I was recently dealing with a claim for possession under section 21 and had a bit of a problem with a break clause.
Break clauses are those clauses which allow you to end the tenancy early provided you do what the clause says. My understanding is that you have to be quite careful to do this.
A typical break clause
For example with a tenancy with a twelve months fixed term with a break clause which reads as follows:
The tenant agrees that the landlord has the right to terminate the tenancy after the first four months by giving the tenant not less than two months notice in writing to end the agreement. The notice must expire at the end of a relevant period, being the 15th day of the month. When the notice period expires the agreement shall cease. This does not affect the right of either the landlord or the tenant to purse their legal remedies agaisnt the other for an existing breach of any rights under the agreement.
Let us say that the tenancy began on 16 October, and that a notice under section 21 was served by the letting agents on the tenants on 1 February, with an expiry date of 15 April. The covering letter did not specifically refer to the breack clause, but did vaguely mention that it was served in respect of the tenancy agreement.
What is the correct meaning?
Now then, the break clause at first reading sounds fairly straightforward, but words are slipperly things, particurly if you try to be too specific, and I think that this clause is ambiguous. For example:
- Does it mean that the notice has to be served after the first four months, OR
- Does it just mean that the tenancy can be terminated after the first four months
If the former, then the landlord is stuffed as the notice was served by the agents part way through the third month (ie before 15 February). However as the expiry date on the section 21 notice was 15 April presumably if the second alternative is the correct one, the landlord will be all right.
I also always worry about whether a section 21 notice on its own, with no real reference in the letter to the break clause itself in the covering letter, can be sufficient to activate the clause, although I seem to remember that there was a case on this a while back where service of a section 21 on its own was allowed.
My feeling was that, to be completely safe, the landlord in the above case ought to serve a fresh notice and start again, but what do you think?
What happened and what could have happened
In this particular case the landlord instructed me to go ahead anyway which I did and we got the order for possession under the accelerated procedure.
However the point was never raised in a defence as the tenants moved out. Would my clients have been successful, I wonder, if the tenants had stayed put and filed a defence?
Have you come across any break clauses which have been drafted in a hard to understand way? I can remember that I once saw one which was so complex that I could not work out how it could be activated at all (sadly I did not keep a record of it).
Aylward v Fawaz (1997) 29 HLR 408, CA may be the case to which you refer where the court accepted a section 21 as a break notice.
I find that with break clauses you have to look (or listen) very carefully to see if it is “to end the tenancy” or “to give notice” after a stated time. Your example seems pretty clear that the measure is the end of the tenancy, not restricting when the notice is given.
I hope the tenant has the same break clause to avoid problems of Unfair Terms In Consumer Contract Regulations!
Thanks David, and its good to have a note of that case.
As it turns out we were all right, but I wish people would not try to make things too complicated when drafting clauses. That is when the problems creep in.
Davis is correct to refer to the UTICCR as to the imbalance likely making the break clause invalid . In addition the regs provide 7.—(1) A seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language.
(2) If there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail …..
This is the problem about the UTICCR – you can only know FOR SURE whether a clause is valid or not, after a court hearing. Which frankly is unhelpful. Its like walking on sand – is it quicksand or solid sand!
Its another reason why I am not too keen on break cluases, although I feel reasonably confident about my own having made it as simple and straightforward as possible.