Break clauses – another tenant is tripped up

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• Break clauses – another tenant is tripped up
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A recent case highlights yet another trap which tenants can encounter when trying to exercise a break clause in their lease.  As we discussed in the Spring edition of Informer, this is a very tricky area of practice.

The latest case, Gemini Press Ltd v Cheryl Lindsay Parsons, hinged on whether a break right was personal to a particular tenant, i.e., whether the break right was lost once the lease was assigned.   In  2002, a lease was assigned to a company called Ashdown Company UK Limited. At the same time, a deed was entered into, inserting a break clause into the lease.  This allowed Ashdown to break the lease on 6 months' notice. The deed used the term "Assignee" throughout, which was defined as including "their respective successors in title".  However, the break clause specifically named Ashdown alone, and made no reference to "Assignee".

In 2005, Ashdown assigned the lease to Gemini Press Limited .  Gemini then attempted to exercise the break right in 2009. However, the Landlord argued that Gemini was not entitled to break the lease, because that right was personal to Ashdown.

The county court judge held that the break right applied only to Ashdown, and not to Gemini as Ashdown's assignee.

Gemini appealed and lost.  Gemini argued that a word like "only" was needed to make it clear that the right to break was personal and not capable of assignment.  As the break clause in this lease did not use the word "only", or anything similar, the right to break was capable of being assigned to Gemini.

The Judge held that the language of the parties in relation to the break clause was different from that which appeared elsewhere in the deed.  Elsewhere the expressions "Tenant" and "Assignee" had been used, but in the break clause there was reference only to Ashdown.  To the Judge it was clear that the language used was designed to limit the right to Ashdown, and the intention was that the break right was not to be a right which was capable of assignment to further assignees.

As ever, great care needs to be taken when exercising break rights.  Please do get in touch if you would like to know more.   

Faye Hyland is a solicitor in the Property Litigation team at Field Fisher Waterhouse LLP