Landlord granting leases commencing January 13 – Leases containing break clauses – Clauses providing for determination on expiry of notices and on third anniversary of commencement of leases – Notices stating leases were to determine on January 12 not January 13 – Whether notices were valid – High Court holding notices were valid – Court of Appeal allowing appeal – House of Lords allowing tenant’s appeal
By two leases dated March 11 1992 for terms of 10 years from January 13 1992 the defendant landlord let a property in Jermyn Street, London SW1, to the plaintiff tenant. The leases both contained a clause which gave the tenant an option to determine them “by serving not less that six months’ notice in writing . . . such notice to expire on the third anniversary of the term commencement date [to] determine this lease and upon expiry of such notice this lease shall cease and determine”. Subsequently the tenant purported to give notice to determine stating that the date of determination was January 12 1995. However, the third anniversary of the term commencement date was January 13 1995. The landlord refused to accept the notices. The tenant sought a declaration that the notices were effective. The High Court granted the declaration. The Court of Appeal allowed the landlord’s appeal and held that since the notices were of a technical nature, because they were not consensual documents and did not require the landlord’s consent, it was necessary for them to be in proper form. Therefore the tenant’s notices would only have been effective if they had complied with the specification in the clause that the leases would terminate on the third anniversary. The tenant appealed to the House of Lords contending that the date of determination submitted by the tenant in its notices was not an essential part of the notices and should give way to the tenant’s obvious intention, having regard to the tenant’s express invocation of the break clause, and therefore the notice should have the effect of expiring on the third anniversary of the commencement of the leases.
Held The appeal was allowed by a majority.
1. The old approach was too strict and too technical and was entirely objective. There had been a shift in the law from the strict construction of commercial instruments to a commercially sensible construction which was more likely to give effect to the intention of the parties: seeHankey v Clavering [1942] 2 KB 326 overruled.
2. The appropriate test was, “Is the notice quite clear to a reasonable tenant reading it ? Is it plain that he cannot be misled by it?”. The notices were sufficiently clear and unambiguous to leave the landlord in no reasonable doubt as to how and when they were intended to operate and therefore they were effective to determine the leases: see Carradine Properties Ltdv Aslam [1976] 1 WLR 442.
John Cherryman QC and Kenneth Munro (instructed by Manches & Co) appeared for the tenant; Nicholas Patten QC and Thomas Leech (instructed by Nabarro Nathanson) appeared for the landlord.
