Case Study - Solicitor negligence on lease break clause

A firm of solicitors negligently failed to serve a valid break notice in a commercial property lease, leaving our client tied into a commercial lease for a further five years and causing significant loss. While the error itself may be clear, professional negligence claims of this nature often involve complex issues of causation and claim value, particularly where it may be argued that the break would not have been validly exercised in any event.

This case is ongoing and demonstrates that a strong case on liability does not equate to a straightforward or risk-free claim. Valuation of damages claims always requires a careful, evidence-based assessment of both legal and commercial risk. Early and detailed assessment is critical to understanding both the true value of the claim and the litigation risk involved.

Key Issues: Liability, Causation and Risk

Although the failure to serve a valid break notice may amount to a clear breach of duty, establishing causation and quantifying loss presents additional complexity.

Break clauses are strictly construed and often subject to multiple conditions which must be complied with for the break to be legally effective, including strict compliance with notice provisions, payment of all sums due under the lease and full compliance with tenant covenants. Even if the notice had been correctly served, the landlord may still have challenged the validity of the break, relying on any failure to comply with these conditions.

As a result, claims like this may turn on a “loss of chance” analysis, requiring an assessment of:

• The likelihood that the break would have been successfully exercised;

• The strength of any landlord challenge;

• The factual and legal position at the break date

This means that:

• The realistic amount of the claim may be reduced to reflect the risk that the break would not have taken effect.

• The claim is not simply a “missed deadline” case, but a fact-sensitive and hypothetical reconstruction of what would have occurred had the notice been validly served.

Client Claim for Losses

Potential losses include:

• The cost of remaining bound by the lease for the unexpired term

• Loss of business opportunity and/or inability to expand

• Additional rental or occupation costs

• Wasted costs associated with the failed break

It's always also important to consider and ensure that a client has understood the importance of mitigating loss, which if lacking or insufficient acn also result in serius implications on claim value and strategy and potentially costs risks.