Break Notices: Whether a break notice served four years prior to the break date was valid (Vistra Trust Corp (UK) v CDS -2022)

Where a break notice was served by a tenant four years before the intended break date, was the notice valid and the lease terminated effectively?

The background

In Vistra Trust Corp (UK) Ltd (trustee for the Property Income Trust for Charities) v CDS (Superstores International) Ltd [2022], a lease of retail superstore premises in Widnes, Cheshire, was granted in 2008. The 21-year lease term expired in 2029.

The tenant served a break notice on 10 December 2018 which would expire on 11 February 2023. The lease was subsequently assigned to the defendant tenant in 2020, which was aware of the break notice having been served. Under s.26 Landlord and Tenant Act 1954, the defendant requested a new lease in June 2022.

The landlord made an application for a declaration that the request for a new lease was not valid as a result of the break notice, and that the lease would terminate on 11 February 2023. The tenant argued that its request was valid and that the lease would not terminate.

The decision

The High Court found in favour of the landlord, agreeing that the break notice was valid and the lease would terminate in accordance with its terms.

Service of the notice some years before the break date did not invalidate the notice, and neither party suffered any prejudice as a result of the notice having been served in 2018. The defendant’s arguments that the solicitors serving the notice did not have authority to do so, or the lack of a signed acknowledgement of receipt of notice, did not succeed due to a lack of evidence. There was no confusion over the identity of the tenant, and the parties all benefited from full knowledge of the break notice and its effect.

The service of the notice binds the tenant and its future assignees, and the defendant’s request for a new tenancy under s.26 therefore failed.

Advice and action for landlords

A number of key points arise from this decision of which landlords should be aware, in particular that – where all parties enjoyed full knowledge of the break notice and its effect – early service of the notice some years prior did not invalidate it.

Further, a request for a new tenancy where a valid break notice had been served would not succeed. In this case, the defendant had not produced sufficient evidence to support its arguments at trial, resulting in a judgment in favour of the landlord.