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In the recent case of Avocet Industrial Estates LLP v Merol and another [2011] EWHC 3422(CH) the High Court has decided that a tenant did not validly exercise a break clause in a lease which was conditional on there being no outstanding payments at the break date.  In this case, whilst rent had been paid up to the break date, the tenant had on certain occasions previously paid the rent after the due date provided for in the lease. The lease contained a standard provision entitling the landlord to charge interest on overdue rent. The landlord contended that there was an outstanding payment of the interest at the break date even though the landlord had not issued any demand for the interest. It was held that the condition for exercising the break had therefore not been satisfied. Even the Judge conceded that the outcome was “a harsh one” for the tenant.

In the light of this decision, tenants will need to check carefully through all previous payments due under the lease,  whether rent or other sums, to ascertain whether the landlord could validly charge interest.

The High Court refused permission to appeal. However an application for permission to appeal is due to be heard in the Court of Appeal in March 2012.

Please note that the above is a summary only of the above case and its implications and is not intended to be fully comprehensive. Each matter will depend on its own particular circumstances and we therefore recommend that legal advice is sought on each occasion.

For further information regarding property matters, please contact Pitmans Real Estate team.

Sally Sharp
Partner
T: +44 (0) 118 957 0362
E: ssharp@pitmans.com