Commercial Union Life Assurance Co Ltd v Label Ink Ltd: ChD 2001

An industrial warehouse was let for a term of 15 years. A clause contained an option for the tenant to break the lease on one year’s written notice on condition that: ‘There shall not be any material breach of the covenants on its part herein contained.’ but ‘Without prejudice to any remedy available to the landlord in respect of any breach of covenant on the part of the tenant or the conditions herein contained.’ It was common ground that a breach could not be material if it was not a subsisting breach on the termination date.
Held: The authorities established: ‘In qualifying clause 7.8 that the breach must be material, it is clearly intended to mitigate that rule as an otherwise trifling breach would disqualify the tenant from exercising the option even though the court might be slow to find such a breach, where it would be unfair to do so.
The intention must be to modify that rule to an extent that is reasonably fair to both landlord and tenant. The tenant is given by clause 7.8 the right to break, providing he complies with his covenants to the extent of avoiding any material breach. In my judgment, in that context, the breach is material if, but only if, having regard to all the circumstances, and to the proper efforts of the tenant to comply with his covenants, as well as the adverse effect on the landlord of any failure to do so, it will be fair and reasonable to refuse the tenant the privilege which the lease otherwise grants. The extent of any breach, the practicality of quantifying any damage arising out of it, the efforts made by the tenant to avoid it, the genuine interest which a landlord had in strict compliance are, in my judgment, all material factors in determining materiality.’


HH Judge Rich QC


[2001] L and TR 29


England and Wales


CitedFinch v Underwood CA 1876
The landlord had covenanted with the tenant, on receipt of notice from the latter, to renew the lease ‘in case the covenants and agreements on the tenants’ part shall have been duly observed and performed’. Notice was duly given but the landlord . .

Cited by:

CitedFitzroy House Epworth Street (No. 1) Ltd and Another v Financial Times Ltd CA 31-Mar-2006
The defendant tenant sought to exercise a break clause in the lease. The landlord said that the notice was deficient because the tenant had failed ‘materially to comply with’ its repairing obligations. The judge found the cost of repairs were . .
Lists of cited by and citing cases may be incomplete.

Landlord and Tenant

Updated: 10 May 2022; Ref: scu.240009