THE DEPUTY JUDGE:
1. The dispute in this case arises from a notice which was served with a view to breaking a lease. Both Defendants were tenants under the lease. The landlord maintains that the notice was served without the authority of either or both Defendants, and that in any event it was invalid because it was expressed to be given on behalf of only one. The Defendants dispute these contentions and say further that the landlord is estopped (by promissory estoppel or estoppel by convention) from denying the validity of the notice.
BACKGROUND
2. The lease is dated
3. The Lease, by clause 1.1, contained a number of definitions including one of “the Tenant” which was to “include the successors in title permitted assigns and Personal Representatives of the Tenant”. Clauses 3.48 to 3.54 contained prohibitions against assignment without the prior written consent of the landlord. Clause 3.48, subject to clause 3.49, prohibited an assignment of the whole of the demised premises. Clause 3.49, subject to clause 3.50, provided that the Tenant might assign the whole of the demised premises once only during the Term. Clause 3.50, subject to clauses 3.51 to 3.53 (the terms of which are not material to this case) provided that the Tenant was not to “assign the whole of the Demised Premises without first obtaining the written licence of the Landlord which shall not be unreasonably withheld or delayed and not in any event to assign the whole of the Demised Premises to a company which is in the same group undertaking (within the meaning of section 259 of the Companies Act 1985) as the Tenant or any associated company of the Tenant …”. Clause 7.2 provided for a break right in favour of the Tenant:
“The Tenant can determine this Lease on 24th March 2007 by giving to the Landlord not less than 9 months’ prior written notice and provided that:
(a) the Tenant has paid the rents reserved up to the date of expiry of such notice; and
(b) on the expiry of such notice the Tenant must deliver up the Premises with vacant possession;
THEN on the expiry of such notice the Term will end but without affecting the rights of either party against the other in respect of any previous breach of covenant.”
4. Clause 7.3 provided that time was of the essence as to all dates and periods referred to in paragraph 7. T&B and Consumer are and always have been in the same group of companies. In August 2004 the Exel Group of companies acquired the Tibbett & Britten Group of companies including T&B and Consumer. On
5. Consumer is, and always has been, a wholly owned subsidiary of Exel, as it is now known. At all material times Consumer has been a dormant company, as its filed reports and accounts disclose. It has the same registered office as Exel. The Lease is not shown in Consumer’s balance sheet as an asset or a liability. Since the takeover of the Tibbett & Britten Group by the Exel Group, Exel and Consumer have had a common director in Exel Nominee No. 2 Limited. The company secretary for both companies is the same, Exel Secretarial Services Limited. Exel has at all material times been a substantial trading company concerned in transportation and distribution services to the manufacturing and retail industries. This information is publicly available.
6. Following considerable correspondence (which I consider more fully below) on a number of topics with the solicitors acting for Prudential, Messrs
“Dear Sirs
RE: A Rail linked Warehouse situated at Hannah Close, Brent Park, Neasden, North London (“the Property”); and
a lease dated
We act for Exel UK Limited, the company formally known as Tibbett & Britten Limited. As the solicitors and authorised agents of Exel UK Limited we HEREBY GIVE YOU NOTICE pursuant to clause 7.2 of the Lease to determine the term granted by the Lease on
We are sending a copy of this letter to your solicitor, Ross Berridge, at
Yours faithfully
Kimbells LLP
cc:
7. The author of the Notice was Mr Neil Lyon, a partner in Kimbells, which firm has acted for both Exel and Consumer in these proceedings. Mr Lyon gave evidence in the course of the trial. He said, and I accept, that the first draft of the Notice was prepared by him the day before the Notice was despatched.
THE ISSUES
8. The issues in the case are:
(i) Were Kimbells authorised to serve the Notice on behalf of either or both of Exel and Consumer? (“The Authority Issue”)
(ii) Were the terms of the Notice effective under the provisions of the break clause? (“The Construction Issue”)
(iii) Is Prudential estopped from denying the validity of the Notice? (“The Estoppel Issue”)
9. At trial it was agreed between counsel (Mr Andrew PD Walker for Prudential and Mr Michael Driscoll QC for the Defendants) that the case should be opened on behalf of Exel and Consumer. Although in closing submissions this was reflected in that Mr Driscoll QC replied to Mr Walker’s submissions, when describing the parties’ respective submissions, I shall first deal with those made by Mr Driscoll because Exel and Consumer shoulder the burden of establishing that a valid break notice was served, and Mr Walker was, despite the order of closing speeches, responding to a case developed by Mr Driscoll.
THE WITNESSES
10. On behalf of the Claimant evidence was given by Mr Lyon and by Mr Ian Cameron, who is now the Vice-President for Real Estate
THE AUTHORITY ISSUE
Group Properties
11. In the course of the trial close attention was paid to whether Kimbells were instructed, with the authority of Exel and Consumer, to serve the Notice. The case for the Defendants was that within their Group, a Property Department was established which had authority to give instructions on behalf of both companies concerned, and that the Property Department instructed Kimbells, who accordingly were authorised to serve the Notice. (The Property Department was referred to by various different names in the course of the case, sometimes as the Property Department, sometimes as the Property Team, and sometimes as Group Property Services.)
12. Mr Cameron’s evidence was that 1997 he was the UK Property Director of Exel Europe Limited, a subsidiary of Exel plc. He said that in his current position, and since the Tibbett & Britten Group was acquired by Exel plc in August 2004, he has had responsibility for the Wembley Warehouse.
13. Mr Cameron said, when giving evidence in Court, that his department managed some 650 properties. He explained that all property dealings for Group companies were dealt with by the Property Department and that it was responsible for all dealings with any Group company property and the management of that property, save that minor repairs would be dealt with at a local operational level. The Property Department would handle matters concerning the exercise of any break clauses affecting leases held by any Group company.
14. Mr Cameron said that all property interests held by any company which were formerly in the Tibbett & Britten Group, including Exel and Consumer, were handled from August 2004 until December 2005 by the Property Department of Exel plc and after December 2005 by a division of Deutsche Post AG known as DHL Real Estate; whichever was the ultimate parent company, the arrangements with the Property Department continued.
15. Mr Cameron’s evidence was that all property issues were dealt with on the basis of guidelines published by the end of 2004 (“the Guidelines”) which remain in force today. He produced these Guidelines in evidence. In his second witness statement he said that every company in the Group including Consumer was expected to give effect to the Guidelines. They are headed “Exel Property EMEA – Introduction to Property Role and
“The general assumption is that Exel will always exercise a break option to terminate a lease early. Indeed, notional capital authorities in project approvals are always calculated on this basis. Therefore specific authority has to be obtained to not exercise a lease break, and the Sector must be able to demonstrate a commercial case for remaining in the property until the earliest of the next break option date or the lease end.”
16. Another part of the Guidelines is headed “Project Process” which contains the following passage:
“The Property Team will conduct all necessary property negotiations and instruct lawyers in respect of the preparation and agreement of all relevant documentation”.
17. When giving evidence Mr Cameron said that the Guidelines were produced following consultation with senior people in the Group’s business, and these Guidelines were then circulated to senior people and operational directors. Mr Cameron said that copies of the Guidelines were sent to Mr G Inglis, Mr J S Turney, and Mr S A Young who were directors of Exel. According to the Annual Report and
18. As for Consumer, Mr Cameron was asked about various of the directors who were mentioned in the Annual Report and Financial Statements for the year ending
19. Mr Cameron said that the Property Department kept information in respect of break clauses on its database and monitored key forthcoming events. It also took steps to determine the intentions of the business units concerning the properties. He said that in 2005 the Department dealt with eight lease breaks for Exel and in 2006 it dealt with four or five such breaks. Solicitors were used on each occasion.
20. When cross-examined about the role of Property Department, Mr Cameron said that the database for the Group went back as far as 1989 and that the old Tibbett & Britten Group information was transferred over to the Exel system. He said that all key information, rent reviews, size of premises and tenant identities were stored. He said that without checking he would not be able to say what records were kept about tenants’ identities. Mr Cameron said that Kimbells did not have access to the database, but when a lawyer was instructed to send a break notice, a deed packet would be despatched to the lead lawyer concerned.
21. In re-examination Mr Cameron said that there would have been no-one in the Group at a senior level who would not have known of the Property Department.
The decision to exercise the break provision
22. In his second witness statement Mr Cameron explained that a contract with Danone Waters, which was dealt with at the Wembley Warehouse, was due to expire on
23. He said that Danone Waters had decided to consolidate two of its operations into one warehouse in the
24. In his first witness statement, Mr Cameron referred to internal DHL Group e-mail correspondence concerning the breaking of the lease at the Wembley Warehouse.
25. On
“… In the meantime, the deadline for serving the lease break is fast approaching. This must be served not later than
26. The reference to “Nick” was to Mr Tretis. Mr Devere responded promptly to Mr Farrow’s e-mail on the same day:
“Please accept this as confirmation to break the lease at Hannah Close.”
27. In his first witness statement Mr Cameron said that subsequent to that correspondence he contacted Mr Basham to ensure that the decision had his authority, and this was verbally confirmed.
28. In his second witness statement Mr Cameron said that throughout the period from June 2004 to September 2006 Consumer was a dormant company which did not trade. He said that as a matter of practice it was not possible for Consumer to act independently of Exel in respect of property matters, or for it to refuse to give effect to any decision made or taken by Exel in relation to property. In cross-examination Mr Cameron said that these statements were based on what he had been told, but at the same time that in the absence of a business project, it would be a nonsense not to break the lease.
29. Cross-examined about the Guidelines, and in particular, the property policy, Mr Cameron said that the decision to make premises non-operational was a business and not a property decision. He confirmed that the Property Department was there to support the business concerned.
The instruction of Kimbells
30. Mr Lyon gave evidence about Kimbells’ dealings with the Property Department. He said that his firm began acting for the Tibbett & Britten Group in the early 1990s, and that the firm always took instructions from the Group’s Property Services Division. Following the takeover of the Tibbett & Britten Group in August of 2004, he said that Kimbells continued to take instructions from the Property Department and subsequently from DHL Real Estate. He said that when his firm was first instructed in relation to the Wembley Warehouse, it was the 142nd instruction from the Tibbett & Britten Group and from Group Property Services. His understanding, which he recorded in his first witness statement, was that all property matters relating to companies in the Tibbett & Britten Group were dealt with by agreement between the companies by Group Property Services.
31. Mr Lyon’s evidence as to the receipt of instructions, contained in his first witness statement, was that Kimbells were first instructed to advise Tibbett & Britten Group in respect of a possession claim against a company called L&B Haulage and Civil Engineering Contractors Limited (“L&B”) which was allegedly trespassing on part of the Wembley Warehouse property. (I shall refer to this matter as “the L&B dispute”). On
32. On 23rd March 2006, in a letter to Mr Farrow dealing with progress in the L&B dispute, Kimbells reminded Mr Farrow that the break notice under the Lease had to be served by no later than 24th June 2006. Mr Farrow forwarded the progress report by e-mail to his colleague Mr Devere under cover of his e-mail of 27th March mentioned above.
33. Mr Lyon’s evidence was that Mr Farrow instructed him, on
The Defendants’ submissions
34. For the Defendants Mr Driscoll relies on all of the matters which I have described above with regard to the Property Department and its functioning. He submits that the evidence before the Court clearly established that:
(i) The Property Department had been formed before the service of the Notice.
(ii) The Property Department was authorised to deal with all property issues relating to Group properties.
(iii) All senior executives within the Group knew of (i) and (ii) above.
(iv) The Property Department functioned by reference to the Guidelines.
(v) The Guidelines were circulated to a number of senior executives.
(vi) The Guidelines authorised the Property Department to serve a break notice in the absence of a business case being advanced against doing so by the business unit which used the property in question.
(vii) In the case of the Wembley Warehouse, the Property Department had instructed Kimbells to deal with the L&B dispute, and the Defendants allowed them to do so. Furthermore the Department acted in accordance with the Guidelines in so doing.
(viii) The L&B dispute became linked with the issue of breaking the lease. In the course of the developing dispute the Property Department instructed Kimbells to serve the Notice.
(ix) The Property Department only gave the instruction to Kimbells to serve the Notice after it had confirmed with the relevant business unit that it had no business case to advance for not serving a break notice; this was in accordance with the procedure laid down in the Guidelines.
(x) Neither of the Defendants had ever challenged the Property Department’s authority to instruct Kimbells to serve a break notice.
(xi) Consumer was little more than a nominee which did not show the Lease as an asset or liability on its balance sheet. It did not pay rent but allowed the Property Department to pay it (as the evidence indicated). It did not use the Wembley Warehouse itself, because Consumer was dormant. Consumer’s directors must have known that someone else was dealing with the Wembley Warehouse and permitted this. Consumer was the wholly owned subsidiary of Exel whose directors plainly knew of the existence of the Property Department and its function.
35. All of this, Mr Driscoll argued, led inevitably to the conclusion that the Property Department was authorised by the Defendants to instruct Kimbells to serve a break notice on behalf of the Tenant. Mr Driscoll submitted that there was in the circumstances, either express authority given by those whom the Defendants allowed to run the business from the Wembley Warehouse, or implied authority.
36. As to implied authority, Mr Driscoll referred me to paragraph 2-030 of Bowstead & Reynolds on Agency, 18th Edition, which is in the following terms:
“Agreement between principal and agent may be implied in a case where one party has conducted himself towards another in such a way that is reasonable for that other to infer from that conduct assent to an agency relationship”.
37. With regard to the assent of the principal, Bowstead states at paragraph 2-032:
“This may be implied when he places another in such a situation that, according to ordinary usage, that person would understand himself to have the principal’s authority to act on his behalf: or where the principal’s words or conduct, coming to the knowledge of the agent, are such as to lead to the reasonable inference that he is authorising the agent to act for him”.
38. Mr Driscoll relied also on paragraphs 2-001, 2-003 and 2-031 to 2-033 of Bowstead.
Prudential’s submissions
39. Mr Walker submitted that it was clear that the Defendants could not establish a decision of the board of either company, or of the duly authorised director, officer or employee, to serve the Notice or to authorise Kimbells (or anyone else) to serve the notice on behalf of either company. He submitted also that the Defendants could not establish an explicit instruction to Kimbells to serve the Notice on behalf of Consumer. It was unclear, he maintained, whether Kimbells were instructed explicitly to serve the Notice on behalf of Exel, or whether Kimbells just sought, or understood, their instructions in that way.
40. In developing these submissions, Mr Walker maintained that it took several attempts by
41. Mr Walker submitted that the evidence upon which the Defendants sought to rely did not go far enough to prove that the Notice was properly authorised on behalf of either of them. He argued that first there was no evidence that the Defendants were bound contractually by the Guidelines. He argued both in his written submissions and his closing submissions in Court, that the Guidelines did not give the Property Department authority to exercise any break notice and that even if the Defendants were obliged to act in accordance with the Guidelines, that would not justify a finding that the Defendants had necessarily acted in accordance with the Guidelines. Secondly he contended that the suggestion pleaded in the points of defence to the effect that the Defendants were “expected to abide by” the Guidelines was necessarily weaker than the case based upon contract and therefore must fail for similar reasons.
42. Dealing with the authorities, Mr Walker submitted that the circumstances were different from the case of Procter & Gamble Technical Centres Ltd v Brixton plc [2003] 2 EGLR 24, where Mr Justice Neuberger, as he then was, had found authority to give a notice was established. There was an issue in that case as to whether there had been delegation of authority to serve a notice in respect of a break clause. Mr Walker drew my attention in particular to the following passages in that case:
“23. I turn to the first requirement: did the tenant, that is TC and no one else, have the relevant desire. In my view it did. I appreciate that one should not be cavalier about running together companies in the same group and treating them as one, even if they have the same ownership and are run by the same individuals. Two companies are two different persons and are to be regarded by the court and by the law generally as such. If this sometimes leads to technical problems for the two companies, then the short answer is that those who live by the sword of choosing to set corporate structures, often to take advantage of company and revenue law, sometimes die by the sword.
24. However, it seems to me unrealistic, indeed counter-factual, in the present case to conclude that TC did not have the necessary desire to determine the lease at the time the Notice was served. In effect, the various companies in the Procter & Gamble Group, including TC, deputed to
25. I see no reason why a tenant company, which is a member of a group of companies, cannot delegate its desire to determine a lease to another company in the same group. An emotional desire may not be capable of delegation, but I do not see why a commercial desire, of the sort contemplated by Clause 7.1 of the lease in the present case, should not be capable of delegation. In those circumstances I think that Mr Jonathan Brock QC, who appears on behalf of TC, is right in his contention that, on the facts of this case, the necessary desire of TC has been established.
26. I turn to the second question, that is whether the Notice was served with the authority of TC. In this connection there is no doubt that it was not TC who drafted or sent the Notice; it was the solicitors, Stevens & Bolton. That in itself would not invalidate the notice. Not only a desire to serve a notice, but, even more clearly, the giving of a notice, can be delegated, provided it was delegated by the person who is required to give the notice.
27. Accordingly, the question is: was the giving of the Notice delegated to the solicitors by TC? I find that a more difficult question. However, despite Mr Lewison’s submissions, I have come to the conclusion that the solicitors did have the authority of TC to serve the Notice. I revert to the evidence from which I have quoted. Decisions as to what to do about property owned by companies in the Procter & Gamble group, and in particular whether to serve the break notice under the lease, were effectively delegated to EMEA by each company within the group which owned property. For this purpose it does not seem to me unrealistic to treat the Procter & Gamble Group as having made a collective decision, imposed on them by Cincinnati, that decisions to serve notices and other decisions relating to English property, and in particular the decision whether to serve the break notice in relation to the subject property, would be dealt with by EMEA.
28. Even ignoring the fact that the letter of instruction to the solicitors was on TC writing paper and was written by Mrs McGregor, who was, I am satisfied, an employee of TC, it seems to me that the instruction to the solicitors to serve the Notice came from the group member, EMEA, to which the relevant decision has in practice been delegated by TC. The fact that nobody within the group had given his mind to the identity of the tenant does not seem to me to invalidate this conclusion. There was, in effect, a general view of all the companies in the group that EMEA would make the decision: it did so, and it instructed the solicitors to serve the Notice.
29. I think it can fairly be said that EMEA took that course on behalf of TC. In terms of commercial common sense, any other conclusion would appear to me to be perverse, given that only TC could serve the Notice.
30. Mr Lewison eloquently suggested that the correct analysis is, nonetheless, that it was left to Miss Taylor to decide for whom she was acting, and that she wrongly decided that it was the original tenant, H&B, as is indicated by the fact that she put its name in the Notice. Therefore, he says, it was H&B which was her client, and the Notice was served on behalf of H&B, and was therefore a bad notice, because it was not served on behalf of the tenant, TC.
31. That is an attractive argument but I do not think it is right. I suppose it is possible for a group of companies to appoint an agent, leaving it to the agent to decide which company in the group is the agent’s principal. However, the argument does strike me as involving pulling oneself up by one’s own bootstraps, on the facts of this case.
32. It seems to me that the solicitors were instructed by EMEA, who were acting on behalf of the tenant, whoever that was. EMEA was therefore acting on behalf of the tenant, who was in fact TC, when EMEA instructed Miss Taylor, and it was therefore TC which was Miss Taylor’s client. Miss Taylor put the wrong name into the Notice. That does not mean that, unwittingly acting contrary to her instructions, she was changing the identity of her principal. She simply got the name of her principal wrong when she put it in the Notice. The fact that they letter of instruction for Stevens and
43. Mr Walker emphasised that at paragraph 27 of his judgment Mr Justice Neuberger was able to identify a delegation of decision making on behalf of the tenant. Evidence in the present case, he argued, did not establish such a delegation.
44. The Defendants’ case, Mr Walker submitted, was undermined by their own case on estoppel since, he argued, Mr Lyon could not have drafted and served the Notice on behalf of Consumer when he believed that he was doing so only on behalf of Exel, whom he had identified as his client. Unlike in the Proctor & Gamble case, he argued, this was not a one-off misidentification of his client by the solicitor drafting the notice; it was very much more fundamental.
45. He submitted, invoking what Mr Justice Neuberger said at paragraph 23 in his judgment, that those who set up company structures must stand or fall by them. The boards of the two companies could have resolved either to delegate decisions appropriately or to serve a break notice, but they did neither.
46. Mr Walker relied on the decision of the Court of Appeal in Lemmerbell Ltd & anr v. Britannia LAS Direct Limited [1998] 3 EGLR 67. This case I shall refer to below in relation to the Construction Issue, but it is convenient to deal with its facts at this stage. In that case, two leases were held by the tenant, LAS Direct Limited (“Direct”) in respect of separate premises. Both leases contained a break clause which enabled the tenant to determine the respective terms on
47. The Court of Appeal reversed Mr Justice Rattee’s decision. The judgment of the Court was delivered by Lord Justice Peter Gibson who said at page 70 of general agency:
“A general agency is an unusual commercial relationship, particularly where a tenant is the principal, the agent having authority to do anything in relation to the subject-matter of the agency, even to the extent of destroying that subject-matter, without reference to the principal. The inference of such an agency, in the absence of express authority creating the agency, requires clear evidence to support it. The mere payment of rent coupled with occupation does not necessarily indicate that the payer has the tenant’s authority to terminate the estate: see Dun & Bradstreet Software Services (
48. The learned Lord Justice then referred to a number of propositions advanced by leading counsel for the landlord of which the third proposition was as follows:
“If the notice is given by somebody other than the lessee/lessor without stating that that person is acting as an agent, it will be valid if:
(a) the giver was in fact duly authorised to give it; and
(b) the circumstances are such that the recipient can act upon the notice safely in the knowledge that it will be binding on the principal of the giver …”
49. Lord Justice Peter Gibson then continued a little later at page 70:
“Proposition (3) is the crucial proposition in the present case. The court can draw the inference in appropriate circumstances that the giver of the notice had due authority to give it as a general agent, but the circumstances must be such that the recipient can act on that notice safely, knowing that the principal will be bound.”
50. Lord Justice Peter Gibson then reviewed the material which was alleged to justify the conclusion of general agency. This included new material which had not been before the trial judge. This new material demonstrated that “the Life Association of Scotland” was a blanket designation for companies in the group headed by LAS Holding Limited.
51. In rejecting the submission that Life was the general agent of Direct and that in such capacity it served valid break notices, Lord Justice Peter Gibson said at page 71:
“… I cannot see how the plaintiffs could act upon the notices safely as being notices that were in fact, or that they had reason to believe were, binding on Direct. They would have been aware that no consent had been given to any assignment by Direct, but that was not inconsistent with there having been an effective assignment. Without the production to them of an assignment, they could not know if Life was the right person to be giving the notices. If Life was not, they could not know from the notices that Direct desired to give and gave (if it did) the break notices. True it is that the plaintiffs were very slow to take the point, but the fact that the point was for a long time not taken does not show that there was no point to be taken, given that only the actual lessee could operate each break clause.
I would therefore hold that there was insufficient material from which it could properly be inferred that Life was the general agent of Direct with authority from Direct to give the break notices. Nor for that matter do I think that there is evidence to support the inference that Mr Lines [a director of the landlord company] knowingly dealt with Life as the tenant. On the contrary, the plaintiffs could not act on the break notices safely in the knowledge that they were binding on Direct. It follows that the break notices served on Life’s behalf were not valid.”
52. Mr Walker relies on these passages in Lemmerbell for his submission that the Guidelines did not give the Property Department authority to exercise the break provision. He maintains that the evidence in the case simply does not justify such findings.
53. Mr Walker also relied on the final part of Mr Justice Hart’s judgment in the case of Havant International Holdings Ltd v Lionsgate (H) Investment Limited [2000] L&TR 297, to which I shall also refer again below in relation to the Construction Issue, but again I deal with the facts of that case at this point. In that case, Havant International Holdings Limited (“HIHL”) was the tenant of commercial premises under two leases granted in 1986 for terms of 24¾ years from
54. Mr Justice Hart construed the notices as being valid (as I shall explain more fully below), but rejected HIHL’s alternative submission that, assuming the notices on their true construction to be notices by
“A similar argument was run (successfully at first instance but unsuccessfully in the Court of Appeal, which had further evidence adduced before it on the question) in Lemmerbell. The evidence relevant to the issue in the present case (largely given by Mr Wilkie the chief executive of both HIHL and
55. Mr Walker submitted that in this case also there was no basis for finding such general authority in favour of the Property Department, and that here also there was no more than a general expectation as to how Group companies would respond to its actions.
Findings on the Authority Issue
56. I accept Mr Cameron’s evidence as to the manner in which instructions were taken and given concerning the Wembley Warehouse, and as to the functioning of the Property Department, and the dissemination of the Guidelines. I accept also Mr Lyon’s evidence as to the manner in which he and his firm were instructed in relation to this and previous transactions.
57. In my judgment, whilst there is no evidence of a formal resolution by the board of directors of either of the Defendants to confer authority upon the Property Department to exercise the break provision, there is ample evidence from which to infer, as Mr Driscoll submitted, that either express authority had been given to the Department, or that there was assent to an agency relationship. I accept Mr Driscoll’s submissions to the effect that the evidence demonstrated the facts which he enumerated, and which I have mentioned above. The evidence shows that the Property Department was a well established feature within the Group of companies of which Exel and Consumer were members, and that its existence, operation and responsibilities were well known among senior management. The experience of Mr Lyon, alone, for Kimbells, demonstrates a well established practice on the part of Group companies giving instructions to solicitors through the Property Department. There was not a suggestion in the case that the propriety of giving instructions through the Property Department had ever been questioned by a Group company. The way in which this particular instruction to Kimbells was dealt with was entirely consistent with there being an implementation of the Guidelines through the Group, and an assumption that matters would be dealt with in accordance with the Guidelines. Thus those concerned with the running of the Wembley Warehouse were told, in accordance with the Guidelines, that they would have to make out a business case to retain the unit, and that case would have to justify the non-exercise of the break provision. Those consulted did not in any way challenge this approach, but gave instructions accordingly. It is, I think, noteworthy (but of course not decisive) that long after the Notice had been served in this case, that the directors of Exel and Consumer cooperated in executing the Deed of Release which was a necessary step in resolving the L&B dispute. This is consistent with an acceptance that authority had been conferred on the Property Department, and through it, upon Kimbells to deal with the property issues affecting Group companies as the Guidelines suggest.
58. It is helpful to have regard to what Mr Justice Neuberger, as he then was, said in the Proctor & Gamble case. The arrangements made between the Group companies, and the giving of instructions to solicitors, in the present case, closely resemble the “collective decision” taken in the Proctor & Gamble Group of Companies that decisions to serve notices and other decisions relating to property, and decisions as to the serving of break notices, would be dealt with by a group organisation established to handle matters of that kind. It is true that when the instruction was given to Kimbells, it does not appear that the Property Department specifically said that the instruction was being given on behalf of Exel and Consumer, but as Mr Justice Neuberger said at paragraph 28 in the Proctor & Gamble case, the fact that nobody within the group in that case had given his mind to the identity of the tenant, did not invalidate the conclusion that the instruction to the solicitor to serve the break notice came from the group member to which the relevant decision had in practice been delegated.
59. The Notice itself stated that Kimbells acted for Exel. If the Notice is to be construed as having been served on behalf of the Tenant, that is both Defendants, then it seems to me that Kimbells must be taken to have been claiming to act for both Defendants so that there would have been a breach of warranty of authority on the part of Kimbells if they did not have such authority. Provided therefore that Kimbells had the necessary authority to serve the Notice, as I find they did, it does not matter that by the time that Mr Lyon prepared the Notice, he failed to apply his mind to the true identity of the Tenant. Again I am reinforced in my conclusion by Mr Justice Neuberger’s finding in the Proctor & Gamble case, in particular at paragraph 32. To adopt and paraphrase his reasoning in that paragraph, Kimbells had been instructed by the Property Department which was acting on behalf of the Tenant, whoever that was. The Tenant was in fact Exel and Consumer which was therefore Kimbells’ client. By putting the wrong name into the Notice it did not mean that Kimbells changed the identity of their principal.
60. I do not consider that the passage at pages 306-7 of Mr Justice Hart’s judgment in the Havant case, in which he rejected the alternative case based upon
THE CONSTRUCTION ISSUE
61. In the course of the trial both parties have examined in detail the correspondence and other dealings between the parties and their respective solicitors. Mr Driscoll submits that these communications are relevant in interpreting the Notice, as they set it in its contextual scene. Mr Walker, whilst disputing the relevance of much of this material, also submits that it assists Prudential’s case in showing that Prudential could not safely have relied on the Notice.
62. Given the issues as to the construction of the notice, and as to estoppel, it is necessary to review these communications in some detail.
The communications between the parties
63. Following receipt of the instruction to act in respect of the L&B dispute, Mr Lyon dealt with the matter for Kimbells. Initially his correspondence was with L&B, but, as will become apparent from the history which I mention below, correspondence soon involved
64. On
“We act for Tibbett & Britten Limited and for Tibbett & Britten Consumer Group Limited, which both hold a lease of the land edged red on the attached plan.
It has been brought to our clients’ attention that you have been occupying part of the land shaded in red on the attached plan. Our clients are not aware that you have any licence, consent or authority to occupy this land”.
65. The letter then raised a number of questions and concluded by saying that if the recipient was in any doubt as to its legal position, then Kimbells recommended that the matter be referred to solicitors immediately. L&B responded on
66. On
67. By September 2004, Prudential itself was therefore in possession of a letter from Kimbells which recorded that Kimbells acted for both companies which constituted the Tenant of the Wembley Warehouse.
68. Mr Lyon said, and I accept, that on
69. On
70. On
71. On
“As you may be aware, your clients have been a tenant of this property from before July 2002, and of course were fully aware of the title/occupation position since before then.
It may well be that if adverse possession has been obtained, my clients will need to look at the terms of the previous lease to your clients as well as the existing lease”.
72. In the light of Mr Lyon’s evidence, with which I deal below when considering the Estoppel Issue, it is very likely that the gap of several months before correspondence resumed led to the error on Mr Lyon’s part when he drafted the Notice, and indeed to the other errors on his part which preceded the sending of the Notice.
73. On about 26th April 2005 Mr Tretis and others had a meeting with Prudential’s representatives, Karen Mordaunt and Gary Streets. They discussed, amongst other things, the dispute concerning the Wembley Warehouse. On the following day Mr Tretis forwarded a note of this meeting by e-mail to Prudential’s representatives. A copy was also forwarded to Mr Lyon. The note of the meeting recorded the following matters:
“… Only Exel can challenge the occupancy (encroachment of the land) since it is the Leaseholders’ responsibility. Exel’s solicitors need to challenge them and have them prove adverse possession – and if L&B can prove it, Prudential may not penalise Exel (at least for the time being). KM expressed concern over the length of time its (sic) taken to pursue this matter. It is not a matter for the Prudential to resolve.
…
Exels (sic) solicitors must have a copy of the original lease signed 7 years ago to see who signed it and K&M checked that the Pru were the landlords when the lease was signed. In which case there must be a file somewhere! …”.
74. On
“[Prudential] have no direct claim to the Land at present due to the leasehold interest of Tibbet & Britten. Any approach to L&B should ideally come from Tibbet & Britten”.
75. It was not until
“On
76. On
“Your client may wish to consider issuing possession proceedings against L&B if only to force L&B to provide evidence of occupation since August 1987. Even if L&B has been in occupation of the land in question since 1987 (which, as you suggest, is perhaps unlikely), it may not be able to demonstrate that the extent of its occupation was sufficient to gain it any rights”.
77. On
78. On
“It would appear that L&B were allowed onto the red land by TPD and not by our client. The red land should have been excluded from the land demised to our client by TPD in our client’s first lease dated
79. On 29th November 2005
80. Possession proceedings against L&B were commenced in the name of Exel alone on
81. Mr Lyon’s witness statement in support of the possession application also referred to Exel as the lessee, but identified both of the Tenant Defendants as other parties to the lease. No explanation was given for why the proceedings were commenced only in the name of Exel although the change of company name was explained. Proceedings were served on
82. Kimbells served a Reply and Defence to Counterclaim on
83. On
“We should however make clear that we formally reserve our client’s rights against your client in the event that L&B succeeds in establishing a possessory title against our client’s leasehold title.”
84. On
85. On
86. During March 2006 there were exchanges of correspondence between
87. By late March 2006, Mr Lyon was mindful of the fact that, under the terms of the Lease, a break notice had to be served no later than
“As your client will be aware, pursuant to clause 7 of its lease, our client may determine the lease on
We question whether there is any value to your client in the disputed land. Both your client and our client face the likelihood of becoming embroiled in costly and protracted litigation, fighting over a tiny parcel of land of minimal, if any, commercial value to your client. It would make sense if your client were to accept that our client may validly exercise the break clause notwithstanding that our client is unable to deliver up vacant possession of the disputed land. If this point can be clarified shortly, our client will then be in a position to decide imminently whether or not it will be exercising the break, which will then give your client the commercial certainty it is seeking”.
88.
“We note, however, that you view the land as having minimal, if any, commercial value. We assume therefore that if our client was to give your client the comfort sought in relation to the break clause, your client would confirm, by way of consideration, that it would bring no claim against our client arising out of or in connection with L&B’s occupation of the disputed land. We look forward to receiving clarification”.
89. Kimbells responded by letter of
“(1) We can confirm that, if your client were to give our client the comfort it seeks in relation to the break clause, then our client would confirm, by way of consideration, that it would bring no claim against your client arising out of or in connection with L&B’s occupation of the disputed land save for points 2 and 3 below.”
90. Points (2) and (3) in the letter dealt with issues of costs in connection with the L&B litigation. The letter raised the question of indemnity in respect of any costs claim raised by L&B and a contribution towards “our client’s litigation costs”. It mentioned a further problem in respect of the break notice, namely, that Ikea had taken over part of the land for the purpose of access to its nearby unit. The letter concluded:
“For the avoidance of doubt our client seeks comfort from your client that it may validly exercise the break clause notwithstanding that Ikea appears to have taken over control of part of its demised land as described above.”
91. On
92. In the course of April and May 2006 there was further communication between Kimbells,
93. According to Mr Lyon’s note of what happened at the meeting, following the departure of Mr Murphy and the other L&B representatives, there followed a discussion with Mr Berridge and Karen Mordaunt. Mr Lyon’s note records that:
“I then asked Karen whether there are any issues that we need to be aware of/any other reasons why Exel may not be able validly to exercise the break clause. She said she could not think of anything, so long as we have complied with all covenants as at that date, including compliance with any schedule of dilapidations. I pointed out that the break is conditional only on us giving up vacant possession and it is not conditional on anything else. She was not aware of this. She confirmed that she could not think of any other reason why we cannot exercise the break. Ross made no comment”.
94. I accept this note as an accurate reflection of what occurred.
95. There followed further communications on behalf of the various parties with a view to resolving issues concerning the disputed land and the related litigation. I should add that all of these communications, beginning with Kimbells’ letter of
96. On
“Ross – further to our site meeting on 18.05.06 can you confirm when the draft Deed of Variation will be available for me to consider? I am conscious that my client’s claim against L&B is listed for a
97. Mr Berridge responded on the same day:
“I thought the view had been taken at the meeting that if your client was going to break its lease there would be no deed of variation. My client would simply agree to take no issue regarding L&B and Ikea’s occupation.
Do I take from this that your client is definitely seeking to determine its lease?”
98. On
“Ross – thanks for your e-mail of 07.06.06. You have given me the assurance I need in respect of Ikea (para. 4 of your letter of 25.04.06), but you have not yet given a similar assurance in respect of L&B. I requested that assurance by letter dated 11.04.06 (para. 1).
If you can give me that assurance, I am likely to be able to clarify my client’s instructions on the break imminently”.
99. On
“My client confirms it will take no point, should your client seek to break its lease, in respect of L&B’s occupation of the disputed land or Ikea’s access. For the avoidance of doubt, your client will otherwise be required to meet the terms of the break provision”.
100. My
“This is the comfort we have been seeking. On this basis I am serving the break notice today: I attach a copy”.
101. In the same e-mail Mr Lyon reminded Mr Farrow that the exercise of the break was conditional on making all due payments and delivering up vacant possession. He concluded that he would be “running everything past Counsel”. In fact, as Mr Lyon confirmed in cross-examination, he did not “run anything” past Counsel. On 13th June Mr
“In reliance on the assurance given in that e-mail by your client, we are today serving the Break Notice on behalf of our client. The original has been sent to your client at its registered office address: we enclose a copy.
Please acknowledge safe receipt, and please confirm that this Notice is accepted by your client as validly served”.
102.
103. Negotiations continued during the summer of 2006 with a view to compromising matters connected with the L&B litigation. By early July there was sufficient common ground between the parties concerned that letters were sent by their respective solicitors to the Court in terms therein suggesting an imminent compromise of the case, and inviting an adjournment of the Case Management Conference until some time after 31st July that year.
104. By early July 2006, it was anticipated that a term of the compromise would be a partial surrender of the Lease in relation to the disputed land so that Prudential would be able to transfer that part to L&B. This was reflected in an e-mail sent by Mr Ziad Mantoura of
“I am happy with Exel UK Limited granting a partial surrender of the land edged green on the attached plan.
As your client will be surrendering the land, please can you prepare an appropriate Deed of Surrender and sent it to me by return”.
105. It is apparent from this exchange that even by early July no one had specifically addressed the need for Consumer to be party to the compromise. When a draft deed of partial surrender was prepared by Kimbells on about 5th July 2006 the error had still not been identified; the draft described Consumer as a surety in respect of the Lease. The error was detected shortly thereafter, and a later draft deed, prepared on about 11th July, identified Consumer as one of the tenant companies. The error appears to have been detected by Mr Mantoura shortly before that draft was prepared.
106. After further correspondence between the various interested parties, a Consent Order was finally agreed and signed on
107. Further on
108. Thus on
109. On 25th September 2006
“Did your client take the view that it was unnecessary for Tibbett & Britten Consumer Group Limited to exercise the break? If so, please could you explain why? We note that the surrender of the lease dated
110. On
“As you are aware, in all dealings relating to this lease, Exel has been acting on behalf of and representing the interests of both tenants. In so doing, Exel has been acting as agent and with the authority of [Consumer].
The break notice was given by Exel on behalf of both tenants with the authority of [Consumer].”
111. Correspondence followed between
Authorities on construction of break notices
112. Both Mr Driscoll and Mr Walker made reference to a number of authorities, upon which they relied in common, dealing with the construction of break notices. Before I turn to their individual submissions it is convenient to deal with those authorities. The starting point in considering the issue of validity is the decision of the House of Lords in Mannai Investment Co Ltd v. Eagle Star Life Assurance Co Ltd [1997] AC 749. Lord Steyn said at page 767G to 768H:
“(2) The question is not how the landlord understood the notices. The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual scene. The approach in Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen (trading as H. E. Hansen-Tangen) [1976] 1 W.L.R. 989, which deals with the construction of commercial contracts, is by analogy of assistance in respect of unilateral notices such as those under consideration in the present case. Relying on the reasoning in Lord Wilberforce’s speech in the Reardon Smith case, at pp. 996D-997D, three propositions can be formulated. First, in respect of contracts and contractual notices the contextual scene is always relevant. Secondly, what is admissible as a matter of the rules of evidence under this heading is what is arguably relevant. But admissibility is not the decisive matter. The real question is what evidence of surrounding circumstances may ultimately be allowed to influence the question of interpretation. That depends on what meanings the language read against the objective contextual scene will let in. Thirdly, the inquiry is objective: the question is what reasonable persons, circumstanced as the actual parties were, would have had in mind. It follows that one cannot ignore that a reasonable recipient of the notices would have had in the forefront of his mind the terms of the leases. Given that the reasonable recipient must be credited with knowledge of the critical date and the terms of clause 7(13) the question is simply how the reasonable recipient would have understood such a notice. This proposition may in other cases require qualification. Depending on the circumstances a party may be precluded by an estoppel by convention from raising a contention contrary to a common assumption of fact or law (which could include the validity of a notice) upon which they have acted: Norwegian American Cruises A/S (formerly Norwegian American Lines A/S) v. Paul Mundy Ltd. [1988] 2 Lloyd’s Rep. 343 . Such an issue may involve subjective questions. That is, however, a different issue and not one relevant to this appeal. I proceed therefore to examine the matter objectively.
(3) It is important not to lose sight of the purpose of a notice under the break clause. It serves one purpose only: to inform the landlord that the tenant has decided to determine the lease in accordance with the right reserved. That purpose must be relevant to the construction and validity of the notice. Prima facie one would expect that if a notice unambiguously conveys a decision to determine a court may nowadays ignore immaterial errors which would not have misled a reasonable recipient.
(4) There is no justification for placing notices under a break clause in leases in a unique category. Making due allowance for contextual differences, such notices belong to the general class of unilateral notices served under contractual rights reserved, e.g. notices to quit, notices to determine licences and notices to complete: Delta Vale Properties Ltd. v. Mills [1990] 1 W.L.R. 445 , 454E-G. To those examples may be added notices under charter parties, contracts of affreightment, and so forth. Even if such notices under contractual rights reserved contain errors they may be valid if they are ‘sufficiently clear and unambiguous to leave a reasonable recipient in no reasonable doubt as to how and when they are intended to operate:’ the Delta case, at p. 454E-G, per Slade L.
113. Lord Hoffmann also adopted a test of whether “the notice clearly and unambiguously communicated the required message” (see page 776C). With regard to the interpretation of notices, he said at page 779F-H:
“In the case of commercial contracts, the restriction on the use of background has been quietly dropped. There are certain special kinds of evidence, such as previous negotiations and express declarations of intent, which for practical reasons which it is unnecessary to analyse, are inadmissible in aid of construction. They can be used only in an action for rectification. But apart from these exceptions, commercial contracts are construed in the light of all the background which could reasonably have been expected to have been available to the parties in order to ascertain what would objectively have been understood to be their intention: Prenn v. Simmonds [1971] 1 W.L.R. 1381, 1383. The fact that the words are capable of a literal application is no obstacle to evidence which demonstrates what a reasonable person with knowledge of the background would have understood the parties to mean, even if this compels one to say that they used the wrong words. In this area, we no longer confuse the meaning of words with the question of what meaning the use of the words was intended to convey. Why, therefore, should the rules for the construction of notices be different from those for the construction of contracts? There seems to me no answer to this question.”
114. Lord Clyde took the same approach at page 781H-782F. Speaking of the inaccuracy in the notice concerned he said :
“Whether that inaccuracy in the notice is fatal or not depends on the proper construction of the notices. The formulation propounded by Goulding
‘In my judgment, notices to complete served under condition 23, if they are to be valid, must be sufficiently clear and unambiguous to leave a reasonable recipient in no reasonable doubt as to how and when they are intended to operate.’
The standard of reference is that of the reasonable man exercising his common sense in the context and in the circumstances of the particular case. It is not an absolute clarity or an absolute absence of any possible ambiguity which is desiderated. To demand a perfect precision in matters which are not within the formal requirements of the relevant power would in my view impose an unduly high standard in the framing of notices such as those in issue here. While careless drafting is certainly to be discouraged the evident intention of a notice should not in matters of this kind be rejected in preference for a technical precision.
The test is an objective one. In circumstances where an estoppel might arise the actual understanding of the recipient may be relevant, but in general the actual understanding of the parties is beside the point. That the test is an objective one was recognised in Micrografix v. Woking 8 Ltd. [1995] 2 E.G.L.R. 32 . It was held there that the landlords would not have been misled by the references to a wrong date both in the notice to terminate the lease and in the covering letter. Each document was expressly written pursuant to the particular break clause in the lease. The recipients would have observed the errors because they would be familiar with the terms of the lease and would have known that the only date of determination had to be
115. At page 783A Lord Clyde too adopted a “sufficiently clear and unambiguous” test in expressing the view that no reasonable landlord would be misled, in the circumstances of that case, by the incorrect statement of a date.
116. Lord Goff of Chieveley and Lord Jauncey of Tullichettle delivered dissenting speeches holding that the notices concerned were invalid because the errors contained in them meant that the notices failed to comply with the requirements of the break provision.
117. In Lemmerbell, the facts of which I have dealt with above, the Court of Appeal held that the notices concerned could not be construed as being given by the tenant. Lord Justice Peter Gibson said at page 71:
“On the face of each notice, Life was said to be the tenant as successor in title to Direct, and that, if true, could only have come about as a result of an assignment without consent. But such an assignment would be effective to make the assignee the lessee for the purposes of clause 7(x). The reasonable recipient could not know, in the absence of proof of the assignment, whether Life was the lessee: it might have been. If Life was not in fact the lessee but Direct was, the reasonable recipient could not know whether Amery-Parkes [the solicitors who served the notices] were authorised by Direct to act for it and to serve the break notice, contrary to the express terms of the notice. To my mind, because it is not obvious from each notice that there was an error in the name of the lessee nor is it obvious who the actual current lessee was nor whether Amery-Parkes were duly authorised by anyone other than Life, it is impossible as a matter of construction to cure what we now know to be the defect by substituting Direct for Life as the person on whose behalf Amery-Parkes were giving each notice.”
118. In Havant, with the facts of which I have also dealt above, Mr Justice Hart referred to the decision in Mannai and said (at page 303) that in his judgment it was quite clear that the Mannai test was an objective one. He continued:
“In Mannai itself the “objective contextual scene” which was allowed to play that role was limited to the terms of the leases. I am unable to read the words “circumstanced as the actual parties were” as admitting evidence the sole function of which is to demonstrate what the parties actually would have thought. This is to make a nonsense of the approach being described as objective and would render invalid the analogy with the construction of commercial contracts.”
119. He continued at page 304:
“That conclusion highlights the importance of deciding whether or not the actual existence of
Once, however, one has identified that
I cannot see why one should exclude the evidence of
120. Mr Justice Hart held that the Lemmerbell case was to be distinguished because in that case an assignment would have been effective to make the assignee the lessee for the purposes of serving a break notice:
“Life, rather than Direct, might have been the lessee with the right to serve the break notice; and this was precisely what was asserted by the terms of the purported notice. The passage cited gives some grounds for supposing that, but for that fact, the Court of Appeal might have been disposed to accept the submission made on behalf of Direct that it was obvious that the solicitors were in error in stating that the notice was served on behalf of Life rather than Direct. In the present case, while
121. Having thus distinguished the Lemmerbell case, Mr Justice Hart continued at page 306:
“The question therefore resolves to this. Would the reasonable recipient assume that there had been a mistake in the description of the company giving the notice? Or would he entertain, as a matter giving rise at least to a reasonable doubt, the possibility that
122. Later at page 306, Mr Justice Hart specifically rejected the submission to the effect that an error as to the identity of the person serving the notice was so gross as to be incapable of being overlooked. He said:
“I do not consider that the mere fact that the ambiguity in the notice goes to the question of who is purporting to give it puts it into some special category. The question in every case is whether, on a fair construction of the notice, it is quite plain that the reasonable recipient cannot be misled by it. For the reasons which I have given, I do not think that a reasonable recipient would have been misled in the present case into thinking that it was
123. In Procter & Gamble a lease granted in 1995 to Procter & Gamble Health & Beauty Care Ltd (“H&B”) contained a break clause in favour of the tenant. Following a series of permitted assignments, in 1998 the lease was vested in another Procter & Gamble company, Procter & Gamble Technical Centres Ltd (“TC”). In 2000 a rent review memorandum was said to be executed by the landlord and the tenant, but the identity of each was wrongly stated; H&B was identified as the tenant. In 2002 a solicitor for Procter & Gamble, relying on the memorandum purported to serve a break notice, but did so in the name of H&B. Mr Justice Neuberger held that the notice was invalid:
“39. Mr Lewison contends that the reasoning [in Lemmerbell] applies here, while, of course, he accepts that each case must be determined on its own facts, and that there is the point that in the notice in that case, the wrong person, Life, was specifically described as “successors in title to the original tenant”. Nonetheless, he says that this case is at least as strong as that case from the landlord’s point of view, and that, in those circumstances, I am effectively bound by the reasoning in Lemmerbell to determine that the notice in the present case is invalid.
40. Despite Mr Brock’s argument to the contrary, I have, with some reluctance, concluded that that argument is indeed correct and that the notice is invalid on this ground. I accept that I have to be very careful of relying on another case, because in each case the question is whether a particular document would have been unambiguously understood to be an effective notice by a reasonable recipient, and that is a question which turns very much on the terms of the particular break clause, the terms of the particular notice, and the particular contextual factors. It would be wrong to rely on the outcome of another case, as opposed to the approach or principles to be extracted from another case. It is clear from the decision in Havant that Mr Justice Hart was well aware of this. He held that a notice with a similar defect was valid, on the basis that, in that case, the clause giving the right to serve the notice was limited in clear terms only to the original tenant, and only if there had been no assignment of the lease. In those circumstances he was able to hold that a notice served in the name of the wrong person could not have been misunderstood by the landlord: the reasoning of Lord Justice Peter Gibson in Lemmerbell did not apply to the notice, and the reasoning of the majority of the House of Lords as to the wrong date in Mannai did apply to it.
41. In the present case, however, to my mind, the facts show it to be at least as strong from the landlord’s point of view as Lemmerbell . It is trite law that a lease can be effectively assigned by the tenant without the landlord’s knowledge or consent, even if the lease contains provisions such as clause 2.21 in the present case. I accept that in Lemmerbell there was reference in the notice to the fact that Life was the successor in title to the original tenant. However, the fact remains that the notice was served on behalf of somebody who the recipient of the notice could reasonably have assumed was the person in whom the lease was vested, and that it was therefore the person entitled to serve the notice. That conclusion appears to me to apply equally if one looks at the first paragraph of the Notice, but it does not stop there.
42. There had been a rather complex series of transactions in 1998-1999, to which I have referred. It is by no means inconceivable that, after those transactions, there had been one or more other transactions relating to the property which had accidentally not been communicated to the landlord. In particular, it is not as if H&B had nothing more to do with the property other than being original tenants because they, of course, were one of the two joint tenants under the under lease of 15th February 1999.
43. Furthermore, there is the third sentence of the Notice. It showed that the writer had carefully considered the rent review memorandum executed in 2000, and had appreciated that the landlord had apparently been wrongly identified as the nominee companies, and that this seemed to be a mistake, because the defendant, to whom the notice was sent, was still the landlord. The, or at any rate a, natural deduction of a reasonable recipient of the Notice would have been that, if the tenant’s own solicitors had taken sufficient care to read the memorandum and noticed that it wrongly identified the landlord, then a fortiori they must have considered, whether it wrongly identified the tenant, their own client. It seems to me that that third sentence of notice is therefore another factor which at least could reasonably have reinforced the view of a reasonable recipient that the Notice was indeed intentionally being served by the person on behalf of whom it was stated to be served, namely H&B.
44. Additionally, in this case, unlike in Lemmerbell , the person on whose behalf the notice was stated to be served, was the original tenant. There is therefore, as Mr Lewison points out, the additional possibility that a reasonable person in the defendant’s position could not have ruled out, that the Notice was being served on behalf of someone who had good reason for wishing to put an end to the lease, but in fact had no right to do so. That is not a fanciful idea, because as Mr Brock says, albeit only by a week or two, the lease was not subject to the Landlord and Tenant Covenants Act 1995 and therefore H&B, as the original tenant, remained liable on the tenant’s contracts, despite the subsequent assignments in 1998 and 1999.
45. I note that, in Lemmerbell, the solicitor who served the notice, Amery Parkes, would have been known by the defendant to have been acting for the actual tenant, Direct, because they had written previously to the landlord on its behalf. Accordingly, it could have been said that at least the landlord would have had reasons to believe that the notice might well have been authorised by Direct. No such point could be advanced here: there is no evidence to suggest that Stevens and
46. In these circumstances, in light of the reasoning in Lemmerbell, it seems to me that the Notice was not valid. Notices of this sort, particularly if served near the last minute, as happened in this case, have to be clear and unambiguous because the recipient is entitled, and may need, to make dispositions in the faith of such notices, i.e. on the basis that such notices can be confidently relied on. If such a notice contains a mistake then, while any mistake which cannot possibly mislead a reasonable recipient should not stand in the way of validity, a mistake which could reasonably mislead a reasonable recipient cannot fairly be overridden.
47. Mr Brock raises another argument, namely that of general agency, which was the primary argument raised in Lemmerbell. As the analysis, I hope, has so far demonstrated, the mere fact that the solicitors had authority to serve the notice does not of itself validate the notice. It has to be good on its face. Reliance on Mannai is the primary way in which Mr Brock puts his case on validity, although it was the secondary argument advanced in Lemmerbell. The primary point advanced by the tenant in Lemmerbell was an extension of the agency argument. It was that there was a general agency. A general agency is one where the agent is entitled to carry out the functions of his principal in the agent’s own name. That argument, although successful at first instance in Lemmerbell was rejected in the Court of Appeal .
48. The Counsel’s opening argument was advanced in the present case on the basis that the solicitors, Stevens and
49. I do not see how, on the facts of this case, TC can get within shouting distance of establishing that the solicitors acted as general agents on their behalf. In any event it seems to me that it would be necessary for TC to establish that H&B, not the solicitors, were general agents for TC.
50. In those circumstances I conclude that the notice was ineffective to determine the lease.”
124. I draw attention to what Mr Justice Neuberger said in paragraph 47 of his judgment to the effect that authority to serve a notice will not of itself validate it; it must be good on its face (in the light, of course, of proper construction). Thus whatever authority Kimbells, or the Property Department, may have had to serve the Notice, unless it was good on its face, in the sense explained, it will not be a valid notice.
125. In Lay v. Ackerman [2005] 1 EGLR 139, tenants served a notice on the landlords, PFCS Trustees, seeking a new extended lease of premises under the Leasehold Reform, Housing and Urban Development Act 1993. The landlord’s counter-notice wrongly identified the landlords as the PFCS Trustees. In proceedings to determine the validity of the notice, the trial judge held that it was invalid. The Court of Appeal (Arden and Neuberger LJJ) reversed this decision. Lord Justice Neuberger, as he then was, said:
“37. … the decisive factor which caused the judge to reach his conclusion was that a reasonable recipient in the position of the respondents receiving the Counter-Notice would (or could) have thought that the reference to the PFCS Trustees as the landlord was deliberate, and this was determinative of the issue. While it appears attractive at first sight, I do not consider that that can be the correct approach. It is, on analysis, an unhelpful test, inconsistent with Mannai , and, above all, not appropriate under the 1993 Act.
38. So far as unhelpfulness is concerned, it appears to me that the answer to the question whether the mis-identification of the landlord was “deliberate” or not depends on how one puts the question. If one were to ask whether the solicitors who prepared the Counter-Notice intended to identify the landlord in the Counter-Notice as the PFCS Trustees, the answer would be in the affirmative. To that extent the mis-identification was deliberate. On the other hand, if one was to ask whether the solicitors had intended to identify someone other than the actual landlord as the landlord, the answer would be in the negative. To that extent the mis-identification was a mistake.
39. The unhelpfulness of the test can also be demonstrated by reference to the facts in Mannai . The landlord who received the two notices could well (and indeed probably would) have believed that the identification of the termination date as 12 January was deliberate, on the basis that was apparently the date on which the tenants (albeit mistakenly) thought that the two leases would come to an end. On the other hand, if one asked whether the landlord believed the tenant intended to put in the correct date of termination, and that therefore the reference to 12 January was a mistake, the answer would be in the affirmative.
40. For this reason, it also appears to me that the test applied by the learned judge cannot have been the test applied in accordance with Mannai . The correct approach on the basis of the decision and reasoning in Mannai is as follows. One must first consider whether there was a mistake in the information contained in the notice (as there was as to the date in Mannai , and there was as to the landlord, in the present case). If there was such a mistake, one must then consider how, in the light of the mistake, a reasonable person in the position of the recipient would have understood the notice in the circumstances of the particular case. Finally one must consider whether, as a result, the notice would have been understood as conveying the information required by the contractual, statutory or common law provision pursuant to which it was served.
The proper approach
41. The Counter-Notice was a notice purportedly served pursuant to a statutory provision, and the validity must therefore be assessed, by reference to, and in the context of, Chapter II of Part 1 of the 1993 Act, and s45 in particular. That appears to me to be the correct approach as a matter of principle, …”
126. The learned Lord Justice then referred to authority and continued:
43. In his excellent argument on behalf of the respondents, Mr Radevsky contended that, in order to be valid, a counter-notice under s45 which mis-identified the landlord, would have to satisfy two requirements. The first is that, notwithstanding the misidentification of the landlord in the counter-notice, a reasonable person in the position of the recipient tenant would be in no real doubt but that the counter-notice is served by the actual landlord. The second requirement is that the counter-notice must leave the tenant in no real doubt as to the identity of his landlord.
44. I would accept Mr Radevsky’s first requirement. It is true that s45(1) merely states that “[t]he landlord shall give a counter-notice …” which, it can be said, does not, as a matter of logical necessity, carry with it the requirement that the recipient tenant should appreciate that the counter-notice actually comes from the landlord. However, I think there is a powerful argument to the effect that it is plainly implicit in the requirement that the landlord gives a notice that the recipient tenant appreciates that it is the landlord who has given the notice. Thus, s45(2) requires the counter-notice to “state that the landlord” either “admits” or “does not admit” the tenant’s right to a new lease. If it is not clear to the recipient tenant that the counter-notice is served by or on behalf of the landlord, it seems to me that any admission or non-admission in the counter-notice cannot be said to be one which the tenant appreciates as being made by “the landlord”.
45. In this connection, I revert to Lord Steyn’s observation as to “the purpose of a notice under the break clause” in Mannai . In this case, the purpose of a counter-notice is to convey to the tenant the landlord’s position in relation to the issues set out in s45(2)–(4) . I do not see how such a counter-notice could be valid if the tenant was not clear that the information was indeed given by or on behalf the landlord.
46. I turn, then to Mr Radevsky’s second requirement, namely that a counter-notice will be invalid if it leaves the tenant in any real doubt as to the identity of his landlord. When one examines the effect of the provisions following s45 in the 1993 Act, that submission appears to have some attraction. In the present case, if the appellants had not begun proceedings within the time limited by s46(2) , then it would have been up to the respondents to apply to the court under s49(1) and, if they failed to do so within the time limited by s49(3) , their Notice of Claim would lapse, which would prevent them not only from acquiring a new lease pursuant to that notice, but also from serving a further notice of claim for another twelve months. If the respondents brought proceedings within the time limited by s49 against a person other than their landlord, they would be at risk of having those proceedings dismissed, and being out of time for issuing further proceedings. Accordingly, argues Mr Radevsky, a counter-notice will be invalid if it wrongly identifies the landlord, because it could result in the tenant being misled in a highly relevant way, namely into issuing proceedings under s49(1) which turn out to be invalid as a result which he may lose the benefit of the notice of claim.
47. Indeed, in relation to the tenant’s need to know who his landlord is, one can go further. I would accept Mr Radevsky’s argument that the same approach and principles for determining if a landlord’s counter-notice is valid, whether it opposes or does not oppose the claim for a new lease. Where a landlord serves a counter-notice stating that he does not oppose the claim for a new lease, the tenant may end up applying to the LVT, in which case he has to identify his landlord as the respondent. That is another circumstance in which the identification of the landlord in a counter-notice might be relied on by the tenant.
48. Despite this argument, I have reached the conclusion that a counter-notice under s45 would not be invalid simply because it had left the tenant in doubt as to the identity of his landlord.
49. It seems to me that the tenant is quite sufficiently protected if the first requirement of the counter-notice is correct, namely that a reasonable person in the position of the tenant could be in no doubt but that the counter-notice is served by or on behalf of the landlord. In such a case, the tenant would ex hypothesi know that the landlord had served the counter-notice, and was therefore responsible for identifying “the landlord” in the counter-notice. In those circumstances, it appears to me that if the tenant thereafter begins proceedings, or serves documents, in connection with his application for a new lease, against or on the person identified in the counter-notice as “the landlord”, it would not be open to the actual landlord to contend that the proceedings or documents were invalid because they named the wrong person as landlord.
50. In other words, while I accept that it is important for the tenant to know who to name as the landlord, whether in correspondence or proceedings, it seems to me that, provided the tenant has been provided with a name in the counter-notice, which he can be confident has come from the actual landlord, he cannot go wrong if he relies on that identification in subsequent documents and proceedings. (Of course, different considerations might apply if, subsequent to the service of the counter-notice, the landlord made it unequivocally clear to the tenant that he had been mis-identified in the counter-notice).
127. After considering further authority, his lordship continued:
60. Mr Radevsky also relied on the decision of the Court of Appeal in Lemmerbell Limited-v- Britannia LAS Direct Ltd [1998] 3 EGLR 67 , a case concerned with the service of a notice on a landlord to determine a lease in accordance with the provisions of a break clause. The original tenant, Direct, had let an associated company, Life, occupy the demised premises, and the break notice was served on behalf of Life. It was held to be invalid. Giving the only reasoned judgment, Peter Gibson LJ said this at 71H:
“The present case seems to me to bear little resemblance to the type of error addressed in Mannai . There, words containing a mere slip, obvious to the reader of the notice when read in context, were construed as meaning what they were plainly intended to mean. In the present case there is no equivalent error. The break notice is not merely given on behalf of Life rather than Direct, but it contains no explanation as to why it was so given, viz Life was the successor in title to Direct. I found it impossible to see how, in these circumstances, it is permissible to construe the break notice as given on behalf of Direct.”
61. It does not appear to me that the decision or reasoning of this court calls into question my rejection the second of the two suggested requirements of a s45 counter-notice. As I have indicated, the essential requirement of a s45 counter-notice, in connection with the issue in the present appeal, is that a reasonable person in the position of the recipient tenant could be in no real doubt but that the counter-notice had been served on behalf of the actual landlord. In my judgment, the notice in Lemmerbell was invalid not merely because it wrongly identified the tenant, on whose behalf it should have been served, but because a reasonable person in the position of the recipient landlord, would not have been confident that it had been served on behalf of the actual tenant. It is for this reason that Peter Gibson LJ said this at 71L:
“To my mind, because it is not obvious from each notice that there was an error of the lessee, nor was it obvious who the actual current lessee was nor whether [the solicitors who served the notice] were duly authorised by anyone other than Life, it is impossible as a matter of construction to cure what we now know to be the defect by substituting Direct for Life as the person on whose behalf [the solicitors] were giving … notice.”
62. In my judgment, if it had been clear that the solicitors in that case were indeed serving the notice on behalf of the actual tenant, whoever it was, then it would have been a good notice. After all, the purpose of the break notice in Lemmerbell was not to identify the tenant to the landlord, but to communicate to the landlord an intention on behalf of the tenant, and no-one other than the tenant, an unequivocal desire to determine the lease in accordance with its terms. Once a person other than the actual tenant was identified in the notice as the person on whose behalf the notice was served, the notice could only be valid if it could be shown that, despite the mid-identification, a reasonable person in the position of the landlord could have been in no doubt but that the notice was served on behalf of the person who was the tenant. For the reasons given, the Court of Appeal held that a reasonable landlord could have been in such doubt.”
128. Lady Justice Arden delivered a concurring judgment, stressing that the tenants were not misled by the counter-notice.
129. In my judgment the essential point of distinction between Lay v. Ackerman and the other authorities under consideration is that it was a case concerned with a statutory counter-notice, in circumstances where the tenants could not be in any real doubt that it was served on behalf of the actual landlord. This is what was emphasised by Lord Justice Neuberger at paragraphs 61-62 of his judgment. It is important to keep this distinction and reasoning in mind when having regard to the observations made in that case as to the approach to be taken to construing the notice with which it was concerned.
130. With these principles in mind I turn to the submissions made on behalf of the parties.
The Defendants’ submissions on construction
131. Mr Driscoll took as his starting point, and was clearly right to do so, the provisions of the Lease. He emphasised that the right to determine provided in clause 7.2 is one only available to “the Tenant”. He maintained that the only person that could exercise the break provision was the original tenant, namely Exel and Consumer, because the Tenant for the purposes of the break provision could not change without Prudential’s first giving its consent to any change, and it had not been asked to do so, nor had it done so. Mr Driscoll emphasised that the definition of the Tenant in the lease at clause 1.1 confined the expression to “permitted assigns”. He maintained that for the purposes of clause 1.1 unlawful assignees could not be “successors in title”, otherwise this would render meaningless the reference in the definition to “permitted assigns”. He submitted that because of the provisions of clause 3.50 of the Lease, an assignment to Exel alone was absolutely prohibited, or was subject to the requirement of consent on the part of the landlord. If therefore there had been an unlawful assignment either to Exel or, to Exel and another, or another entity all together, such assignee would not be “the Tenant” for the purposes of the break provision. Thus he submitted that the present case was similar to the Havant case in that in the Havant case no break notice could validly be given by anyone other than the original Tenant, namely Exel and Consumer. Mr Driscoll submitted it was possible to distinguish the Lemmerbell and Proctor & Gamble cases, as in both of those cases an unlawful assignment could have afforded to the giver of the notices the right to determine the lease although the landlord could not know whether there had been such an assignment; see page 71L in Lemmberbell and paragraph 40 in Proctor & Gamble.
132. Mr Driscoll submitted that it would have been unreasonable speculation on the part of Prudential to have supposed that Exel had given the Notice on its own behalf because Consumer no longer existed. Consumer could only have ceased to exist if it had been dissolved, which would give rise to a notice of dissolution against its name at the Companies Registry: dissolution would take place only 3 months after the registration of the notice pursuant to the sections 201(2) and 205(2) of the Insolvency Act 1986. Before a liquidator could file any such notice there would have had to have been a liquidation in the course of which Prudential as a creditor would have been given notice. What is more, Mr Driscoll submitted, a company search would have shown as a matter of certainty whether a dissolution had occurred. Mr Driscoll submitted that it was permissible, in construing the Notice, to take account what a company search would have revealed since it was publicly available information, and in this regard he relied upon passages in Mr Justice Hart’s judgment in the Havant case at pages 304-305 to which I have referred above. In fact, a company search was carried out by Mr Berridge prior to 19th June 2006.
133. Mr Driscoll submitted that, knowing of the continued existence of Consumer, it would be fanciful for a reasonable landlord to think that another notice might be provided on the part of Consumer.
134. Mr Driscoll then submitted that there were a number of reasons for why the reasonable recipient of the Notice would have concluded that a mistake had been made in the drafting of the Notice:
(i) It would have been apparent that to be valid a break notice had to be given on behalf of the Tenant which in the absence of any licence to assign meant Exel and Consumer together for the reasons mentioned in Mr Driscoll’s submissions which I have summarised earlier in this judgment.
(ii) The reasonable recipient would have noted that Consumer was not referred to in the body of the Notice and questioned whether this was a mistake.
(iii) The Notice was expressed to be given pursuant to clause 7.2 and since it was obviously intended to be a valid notice, it would have to be given on behalf of both Exel and Consumer. There would be no commercial sense in serving a notice on behalf of Exel alone. In this respect the case was similar, Mr Driscoll submitted, to the position in Havant, and unlike the position in both Lemmerbell and Proctor & Gamble.
(iv) The Notice was given by Kimbells who had previously stated in writing in their letter of 27th July 2004 (which was copied to Prudential on 10th September 2004) that they acted for both Exel and Consumer. The file reference remained the same, TIB22-142.
(v) Dissolution of Consumer will have been excluded for the reasons noted above. The company search would also have revealed that Consumer was a dormant company so that it was unlikely that Consumer would have wanted to retain the Lease when Exel did not.
(vi) The company search would have revealed to the reasonable landlord that the companies were in the same group, and Exel was the parent of Consumer. This also would have suggested that it was unlikely that Consumer would wish to retain the Lease when Exel did not.
(vii) The reasonable recipient of the Notice would have known of the link between the exercise of the break clause and the occupation of the disputed land by L&B and the implications that such occupation would have for the Tenant’s ability to deliver vacant possession and thus comply with the break provision. The L&B dispute was known by Prudential to be dealt with by Kimbells for the Tenant and that on 13th June 2006, the very day when the Notice was sent, Prudential had confirmed through
(viii)
135. Against all of this background, Mr Driscoll submitted, the reasonable landlord would have concluded that Kimbells intended to give the Notice on behalf of the Tenant (that is both Exel and Consumer) and not Exel alone, and would have had no reasonable doubt that by mistake Kimbells had not referred also to Consumer when they had obviously intended to.
136. Mr Driscoll submitted that this case was similar to the Havant case because a good notice could only be given by Exel and Consumer together, and the reasonable landlord would have known from the information which he had that there could be no permitted assignee to take their place.
137. Mr Driscoll then submitted that the approach taken by Lord Justice Neuberger in Lay v Ackerman was applicable in the present case. In particular he relied upon what Lord Justice Neuberger said at paragraph 62 to the effect that if it had been clear in Lemmerbell that notice was being served on behalf of the actual tenant, whoever it was, it would have been a good notice. On the facts of this case, Mr Driscoll submits, there could be no reasonable doubt that Kimbells, instructed as they were by both companies who were together the Tenant, and mistaken as they were as to the identity of the Tenant, were nonetheless clearly serving a notice under clause 7.2 on behalf of the Tenant.
138. Mr Driscoll then sought to distinguish Lemmerbell on the basis that in that case an assignee under an unpermitted assignment could exercise the break provision; see page 71L of the Report. Mr Driscoll emphasised that for the reasons mentioned above, Exel alone could not have exercised the break provision.
139. Mr Driscoll then addressed the passage at page 71L-M in Lemmerbell in which Lord Justice Peter Gibson said that because it was not obvious from each notice in that case that there was an error in the name of the lessee, nor was it obvious who the actual current lessee was, nor whether the solicitors were duly authorised by anyone other than Life, it was impossible as a matter of construction to cure the known defect by substituting Direct for Life as the person on whose behalf the solicitors were giving each notice. These considerations, Mr Driscoll argued, do not arise in the present case, because there was simply an omission of Consumer’s name, and Exel was not described as a successor in title. In any event, Mr Driscoll submitted, the question of authority to give a notice should not be confused with the question of whether the notice as a matter of form complied with the requirements of the Lease. However, Mr Driscoll argued, that in the present case, Prudential knew that Kimbells acted for both Defendants as of September 2004 and had no substantial reason to suppose that they did not have authority to give a notice on behalf of the Tenant.
140. With regard to the Proctor & Gamble case, Mr Driscoll emphasised that the break notice was served in the name of the original tenant at a time when there had been an assignment. He pointed out that the very feature of the Havant case by reference to which Mr Justice Neuberger distinguished it, is also a feature of the present case, namely, that the break provision is one of which only the original tenant could take advantage (as explained above).
141. Mr Driscoll submitted that since this is a case concerned with the construction of a notice given under a lease, not the construction of a contract, any rule of law excluding the consideration of negotiations leading up to the conclusion of a contract has no application. Thus if the solicitors for the parties had agreed in correspondence before the notice was served that Exel could be treated as the Tenant for the purposes of the break notice, it would plainly be wrong not to look at that agreement for the purpose of construing the Notice.
Similarly, he maintained, where there has been such an assumption that Exel was the tenant and entitled to exercise the break right, it was permissible to look at the communications. In this regard, he maintained, it did not matter that
142. Mr Driscoll referred me to the decision of the Court of Appeal in KPMG LLP v. Network Rail [2007] EWCA Civ 363, in particular paragraphs 44 to 50 for the proposition that where there has clearly been a mistake in a contract and it was clear what the mistake was, the court would construe it as though the mistake had not been made. This approach, he submitted, should be adopted in the case such as the present. In the course of developing his submissions orally, Mr Driscoll accepted, however, that the effect of the authorities was that a court would hold a document effective if there was plainly a mistake in its drafting, but this approach would only be available if the mistake in drafting was the only realistic possibility.
143. In all the circumstances Mr Driscoll submitted that the only explanation for the omission to make reference to Consumer was a mistake by Kimbells and that any other explanation was not a reasonable one in the light of the history.
144. Mr Driscoll also placed considerable emphasis on the fact that Prudential knew that the Property Department was paying the rent for the Wembley Warehouse as shown by what is recorded in Prudential’s computer records. Those records note the tenants as Exel and Consumer but give the relevant contact address as the Property Department.
Prudential’s submissions as to construction
145. With regard to the Notice itself, Mr Walker made four points:
(i) The heading correctly referred to all the original parties to the Lease, and when referring to Exel, did so by its earlier name at the time when the Lease was granted.
(ii) It stated that Kimbells acted for Exel which had changed its name.
(iii) It said that it was given by Kimbells as solicitors and authorised agents for Exel.
(iv) Those references to Exel alone were in clear contrast to the reference to both companies in the heading.
146. Mr Walker submitted that the effect of the Lemmberbell and Lay v Ackerman decisions is that where the issue concerns the identity of the person on whose behalf a notice is given, the notice will be invalid unless the reasonable recipient would know:
(i) that the person identified as the one on whose behalf the notice has been served had been identified by mistake,
(ii) the entity on whose behalf the notice should have been served,
(iii) that it was being served on their behalf.
147. Exel, Mr Walker submitted, was correctly named in the Notice so that the mistake was not a misnomer, but the omission of Consumer. Whereas a misnomer might, in certain circumstances, be an obvious error, the omission of a party will increase the uncertainty of the reasonable recipient of the notice.
148. With regard to what material is relevant in construing the Notice, Mr Walker submitted that it was simply the Notice itself and the Lease, and for that he relied on Lord Hoffmann’s speech in Mannai at 779E-F and on Lord Clyde’s speech at 781F-G.
149. On the strength of the Lemmerbell and Proctor & Gamble decisions, Mr Walker submitted that, for the Notice to be valid, a reasonable landlord would have had to have been entirely confident that Exel was named alone in the Notice by mistake, but the current lessees were still Exel and Consumer and that Kimbells were duly authorised to give notice on behalf of both. Each of those elements, he submitted, must be “obvious”.
150. A reasonable landlord receiving the Notice, Mr Walker argued, could not act on it safely with the knowledge that it was valid, nor could he be confident of the elements mentioned above, because:
(i) The form of the Notice was clear, emphatic and unambiguous and was given by Exel alone.
(ii) A reasonable recipient would note the use of Exel’s name in the body of the Notice in contrast to its original name in the heading, and conclude that consideration had been given to the identity and names of the original tenants, suggesting that there was no mistake in the reference.
(iii) This would contrast with the identification in the Lease of Consumer and Exel as lessees.
(iv) Nothing in the relevant circumstances would assist the reasonable recipient to resolve the uncertainty. He would thus be left without any confidence that a valid notice had been given.
151. Even if wider circumstances could properly be taken into account, Mr Walker submitted, genuine and reasonable doubts would remain as to the Notice:
(i) Its wording appeared to assert that the Lease was vested in Exel alone, contrary to the original position.
(ii) A reasonable recipient could not be confident that there had not simply been a release or assignment of Consumer’s interest to Exel alone, which might have been regarded as permitted, or have been effected despite any restrictions contained in the Lease.
(iii) Consumer could have been dissolved.
(iv) These possibilities would have been given weight by the change of the name of Exel.
(v) There would be uncertainty as to whether the Notice had been given deliberately on behalf of Exel, rather than by mistake; uncertainty as to the current lessees, and uncertainty as to whether the Notice could safely be acted upon as having been given by, and by and on behalf of, all of the current lessees.
152. Mr Walker submitted that the present case was not comparable to the Havant case. Clause 3.50 of the Lease did not absolutely prohibit assignments by both Defendants to one of them only, and any absolute prohibition (such as that for which Mr Driscoll contended) would not be obvious to a reasonable landlord receiving an erroneous notice. Equally it was not something which such a landlord should know or assume was both appreciated, and, very importantly, had been observed by the original lessee. Mr Walker submitted that the Havant decision was a marginal one and the circumstances of the present case fell well short of those in Havant, not least because the present break clause was not expressed to be a personal one.
153. In developing his submissions orally, Mr Walker suggested that the case for the Defendants is internally inconsistent. He maintained that for the purposes of the construction argument the Defendants maintained that the change in the correspondence from references to Exel and Consumer, to Exel alone was not to be taken as indicative that anything had changed in relation to the identity of the Tenant. On the other hand, the Defendants relied on the same correspondence as indicative of a change whereby everyone treated Exel as the Tenant for the purposes of establishing estoppel.
154. Mr Walker went on to submit that:
(i) The fact that two different meanings could be asserted undermined any case based on construction and estoppel as to an objective meaning.
(ii) The alternative interpretation of the correspondence undermined any suggestion that there was a single common understanding.
(iii) When the issue as to the validity of the Notice first arose, on 28th September 2006, Kimbells did not rely on the cases now advanced, but suggested that Exel had been acting on behalf of and representing the interests of both Defendants. Nothing was said as to the construction argument, or as to any estoppel.
155. With regard to the context in which the Notice was served, Mr Walker submitted that this did not assist the Defendants’ case because what it demonstrated was an unclear picture:
(i) The early correspondence from Kimbells suggested that it acted for both the Defendants.
(ii) Later correspondence suggested that Kimbells acted only for one company, namely, Exel.
(iii) The pleadings in the L&B proceedings, prepared by Kimbells, asserted that the Lease was vested in only Exel.
156. Mr Walker relied upon passages in Lemmerbell (page 72B-C) and in Proctor & Gamble (at paragraph 42) for the proposition that where a notice has been drafted by a solicitor it is to be expected that care will have been taken in identifying the party on whose behalf it is said to be served. This would tend to limit any room for mistake.
157. Having regard to all of these matters, Mr Walker submitted that, from the point of view from the reasonable recipient of the Notice, there remained a real possibility that Consumer had simply been overlooked and that its authority to exercise the break had not been sought.
Findings on construction
158. The following principles emerge from the authorities:
(1) To be effective a break notice served by or on behalf of a tenant must clearly and unambiguously communicate to the landlord that the person entitled to exercise the break provision is determining the lease on the permitted date; Mannai, Lemmerbell, Procter & Gamble.
(2) If someone other than the tenant gives the notice without stating that he acts as an agent, the notice will be valid provided that the giver of the notice was authorised to give it, and the circumstances are such that the landlord can act upon the notice safely in the knowledge that it will be binding upon the tenant; Lemmerbell.
(3) An objective approach is to be taken to construing a break notice. What has to be considered is how a reasonable person, in the light of the background which could reasonably have been expected to be available to the parties, would have understood the notice; Mannai.
(4) A mistake in the notice, even as to the identity of the person giving it, will not necessarily invalidate it, provided that in all the circumstances its meaning is clear, the mistake is obvious, and the recipient can safely rely upon it; Lemmerbell, Havant, Procter & Gamble, and, of course, Mannai.
159. I gratefully remind myself of what Mr Justice Neuberger said in Procter & Gamble at paragraph 40 (cited above) as to taking care about relying on other cases, and the need to fasten upon the circumstances of the particular case before the Court. The question for determination in this case then, is whether the Notice clearly and unambiguously would have been understood by a reasonable recipient to be an effective notice given on behalf of the Tenant, that is the Defendants. This question must be answered by reference to the terms of the break clause, the terms of the Notice, and the context in which the Notice was served.
160. I find that, contrary to Mr Walker’s submission on this point, the relevant contextual scene is not confined to the Lease and the terms of the Notice itself. In many cases such limited material will be all that is relevant, as Lord Hoffmann said in Mannai at page 779E-F. However, that will be because in many cases there will have been no correspondence or other communication between the parties in the run up to the exercise of the break provision. To take Lord Hoffmann as indicating that only the Lease and the Notice were relevant would run entirely counter to the thrust of his speech Mannai where especially at page 779F-G cited above he clearly favoured the approach of admitting all the relevant background available to the parties to be considered to ascertain intention.
161. The following matters I consider to be of significance:
(i) The break could only be exercised under clause 7.2 of the Lease by the Tenant, which in turn, for the purposes of this case, meant only Exel and Consumer together, their successors in title or permitted assigns. Whilst I accept Mr Walker’s submission that this provision was less tightly drawn than the equivalent provision in Havant (which made it very clear that the break right was personal), in my judgment Mr Driscoll is correct in his submission that any assignee would not have had the right to exercise the break right, unless Prudential had consented to the relevant assignment. Therefore Prudential knew that there was no assignee who would qualify as Tenant who could validly exercise the break right. Prudential would not know, however (and as Mr
(ii) The Notice was said to be served “pursuant to the clause”, asserting thereby that it was one which the giver of the Notice was entitled to give. Such an entitlement would not exist if there had been an unpermitted assignment. It is, however, necessary to be cautious in attributing too great weight to this factor. Inevitably a person serving a break notice will wish it to be taken as a valid notice and therefore will purport to, and probably claim to, act pursuant to the relevant break provision. This desire on the part of the notice giver, however, cannot be elevated in the process of construction, to the status of an overriding indicator as to the validity of what otherwise might be a defective notice, especially if there are other factors present which may suggest that the notice giver is not entitled to serve the notice. In Lemmerbell the solicitors purported to be acting “within” the break clause, but that claim did not enable the Court of Appeal to overlook the other manifest deficiencies in the notice concerned so as to uphold the notice. In Procter & Gamble the notice was purportedly given “in accordance with” the break clause, but this similarly did not cause the notice to be construed as valid. In Havant the error was simply as to the name given,
(iii) Rent was known by Prudential to be paid by the Property Department, but this would not necessarily preclude a payment of rent by that Department even in the event that Consumer had, for example, purported to assign or release its interests to another Group company.
(iv) Consumer was at all times a company still in existence. A company search would have revealed its continued existence, its subsidiary relationship with Exel, and the fact that it was dormant. This information was publicly available, and I adopt the reasoning of Mr Justice Hart in the Havant case for finding that such publicly available information can be taken into account as part of the contextual setting. I am reinforced in this view by Lord Hoffmann’s speech in Mannai at page 779G where his Lordship said that “commercial contracts are construed in the light of all the background which could reasonably have been expected to have been available to the parties in order to ascertain what would objectively have been understood to be their intention”. A company search being publicly available information seems to me to fall into that category, and its availability is demonstrated by the fact that a search was actually undertaken on behalf of Prudential following the serving of the Notice. However, whilst Mr Driscoll relied on the continued existence of Consumer, but as a dormant subsidiary of Exel, as a factor in favour of upholding the Notice, such continued existence of Consumer would equally mean that absence of reference to it in the Notice as a company on whose behalf notice was being given, would call for an explanation.
(v) Kimbells had previously acted, and claimed to act, on behalf of both Defendants, and this was set out in correspondence available to Prudential. This notification, however, was given in a letter of 27 July 2004 to L&B (albeit later copied in September directly to Prudential), and was in the context of the L&B dispute, a litigious matter.
(vi) Kimbells’ notification of acting for both Defendants was followed by their confirmation directly to
(vii) The pleadings served by Kimbells in the L&B litigation stated unequivocally that Exel was the lessee holding the residue of the term of the Lease made between Prudential and both the Defendants. This assertion was verified by a statement of truth signed by Mr Lyon. In order for the action to be properly constituted if Consumer remained a tenant, Consumer was a necessary party, yet had not been made so. No point as to this was taken in any subsequent pleading, and by reason of various interlocutory orders the litigation never reached the stage at which Prudential was obliged to plead its case as to title. The Particulars of Claim verified by Mr Lyon therefore suggested that whilst Consumer had at one time been a lessee, it did not continue to be, for some unexplained reason. This pleading formed part of the contextual scene against which the Notice was to be interpreted. It would be a rash recipient of the Notice who felt able to disregard what had been pleaded on behalf of Exel, especially where Exel’s solicitor had personally verified the pleading.
(viii) The Notice itself suggested that its draftsman had checked the provisions of the Lease carefully since reference was made correctly to the original parties, the date of the Lease, and to the relevant provision. Yet the same Notice stated that Kimbells acted for Exel, and made no mention of Consumer.
162. In my judgment the Notice, against the background described, would not unambiguously have been understood to be an effective notice by a reasonable recipient. Its own terms would generate real doubt as to whether it was served on behalf of Consumer, because they suggested that although Consumer was known to have been a lessee, the Notice was not being served on its behalf. The background described does not eliminate the doubt manifest from the Notice; it multiplies it. In terms, through the pleadings in the L&B action, Kimbells did not equivocally hint that Exel alone was the Tenant; they positively averred it. This left unexplained the position of Consumer.
163. This case is to be distinguished from the Havant case. In the present case there was material both in the Notice, and extraneous to it, to suggest that the omission of reference to Consumer in the body of the Notice was not accidental.
164. I do not consider that this conclusion can be disturbed by the consideration that only the Tenant (as defined) could exercise the break option validly. As Mr Walker submitted, a possible explanation, judged from Prudential’s perspective, was that Consumer had simply been overlooked. (That would not be fanciful; it had been overlooked in relation to the L&B litigation, although, of course, Prudential would not know that this was due to oversight.) As Mr Walker further submitted, the reasonable landlord could not know or assume that the Defendants’ had appreciated, and honoured, the provisions of the Lease, with regard to what would constitute a valid assignment and who could validly exercise the break option.
165. Further I do not consider that any of the communications between the parties and their solicitors led to any special use of language whereby reference to Exel should be understood to be a reference to both Defendants. Certainly such usage cannot be gleaned from the use of the term “client” or “clients”, when the respective solicitors adopted such terms in correspondence. There was a complete inconsistency of usage, sometimes within the same letter. Further, in the context of the exercise of the break provision no-one attempted in the course of communications to identify who was being referred to as the Tenant, save that when Kimbells did actually address the point, in pleadings and in the Notice, they identified Exel without mention of Consumer, whilst at the same time acknowledging that Consumer had at some point been one of the Tenants.
THE ESTOPPEL ISSUE
166. Since the Notice was not a valid exercise of the right to break the Lease, the issue arises as to whether Prudential is estopped from disputing that there had been such a valid exercise. I have described above the history of the communications between the parties and their respective solicitors, but in relation to this issue I must deal also with other evidence which was given at trial.
Mr Lyon’s evidence
167. Mr Lyon’s evidence was that after he received instructions from Mr Bayes in October 2004 to the effect that he should not incur further costs without prior instructions, he placed his file on hold. He was then re-instructed by Mr Farrow of the Property Department in April 2005. In his first witness statement Mr Lyon acknowledged that the reference in his letter of
168. Mr Lyon accepted that he continued his mistake when commencing proceedings against L&B. He referred to the correspondence with
169. In his first witness statement, Mr Lyon said that in reliance on the way in which
170. In his second witness statement Mr Lyon said that he did not become aware of the mistake that had been made until he received
171. In both his witness statements Mr Lyon dealt, in some detail, with the events which followed the serving of the Notice. This material was introduced because at one stage the Defendants sought to advance their case as to estoppel on the basis that in the light of conduct on the part of Prudential following the serving of the Notice, it would be inequitable for Prudential to take the point that the Notice had not been validly served. In the course of the trial, I gave permission for the Points of Defence to be amended to develop the case in that regard, but with the qualification that the amendment should make clear that the Defendants were not making any allegation of a new representation or convention after the serving of the Notice. It is however unnecessary for me to deal with the evidence in relation to conduct after the serving of the Notice because Mr Driscoll realistically accepted in the course of making his submissions that it was not open to him, on the material available, to advance the case as to estoppel by reference such events.
172. In cross-examination Mr Lyon said that as from the moment that he was reinstructed in April 2005, he believed that Exel was the Tenant and entitled to exercise the break. He said that he never had any doubt that he was instructed by the Tenant and was working under a mistaken assumption that the Tenant was Exel.
173. Asked about his letter of 28th September 2006 (which did not advance a case based upon the construction of the correspondence or estoppel but asserted Exel’s agency on behalf of both Defendants), Mr Lyon said that this was just a response by which he hoped to “knock the matter on the head” quickly. He said that when he wrote the letter he was shocked and that although he knew the letter might be relied on, he had not felt able to raise detailed arguments on estoppel. He pointed out, perfectly fairly, that he had to notify insurers and his clients and that a detailed response would have to await assistance from counsel.
174. He said that he had no better explanation of how he worked on the basis of there being only one client, but he attributed the error to the fact that his file had been closed for a period of about 6 months. He said that it was in April 2005 that he lost sight of the fact that there were two tenants. He said that at that time Consumer simply slipped from his mind.
175. He said that when he drafted the Notice he looked at nothing because he was clear that the Tenant was Exel. In respect of the e-mail communication between him and Mr Berridge on 9th and 13th June 2006 (culminating in Mr Berridge’s confirmation that should the Lease be broken, Prudential would take no point in respect of L&B’s occupation of the disputed land or Ikea’s access), Mr Lyon said that he was not conscious of any point about the identity of the Tenant. He said that all times Mr Berridge knew that he acted for the Tenant.
Mr Berridge’s evidence
176. Mr Berridge also gave evidence at trial. In his first witness statement he dealt with points concerning the validity of the Notice and the authority of Kimbells.
177. In his second witness statement he said that he gave no thought to the identity of Kimbells’ client or clients until such time as it became important to Prudential to do so. With regard to the L&B dispute, he said that he was not concerned with the precise identity of Kimbells’ client(s) but was trying to ensure that the issue of L&B’s occupation was resolved. As to the reference to the manner in which his own correspondence referred to Kimbells’ client, he said that he did no more than follow and use Mr Lyon’s own characterisation. He said that at no stage insofar as he was concerned, did he or Prudential do anything which might have encouraged or justified any belief on the part of Kimbells or the Defendants that a break notice given by Exel alone would be a valid notice or that Prudential recognised Exel as the person entitled to break the Lease. He said that it was not until he considered Kimbells’ letter of 13th June 2006 that he had any cause to consider the identity of the Tenant. He said that when he received the Notice, his initial view was that its form and wording appeared to be and was likely to be deliberate and that Kimbells had probably had good reason to serving the Notice on behalf of Exel alone. He said that his expectation was that he would be told that there had been an assignment that had led to the term of the Lease becoming vested in Exel alone so that Exel alone was entitled to give a break notice.
178. In cross-examination Mr Berridge said that when he received Kimbells’ letter of
179. Mr Berridge said that when he received Mr Lyon’s email of 9th June 2006 (seeking an assurance that no point would be taken on an exercise of the break provision in respect of L&B’s occupation of the disputed land) he did not address his mind to who Kimbells’ client was, and did not give thought to the precise identity of the Tenant. He said he thought that Kimbells’ client was the Tenant. He accepted that “your client” in his e-mail could possibly be interpreted as meaning Exel.
The Defendants’ submissions on estoppel
180. Mr Driscoll submitted that it was clear from the correspondence that, up to the service of the Notice, both Kimbells and
181. Mr Driscoll placed particular reliance on
182. Mr Driscoll submitted that in the circumstances Prudential was estopped from denying that Exel was not “the Tenant” or not authorised to give an effective break notice in its own name. He said that in reliance on the representation that Exel was entitled to serve an effective break notice, Exel served such a notice.
183. Mr Driscoll submitted that it was plain from the correspondence that from June 2005 onwards Mr Lyon mistakenly treated the Lease as a lease granted to Exel alone, and that he laboured under that mistaken assumption all the time down to the moment when he drafted and sent off the Notice. He argued that Mr Berridge made the same assumption, and never corrected Mr Lyon.
184. As to Prudential’s case that it was unimportant to it until the Notice was served to establish who the tenant was, Mr Driscoll submitted that this case could not stand up to scrutiny because the identity of the Tenant was relevant to the possession proceedings and who was the tenant who served the break notice. Mr Driscoll submitted that Mr Lyon asked Mr Berridge for confirmation that Prudential would accept a break notice from Exel as valid even though vacant possession could not be delivered.
185. Both solicitors, Mr Driscoll pointed out, dealt with both the L&B dispute and the matter of the break clause under the same reference number, and the issues became inextricably linked before Notice was served.
186. Mr Driscoll contended that the letter of
187. From June 2005, Mr Driscoll argued, the solicitors for the parties proceeded on the basis of an underlying assumption of fact (due to mistake or indifference) on which they conducted dealings between themselves right down to 13th June 2006 when in reliance on that assumption Kimbells drafted and served the Notice, based on that assumption, which notice was good if the parties were bound by the underlying assumption. Quite clearly, Mr Driscoll argued, it would now be unconscionable, unfair or unjust for Prudential to go back on that underlying assumption if the requirements for an estoppel by convention are otherwise met. The convention, he argued, was established in the course of correspondence between solicitors acting for the parties.
188. Mr Driscoll put his case primarily on the basis of an estoppel by convention and relied in particular upon the principle, as stated by Lord Denning MR in Amalgamated Investment & Property Co Ltd v. Texas Commerce International Bank Ltd [1982] QB 84 at page 122:
“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.”
189. Mr Driscoll submitted that this principle applied to the conduct of all the parties and their solicitors who proceeded on the basis that Exel was entitled to serve an effective break notice so that it would be unfair if Prudential were now to resile from that common, albeit, mistaken, assumption.
Prudential’s submissions on estoppel
190. Mr Walker submitted that for there to be promissory estoppel, the Defendants would need to prove that there was a clear and unequivocal assurance which was intended to affect the legal relationship between the parties, that it was relied upon by the Defendants and that they had suffered detriment by reason of a change of position so that it would be unjust if Prudential were allowed now to go back on it.
191. As to an estoppel by convention, Mr Walker submitted that the Defendants would need to prove the mutual establishment of a convention or common understanding as to the legal relationship between Prudential and the Defendants under the Lease and that this was communicated by each to the other, and was intended to be, and was, acted upon in operating the relevant relationship on the basis of the convention. In addition, reliance upon the convention and the detriment, such that it would be unjust if Prudential were to be allowed to depart from the convention, would have to be established.
192. Mr Walker submitted that the required elements of both estoppels were absent from this case. He submitted that there was no assurance at all let alone an assurance to the effect that a notice given by Exel alone would be treated as a valid break notice.
193. Mr Walker submitted that no landlord could sensibly give an assurance that he would treat a notice between himself and only one of two tenants as doing something which it would not do in law as between himself and both tenants. He argued that no landlord would be understood as doing so without the same being made absolutely clear. In oral submissions, Mr Walker developed this point by asking rhetorically how could a landlord allow one tenant to exercise a break notice without tying in the rights of the other?
194. For an assurance, by way of promissory estoppel, or a convention, to be operative in this case, Mr Walker argued, it would need to go so far as to make clear that Prudential would allow Exel to serve in its own name a break notice even if (as was the case), it was not the sole lessee.
195. Further, Mr Walker submitted, there could be no estoppel, because there was no recognition on the part of Prudential or
“… If the circumstances were such that it was reasonable to conclude that the insurers were aware of the nature of the limitation of the cover and that the insurers conduct represented that the cover was nonetheless satisfactory to them, then they implicitly represented that they would not claim any right that depended upon an assertion that the limitation of cover was unsatisfactory.
In my judgment the brokers fail to make out this case on the facts. I have already made findings in respect of the state of mind of the insurers when they signed the order letters and received the cover notes and contract wording. Those findings were made in the light of the evidence given by the insurers themselves but they were based largely on the implications to be drawn from the surrounding circumstances at the time. The conduct of the insurers did not unequivocally represent, when viewed objectively, that they were aware of the existence and nature of the limitation of cover that had been inserted without their instructions and that the reinsurance was nonetheless satisfactory to them.”
196. Mr Walker relied also on the following passage in the judgment of Lord Justice Tuckey (with which the other member of the Court, Lord Justice Carnwarth agreed) in the Court of Appeal’s decision in HIH Casualty and General Insurance Limited, Axa Corporate Solutions [2002] 2 All ER (Comm) at paragraphs 21 and 22:
“21… Mr Hamblen submits however that the representation must carry with it some apparent awareness of the right upon which the representor will not insist. Mr Flaux did not dispute this and I do not think he could have done so because otherwise the representation would lack the necessary character to found the estoppel. As the judge put it “the essence of the plea must go to the willingness of the representor to forego its rights”. Unless the representation carries with it some apparent awareness of rights it goes nowhere: the representee will not understand the representation to mean that the representor is not going to insist upon his rights because he has said or done nothing to suggest that he has any.
22. What I have said illustrates the difficulty in establishing this type of estoppel when neither party is aware of the right which is to be foregone. A representor who is unaware that he has rights is unlikely to make a representation which carries with it some apparent awareness that he has rights. Conversely a representee who is not aware that the representor has a particular right is unlikely to understand the representation to mean that the representor is not going to insist on that right or abandon any rights he might have unless he expressly says so.”
197. The communications in the present case, Mr Walker submitted, could not be regarded on either side as having been intended to affect the legal rights of the Prudential or the Tenant under the Lease, or as containing anything by way of any common understanding as to such rights. He argued that a solicitor could not expect to rely on the kind of statements on which the Defendants rely in this case unless it was clear that the solicitors with whom they were dealing,
198. In all the circumstances therefore, Mr Walker submitted, there was no assurance capable of giving rise to an estoppel. He relied upon the same matters to submit that there was no convention, but he also relied upon a number of other points. Prudential, he submitted, in no way suggested that it was adopting or acquiescing in any convention or that it would accept a break notice served by Exel alone. Mr Lyon did not actually think that Prudential, through
199. Mr Walker submitted that both pleas of estoppel were to be defeated because the element of reliance required for both was wholly absent. He argued that Mr Lyon relied on nothing more than his own mistaken belief.
200. Finally with regard to estoppel, Mr Walker submitted that no change in position, detriment or unconscionability could be established, since it was not the case that Mr Lyon had been induced to prepare the Notice in the manner that he did because of anything done on the part of Prudential or
Findings on estoppel
201. I entirely accept Mr Lyon’s evidence that from the time that he was reinstructed in 2005 he believed that Exel was the Tenant and was entitled to exercise the break provision. This, however, was not as a result of anything which Prudential or
202. I accept the evidence of Mr Berridge. He did not apply his mind to who the Tenant was, even when receiving Mr Lyon’s e-mail of 9th June seeking assurance that no point would be taken as to the exercise of the break provision on the basis of L&B’s occupation of the disputed land.
203. Attractively as Mr Driscoll put the case on estoppel, I find neither promissory estoppel, nor estoppel by convention to be made out for the following reasons:
(i) The difficulty for the Defendants is that the Notice was given in the name only of Exel when it should have been given in the name of Exel and Consumer. For any estoppel to be operative it is necessary that the assurance or convention went to this point. There would thus have had to have been an assurance or convention to the effect that Exel alone could exercise the break provision, and this despite the interests of any other tenant. It is only necessary to identify this requirement to recognise how improbable it is that any such estoppel would arise. No-one consciously acting for two joint tenants would be likely to seek any assurance to this effect, or seek to set up any such convention. It would be wholly unnecessary to do so, for the obvious reason that inserting the names of both tenants in a break notice would hardly be an onerous task. Equally, no-one acting for a landlord would be likely to give such an assurance; as Mr Walker submitted, it could not sensibly be done without the involvement of both tenants.
(ii) I do not accept that there was a common or underlying assumption between the parties or their respective solicitors that Exel alone was the Tenant and could exercise the break provision. In my judgment the correspondence does not demonstrate that Mr Berridge operated on that basis, let alone that there was any communication to that effect which crossed the line between the parties (a requirement of estoppel by convention described in The Vistafjord [1988] 2 Lloyds Rep, 343, see especially the judgment of Lord Justice Bingham, as he then was, at page 351). Mr Berridge was content simply to refer to “your client” without addressing the identity of the client. If “your client” referred to “the Tenant”, the statement that the Tenant could exercise the break provision meant no more than that Exel and Consumer could break the Lease. This was no indication that Exel alone could do so, irrespective of whether there was another tenant. Mr Berridge at no stage indicated in correspondence that he or Prudential were operating on the basis that Exel alone was Kimbells’ client.
(iii) In my judgment the correspondence does not demonstrate an assurance of willingness on the part of
(iv) Mr Lyon did not rely on anything said by
(v) In the circumstances there was no assurance or convention which led to the drafting of the Notice, nor was there any reliance upon communications from
CONCLUSIONS
204. For the reasons given above, I conclude that:
(1) Kimbells were authorised to serve the Notice on behalf of Exel and Consumer, having been properly instructed to do so by the Property Department.
(2) The terms of the Notice were not effective under the provisions of the break clause.
(3) Prudential is not estopped from denying the validity of the Notice.
205. I will hear further submissions on the form of relief to be granted.
206. I am extremely grateful to counsel on both sides for the considerable assistance which they have given me in this case, and for the quality and clarity of their submissions.
