Landlord and tenant — Option clauses in leases of a shop and a flat — Tenants claim specific performance of options enabling them to obtain further terms of 21 years after expiry of terms of 35 years — Whether requests effective to exercise options — Whether landlords estopped from disputing exercise of options — Leases provided for the options to be exercised by ‘the written request the tenant made three months before the expiration of the term hereby created’ — Original terms expired in 1984, and three months before the expiry date would have been Christmas 1983 — Requests by tenants to exercise the options were made as early as January 1981 — The first point decided by the judge was whether, in the light of Biondi v Kirklington & Piccadilly Estates Ltd, such a request in 1981 was made a reasonable time before Christmas 1983 — He held that the option clauses contemplated that the request should be made a reasonably short time before Christmas 1983, especially in view of the proviso in the clauses that there must be no breach or non-observance of covenants at the date of the request — Hence the request made nearly three years before Christmas 1983 was not made at a reasonable time — He also held that some correspondence in 1983 in which the 1981 requests were mentioned did not constitute fresh requests — The second point related to the question of estoppel — One of the landlords had agreed in correspondence with the tenants’ solicitors that the phrase in the option clause ‘request of the tenant made three months before the expiration of the term’ meant at any time before the date which was three months before the expiration of the term, but this interpretation was repudiated a few months later by surveyors on behalf of the landlords as incorrect and made without professional advice — It was argued that, despite this repudiation, the original agreement by the joint landlord created an estoppel — The judge, without deciding whether the correspondence would have created an estoppel, held that in any case the repudiation was effective; there was nothing to prevent the landlords from resiling from their earlier position — Claim for specific performance dismissed
In this case
Violet Jane Multon and Florence Ivy Clarke, tenants of a shop and of a
first-floor flat at 71 St Helen’s Gardens, London W10, brought an action for
specific performance of options contained in leases of the premises against
their landlords, Horace Arthur Cordell and Barry Marshall Cordell.
Robert Pryor
QC and Kirk Reynolds (instructed by Nicholas Morris) appeared on behalf of the
plaintiff tenants; Ian Lamb (instructed by Pickering & Butters, of
Stafford) represented the defendant landlords.
Giving
judgment, JUDGE THOMAS said: The plaintiffs are the tenants and the defendants
are the landlords under two leases. They are successors in title to the
original tenants and landlords. The plaintiffs in this action seek specific
performance of options contained in the two leases. By one of the leases, which
is dated May 2 1949, the lock-up shop known as 71 St Helen’s Gardens, London
W10, was demised for the term of 35 years from March 25 1949 at the rent and
upon the other terms and conditions set out in the lease. By the other lease,
also dated May 2 1949, the first-floor flat at 71 St Helen’s Gardens was
demised for a like term of 35 years from March 25 1949 at the rent and upon the
other terms and conditions set out in that lease.
Each of the
leases contained in clause 3(4) a covenant by the landlord in the following
terms:
The landlord
will on the written request of the tenant made three months before the
expiration of the term hereby created and if there shall not at the time of
such request be any existing breach or non-observance of any of the covenants
on the part of the tenant hereinbefore contained at the expense of the tenant
grant to him a lease of the demised premises for a further term of 21 years
from the expiration of the said term at the same rent and containing the like
covenants and provisos as are herein contained, with the exception of this
covenant for renewal, the tenant on execution of such renewed lease to execute
a counterpart thereof.
The term of 35
years from March 25 1949 expired on either March 24 or 25 1984 and three months
before the expiration of that term of 35 years brings us to Christmas 1983.
Under cover of
a letter dated January 5 1981 the plaintiffs’ solicitors wrote to the
defendants and enclosed in that letter two formal requests for the grant of a
new lease for 21 years in accordance with the provisions of clause 3(4).
The first
question I have to answer is whether or not those requests are effective to
exercise the option contained in clause 3(4). That depends upon the
construction of that clause. A clause in similar terms was considered by
Roxburgh J in Biondi v Kirklington & Piccadilly Estates Ltd
[1947] 2 All ER 59. The only difference between the covenant which Roxburgh J
was considering and clause 3(4) in the present case was that in the former the
request was to be made six calendar months before the expiration of the term
granted, which in that case was also 35 years. The term granted by the lease in
that case was 35 years from February 8 1911. The lease itself was executed on
March 1 1911. The 35 years, therefore, expired on February 7 or 8 1946, and
that made the date six months before the expiration of the term August 8 1945.
In the Biondi case the lessee served a notice on the lessor electing to
exercise the option for renewal on March 10 1911; that is just 10 days after
the execution of the lease.
Roxburgh J,
interpreting the covenant in question, said at p 60-E that it was:
capable of at
least four different meanings: (i) made on August 8 1945; (ii) made at any time
before August 8 1945; (iii) made on or a reasonable time before August 8 1945;
and (iv) given so as to take effect on August 8 1945.
In that case
he said that the second possible construction — that is, made at any time — was
the only one which would avail the plaintiff, and he considered the case on
that footing.
In the present
case it is not contended that the same meaning should be ascribed to the
covenant I am considering, and it is common ground that the first question I
have to answer is: was the request, made in this case on January 5 1981, made a
reasonable time before Christmas 1983?
Clause 3(4) in
specifying a period of three months before the expiration of the term of 35
years is specifying a brief period before the expiration of the term, and that
suggests to me that the request must be made within a reasonably short time
before Christmas 1983.
Further, it is
to be noted that the clause provides that breaches or non-observance of the
tenants’ covenants are to be considered at the time that the request is made.
There is no suggestion in the present case that there have been any breaches at
any time, but it seems to me that it must have been in the contemplation of the
parties when the leases were executed in 1949 that consideration of whether or
not there were breaches of covenants should be as late in the term of years as
was reasonably possible; in other words, that there should not be a long
interval between the request and the end of the term.
The request
made in this case on January 5 1981 was made three years, or nearly three
years, before Christmas 1983 and that does not strike me as a request made at a
reasonable time.
The next
question arises out of a letter dated May 12 1983 written by the plaintiffs’
solicitors to the defendants’ solicitors. That letter was written in answer to
a letter from the defendants’ solicitors to the plaintiffs’ solicitors. In the
letter dated May 9 1983 the defendants’ solicitors wrote:
We note from
the correspondence that notices under clauses 3(4) of the two leases held by
your clients in relation to the lock-up shop and the first-floor flat have been
purported to be served on our clients. We should be pleased if you would let us
have copies of such purported notices.
The letter of
May 12 in answer said:
As requested
we enclose copies of the counterpart underlease dated 10th June, 1968;
which is not
relevant
our notice is
dated 5th January, 1981 to your clients and of our covering letter. We look
forward to hearing from you with drafts for approval of the new leases to which
our clients are entitled.
It is urged by
the plaintiffs that that letter of May 12 enclosing copies of the notices sent
on January 5 1981 constitutes a fresh request for new leases. In my view, it
was not a request at all within the meaning of clause 3(4). It did not evince
an intention to exercise the option in a clear way, either formally or
informally. The last part of the letter of May 12 makes it clear that the author
of the letter regarded his clients as being then entitled to new leases; not
that they were making a request for them.
The letter of
May 12 1983 was written some seven months before Christmas 1983. I do not need
to express an opinion as to whether that period of seven months was a
reasonable interval before Christmas 1983, but I incline to the view that it
probably was a reasonable interval.
The final
question with which I am concerned is the question of estoppel. It arises out
of some correspondence which I shall read. On November 6 1980 the plaintiffs’
solicitors wrote to the solicitors who had been acting for the defendants on
other matters, saying:
Clause 3(4)
of the leases gives our clients the right to take a further term upon the
expiration of the existing term in March 1984 subject to a ‘written request
from the tenant made three months before the expiration of the term hereby
created’. We have always considered the words ‘made three months before’ to
mean made at any time before the date three months before the expiration of the
term as otherwise our clients would appear to be limited to a single and
specific day upon which to make the request, which can hardly have been the
intention of the parties to the lease. First, do you agree with our interpretation? Secondly, if you do, are you prepared to
advise your clients to give some suitable form of confirmation?
It seems that
at that stage the solicitor who had been acting for the defendants had
semi-retired (so it appears from an attendance note) and he passed the
correspondence on to the defendants.
On December 27
1980 the second defendant, Mr B M Cordell, wrote to the plaintiffs’ solicitors,
saying in the last paragraph of his letter:
So far as
your second point is concerned I think your interpretation of the words ‘made
three months before’ would seem to be reasonable and I concur with this.
That letter
having been received, the plaintiffs’ solicitors, on January 5 1981, wrote the
letter I have already referred to to the defendants enclosing the formal
requests for the new leases. In that letter in the second paragraph the
plaintiffs’ solicitors said this:
Thank you for
confirming that you share our interpretation of the words ‘made three months
before’ in clause 3(4) of the leases dated May 2 1949. In the circumstances, as
our clients obviously wish to exercise the option contained in the leases, we
now enclose the appropriate notices and shall appreciate the return of one copy
of each of them.
Obviously the
plaintiffs’ solicitors acted on the written agreement of both parties as to
what clause 3(4) meant.
Later on, on
March 25 1981, Messrs Willmotts, surveyors and estate agents, wrote to the
plaintiffs’ solicitors on behalf of the defendants, saying this in the second
paragraph:
We have also
been forwarded various correspondence passing between yourselves and our
clients in connection with the option clause contained under clause 3(4) of the
lease dated 2nd May, 1949. We must make it clear that our clients had not
sought professional advice on the significance of the wording of this clause
prior to agreeing with the contention raised in your letter to him of the 6th
November, 1980. We would make it quite clear that our client now withdraws the
statements made in his letter in reply dated 27th December and you may also
take it that we disagree with your interpretation. The request to exercise the
option set out in your letter dated 5th January is not, therefore, acceptable
to our clients and we should be obliged if you would convey this to your own clients
accordingly.
I have read
the correspondence which gives rise to the question of estoppel. What the
plaintiffs say is that the defendants are estopped from asserting that the
construction of clause 3(4) is other than that referred to in the earlier of
the letters I have just quoted. The estoppel they rely on is an estoppel by
convention.
In Spencer
Bower & Turner on Estoppel by Representation, 3rd ed, at p 157,
estoppel by convention is described as follows:
This form of
estoppel is founded, not on a representation of fact made by a representor and
believed by a representee, but on an agreed statement of facts the truth of
which has been assumed by the convention of the parties, as the basis for a
transaction into which they are about to enter. When the parties have acted in
their transaction upon the agreed assumption that a given state of facts is to
be accepted between them as true, then as regards that transaction each will be
estopped against the other from questioning the truth of the statement of facts
so assumed.
That
description of estoppel by convention was adopted by Brandon LJ (as he then
was) in Amalgamated Investment & Property Co Ltd v Texas Commerce
International Bank Ltd [1982] QB 84, at pp 130 and 131. What Lord Denning
MR had to say about the matter is to be found at p 122 of the same report: I
shall quote from paras A-B on that page:
The doctrine
of estoppel is one of the most flexible and useful in the armoury of the law.
But it has become overloaded with cases. That is why I have not gone through
them all in this judgment. It has evolved during the last 150 years in a
sequence of separate developments: proprietary estoppel, estoppel by
representation of fact, estoppel by acquiescence, and promissory estoppel. At
the same time it has been sought to be limited by a series of maxims: estoppel
is only a rule of evidence, estoppel cannot give rise to a cause of action,
estoppel cannot do away with the need for consideration, and so forth. All
these can now be seen to merge into one general principle shorn of limitations.
When the parties to a transaction proceed on the basis of an underlying
assumption — either of fact or of law — whether due to misrepresentation or
mistake makes no difference — on which they have conducted the dealings between
them — neither of them will be allowed to go back on that assumption when it
would be unfair or unjust to allow him to do so. If one of them does seek to go
back on it, the courts will give the other such remedy as the equity of the
case demands.
The letter
dated December 27 1980 which I have already read seems to me to be an
expression of opinion rather than a concurrence in the truth of facts which are
being assumed, but I am not at all certain that there is not, nevertheless, in
the correspondence, including the letter of November 6 1980, an underlying
assumption by the parties on the basis of which the plaintiffs proceeded: but
on March 25 1981 Messrs Willmotts on behalf of the defendants made it clear
that the defendants were resiling from the position created by the earlier
letters, whatever that position might be.
That date,
March 25 1981, is more than two-and-a-half years before Christmas 1983 and at
that early stage the defendants were
adopted.
It seems to
me, looking back at what Lord Denning had to say in Amalgamated Investment
& Property Co Ltd v Texas Commerce International Bank Ltd, that
there is nothing unfair or unjust for the defendants to resile from their
earlier position. The plaintiffs still had ample time to serve at an
appropriate time the relevant requests under clause 3(4), and, indeed, if they
had wanted to hold the position, should have done so.
Having reached
the conclusions which I have on the three questions which have been posed, I
must dismiss the claim for specific performance.
