Taylor v Inntrepreneur Estates (CPC) Ltd
Mr Wyn Williams QC, sitting as a deputy judge of the division
Parties agreeing subject to contract to grant of three-year lease of public house – Statutory security to be excluded – Later letters from defendant landlord not expressly stated to be subject to contract – Claimant signing and returning copy of lease – Landlord declining to sign – No application made for court approval of exclusion – Whether binding agreement concluded – Whether formation conditional upon obtaining court approval – Claimant’s case struck out under CPR 3.4(2)(a)
The claimant and his family occupied a public house, owned by the defendant landlord, under a series of short tenancy management agreements (TMAs) that expressly excluded the security of tenure provisions of the Landlord and Tenant Act 1954. By a letter to the claimant (the instigating letter), dated February 1994 and headed “subject to contract”, the landlord’s agent set out the terms of a proposed three-year agreement and requested the claimant to sign and return a copy of that letter as “confirmation of your intention to proceed”. In March 1994 the claimant complied with that request.
During May 1994 the parties agreed on certain terms to be included, but a meeting planned for the signing of the agreement in June 1994 had to be cancelled by the claimant for family reasons. Later that month, the claimant, complying with a telephoned request from the agent, signed a further TMA, which was intended to operate as a stop-gap measure until 31 July 1994, that being the revised commencement date of the proposed agreement. On 7 July the agent forwarded a copy of the agreement for the claimant’s signature, the accompanying letter emphasising that court approval of the contracting-out provisions had to be obtained, at the very latest, by the end of the month. Two days later, the claimant returned the agreement duly signed, together with post-dated cheques to cover the first 10 months’ rent. Later that month, a fire occurred at the premises and they were vacated by the claimant and his family. No steps were taken by the landlord to sign the agreement or obtain the necessary court approval.
Parties agreeing subject to contract to grant of three-year lease of public house – Statutory security to be excluded – Later letters from defendant landlord not expressly stated to be subject to contract – Claimant signing and returning copy of lease – Landlord declining to sign – No application made for court approval of exclusion – Whether binding agreement concluded – Whether formation conditional upon obtaining court approval – Claimant’s case struck out under CPR 3.4(2)(a) The claimant and his family occupied a public house, owned by the defendant landlord, under a series of short tenancy management agreements (TMAs) that expressly excluded the security of tenure provisions of the Landlord and Tenant Act 1954. By a letter to the claimant (the instigating letter), dated February 1994 and headed “subject to contract”, the landlord’s agent set out the terms of a proposed three-year agreement and requested the claimant to sign and return a copy of that letter as “confirmation of your intention to proceed”. In March 1994 the claimant complied with that request.
During May 1994 the parties agreed on certain terms to be included, but a meeting planned for the signing of the agreement in June 1994 had to be cancelled by the claimant for family reasons. Later that month, the claimant, complying with a telephoned request from the agent, signed a further TMA, which was intended to operate as a stop-gap measure until 31 July 1994, that being the revised commencement date of the proposed agreement. On 7 July the agent forwarded a copy of the agreement for the claimant’s signature, the accompanying letter emphasising that court approval of the contracting-out provisions had to be obtained, at the very latest, by the end of the month. Two days later, the claimant returned the agreement duly signed, together with post-dated cheques to cover the first 10 months’ rent. Later that month, a fire occurred at the premises and they were vacated by the claimant and his family. No steps were taken by the landlord to sign the agreement or obtain the necessary court approval.
In July 1995 the landlord, purporting to act under the most recent TMA, served a notice to quit. The claimant, who had expended more than £14,000 on improvements to the premises over the first half of 1994, sought a declaration that a three-year lease agreement had come into force on 31 July 1994, and that the landlord was in breach of contract by refusing access to the premises. The landlord applied under CPR 3.4(2)(a) for an order that the claimant’s case be struck out on the basis that it disclosed no reasonable grounds for bringing the claim.
Held: The claimant’s case was struck out.
1. There was nothing in the pleadings or the evidence to suggest that the words “subject to contract”, as used in the instigating letter, were not to have their usual effect of rendering the alleged contract incomplete until exchange of copies in accordance with ordinary conveyancing practice: see Eccles v Bryant [1948] 1 Ch 93. It was common ground that no contrary intention could be inferred from the absence of such words in subsequent documents emanating from the landlord.
2. Since the terms proposed by the instigating letter made it clear that statutory security of tenure was to be excluded, the alleged agreement was further subject to the implied condition that no binding agreement would come into existence before the court had given the necessary approval: see per Knox J in Cardiothoracic Institute v Shrewdcrest Ltd [1986] 1 WLR 368 at pp375 and 377.
3. Having regard to the above, the claimant was in no position to show that the landlord had created or encouraged a belief that it considered itself bound. There was, accordingly, nothing to support a claim based upon proprietary estoppel: see per Lord Templeman in Attorney-General of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] 1 AC 114 at p124.
Stephen Bickford-Smith (instructed by Maitland Walker, of Minehead) appeared for the claimant; Martin Rodger (instructed by Masons) appeared for the defendant.
Alan Cooklin, barrister
