpac’s argument that the break option was revived, and so the landlord’s refusal of consent to the assignment was a reasonable refusal even though its fear turned out to be unfounded.
Norwich Union Life & Pensions v Linpac Mouldings Limited (2009) EWHC 1602 (Ch)