Landlord and tenant — Break clause — Whether notice containing wrong termination date valid notice to determine lease
In 1990 the
applicant tenants were granted a 20-year term of an industrial building. Clause
8 of the lease contained a provision enabling the tenants to determine the
lease at the expiration of the fifth year of the term by giving to the
landlords not less than 12 months’ notice. By a letter dated January 21 1994
the tenants stated they were enclosing a notice determining the lease on March
23 1995. The notice enclosed stated that they were determining the lease on
March 23 1994 and referred to clause 8. The tenants applied for a declaration
that the lease would determine on June 23 1995. The respondent landlords denied
that the letter or notice would effectively determine the lease.
take into account the background knowledge of the particular reader, in this
case the landlords who knew that the date of determination could only be June
23 1994. The landlords would see the letter and the notice and see a mistake in
the dates specified, knowing that there is no requirement to specify any date.
They would also see a reference to clause 8 of the lease. The landlords would
not have been misled by the pair of wrong dates; they would have known that the
tenants wanted to determine the lease and accordingly the notice was valid.
The following
cases are referred to in this report.
Carradine
Properties Ltd v Aslam [1976] 1 WLR 442;
[1976] 1 All ER 573; (1975) 32 P&CR 12
Hankey v Clavering [1942] 2 KB 326; [1942] 2 All ER 311, CA
Land v Sykes [1992] 1 EGLR 1; [1992] 03 EG 115, CA
This was an
application by the tenants, Micrografix, by way of originating summons to which
the landlords, Woking 8 Ltd, were the respondents.
Jonathan Brock
(instructed by Garrett & Co, of Reading) appeared for the plaintiffs; Stan
Gallagher (instructed by Davies Arnold Cooper) represented the defendants.
Giving
judgment, JACOB J said: This is yet another recession case. Here some
tenants took a 20-year lease of an industrial building in 1990. Rents have
fallen and they desire to exercise their rights under the lease to terminate
it.
The lease
contained provision for such termination solely at the end of the fifth year.
Clause 8 reads as follows:
If the tenant
shall be desirous of determining the tenancy hereby created at the expiration
of the fifth year of the term hereby granted and shall give to the landlord not
less than 12 months previous written notice of such its desire and shall up to
such determination pay the rents hereby reserved and perform and observe the
covenants on its part herein contained, then in such case immediately on the
expiration of the fifth year of the term this demise and everything herein
contained shall cease and be void.
The tenants
sent a letter with a notice of an intention to determine the lease. The letter
was sent on January 21 1994 and read as follows:
We are your
tenants at the premises known as Unit 1 [address given]. We enclose by way of
service upon you notice determining our lease on 23rd March 1995 pursuant to
clause 8 of our lease. You are requested to acknowledge receipt of this letter
and to confirm you accept the notice as valid notice of our intention to
determine our lease.
The notice
sent with that letter was to the landlords. It identified the premises and read
as follows:
We Mishcon de
Reya [address given], solicitors to the tenants, hereby give you notice that
the tenants intend to quit and deliver up possession of Unit 1 [address given]
now occupied by the tenants as your tenant on 23rd March 1994 pursuant to
clause 8 of the lease made between you and our client.
There was
provision for a date, but no one ever inserted the date. There is an obvious
discrepancy between the letter and the notice in that the letter refers to
March 1995 and the notice to March 1994.
It is common
ground that both of those dates are inappropriate and that the only date for
determination of the lease was June 23 1995. Accordingly, the question on this
construction summons before me is whether the notice read with the letter was
effective. The landlords say no; the tenants say yes.
It is common
ground that the modern approach to notices as between landlord and tenant was
that of Goulding J in Carradine Properties Ltd v Aslam [1976] 1
WLR 442. In that case he said (at p444G):
I would put
the test generally applicable as being this: ‘Is the notice quite clear to a
reasonable tenant reading it? Is it plain that he cannot be misled by it?’
In Carradine
the notice, which was in fact a notice to quit, was a wholly impossible
date because the date had already been passed and, applying the test, Goulding
J had no difficulty in holding that the notice to quit was effective.
In so holding,
he distinguished the celebrated, much distinguished, case of Hankey v Clavering
[1942] 2 KB 326, where Lord Greene MR indicated that notices of this kind —
that is to say notices between the landlord and tenant and the like — should be
construed strictly. He said at p329:
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.
Carradine, as I have indicated, is the modern approach, and the principle of
Goulding J has been applied in a number of cases since, both at first instance
and in the Court of Appeal. It is illustrative of the more modern approach to
the construction of all documents, that one should lean more in favour of
making them work than not work than perhaps one did in the past.
I turn to
consider, as indicated in Carradine, what a reasonable tenant, reading
the letter and the notice, would make of it and, in particular, to consider
whether he would be misled by it. In so doing, I assume that the reader, the
landlord, is well aware that the only date which could be given is in fact June
23 1995. It must always be the case when construing the document that one must
take into account the background knowledge of the particular reader concerned.
So the
landlords know that the date of determination can be, and can only be, June 23
1995. They see the letter and they see the notice. They see that there is a
mistake on the dates. They also know that there is no requirement to specify
any date, and they see as plain as anything that the tenants want to leave.
They understand the tenants’ desire because we are in a time of recession.
I think they
see as plainly as anything that the tenants have made a mistake as to the date,
that in any event the tenants need not have specified a date at all and that
the tenants are intending to go when they can. I think they see that because
both the letter and the notice expressly refer to clause 8, thereby inviting
the landlords specifically to read the letter in conjunction with clause 8.
Mr Stan
Gallagher ingeniously suggested that the reference to clause 8 was a reference
to the latter part of the clause only, to the portion of the clause concerned
with continuing to pay the rent and so on up until the tenants leave. That
seems to me to be much too much of a strained view.
I therefore
think the landlords would not have been misled by the pair of wrong dates. They
would have seen exactly what the tenants intended and that accordingly the
notice was valid.
I heard a
further argument along the lines that, even if a notice is somehow defective,
if the landlords do not misunderstand it and accordingly knows what they are
really looking at, that can be taken into account too. The argument went like this.
There is no evidence from the landlords here, there is no evidence that they
were misled and, accordingly, the letter and notice should be treated as
unambiguous. Reliance was placed upon Land v Sykes [1992] 1 EGLR
1. Scott LJ said at p4:
On this part
of the case I would add that, in my opinion, if a notice to quit in fact
communicates the correct information to the recipient tenant, I do not think
that it is any business of the courts, or that there is any requirement of the
law of landlord and tenant that operates, to deprive the notice of validity by
reference to what some hypothetical reasonable tenant might have thought the
notice meant. I agree that, if objectively construed in the light of the facts
known to both landlord and tenant the meaning of the notice is clear, that is
an end of the matter. But if, in fact, the tenant was not confused, I for my
part think that that would suffice. I regard the approach of Sellers LJ in Frankland
v Capstick as authority.
So Scott LJ
went further and said that the understanding of the recipient of the letter can
matter. That appears to be in direct conflict with what was said by Lord
Greene.
I find some
difficulty in understanding how the understanding of the particular recipient
could assist, given that the document is a unilateral document. It may be that
what is involved here is some form of estoppel. For instance, in this case the
letter asked the landlords to acknowledge receipt of this letter and to confirm
that they accepted the notice as a valid notice. So far as I can see, they did
not do that; nor do they say the notice was invalid. It may be that that is the
sort of conduct that Scott LJ had in mind. I do not have to consider the point
further because, in my judgment, the case falls within the Carradine
principle, that is to say a landlord would not be misled by the notice in the
circumstances of this case.
I would only
add this in relation to Carradine. Mr Gallagher reminded me of the end
of the judgment of Goulding J which referred to the possibility of a different
date, a possible but manifestly erroneous date. He said:
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.
That was an obiter
observation at a point in time up to which the rather stricter view of Lord
Greene had prevailed. In 1995 I rather think that a court faced with an obvious
slip would construe the document without the slip.
In the result,
the application succeeds.
