18 Apr 19 by Amy Durkin
With all the doom and gloom that is currently being reported in the Press, we have seen a number of occupiers looking to serve their break notice or have their leases forfeited. There has more recently been seen in a case heard by the High Court in London where a Tenant claimed Brexit had frustrated the lease, stating it was unforeseen at the time the parties entered into their lease of agreement and thus stated their lease should be forfeited. If the case for Frustration was successful, the Tenant could walk away from their lease.
Serving break notice
Frustration is rarely used as in essence for the lease to be frustrated, it must be virtually impossible to fulfil the contract or the parties’ obligation, or the performance of the lease to be “radically different” from the original agreement. Frustration came into being in 1863 and the Courts have been reluctant to discharge contracts and leases on this basis because they do not want to allow parties to ‘escape from a bad bargain’.
This case in particular is relating to an office building in Canary Wharf where the lease runs out in 2039 at a current rent of £13 million per annum with no break clause, so the margins where high and the benefits to the Tenant were great. However, the Court ruled in favour of the Landlord stating that Brexit is deemed as a frustration of the lease.
This bought welcome news to stop future copy cat cases being brought to Court, but until a Brexit deal has been put in place, it is very difficult to determine how the market will act. The uncertainty is causing many people to have to sit and wait, plan for all options or carry on as usual.
If you would like to discuss your lease and your future plans for the property then please do give a member of the Lease Advisory team a call.