Break Clause
Break clause
24/Jun/2011
Per NYK Logistics (UK) Ltd v Ibrend Estates BV [2011] the Court of Appeal has held that a tenant failed to give vacant possession pursuance to the terms of the break clause in its lease.
The tenant did not have to carry out repairs as a condition of the exercise of the break clause, but wanted to do them to control costs and quality and avoid a dilapidations claim for damages in excess of its own costs in doing the repairs. The tenant had not finished its repairs by the break date. Although the tenant had tried to contact the landlord to agree an extension of time to continue the repairs, the landlord had failed to respond. Workmen (employed by the tenant) remained in the property following the break date to finish off the outstanding repairs. The tenant also continued to employ a security guard for a further week following the break date because of concerns that the property would be vandalised.
The Court of Appeal held that the tenant should have moved everyone out of the property by midnight on the break date, including its security guard. The tenant should have contacted the landlord's agent on the break date to explain it was vacating and agreed to deliver the keys that same day. The tenant could then have contacted the landlord on the next working day and asked the landlord whether it would permit the tenant to return to the property, as its licensee, to complete the outstanding works. The tenant also failed on its subsidiary argument that the landlord had waived performance of the requirement to provide vacant possession.
The tenant did not have to carry out repairs as a condition of the exercise of the break clause, but wanted to do them to control costs and quality and avoid a dilapidations claim for damages in excess of its own costs in doing the repairs. The tenant had not finished its repairs by the break date. Although the tenant had tried to contact the landlord to agree an extension of time to continue the repairs, the landlord had failed to respond. Workmen (employed by the tenant) remained in the property following the break date to finish off the outstanding repairs. The tenant also continued to employ a security guard for a further week following the break date because of concerns that the property would be vandalised.
The Court of Appeal held that the tenant should have moved everyone out of the property by midnight on the break date, including its security guard. The tenant should have contacted the landlord's agent on the break date to explain it was vacating and agreed to deliver the keys that same day. The tenant could then have contacted the landlord on the next working day and asked the landlord whether it would permit the tenant to return to the property, as its licensee, to complete the outstanding works. The tenant also failed on its subsidiary argument that the landlord had waived performance of the requirement to provide vacant possession.