Lease – Assignment – Specific performance – Appellant business tenant agreeing to assign lease to respondent prior to moving to alternative premises – Appellant giving notice to respondent when alternative premises ready pursuant to agreement -Parties failing to complete assignment within 15 working days as required by agreement (condition date) – Respondent purporting to serve termination notice -Whether appellant entitled to specific performance of agreement for assignment of lease – Appeal dismissed The appellant tenant occupied two floors of business premises in Bermuda (Mintflower Place) under a lease which was due to expire at the end of 2008. On termination of its lease, the appellant wished to move to alternative premises and the respondent assignee was willing to take a new lease of Mintflower Place. Since the alternative premises were not ready for occupation at the end of the appellant’s existing lease, the appellant, its landlord and the respondent agreed that a new lease of Mintflower Place would be granted to the appellant for a tern commencing on 1 January 2009; that, when the alternative premises became available for occupation, the appellant would assign to the respondent the new lease of Mintflower Place; and that the landlord would consent to that assignment. Completion of the assignment was to take place following service by the appellant of a notice that it was ready to move. The assignment was to be completed by the assignment on the so-called condition date which had to be no more than 15 working days after receipt by the respondent of the appellant’s notice. If the condition date had not occurred by 31 December 2009, either party might serve notice to terminate the agreement. The new lease was granted to the appellant on 23 January 2009. The fit-out works to the alternative premises took longer than anticipated and the appellant served the relevant notice on 18 December 2009. The period of 15 working days after receipt of that notice by the respondent expired on 13 January 2010. Completion of the assignment of the lease to the respondent did not take place between 18 December 2009 and 13 January 2010. Therefore, the agreement required that the assignment be completed on 13 January 2010. On that day, before completion had taken place, the respondent served notice of termination, taking the view that it was no longer obliged to take an assignment of the lease. The appellant’s claim for specific performance of the agreement was dismissed by the trial judge. That decision was upheld by the Court of Appeal of Bermuda. The appellant appealed to the Privy Council. The issue was whether, on the true construction of the agreement, and on the facts, the respondent was entitled to serve a termination notice under the agreement. Held: The appeal was dismissed. (1) The agreement did not expressly impose any temporal restriction on the right to serve a termination notice. However, in order to give business efficacy to the bargain which the parties had made, it was necessary to imply a term that a termination notice could not be served after there had been a breach by the party serving the notice of its obligation to complete on the condition date. It was not necessary to imply a term that a termination notice could not be served at a time when there had been no breach by the party serving the notice of its obligation to complete. So there was no basis for implying a term that a termination notice could not be served on the condition date itself. The assignee would not have been in breach of its obligation to complete until midnight on 13 January 2010; but it would not have been in breach of its obligation to complete at the time when, in fact, the termination notice was served on that day. Accordingly, under the terms of the agreement, it was open to the respondent to serve the termination notice when it did. Jonathan Small QC and Nathaniel Duckworth (instructed by Harcus Sinclair) appeared for the appellant; Jonathan Gaunt QC and David Kessaram (instructed by Charles Russell LLP) appeared for the respondent. Eileen O’Grady, barrister
Lancashire Insurance Company Ltd v MS Frontier Reinsurance Ltd
Lease – Assignment – Specific performance – Appellant business tenant agreeing to assign lease to respondent prior to moving to alternative premises – Appellant giving notice to respondent when alternative premises ready pursuant to agreement -Parties failing to complete assignment within 15 working days as required by agreement (condition date) – Respondent purporting to serve termination notice -Whether appellant entitled to specific performance of agreement for assignment of lease – Appeal dismissed The appellant tenant occupied two floors of business premises in Bermuda (Mintflower Place) under a lease which was due to expire at the end of 2008. On termination of its lease, the appellant wished to move to alternative premises and the respondent assignee was willing to take a new lease of Mintflower Place. Since the alternative premises were not ready for occupation at the end of the appellant’s existing lease, the appellant, its landlord and the respondent agreed that a new lease of Mintflower Place would be granted to the appellant for a tern commencing on 1 January 2009; that, when the alternative premises became available for occupation, the appellant would assign to the respondent the new lease of Mintflower Place; and that the landlord would consent to that assignment. Completion of the assignment was to take place following service by the appellant of a notice that it was ready to move. The assignment was to be completed by the assignment on the so-called condition date which had to be no more than 15 working days after receipt by the respondent of the appellant’s notice. If the condition date had not occurred by 31 December 2009, either party might serve notice to terminate the agreement. The new lease was granted to the appellant on 23 January 2009. The fit-out works to the alternative premises took longer than anticipated and the appellant served the relevant notice on 18 December 2009. The period of 15 working days after receipt of that notice by the respondent expired on 13 January 2010. Completion of the assignment of the lease to the respondent did not take place between 18 December 2009 and 13 January 2010. Therefore, the agreement required that the assignment be completed on 13 January 2010. On that day, before completion had taken place, the respondent served notice of termination, taking the view that it was no longer obliged to take an assignment of the lease. The appellant’s claim for specific performance of the agreement was dismissed by the trial judge. That decision was upheld by the Court of Appeal of Bermuda. The appellant appealed to the Privy Council. The issue was whether, on the true construction of the agreement, and on the facts, the respondent was entitled to serve a termination notice under the agreement. Held: The appeal was dismissed. (1) The agreement did not expressly impose any temporal restriction on the right to serve a termination notice. However, in order to give business efficacy to the bargain which the parties had made, it was necessary to imply a term that a termination notice could not be served after there had been a breach by the party serving the notice of its obligation to complete on the condition date. It was not necessary to imply a term that a termination notice could not be served at a time when there had been no breach by the party serving the notice of its obligation to complete. So there was no basis for implying a term that a termination notice could not be served on the condition date itself. The assignee would not have been in breach of its obligation to complete until midnight on 13 January 2010; but it would not have been in breach of its obligation to complete at the time when, in fact, the termination notice was served on that day. Accordingly, under the terms of the agreement, it was open to the respondent to serve the termination notice when it did. (2) The respondent had not lost its right to serve a termination notice by reason of its conduct between 18 December 2009 and 6 January 2010. The respondent had not become entitled, under the terms of the agreement, to exercise the right to serve a termination notice until 1 January 2010. It was not until then that the respondent needed to decide whether or not to exercise that right. On the material before the trial judge, it was impossible to contend that, in the period from 31 December 2009 until 13 January 2010, the respondent had acted in a manner which was consistent only with it having chosen not to exercise that right. Nor could it be said that, either during that period or at any time during the period from 18 December 2009 to 31 December 2009, the respondent communicated to the appellant, in clear and unequivocal terms, an election not to exercise its right to serve a termination notice: Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The Kanchenjunga”) [1990] 1 Lloyd’s Rep 391 and Flacker Shipping Ltd v Glencore Grain Ltd [2002] EWCA Civ 1068 considered. Jonathan Small QC and Nathaniel Duckworth (instructed by Harcus Sinclair) appeared for the appellant; Jonathan Gaunt QC and David Kessaram (instructed by Charles Russell LLP) appeared for the respondent. Eileen O’Grady, barrister
