In Vistra Trust Corporation (UK) Limited (as trustee for the Property Income Trust for Charities) v CDS Superstores International Limited [2022] the Court was asked to determine whether a break notice which had been served by a previous tenant (i) had been validly served, and if so (ii) whether it was legally binding on that tenant's assignee such that the assignee was prevented from applying for a new tenancy pursuant to the Landlord & Tenant Act 1954 (the Act).
The case concerned a retail superstore trading as ‘The Range’ based in Widnes. A lease of the property had originally been granted to B&Q plc (B&Q) for a term of 21 years expiring on 11 February 2029 subject to a tenant’s contractual break option to determine the term on or after 11 February 2023 (the Break Date) on giving the landlord not less than six months written notice.
In 2018 B&Q served a break notice to terminate the lease on the Break Date. Two years later they assigned the lease to CDS Superstores International Limited (CDS), flagging that a break notice had been served. CDS subsequently served a request pursuant to section 26 of the Act for a new tenancy to commence the day after the Break Date.
The landlord applied for a declaration that the break notice had been validly served and that CDS did not therefore have a right to request a new tenancy because of the operation of section 26(4) of the Act which prevents service of a section 26 notice where a tenant has already served a notice to quit.
CDS made several valiant efforts to argue that the break notice was invalid, including that it had been served too soon, that there was insufficient evidence of the managing agents' authority to instruct that it was served and no evidence of proper service. They also argued that the format of the tenant's name was incorrect on the notice because there were insufficient spaces between the letters. However, the judge found in favour of the landlord on all these points and was satisfied that the notice had been validly served.
CDS also tried to argue that the wording of section 26(4) was such that it only precludes service of a section 26 notice where ‘the tenant’ has already given notice to quit and this meant the tenant who had served the break notice and not its successor in title. However, the judge rejected this, holding that it was not in line with previous judicial interpretation and that once a tenant has served a contractual break notice, then any tenant of those premises is precluded from making a request for a new tenancy.
This case is a useful reminder about the operation of break clauses by tenants in the context of the Act. It is clear that tenants will not be allowed a second bite of the cherry by applying for a new tenancy under the Act once a valid break notice has been served, either by the current tenant or a predecessor in title.
