Stroppy landlords who refuse to co-operate with tenants wanting to exercise their option to break a lease may be a nuisance - but courts must overlook their petulance when passing down judgment, a Midlands legal expert has stressed.
Real estate litigator Katherine Campbell said a recent Court of Appeal ruling had thrown welcome light onto a High Court order made in September last year that shook the professional property community.
Mrs Campbell, who is based in the Midlands office of international law firm Reed Smith, says the issues were highlighted during a high profile case in which the Financial Times sought to break the lease on its Fitzroy House offices in London - despite the fact that £20,000 worth of repairs had been left undone.
The landlord argued that the newspaper should not be allowed to break the lease because, under its terms, all defects should have been rectified first.
If the judge had agreed, the FT would have remained liable on the lease through to its expiry years later.
During the case it emerged that the landlord, Fitzroy House (No.1 and No.2) Ltd, had refused to co-operate with the FT, which had tried to obtain its agreement on what work was required, and it was here that the judge - controversially - appeared to allow his personal feeling to intrude, describing Fitzroy's behaviour as "unreasonable".
He also described the number, nature, and value of the outstanding defects as insubstantial, and said the remaining ones did not affect the landlord's ability to attract new tenants.
Mrs Campbell said: "The degree of subjective intervention by the judge naturally caused concern - if not shock - amongst the professional property community. It introduced a degree of uncertainty into the interpretation of lease provisions which was never going to be acceptable to landlords."
The case was appealed, and although Fitzroy lost, the Court of Appeal did find that the High Court had applied the wrong test, and had taken irrelevant considerations into account - including the landlord's behaviour in withholding co-operation.
Instead, said the Appeal Court, the judge should have confined himself to the fact at the heart of the case - whether the state of the offices prevented the landlord find-ing a new tenant. The answer was that it did not.
"The case went through a complete 'about turn'," said Mrs Campbell. "The High Court judge said he didn't like the way the landlord behaved, and it wasn't right that the FT was kept in the dark.
"On the other hand the Court of Appeal ruled that the landlord was under no obligation to co-operate with a tenant in deciding what remedial work was necessary to comply with the terms of the lease."
Mrs Campbell warned: "Alt hough the ruling has returned us more or less to the status quo, there is a message here for both sides.
"Tenants should under-stand that any landlord will be looking very closely at the repairs they carry out prior to exercising a break clause in a lease.
"Under the circumstances I would recommend that they carry out a 'Rolls-Royce' job, in which everything is done to the highest possible standards."
She added: "Landlords should also now appreciate that they can't get away with demanding unrealistic levels of repair work, holding the tenant to ransom over the proverbial missing screw."