PCE Investors Ltd. v Cancer Research UK

A break option requiring payment of rent reserved and demanded up to the termination date may require payment of the full quarter’s rent falling due before termination, even where the quarter extends beyond that date. The obligation is assessed when the rent falls due and is not retrospectively reduced by the later exercise of the break option. Rent payable in advance is not apportioned merely because the lease subsequently terminates. A landlord is not generally under a duty to correct the tenant’s mistaken legal view by remaining silent. Estoppel by silence requires particular circumstances creating an obligation to speak; a prior demand for the full rent may be sufficient to prevent any misleading representation.

The tenant sought summary judgment declaring that its underlease had been determined by a break notice. The landlord sought summary judgment on the claim and its counterclaim. The tenant had tendered rent calculated only to the proposed termination date, although a full quarter’s rent had fallen due before that date. The landlord also alleged failure to pay service charges and failure to give vacant possession, and the tenant sought permission to amend its defence to plead estoppel by silence.

The central issues were whether the break clause required payment of the full quarter’s rent, whether service charges formed part of the required payment, whether vacant possession could be determined summarily, and whether the landlord was estopped from relying on the rent shortfall.

1. The tenant’s break notice was invalid because a full quarter’s rent had fallen due while the underlease was subsisting. The obligation could not be retrospectively reduced by the later termination.
2. The service-charge issue was adjourned for determination with the related proceedings.
3. Whether vacant possession had been delivered was a factual issue unsuitable for summary judgment.
4. There was no general duty in English commercial law to correct another party’s legal mistake by silence. The landlord’s prior demand for the full rent meant that its silence was not misleading. Permission to amend the defence to plead estoppel was refused.
5. The court directed that any remaining issues should be conjoined with the related proceedings.

This was a first-instance decision of the High Court (Chancery Division). The judgment records related proceedings concerning service charges, but no prior appellate decision.