Court of appeal overturns case based on strict wording in break clause

The case of Capitol Park Leeds PLC v Global Radio Services Limited, highlights that attention to detail is needed with the wording of property break clauses. as “vacant possession of the premises” could be perceived differently by landlord and tenant.

In this case, the landlord let commercial premises to the tenant and the lease contained a “break” clause that allowed the tenant to end the lease early by serving a break notice, subject to certain conditions. One of these conditions was that the tenant had to give vacant possession of the premises to the landlord by the break date.

The tenant served their break notice and before they left the premises, they ripped out all the fixtures and fittings, leaving the landlord with an empty shell.

The landlord claimed that the tenant had not given back the premises that had been let to the tenant because all the fixtures and fittings had been ripped out. The trial judge agreed.  However, the Court of Appeal overturned the decision. Their rationale was that vacant possession of the premises had been given back by the tenant. The premises were empty of both people and belongings and further, no other property interests over the premises had been created.

To some extent the case was determined on the strict wording of the “break clause”.  Whilst the Court of Appeal said that the landlord could pursue a claim against the tenant, the rationale of the decision is in my view questionable. As the court said, the landlord could still make a claim against the tenant presumably for dilapidations, However, the case could set a dangerous precedent, in permitting a tenant to behave in the way they did and still be released from the lease. It remains to be seen whether the landlord will appeal to the Supreme Court.

If you need advice on drafting a property break clause or if you are involved in a property dispute please contact Simon Tucker.