KPMG Llp v Network Rail Infrastructure Ltd

KPMG Llp v Network Rail Infrastructure Ltd

The correct construction of the break clause is that the tenant has five opportunities to break the lease, including two free-standing rights not dependent on rent review, as the clause stands. However, Network Rail is entitled to rectification for mutual mistake, as convincing proof shows both parties intended only three break rights dependent on rent review and rent increase, and the omission of relevant words was unintended.

Parties
Claimant: KPMG LLP; Defendant: Network Rail Infrastructure Ltd
Jurisdiction
England and Wales
Judgment Date
31 January 2006
Procedural Posture
Civil / Judgment
Outcome
Rectification granted for mutual mistake.
Legal Topics
Leasehold, Break Clause, Rectification, Contract Construction, Mutual Mistake, Unilateral Mistake
Property Law Contract Law Equity Leasehold Break Clause Rectification Contract Construction Mutual Mistake +1 more

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Parties

KPMG LLP

Claimant

Network Rail Infrastructure Ltd

Defendant

Procedural Posture

Civil / Judgment

Legal Issues

  1. 1 Proper construction of tenant’s break clause in reversionary sub-underlease
  2. 2 Whether rectification should be granted for omission of words in break clause
  3. 3 Whether omission was mutual or unilateral mistake

Ratio Decidendi

The correct construction of the break clause is that the tenant has five opportunities to break the lease, including two free-standing rights not dependent on rent review, as the clause stands. However, Network Rail is entitled to rectification for mutual mistake, as convincing proof shows both parties intended only three break rights dependent on rent review and rent increase, and the omission of relevant words was unintended.

Court Disposition

Rectification granted for mutual mistake.

Orders

  • Paragraph 5 of Part II of the Fifth Schedule to the reversionary sub-underlease to be rectified by insertion of omitted words before 'and thereafter'.