English High Court case concerning a break option contained in a sublease between Cancer Research (the landlord) and PCE (the tenant). PCE sought to exercise the break option which was conditional on payment of the rent up to the break date. The break date occurred shortly after a quarter day and, after receiving an invoice for a full quarter’s rent (payable quarterly in advance) from Cancer Research, PCE sent an email to Cancer Research’s managing agents advising them that a payment had been made for the rent for the period between the quarter day to the break date and asking whether that was the correct basis for calculating the rent for that period. The managing agents did not respond.
Cancer Research then argued that the PCE had failed to terminate the lease properly contending that, to do so, PCE would have to (amongst other things) pay the full rent for the quarter in advance. The court agreed with Cancer Research. On the September quarter day it could not be said with certainty that the sublease would terminate on the break date as the tenant may have been in breach of another condition of the break option. The clear obligation on the quarter day to pay a full quarter’s rent could not be retrospectively reduced merely because an event which occurred after that date operated to terminate the sublease from the future date.
PCE’s alternative argument based on estoppel also failed. On the facts before the court, there was no basis for finding that there was a duty on the part of the Landlord to tell the Tenant that the Landlord believed the full rent was due.