Good News for Tenants – Court Upholds a Break Notice Despite Last Minute Demands for Rent

The judgment in Sterling House Ltd (“the Landlord”) v International Baccalaureate Organisation (UK) Ltd (“the Tenant”) [2026] EWHC 2680 (BP) will be welcomed by tenants of commercial properties.

Facts

The Tenant sought to break its lease on Monday 23rd February 2026 (“the Lease”). The Lease permitted the Tenant to break on a specific date provided that the annual rent, service charge, and insurance rent were fully paid up to that date. The annual rent was payable quarterly in advance and the insurance rent on demand.

The Tenant made repeated requests to the Landlord’s agents for an invoice to cover all sums owed up to the break date so that it could pay the necessary amount to validly break the Lease.

On 10th February, an invoice was received that covered rent for 22nd December – 23rd February (i.e., not the usual quarter period which would have also covered the balance of February and the whole of March). This was paid by the Tenant on 13th February.

On 20th February, a demand for insurance rent was emailed to the Tenant’s Singapore office and was hand delivered to the Tenant’s registered office but with no indication that it was urgent. By the time payment was made from Singapore, it was the afternoon of 25th February.

Issues

The Landlord’s argument was that the break notice was invalid because the annual rent and insurance rent were not fully paid by Tenant come 23rd February.

The Tenant’s argument was based on the principal of ‘estoppel’. The Landlord’s invoice of 10th February was a clear representation on what the Tenant would need to pay to ensure the break was valid. The Tenant had relied on that representation by paying the invoice in the reasonable belief that it was all that was required.

It was “unconscionable” for the Landlord to claim the additional rent having had the opportunity to demand it earlier; particularly with the insurance as that demand was made on a Friday afternoon before the Monday break date. The insurance policy was in place from December 2025 so there had been ample opportunity for the Landlord to demand payment.

Decision

The Court found in favour of the Tenant.

The Tenant had reasonably assumed that the February 10th invoice was the full amount required to validly break the Lease. The correspondence with the Landlord’s agents made it clear that the Tenant was asking for invoice to cover all sums needed to comply with the break; the Tenant had asked for an invoice to include March 2026 and had chased the agents for the invoice. When the invoice did arrive, it was clear on the sums due to the break date.

The Court also held that the demand for insurance rent issued on Friday afternoon did not give the Tenant reasonable time to pay before midnight on the break date and the Tenant had paid as it could.

Implications

The case demonstrates the importance of taking legal advice for both landlords and tenants when it comes to both the initial drafting of a break clause and at the point of exercising the break. Even when the wording in a lease is followed to the letter, it may not be sufficient.

The Court made it clear that landlords cannot act unreasonably when dealing with a break notice. It is also important to note that in this case the Tenant’s actions could not be faulted because they had made all reasonable efforts to comply with the terms of the break clause.

Tenants will take comfort from this case that where they do all that they reasonably can to comply with their lease, a Court will provide protection from the actions of an unreasonable landlord.

For more information, please contact Dylan Toner or another member of the Real Estate Team.

*This information is for guidance purposes only and does not constitute, nor should be regarded as, a substitute for taking legal advice tailored to your circumstances.