Serving a valid break notice: Getting the landlord’s name right
There are strict requirements which must comply with when serving a valid break notice. Previously, the court has held that errors within a notice may not render it invalid if the mistake would not have misled the “reasonable recipient”. However, the High Court’s decision in Vanquish Properties (UK) Ltd Partnership v Brook Street (UK) Ltd [2016] EWHC 1508 (Ch) suggests that a new, stricter, approach may now be taken.
Brook Street were the tenants of a lease for premises based on the lower ground floor of 108 Fenchurch Street, for a fixed term of 10 years commencing on 28 October 2011. The landlord named on the lease was the Mayor and Commonalty of the City of London (the City Corporation). The lease contained a break clause which allowed the landlord to determine the lease on 27 September 2016, with not less than 6 months’ notice in writing.
In May 2014 planning permission was granted which permitted the demolition of premises and the construction of new buildings on the site. On 22 March 2016, the City Corporation granted an overriding lease to “Vanquish Properties (UK) Limited Partnership acting by its general partner Vanquish Properties GP Limited”. The overriding lease was granted for a term of fewer than 7 years and therefore was not a registrable interest.
On the same day as the overriding lease being granted Vanquish instructed its solicitors to serve a break notice in accordance with the break clause and an s25 notice pursuant to the Landlord and Tenant Act 1954. In the notice, the solicitors stated that they were instructed by, and were serving the notice on behalf of “Vanquish Properties (UK) Limited Partnership, the landlord of the property”.
The tenants challenged the validity of the notice on the basis that, despite the overriding lease, the party giving notice was not their landlord under the lease as the legal estate in the land could not be vested in the name of a partnership. A limited partnership is governed by the Limited Partnership Act 1907 and is not a legal entity in its own right and therefore cannot hold an interest in land. A limited partnership, as defined under s4(2), must consist of one or more persons called general partners and one or more persons to be called limited partners, in this case, the general partner of the limited partnership was Vanquish Properties GP Limited. The General Partner is responsible for the day-to-day management and control of the business. For a partnership to hold an interest in land the partners themselves must be parties to the lease and section 34(2) of the Law of Property Act 1925 provides that, if there are more than four partners in the partnership then the first four partners named will hold the land as joint tenants in trust for the partnership.
Brook Street argued that the notice was invalid because Vanquish Properties (UK) Ltd Partnership could not have served a valid notice as it was not possible in law for the partnership to be the landlord of the lease. The court agreed and held that, in law, the landlord could only be Vanquish Properties GP Limited. The court also held that the incorrect name on the notice was enough to invalidate the notice because a “reasonable recipient” would have been confused upon receipt of the notice. Accordingly, the claim was dismissed and Vanquish lost the right to determine the lease pursuant to the break clause.
Serving a valid break notice is important to break the lease in accordance with any break clause, a failure to serve a valid not could result in a missed opportunity for the landlord. Therefore, when serving or being served with a notice it is important for both landlords and tenants to check the name on the notice and whether it is valid. This is even more important when a complex scenario arises involving partnerships and corporate entities as the landlords or tenants.