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Tyco Fire & Integrated Solutions (UK) Limited v Regent Quay Development Company Limited [2016] CSOH 97
In the recent Scottish case of Tyco Fire & Integrated Solutions (UK) Limited v Regent Quay Development Company Limited [2016] CSOH 97, the Court of Session held that a break notice was valid since no reasonable recipient would have been perplexed by the errors it contained.
Background
Regent Quay Development Company Limited granted a lease of Units 3 & 4, The Glover Pavilion, Aberdeen to Tyco Fire & Integrated Solutions (UK) Limited in 2004 for a term of 10 years.
In 2011, the parties varied the lease to:
- Include Unit 1 as well as Units 3 and 4;
- Extend the term of the lease to 30 August 2021; and
- Give Tyco a right to break the lease on 31 August 2016 on giving Regent not less than six months prior notice.
On 11 January 2016, Tyco served a notice on Regent in order to exercise its break right. However, Regent claimed that the notice contained two errors:
- The header of the letter referred only to Units 3 & 4 not Unit 1 and defined these units as "the Premises".
- The first paragraph of the letter defined "the Lease" with reference only to the original lease and not the variation.
Regent claimed that the combined effect of these errors was that Tyco had purported to exercise a break right in respect of part of the premises and, as Tyco was not entitled to do this, the notice was invalid.
Tyco sought a declarator that the break notice was valid and that the lease would accordingly terminate on 31 August 2016.
Validity of the Break Notice
"The Lease"
The Court held that the definition of "the Lease" given in the break notice was not an error at all since the lease remained "the Lease" even though its terms were varied by the parties in 2011 by the Minute of Variation. The decision was reached on the basis that it was clear from the notice, read as a whole, that the sender was fully aware of the variation which was separately defined.
"The Premises"
There were two possible ways in which a recipient could interpret the header:
- That it contained a clerical error and should have referred to Unit 1 as well; or
- That it re-defined "the Premises" to the meaning of the original lease for the purposes of the notice.
Lord Tyre in his judgment was satisfied that no reasonable recipient of the notice would be perplexed by this error and would be in no doubt that the former interpretation was the correct one.
The notice was therefore held to be valid, despite the "theoretical ambiguities" suggested by "the ingenuity of lawyers".
Practical implications
Although this decision was in favour of the tenant and whoever was responsible for the poorly drafted notice, it should be received with caution. Had Tyco's notice not shown so clearly a full awareness of the existence of the variation, the decision may well have been different.
This should serve as a reminder that careful consideration of all relevant documentation is required when preparing a break notice. A quick letter based solely on the original lease may not be sufficient as the consequences of overlooking variations to the lease could be severe.
That said, the mere fact that a notice contains an error does not mean that it is necessarily invalid; it all depends on whether the "reasonable recipient" would be perplexed by it or not.
