Landlord and tenant — Break clause — Notices determining fixed term lease one day earlier than date specified in break clause — Whether notices valid
By two leases
dated March 11 1992 premises were demised by the appellant landlord to the
respondent tenant for a 10-year term. Clause 7(13) of each lease provided that
the tenant might determine the lease by serving a notice of not less than six
months expiring on the third anniversary of the term commencement date. The
parties agreed that the term commencement date was January 13 1992 and the
third anniversary January 13 1995. By two letters dated June 24 1994 the tenant
respectively gave notice to determine each lease on January 12 1995. In the
court below, Judge Rich held that the notices were effective to determine the
leases; the landlord appealed.
purports to determine a demise for a fixed term on a date not authorised by the
lease, the date cannot be corrected simply because it is clear: first, what the
correct date ought to be; second, that the wrong date was inserted by a slip;
and, third, that the recipient might guess or even be certain that that was
what had happened. An exception can only be made where the date is an
impossibility; the notices served by the tenant did not fall within that
exception. The notices, in specifying January 12 1995, were ineffective in
determining the fixed terms of the leases on January 13 1995.
The following
cases are referred to in this report.
Cadby v Martinez (1840) 11 A&E 720
Carradine
Properties Ltd v Aslam [1976] 1 WLR 442;
[1976] 1 All ER 573; (1975) 32 P&CR 12
Crate v Miller [1947] KB 946; [1947] 2 All ER 45; [1947] 63 TLR 389
Doe d
Bedford (Duke) v Kightley (1796) 7 TR 63
Hankey v Clavering [1942] 2 KB 326; [1942] 2 All ER 311, CA
Sidebotham
v Holland [1895] 1 QB 378
Yeandle
v Reigate & Banstead Borough Council
unreported March 16 1995
This was an
appeal by Eagle Star Life Assurance Co Ltd from the decision of Judge Rich QC
(sitting as a judge of the High Court), who determined the validity of certain
notices served by the respondent, Mannai Investment Co Ltd.
Nicholas
Patten QC (instructed by Rosling King) appeared for the appellant; John
Cherryman QC and Keith Munro (instructed by Manches & Co) represented the
respondent.
Giving the
first judgment, Nourse LJ
said: The question on this appeal is whether two identical notices given by a
tenant of business premises were effective exercises of powers to determine the
fixed terms for which the premises were held.
The landlord
is the defendant, Eagle Star Life Assurance Co Ltd. The tenant is the
plaintiff, Mannai Investment Co Ltd. The demised premises consist, first, of
office premises on the second floor of Brook House, 98/99 Jermyn Street, London
SW1, and, second, of the basement car park of Brook House. By two leases dated
March 11 1992, the office premises and the car park respectively were demised
by the defendant to the plaintiff, in each case:
For the term of ten years subject to the provisions of Clause 7(13) hereof
from and including the 13th day of January 1992.
By clause
7(13) of each lease (headed ‘Determination’) it was agreed, so far as material,
that:
The Tenant
may by serving not less than six months notice in writing on the Landlord or
its solicitors such notice to expire on the 3rd anniversary of the term
commencement date determine this Lease and upon expiry of such notice this
Lease shall cease and determine and have no further effect …
The expression
‘the term commencement date’ in clause 7(13) of each lease is not defined. But
it is agreed, correctly in my view, that by virtue of the words ‘from and
including the 13th day of January 1992’ it was that date. It is further agreed,
also correctly, that the third anniversary of that date was January 13 1995.
By two letters
dated June 24 1994 and served on the defendant more than six months before the
due date, one referring to the lease of the office premises and the other to
the lease of the car park, the plaintiff gave notice to the defendant as
follows:
Pursuant to
Clause 7(13) of the Lease we as Tenant hereby give notice to you to determine
the Lease on 12th January 1995.
Shortly
stated, the question is whether those notices, though expressed to determine
the leases on January 12, were effective to determine them on January 13 1995.
In the court below Judge Rich QC, sitting as a judge of the High Court, held
that they were. The defendant now appeals to this court.
Two points are
taken on behalf of the plaintiff. First, it is said that, although the notices
referred to January 12, it is clear beyond a peradventure that their effect was
to determine the leases on January 13, being the only date on which they could
have been determined. Second and alternatively, it is said that the notices did
not take effect until that moment of time which was both the last moment of
January 12 and the first of January 13, so that they did determine the leases
on January 13. I will deal with the points in that order, being the order in
which they were argued before and decided by the judge.
In support of
the first point Mr John Cherryman QC, for the plaintiff, relies primarily on
the fact that each notice was expressed to be given pursuant to clause 7(13) of
the lease, a provision affording the tenant an opportunity, a unique
opportunity, to determine the lease on January 13 1995 and on no other date. He
submits that the date inserted in the notice was not essential to its
operation. Thus it would have been enough if the words ‘on 12th January 1995’
had been omitted; alternatively if the words ‘on the third anniversary of the
term commencement date’ had been inserted in their place. Mr Cherryman adds
that no reasonable landlord could reasonably have been misled into thinking
that the notices were to take effect on any date other than January 13.
I agree with
Judge Rich that these submissions are contrary to authority and must be
rejected. In Hankey v Clavering [1942] 2 KB 326 the plaintiff had
demised certain premises to the defendant for a term of 21 years from December
25 1934. The lease gave either party the power to determine the demise at the
expiration of the first seven or
plaintiff wrote to the defendant’s solicitors saying:
… I will be
obliged if you would accept the six months’ notice to terminate your client’s
lease which I am allowed to give on June 21 1941. This would mean that he would
have to give up the cottage on December 21 1941 …
The seventh
year of the term expired not on December 21 but on December 25 1941. Applying
the decision of the Court of King’s Bench in Cadby v Martinez
(1840) 11 A&E 720, this court held that, although the insertion of December
21 was obviously a slip on the part of the plaintiff, the notice was invalid.
The reasoning
which led to that conclusion is expressed in the judgment of Lord Greene MR,
with which the other member of the court, Lord Clauson, agreed. At p329, the
Master of the Rolls said:
Notices of
this kind are documents of a technical nature, technical because they are not
consensual documents, but, if they are in proper form, they have of their own
force without any assent by the recipient the effect of bringing the demise to
an end. They must on their face and on a fair and reasonable construction do
what the lease provides that they are to do. It is perfectly true that in
construing such a document, as in construing all documents, the court in a case
of ambiguity will lean in favour of reading the document in such a way as to
give it validity, but I dissent entirely from the proposition that, where a
document is clear and specific, but inaccurate on some matter, such as that of
date, it is possible to ignore the inaccuracy and substitute the correct date
or other particular because it appears that the error was inserted by a slip.
By the clear wording of this notice the plaintiff purported to bring the lease
to an end on December 21 1941. In so doing he was attempting to do something which
he had no power to do, and, however much the recipient might guess, or however
certain he might be, that it was a mere slip, that would not cure the defect
because the document was never capable on its face of producing the necessary
legal consequence.
Hankey v Clavering was distinguished by Goulding J in Carradine
Properties Ltd v Aslam [1976] 1 WLR 442, where a predecessor of the
plaintiff had demised certain premises to a predecessor of the defendant for a
term of 21 years less three days from September 27 1968. The lease contained a
power for either party to determine the demise at the expiration of the first
seven or 14 years of the term by 12 months’ previous notice in writing. By a
notice dated September 6 1974 and served on the defendant either on that day or
very shortly thereafter the plaintiff gave the defendant notice as follows:
… we hereby
give you notice that we intend to determine the term created by the lease on
September 17 1973, and that we require you to quit and deliver up possession … on
that date.
The term
having been 21 years ‘from’ September 17 1968, it was clear that if the date
specified in the notice had been September 17 1975 it would have been valid. So
the question was whether what was clearly a clerical error in typing 1973 instead
of 1975 invalidated the notice.
In holding
that it did not, Goulding J said at p446C:
In an option
clause the requirement is that a party must strictly comply with the condition
for its exercise. If the condition includes the giving of a particular notice,
it seems to me that the logical first approach is to interpret the notice,
looking at the words and applying legal principles to their construction, and
then ask whether it complies with the strict requirements as to exercise of the
option. If that is right, I think a benevolent approach could be applied in
this case, as in the Duke of Bedford‘s case (1796) 7 Term Rep 63,
because reasonably read by a reasonable tenant the mistake is obvious on the
face of it, and there is no doubt what the mistake was. Therefore one
interprets the notice as asserting an intention to determine in 1975.
Mr Nicholas
Patten QC, for the defendant, was, if necessary, disposed to submit that Carradine
Properties Ltd v Aslam was wrongly decided. I do not think that it
was. Rather, I think that it was both principled and manifestly just. The
ground of the decision is illuminated by the judge’s reliance on Doe d Duke
of Bedford v Kightley (1796) 7 TR 63, an authority cited by counsel
for the unsuccessful landlord in Hankey v Clavering, although not
referred to in the judgments. The essential facts and the judgment in that case
were quoted by Goulding J at [1976] 1 WLR 444A:
On the trial
of this ejectment at the last assizes before Lord Chief Justice Eyre, the
defendant, who was a tenant to the lessor of the plaintiff, objected to the
notice to quit, which was served just before Michaelmas 1795 and was to quit
‘at Lady-Day, which will be in the year 1795’. Lord Kenyon CJ, giving judgment,
said: ‘the time when the notice was given and the words in it ‘which will be’
manifestly showed that this was a notice to quit at the then next Lady-Day; and
the conduct of the parties also showed that they so considered it. Then the
year 1795 in the notice may be rejected as an impossible year’.
In like
manner, the effect of Goulding J’s decision was to reject 1973 as an impossible
year, a basis of decision recognised by the judge himself at p446E:
It is true
that if whoever made the mistake had typed 1976 instead of 1973, the error
would probably have been incurable because although the tenant might suspect
there was a slip, it might be that the landlord did intend 1976, not knowing or
understanding his rights under the lease. In such a case the tenant would be
entitled to disregard the notice but because a past date was given in the
notice it is insensible and therefore an authority such as the Duke of
Bedford‘s case is in point.
The effect of
these authorities can be summarised as follows. If a notice clearly and
specifically purports to determine a demise for a fixed term on a date not
authorised by the lease, the date cannot be corrected simply because it is
clear, first, what the correct date ought to be, second, that the wrong date
was inserted by a slip and, third, that the recipient might guess or even be
certain that that was what had happened. An exception can only be made where
the date specified is an impossibility, either because it has passed or because
it is on some other ground inconceivable that it was the date intended. The
notices in the present case, having clearly and specifically purported to
determine the leases on a date which had not passed and could conceivably, like
Goulding J’s example of 1976, have been the date intended, do not fall within
the exception. Like Judge Rich, I would therefore decide the first point in
favour of the defendant.
The second
point, which, if it were correct, would bring about the magical result that a
notice to determine a fixed term on January 12 takes effect either on that day
or on January 13, is based on a heresy. I have never before heard it suggested
that the last moment of time on one day is the same as the first moment of time
on the next and no authority has been cited to support such a proposition. The
two moments of time, albeit separated by an immeasurable stroke of midnight,
have always been treated as separate, and many decisions in this and comparable
areas of the law would be inexplicable if they were not. So the notices in this
case cannot have taken effect at any time later than the last moment of January
12 1995. On the authority of Hankey v Clavering that means that
they were bad.
In deciding
this point in favour of the plaintiff, Judge Rich accepted Mr Cherryman’s
alternative submission that the case was governed by the decision of this court
in Sidebotham v Holland [1895] 1 QB 378. I entirely and
respectfully disagree. In that case the plaintiff had agreed in writing to let
a house to the defendant as yearly tenant ‘commencing on the 19th of May,
1890′. On November 17 1893 the plaintiff gave the defendant notice to quit on
May 19 following and subsequently brought an action for possession against her.
The tenancy having been expressed to commence on May 19, each year of it
expired on the May 18 following and it was said by the defendant that a notice
to quit on May 19 was therefore bad. The majority of the court (Lord Halsbury
and Lindley LJ) disagreed and, although he expressed doubt in the matter, AL
Smith LJ did not dissent. It was held that the tenancy could be determined by
six months’ notice to quit either on May 18 or on May 19, that is to say either
on the last day of the year or on the anniversary of its commencement date. In
either case the tenancy would have determined at the last moment of time on May
18. I agree with Mr Patten that the case decided nothing more than that. It
distinctly did not decide that a notice to determine a fixed term on May 18 can
take effect as a notice to determine it on May 19.
The essential
ground of the majority decision in Sidebotham v
Halsbury concurred, at p383:
But, although
a half-year’s notice to quit on the 18th would be correct, it does not follow
that a notice to quit on the 19th, which is the anniversary of the day on which
the tenancy commenced, is bad, and I am clearly of opinion that it is not. I
have looked at all the decisions which were referred to in the argument and at
many more, and I can find none in which it has been held that a half-year’s
notice to quit on the anniversary of the day on which the tenancy commenced is
bad. I should be very much surprised to find such a case. The validity of a
notice to quit ought not to turn on the splitting of a straw. Moreover, if
hypercriticisms are to be indulged in, a notice to quit at the first moment of
the anniversary ought to be just as good as a notice to quit on the last moment
of the day before. But such subtleties ought to be and are disregarded as out
of place.
As I think was
recognised by this court in its later decision of Crate v Miller
[1947] 2 All ER 45, the true view of Sidebotham v Holland is that
it established a special rule for determining periodic tenancies, whether
yearly, weekly or for any intermediate period, at common law. It is
characteristic of such tenancies that they are not regulated by any express
provision for their determination. The rule established by Sidebotham v Holland
is that they may be determined at the end of the period by a notice to quit of
the requisite length, either on the last day of the period or on the
anniversary of its commencement date. Thus in Crate v Miller
Somervell LJ, in delivering the judgment of himself, Evershed LJ and Wynn-Parry
J, said of Sidebotham v Holland, at p46F:
As we read
that decision, it is based, first, on the view that, on the dates in question
there, the tenant had to quit and deliver up possession by midnight at the end
of May 18; secondly, that a notice to quit and deliver up possession either on
the 18th or on the 19th could be construed as a notice to quit at that moment
of time, being the end of the period, in that case a year, which began on the
previous May 19. Lindley LJ says (ibid):
… a notice to
quit at the first moment of the anniversary ought to be just as good as a
notice to quit on the last moment of the day before.
In other
words, a notice to quit on either day could be construed as a notice to quit
when the current period in question ended.
Mr Cherryman
seeks also to rely on the very recent decision of Leggatt and Roch LJJ in Yeandle
v Reigate & Banstead Borough Council unreported — March 16 1995.
That decision assists him no more than Sidebotham v Holland.
There the agreement was in something of a hybrid form attributable to what is
now section 25(1) of the Agricultural Holdings Act 1986, the tenancy having
been expressed to commence on September 29 1968 and to continue from year to
year until determined by either party on September 29 in any year by 12 months’
notice in writing. It is important to emphasise that, since the tenancy was a
yearly tenancy commencing on September 29, the effect of a notice to determine
it on September 29 would in fact have been to determine it at the last moment
of time on September 28. The landlord duly served on the tenant a notice to
quit dated July 27 1992 requiring him to deliver up possession on September 28
1993. Applying Sidebotham v Holland and Crate v Miller,
this court held that the tenancy could be determined as well by a notice to
quit on September 28 as by one on September 29.
In my
respectful opinion, that decision was correct, although for myself I would have
preferred to base it on a somewhat different ground from the ground adopted in
that case. Since the effect of a notice to quit on September 29 would have been
precisely the same as a notice to quit on September 28, ie to determine the
tenancy at the last moment of time on September 28, there could have been no
possible reason for not giving effect to a notice in the latter form. But
however that case is viewed, it is, like Sidebotham v Holland, no
authority for the proposition that a notice to determine a fixed term on
September 28 can take effect as a notice to determine it on September 29.
For these
reasons, differing from the judge, I would, like the first, reject the
plaintiff’s second point and allow the defendant’s appeal accordingly.
Agreeing, Roch LJ said: In Yeandle v Reigate
& Banstead Borough Council, on which Mr Cherryman, for the respondents,
based one of his arguments, my intention was to follow and apply the principle
stated by Lindley LJ in Sidebotham v Holland, as read by this
court in Crate v Miller in the passage in the judgment at p46F
cited by Nourse LJ, namely that: a notice to quit on either day in the case of
a periodic tenancy is to be construed as a notice to quit when the current
period of the tenancy ended. I gratefully accept the correction that I should not
have said that the notice expressed to take effect on September 29 would take
effect at the first moment of that day.
This appeal
does not concern the serving of a notice to quit intended to terminate a
periodic tenancy. It concerns the construction of a term in two leases of 10
years certain which permits the tenant to break the tenancies on one particular
day. The notices served did not do that. Consequently the leases survive and
the appeal must, in my opinion, succeed.
Also agreeing,
Hobhouse LJ said: The
leases were each for a term of 10 years from and including January 13 1992. By
clause 7(13) in each lease, the tenant was given a contractual right to
determine the lease by serving a notice ‘to expire on the 3rd anniversary of
the term commencement date’. The clause further provides that ‘upon expiry of
such notice’ the lease shall cease and determine.
In my
judgment, the decision of this appeal is concluded by the construction of
clause 7(13). The contractual right to terminate the lease can only be exercised
by serving a notice which complies with the contractual provision. If authority
is required for this obvious proposition, it is to be found in Hankey v Clavering
[1942] 2 KB 326.
It is conceded
that the third anniversary of the term commencement date is the calendar day
January 13 1995. It is also accepted that, in the absence of some special
provision, a notice expiring on a given day expires at the last moment of that
day and a lease terminates at the last moment of its concluding day.
Clause 7(13)
requires a notice expiring on January 13 1995. It follows that the notice and,
therefore, the lease shall expire at the last moment of that day. The
plaintiff’s argument affirms that the effect of the notices which it served was
to seek to terminate the leases at the last moment of January 12 1995 which it
submits is the same as the first moment of the 13th. But this is still 24 hours
too soon. The plaintiff’s notices would be contractual notices only if they
expired at the last moment of the 13th. It is accepted, obviously correctly,
that they did not have that effect.
At one stage
of its argument the plaintiff was driven to submit that clause 7(13) implicitly
left to the tenant the choice of the time on the 13th at which the lease should
determine. There is no justification for so construing this clause.
The nub of
this case is that the plaintiff has read the clause as if it said ‘to expire at
the end of the third year of the term’. It does not.
Appeal
allowed.
