In Sterling House Ltd v International Baccalaureate Organisation (UK) Ltd [2026] EWHC 2680 (BP), the High Court held the tenant's break notice was valid. The tenant relied on estoppel to argue it had paid the correct amount of outstanding rent, based on the invoice it received from the landlord's agents. Nevertheless, both landlords and tenants need to prepare in advance and ensure compliance with all break conditions ahead of any break date.
The history
In February 2024, the parties entered into a lease at Sterling House, Cardiff Gate Business Park. As is typical, the lease required the tenant to pay rents in advance on the usual quarter days. The tenant served a break notice seeking to terminate the lease on 23 February 2026. So far, this was a common scenario.
But on 6 February, the tenant asked the landlord's agents for invoices of outstanding rents. The agents sent an invoice covering rents up to 23 February rather than a full quarter, which the tenant paid. Further, the agents hand-delivered a demand for outstanding insurance rent to the tenant's registered office at 3pm on 20 February, the Friday afternoon before the break date on Monday. The tenant did not process payment (through its accounts office overseas) until 24 February, after the break date. The break conditions required that the tenant was not in arrears on the break date.
The arguments
The landlord argued that the outstanding main rent (c. £45,000) and insurance rent (c. £2,300) meant the break conditions were not satisfied, therefore the break notice was invalid. Following the decisions in PCE Investors v Cancer Research UK [2012] EWHC 844 (Ch) and Marks & Spencer Plc v BNP Paribas Securities Services Trust Co [2015] UKSC 72, the landlord asserted that the full quarter of rent was due unless there was clear wording showing an agreement to apportion rent to the break date. In this case, the invoice referred the tenant to the terms of the lease and the tenant did not query the amount in the invoice.
The tenant rejected this on the basis of estoppel. First, the agents' invoice on 6 February was a clear representation that the amount invoiced was all that was required. Secondly, the tenant gave witness evidence to demonstrate the tenant relied on that representation to its detriment. Thirdly, the tenant argued it was unconscionable to revoke that representation. The tenant also argued it had not been given a reasonable opportunity to pay the outstanding insurance rent given the late demand.
The Court accepted the tenant's arguments. It held that the invoiced amount was a clear representation covering all sums due and that the demand on Friday afternoon did not give the tenant a reasonable time to pay. There was no suggestion that the tenant did not have the money to make the payment.
Our takeaways
For landlords, there needs to be clear communication internally and with agents to ensure tenants cannot rely on representations made before the break date. In particular, invoices should be checked thoroughly and sent well in advance of the break date. If there are significant errors in invoices, we may see a rise in claims by landlords against agents. Another common break condition is that the tenant provides vacant possession. Landlords need to ensure tenants cannot rely on any statement that items can be left in the premises after the break date.
For tenants, although estoppel is a fall-back argument, break conditions still require strict compliance. For outstanding rents, the most cautious approach is to check the lease provisions carefully and overpay if there is ambiguity about the amounts due. Invoices should be requested in advance, chased, and there should be written confirmation to the landlord or agents that there are no further sums due. The Court suggested that the tenant appeared to rush dilapidations works just before the break date, which led to a delay in processing invoices. The tenant's exit plan should be clear and coordinated.
