Three cases in recent times in Scotland and a very recent case in England & Wales have emphasised yet again the need for clear and joined up thinking when it comes to exercising notices pursuant to leases. In the current climate this is increasingly relevant in both Scotland and England & Wales.

Validity of Service

The Scottish case of Ben Cleuch Estates Ltd v Scottish Enterprise (4 January 2008) emphasises the need for research to be carried out by both the tenant and their solicitors to decide to whom the notice should be addressed and to what address it should be sent. The tenant in this case had relied on the name provided on the rent invoices as to the identity of the landlord. They also obtained addresses to send the notice to from the landlord's agent. The court held that the notices had been incorrectly served as they had identified the wrong landlord and the other addresses provided by the agent were also incorrect for the same reason. However, in this case the landlord was personally barred from denying that the break option had been validly exercised, using the relevant objective test that it was reasonable for the tenant to have presumed the landlord identified on the rent invoices was correct.

Right to exercise break option?

The Scottish case of Trygort (Number 2) Ltd v UK Home Finance Ltd (29 October 2008) deals with another issue with respect to notices. The tenant could only exercise the break notice if it was not in breach of its lease. The landlord contested the tenant was in breach at the time the notice was issued. The Scottish court favoured the English approach to this matter, ruling that the break option would only be dependant on "no subsisting breach" rather than "never any breach" and found in favour of the tenant.

This emphasises that lawyers should ensure (as is now more common practice) that a break clause is just that and there are no strings attached to the exercise of this by the tenant (or the landlord).

Timing of Service of Notice

The Scottish case of Carmarthen Developments Ltd v Pennington (24 September 2008) emphasises the need for careful drafting of notice provisions in any agreement. This related to a contract to purchase land, which contained various suspensive conditions. The question was whether the purchaser had exercised its right to intimate that the suspensive conditions had been purified before or after the notice from the seller resiling from the contract. It was held that the intimation that the suspensive conditions had been purified was received just 10 minutes before the notice from the seller resiling from the contract so the contract became unconditional and the seller could not, therefore, terminate.

Does an acknowledgment of a defective notice validate it?

The recent case in England & Wales of Orchard (Developments) Holdings Plc v Reuters Ltd (2009) highlights more specifically the issue of whether a landlord who accepts a defective informal notice validates it. It was agreed that an acknowledgement by a landlord would make an informal notice effective on the date it was acknowledged but in this case the acknowledgement was received after the relevant break date so the informal break notice had not been validated in time. It was highlighted that there is no duty on the landlord to acknowledge an informal notice.

Please click here for the Law-Now dated 8 January 2009 called, "How to break your lease and how to get it right" where our London colleagues have provided helpful pointers which equally apply in Scotland.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 16/02/2009.