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Articles
Be Sure To Make A Clean Break...
The recent case of Hotgroup PLC v Royal Bank of Scotland plc (as Trustee of Schroder Exempt Property Unit Trust ("Schroder Trust")) emphasises the importance of considering the service of notice provisions of the Lease carefully and also complying with them.
The Tenant had the benefit of a break clause permitting it to bring the Lease to an end on 3rd July 2010 on the giving of not less than 9 months notice and upon satisfying the pre-conditions detailed in the Lease.
The Lease included a clause providing that any notice or document served under the Lease may be served in any way permitted by section 196 of the Law of Property Act 1925. There was a further sub-clause which stated that while the reversion to the Lease remained vested in Schroder Trust, no notice will be deemed to be validly served on Schroder Trust unless a copy of the notice is also served on Schroder Property Investment Management Limited ("Schroder Management").
At the time of service of the notice, the reversion to the Lease remained vested in Schroder Trust. The Tenant served notice on Schroder Trust by the required date (i.e. before 3 October 2009), but did not send a copy of the notice to Schroder Management prior to the required date, despite the fact that the words in the notice provisions of the Lease were clear and unambiguous as to this requirement.
As a result, the Judge concluded that the Tenant had failed to comply with the terms of the break clause and it had not been validly exercised. The claim was therefore dismissed and Schroder Trust were entitled to a declaration that the break clause option had not been complied with.
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Author: Taf Ali
Published: Colman Coyle E-Bulletin
Date: June 2010