Avocet Industrial Estates LLP v Merol Ltd & Anor [2011] EWHC 3422 (Ch) (19 December 2011)

Avocet Industrial Estates LLP v Merol Ltd & Anor [2011] EWHC 3422 (Ch) (19 December 2011)

The court held that there was an implied agreement, based on the parties' course of dealing, that the landlord would accept payment by cheque for sums due under the lease, including the six months' rent required by the break clause. The landlord did not promptly reject the cheque tendered on 16 March 2010, and thus was deemed to have accepted it. Therefore, the tenant validly exercised the break clause. The court also held that default interest could be due without a demand, but on the facts, this did not invalidate the break notice.

Citation
[2011] EWHC 3422 (Ch)
Parties
Claimant: Avocet Industrial Estates LLP; First Defendant: Merol Limited; Second Defendant: Tudor Rose International Limited
Jurisdiction
England and Wales
Judgment Date
19 December 2011
Procedural Posture
Commercial Lease Dispute / High Court Trial Judgment
Outcome
Claim dismissed. Declaration granted that the lease was validly determined by the tenant's break notice.
Legal Topics
Break Clause Operation, Payment by Cheque, Default Interest, Implied Agreement, Estoppel, Construction of Lease Terms
Landlord and Tenant Contract Law Property Law Break Clause Operation Payment by Cheque Default Interest Implied Agreement Estoppel +1 more

Case Brief

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Parties

Avocet Industrial Estates LLP

Claimant

Merol Limited

First Defendant

Tudor Rose International Limited

Second Defendant

Procedural Posture

Commercial Lease Dispute / High Court Trial Judgment

Legal Issues

  1. 1 Whether the tenant validly exercised the break clause in the lease
  2. 2 Whether payment by cheque satisfied the requirement to pay six months' rent by the break date
  3. 3 Whether the tenant was liable for default interest without a demand from the landlord

Ratio Decidendi

The court held that there was an implied agreement, based on the parties' course of dealing, that the landlord would accept payment by cheque for sums due under the lease, including the six months' rent required by the break clause. The landlord did not promptly reject the cheque tendered on 16 March 2010, and thus was deemed to have accepted it. Therefore, the tenant validly exercised the break clause. The court also held that default interest could be due without a demand, but on the facts, this did not invalidate the break notice.

Court Disposition

Claim dismissed. Declaration granted that the lease was validly determined by the tenant's break notice.

Orders

  • Declaration that the lease was determined on 17 March 2010 pursuant to the break notice.
  • Landlord not entitled to rely on non-payment of default interest or mode of payment to invalidate the break.