Alterations requiring lessor’s consent – Letter purporting to give consent yet headed "Subject to licence" – Further condition requiring execution of formal document – Whether letter nevertheless a "consent" for purpose of relevant clause
The terms of a 999-year lease granted in 1915 of premises in Oxford Street, London W1, required the lessee to obtain the licence of the lessor before effecting certain works of alteration, it being further declared that such licence "may be temporary or permanent, revocable or irrevocable or otherwise howsoever framed or qualified by lessor". By letter dated 5 January 1993, referring to plans already submitted, the respondent tenant, Prudential Assurance Co Ltd, sought the licence of the then lessor to the carrying out of major works of replacement of the concrete cladding which had so deteriorated as to be beyond repair.
The lessor’s reply was communicated by their managing agents on May 18 1993 in a letter carrying the heading, "Subject to Licence". That letter confirmed that the freeholder gave his consent subject to a formal licence being entered into by the respondent lessees and further stated that in the event of acceptance the writer would arrange for the lessor’s solicitors to prepare the necessary licence. In their letter of acceptance dated September 7 1933, the respondents confirmed that they had duly instructed their solicitors. Subsequent events, including the sale of the reversion to the appellant landlords, Mount Eden, gave rise to a dispute between the parties and in particular whether the letter of May 18 amounted to a "written consent" for the purpose of the relevant clause in the lease. On a summons to determine that question by way of preliminary issue the judge held that the letter did constitute such a consent. The landlords appealed.
Held The appeal was dismissed.
1. Disregarding the heading, the fact that the consent was expressed to be conditional upon the execution of certain legal formalities did not prevent it from operating as a consent within the meaning of the lease.
2. Adopting the analysis offered by Harman J in Venetian Glass Gallery Ltd v Next Properties Ltd [1989] 2 EGLR 42, a distinction should be drawn between negotiations between parties who were legal strangers and a unilateral act by a party to a pre-existing legal relationship. In the former case the phrase "subject to contract" or like expressions worked the well established "magic" of suspending legal relations notwhstanding an apparent conflict with an otherwise firm commitment expressed in the rest of the document. In the latter case the heading had to be read together with the text in order to discover the true intention of the writer. In this case, which fell into the second category, the only way to reconcile the heading and the remainder was to find a conditional consent of the kind allowed for by the lease.
Kim Lewison QC (instructed by Herbert Smith) appeared for the appellant, Mount Eden Land Ltd; Derek Wood QC (instructed by Lovell White Durrant) appeared for the respondent Prudential Assurance Co Ltd.
