In this case, the Claimant was a Limited Partnership made up of five partners. The Claimant claimed that they had been granted an overriding lease of office premises held by the Defendant company. This meant, according to the Claimant, that they were the immediate landlord of the Defendant. The Claimant’s solicitors then served a break notice on the Defendant seeking to terminate the Defendant’s underlease in 6 months’ time pursuant to a break clause in the lease. The Claimant wanted to demolish the building and undertake major redevelopment works in the City of London.
The Defendant maintained that the Claimant could not have been granted an overriding lease because partnerships cannot hold property as they were not a legal person. In addition, the overriding lease could not have vested in the five partners in the partnership. This was because the individual partners were not named in the overriding lease and, in any event, where land is held by more than four people, it vests in the first four named, who would hold on trust for all five partners.
The Claimant argued that the overriding lease was either vested in the partnership, in the first four named partners or in the general partner of the partnership and sought to contend that it was obvious that the break notice had been served by one of these bodies.
The Judge found that the overriding lease was held by the general partner company because the partnership could not could it and it could not be ascertained which of the five partners intended to hold the lease. Given this, the Claimant limited partnership could not have served a valid break notice. Furthermore, on these facts, the break notice would not have been clear to a reasonable recipient and so this escape route could not be used.
The decision meant that the Claimant could not terminate the underlease in September 2016 so it will continue until 2021 scuppering the valuable redevelopment plans unless some deal can be reached. Again, this case shows that it is vital to correctly observe the requisite contractual requirements when serving a break notice.