KPMG Llp v Network Rail Infrastructure Ltd [2006] EWHC 67 (Ch) (31 January 2006)

KPMG Llp v Network Rail Infrastructure Ltd [2006] EWHC 67 (Ch) (31 January 2006)

The court held that it was not permissible to construe the break clause as if the omitted words were present, as it was not clear that the omission was accidental or what the precise words should be, given the history of negotiations and amendments. The clause, as drafted, is capable of sensible construction, providing five break opportunities, three linked to rent reviews and two 'free-standing'. The antecedent agreement and annexed sub-underlease could not be used to contradict the executed lease. The tenant does not have an implied right to initiate a rent review.

Citation
[2006] EWHC 67 (Ch)
Parties
Claimant: KPMG LLP; Defendant: Network Rail Infrastructure Ltd
Jurisdiction
England and Wales
Judgment Date
31 January 2006
Procedural Posture
Chancery Division Construction of Lease/rectification / First Instance Judgment
Outcome
Claim dismissed as to rectification; declaration granted as to construction of break clause.
Legal Topics
Construction of Break Clauses, Rectification of Written Instruments, Landlord and Tenant, Rent Review Provisions
Property Law Contract Law Construction of Break Clauses Rectification of Written Instruments Landlord and Tenant Rent Review Provisions

Case Brief

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Parties

KPMG LLP

Claimant

Network Rail Infrastructure Ltd

Defendant

Procedural Posture

Chancery Division Construction of Lease/rectification / First Instance Judgment

Legal Issues

  1. 1 Proper construction of tenant's break clause in a reversionary sub-underlease
  2. 2 Whether the break clause should be rectified to include omitted words

Ratio Decidendi

The court held that it was not permissible to construe the break clause as if the omitted words were present, as it was not clear that the omission was accidental or what the precise words should be, given the history of negotiations and amendments. The clause, as drafted, is capable of sensible construction, providing five break opportunities, three linked to rent reviews and two 'free-standing'. The antecedent agreement and annexed sub-underlease could not be used to contradict the executed lease. The tenant does not have an implied right to initiate a rent review.

Court Disposition

Claim dismissed as to rectification; declaration granted as to construction of break clause.

Orders

  • It is declared that the tenant has five opportunities to break the lease as set out in the judgment.
  • Rectification of the lease is refused.