Breaking badly: landlord estopped from challenging break

Sterling House v International Baccalaureate Organisation [2026] is a relatively rare (and from a practitioner's perspective, very exciting) example of the validity of a break exercise ending up before the court. It is a timely reminder (if one was ever needed) of the importance of landlord and tenant both being fully aware of how a lease break operates and how their conduct can have a bearing on the satisfaction of break conditions.

An incomplete invoice

Here, the tenant break in the lease of their commercial premises was conditional on rent and insurance rent being paid. Rent was due quarterly in advance, insurance rent payable on demand.  The lease terms meant that if either sum was outstanding at the termination date the break notice would have no effect.

After serving its break notice to terminate the lease on 23 February 2026, the tenant requested (and chased for) an invoice from the landlord's agent for the rent due for the December quarter. The agents responded with an invoice for rent for the period “22-Dec-2025 to 23-Feb-2026”. However, this invoice did not cover the entirety of the December quarter (within which the break date of fell) leaving circa £45,000 of the rent for that quarter unpaid after the tenant settled the invoice.  The invoice also did not mention insurance rent.

At 3pm on the Friday before the break date (which was on the Monday) the landlord served by hand an insurance rent demand which the tenant could not pay before the break date. The landlord issued proceedings stating the break was ineffective because the tenant:

• owed the full quarter's rent, not only the invoiced rent apportioned up to the break date; and
• had failed to pay the demanded insurance rent.

Estoppel saves the tenant

The court acknowledged the Supreme Court's previous confirmation that in the absence of clear wording, rent payable in advance is not apportioned if the break date falls within a rent quarter and there is no basis for implying a term requiring repayment of overpaid rent (Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited and another [2015] UKSC 72).

Notwithstanding this, the High Court ruled in favour of the tenant.  It found that, despite the wording of the lease, an estoppel operated by virtue of the rent invoice the landlord issued, and the tenant reasonably relied on what it had received. From a practitioner's perspective, the court's finding that a landlord's conduct in the lead up to the break date can create an estoppel is significant, especially when assessing the effect on the lease's otherwise strict contractual requirements.

The court also found the insurance rent demand failed to allow the tenant (based in Singapore) a reasonable opportunity to make the payment. The judgment includes a brief discussion of the "mechanics for payment" test.

Valid exercise of a break right turns on seemingly small details.  Whether you are a tenant seeking to exercise a break right or a landlord responding to a tenant's break notice, it is essential to identify at an early stage exactly what must be done before the break date. Forward planning is everything!

Please contact our Property Litigation team who can guide you through the process.