Over Taylor Biggs

Reuters were tenants of premises in Nottingham under a Lease that expired in 2016.  There was a Tenant's break option in 2006 and 2011 by giving the Landlord at least 6 months' prior notice.  Reuters sought to exercise the break by serving notice in July 2005.  Notice was given by letter and by fax but the letter was posted in the wrong letter box and was therefore ineffective.  The notice sent by fax was received.

However, the Lease did not allow Reuters to give notice by fax.  The Landlord acknowledged receipt of the faxed notice only in a letter more than 12 months later.

The question referred to the Court was whether under the Lease the faxed notice, acknowledged belatedly, was valid and therefore entitled Reuters to determine the Lease in 2006.  Under the Lease a formal notice could be given by fax but only if the recipient (or its agents) acknowledged receipt.

Reuters argued that its faxed notice was ineffective for a while but was retrospectively validated by the Landlord's subsequent acknowledgement, even if this took place more than 16 months after the last date for service of the 6 months' notice to determine the Lease.

The Landlord argued that acknowledgement did not validate the notice as the time for acknowledgement ended after a reasonable time had elapsed from the giving of the notice.  As the acknowledgement was a substantial time afterwards, the notice was invalid.

The Court confirmed that there was no obligation to acknowledge a faxed notice.  Instead, it was crucial to determine whether the acknowledgement could retrospectively validate the faxed notice outside the 6 months' notice period and after the actual break date had passed.

The Court concluded that after the break date had passed, the Lease either ended or it continued.  If it continued because of the failure to acknowledge the notice, the Lease could not subsequently come to an end simply because the Landlord had later acknowledged notice.

As ever, the importance of careful scrutiny of the precise terms of the manner of exercise of a break option is critical.  Often this will require cross-reference to the provisions in the Lease governing the means of serving formal notices.  These should be followed with precision.  If an individual is nominated to deliver a copy of the notice to the premises (if this is prescribed in the relevant Lease) it is essential that the letter is posted to the correct address or to the correct post box if there are several at the building in question.