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Break notice issued in the name of a Limited Partnership with 5 partners found invalid by High Court

A recent high court case[1] held that a break notice served by a landlord which is a Limited Partnership consisting of 5 partners was invalid because it was unable to hold a legal interest in property and could not therefore be the “lessor” under this notice.

In this case the landlord of the disputed premises had demised a part of the premises in question to Brook Street Ltd (UK). The lease in question contained a break option, requiring at least 6 months’ notice. An overriding lease on the property was subsequently granted to a limited partnership, Vanquish Properties UK, comprising 5 partners. Vanquish proceeded to serve a break notice on B.

Brook Street argued that the notice could not be valid. The notice was required to be given by the “lessor” and it was proposed that Vanquish could not have held the overriding lease as, being a limited partnership, it had no legal personality. Furthermore the Law of Property Act 1925 stipulates that title cannot be vested in more than 4 people, precluding the lease from being vested in Vanquish’s partners. Vanquish argued that the notice should have been construed as being served by its general partner, and that the Mannai Principle applied to ensure the validity of the notice. This states that a minor mistake in such a notice will not necessarily invalidate it as long as a reasonable person with knowledge of the context and facts surrounding the issue of the notice would not be confused by the error.

The court ruled in Brook Street’s favour, holding the Mannai principle did not apply because there had been no prior contact between the parties and because the notice specifically named Vanquish as the landlord. Brook Street may well therefore have been under the impression that the notice was served by Vanquish itself. This case highlights the importance of ensuring that the formal requirements of a break notice are fulfilled correctly. In such cases even a small discrepancy can bind the parties to a costly tenancy for a period of several years. In addition, the case has repercussions for limited partnerships seeking to invest in property. It is essential therefore that a Limited Partnership hold the title to property in the names of 4 or less of its partners to ensure that this title is valid.

[1] Vanquish Properties (UK) Limited Partnership v Brook Street (UK) Limited [2016] EWHC 1508 (Ch)

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