Attacking conditional break rights

There is a fantastic article in this week’s Estates Gazette by Guy Fetherstonhaugh QC (“Humpty Dumpty and break clauses” - EG 21 January, page 86) which should be read by every tenant, and tenant’s advisor, who is struggling to convince its landlord that it has complied with all of the pre-conditions of the break. In this article, Guy Fetherstonhaugh QC encourages judges to take a “commercially purposive” approach to the interpretation of break clauses and their conditions: in effect, to perceive ambiguities in the drafting, so as to open the door to interpretation and construction of clauses that clearly flout business common sense. He says “…it is difficult to see why break clauses should be singled out for special [literal] treatment.”

The article must have been written before the report in Avocet Industrial Estates LLP v Merol Ltd & Anor [2011] EWHC 3422 (Ch) in which the tenant was denied its break because of £130 of unpaid default interest. Holding a tenant to a lease for a further 5 years (and in excess of £300,000 of rent) simply because the tenant had not paid £130 of default interest that the landlord had not asked for clearly flouts business common sense. The Appeal Court should be asked to intervene, to more closely analyse the clause, and to construe. In that case, was default interest really a payment that was “due to have been paid” before the break date? On what date did it fall “due”?