Problem With Exercise Of Right Which Is Dependent On Full Compliance With Contract

Avocet granted Merol's predecessor a lease of business premises. The lease stated that if any annual rent or other money payable under the lease had not been paid by the due date, whether formally demanded or not, the tenant was to pay the landlord interest at a specified rate. There was also a rent deposit deed under which the tenant was to receive the interest on the rent deposit unless it was in arrears with its payments under the lease. The lease contained a break clause which allowed the tenant to terminate unless at the relevant date any payment under the lease had not been paid.

Merol served a break notice. In its covering letter, it stated that it was not aware of any breach of the lease and noted that Avocet had not given notice of any intention to draw on the rent deposit in respect of a breach. Avocet gave no substantive response to the break notice. Between the date of the break notice and termination date, Merol paid rent late on three occasions – but