It is a sign of these still somewhat troubled economic times that lease notices are being regularly disputed and litigated. Break notices often steal the lime light, but even commercial lease notices served pursuant to the 1954 Act are being challenged. There appears to be no end to what can go wrong in a notice, and without a consistent approach by the Courts, whether a notice will be held up or will fail can seem like a game of chance. This turns what should on the face of it be an easy task into a legal minefield.
The key point to remember is that the lease is king. The lease will dictate who the notice should be addressed to, who the notice should be served on (not necessarily the same person) and when the notice should be served. Depending on the type of notice to be served, the lease may also dictate the form of the notice and any pre-conditions that need to be complied with.
The implications of a bad notice will depend on the type of notice served, but perhaps the starkest illustration is the case of Avocet Industrial Estates LLP v Merol Ltd & Another. In this now infamous case, the tenant’s break notice was held by the High Court to be invalid because of its failure to pay interest of approximately £130 (even though the interest had not been demanded). The effect was that the tenant was liable for the rent for the remainder of the term, over £300,000. The tenant was set to appeal the decision, but an agreement was reached between the parties and, therefore, Avocet remains good law. Subsequent decisions in the Courts have been more tenant-friendly, but the approach has been far from consistent.
Given the potential liabilities faced by a party if a notice is invalid, we recommend using a specialist solicitor to serve any notice pursuant to a lease. Further, if a tenant is seeking to break its lease and the break is subject to pre-conditions, we recommend seeking advice from your solicitor on compliance with any pre-conditions.
At OTB Eveling we offer a competitive fixed fee pricing structure for service of notices and other commercial lease management work. For more information, please contact Michael Clark, OTB Eveling’s specialist property litigator.