Equipment lease – Claimant financing acquisition of equipment to be installed in demised premises – Equipment lease entered into with tenant – Claimant and defendant landlord entering into waiver agreement – Both agreements providing for equipment to remain property of claimant – Defendant’s waiver specifying 28-day period for claimant to remove equipment once notified of termination of premises lease – Whether defendant giving claimant inadequate notice– Whether claimant having further rights against defendant after 28-day period – Claim dismissed
In 2004, the defendant landlord let the ground floor and basement of its premises to a tenant for use as a children’s play centre and restaurant. The claimant company entered into an equipment lease with the tenant by which the claimant financed the acquisition of various items for the demised premises, including air-conditioning systems, fire and intruder alarm systems and moveable walls. The equipment lease provided that the equipment remained at all times the claimant’s property, and that the tenant should do nothing to prejudice the claimant’s rights in respect of it. The claimant and the defendant entered into a “landlord’s waiver” agreement, which provided that the equipment would remain the claimant’s property whether or not incorporated into or attached to the premises. In the event of the termination of the premises lease, the defendant was to notify the claimant and allow it 28 days in which to remove the equipment.
The tenant fell into financial difficulties and defaulted on the payments to the defendant under the premises lease and the claimant under the equipment lease. In May 2007, the claimant terminated the equipment lease and demanded the return of the equipment. Shortly afterwards, the defendant forfeited the lease by physical re-entry. It informed the claimant of this by telephone in June 2007, but the latter did not remove the equipment. In August 2007, the defendant relet the premises, with the use of the equipment.
The claimant brought a claim for damages against the defendant, contending that it had breached the terms of the landlord’s waiver. It contended that the defendant had given inadequate notification of the termination of the premises lease and had destroyed the claimant’s right to repossess the equipment by reletting the premises without reserving a right of entry for the claimant for that purpose.
Held: The claim was dismissed.
Notwithstanding the terms of the landlord’s waiver, most of the equipment had become part of the premises once installed and did not in law remain the claimant’s property. Consequently, the claimant’s interest in the equipment was confined to its contractual rights under the equipment lease and the landlord’s waiver. The latter agreement, properly construed, gave the claimant 28 days, after notification by the defendant that the premises lease was terminated, in which to remove the equipment; the notice did not need to refer to that period specifically. There was no general presumption that notices should be in writing and it could not reasonably be inferred, as a matter of construction of the landlord’s waiver, that written notice was required: Mannai Investment Co Ltd v Eagle Star Life Assurance Co [1997] 1 EGLR 57; [1997] 24 EG 122; [1997] 25 EG 138 distinguished.
Further, a written notice was not required under section 196(5) of the Law of Property Act 1925. Although the landlord’s waiver was an “instrument affecting property” within that section, notice was not “required to be served” thereunder. A distinction was to be made between “serving” notice and merely “giving” it. The need for writing was implicit in any requirement for “service” of notice, whereas the landlord’s waiver, properly construed, permitted notice to be given orally. Section 196(5) did not import a stringent requirement for writing where that was not required by the contract or other instrument affecting property: R v Shurmer (1886) LR 17 QBD 323 considered; Re 88 Berkeley Road NW9 [1971] Ch 648 distinguished. Accordingly, the defendant had given sufficient notice to the claimant to start the 28-day period running. There had been no implied agreement to suspend that period pending further developments. The claimant’s rights had therefore been lost on expiry of the 28-day period and it had no claim against the defendant.
Edward Francis (instructed by Michael Wydra & Co) appeared for the claimant; Richard Clegg (instructed by Ingram Winter Green) appeared for the defendant.
Sally Dobson, barrister
