A landlord could properly refuse to consent to the assignment of a lease back to an original tenant in circumstances where the parties accepted that, if there was a re-assignment, the original tenant could exercise a right conferred on it alone as tenant to determine the lease. The clause read:- ‘If the Tenant (meaning only ICI Petroleum Ltd) shall desire to determine the term at the expiration of the tenth year thereof, and of such desire, shall give to the Landlord more than twelve months notice in writing …’ It was common ground that the break clause could be exercised by the original tenant on reassignment of the lease back to him.
Held: The court doubted that this was correct. If it had been intended that the original tenant should be able to exercise the break clause after re-assignment to it, clause 5(13) would have been drafted in different terms: ‘One asks oneself why the right conferred by the break clause was made personal to Enterprise. There is no obvious answer to this. There could perhaps be a certain commercial logic in confining the right to Enterprise so long as Enterprise throughout remains the tenant. Enterprise could pull out after ten years if it wished. But if, meanwhile, Enterprise chose to realise its investment by disposing of its entire interest by assignment then its right to withdraw would lapse. However, neither party contended before us that Enterprise’s right is so confined. Quite what is the commercial rationale which would revive Enterprise’s right to terminate if, having assigned the lease, it takes a re-assignment, is not apparent on the material before us. Be that as it may, what is clear is that, had the intention been that at any time Enterprise was to have the right to end its liabilities on the lines now being contended for, clause 5(13) would not have been drafted in the form which the parties chose.’
Judges:
Sir Donald Nicholls VC
Citations:
[1994] 2 EGLR 48
Jurisdiction:
England and Wales
Cited by:
Cited – BP Oil UK Ltd and others v Lloyds TSB Bank Plc CA 21-Dec-2004
An option was granted to three lessees for the purchase of the reversion. After one ceased to be a lessee, the remaining two purported to exercise the option. The landlord said that only the three could exercise the option together.
Held: The . .
Cited – JBW Group Ltd v Westminster City Council CA 12-Mar-2010
The tenant had applied to the landlord for consent to assign certain leases. The court had declared the right to exercise break clauses in certain leases as lost. The court had found the right to be lost after the assignment of the leases by the . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant
Updated: 30 April 2022; Ref: scu.222562