'You Need To Be Best Friends [For] Life With Break Clause Conditions'

The case of Friends Life Limited v Siemens Hearing Instruments Limited [2014] EWCA Civ 382 has confirmed that all conditions (even procedural) must be complied with in order for a break to be effective. This decision overturns the earlier High Court decision [2013] EWHC B15 (Ch) (see Giving the tenant a lucky break? Real Estate Bulletin: October 2013).

Facts

A lease was entered into between Sun Life Assurance Society Plc (later Friends Life Assurance Society Ltd ("the Landlord") and A&M Hearing Ltd (later Siemens Hearing Instruments Limited ("the Tenant")) on 27 January 1999 of Premises in Crawley. Under the lease, the tenant could break the lease on 23 August 2013 (subject to satisfying certain pre-conditions such as giving vacant possession) by giving the Landlord no more than 12 and no less than 6 months' notice. The lease also stated that any break notice "must be expressed to be given under Section 24(2) of the Landlord and Tenant Act 1954".

A break notice was served on behalf of the tenant which did not make reference to Section 24(2) of the Landlord and Tenant Act 1954 ("the Act"). It was challenged by the landlord and the tenant issued court proceedings seeking a declaration that the break notice was validly served.

High Court Decision

The case was initially heard by a deputy judge of the High Court. The tenant submitted that its notice was effective because (amongst other arguments):

  1. There was no such thing as a notice under Section 24(2) and the required formula was meaningless. Therefore, all that was required on the proper construction of the break clause was a straightforward notice, such as the one that was given, which did not state it was given under Section 24(2) of the Act

  2. Even if the break clause did require the stipulated words to be stated, on its proper construction, the failure to state meaningless words did not render the notice invalid

The first instance judge found that the notice was defective for failing to reference Section 24(2) of the Act but that this did not render the notice invalid. This was despite the break clause stating that such notice "must be expressed to be given under Section 24(2)".

Court of Appeal Decision

The landlord appealed to the Court of Appeal.

In the lead judgment, Lord Justice Lewison said that "it is impossible in my judgment to interpret the clause as if it is said that the notice "must" be expressed in a certain way, but it does not matter if it is not". As such, the Court of...

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