Notice to determine term under option in lease–Validity of notice disputed by lessors–Notice given by lessees’ subsidiary to lessors’ subsidiary–Subsidiaries acting as agents and notice therefore valid–Alternatively, lessors estopped from denying validity of notice–Lessors’ claim for declaration fails
This was an
originating summons by Townsends Carriers Ltd, lessors of warehouse premises in
Northamptonshire, claiming that provisions for determination of the lease of
the premises held by Pfizer Ltd had not been complied with by the lessees. The
premises had been occupied by a subsidiary company of the lessees, Unicliffe
Ltd, who had paid rent and corresponded in connection with the tenancy with a
subsidiary of the lessors, Wilkinson Transport Ltd. The notice terminating the
lease had been sent by Unicliffe Ltd to Wilkinson Transport.
J Speed
(instructed by A Barone) appeared for the plaintiffs; W A Blackburne
(instructed by Allen & Overy) represented the defendants.
Giving
judgment, MEGARRY V-C said that this originating summons raised a short point
on the construction of a provision for determination contained in a lease and
also of a notice purporting to exercise the power of the determination. It also
raised questions of the use of the right and wrong notepaper in groups of
associated companies. The lease dated August 30 1970 demised certain warehouse
premises in Northamptonshire for a term of seven years from September 1 1970.
The lessor was Braybrook Townsends Ltd, and the lessee, Pfizer Ltd. The provision
for determination was contained in clause 4(c) of the lease. This read: ‘If
either the landlord or the tenant shall desire to determine the term at any
time after August 31 1973 they shall give to the other party 12 months’
previous notice in writing.’ On
September 1 1972 Braybrook Townsends Ltd changed its name to Townsends Carriers
Ltd, and for convenience he (his Lordship) would call the company Townsends
throughout. The reversion and the term had remained vested in the original
parties to the lease but a letter dated January 15 1974 recorded certain
variations in the lease that were said to have been agreed.
The notice in
dispute was contained in a letter dated August 7 1975. That letter was from a
company called Unicliffe Ltd and signed by one of its directors. Unicliffe Ltd
and Pfizer Ltd were both wholly-owned subsidiaries of the Pfizer Group Ltd. The
letter was addressed to ‘Wilkinson Transport.’
A company called Wilkinson Transport Ltd was, like Townsends, a
wholly-owned subsidiary of BG Nominees Ltd and Lex Service Group Ltd. The
letter expressed the wish ‘formally to give notice under clause 4(c) of our
desire to terminate the arrangements as they presently stand as at September 1
1976.’
In these
circumstances Townsends had taken out an originating summons which sought a
declaration that the letter of August 7 1975 did not amount to a valid notice
to exercise the option to determine the lease. Townsends’ case was simplicity
itself. The landlord was, and always had been, Townsends; the tenant was, and
always had been, Pfizer Ltd. The power of determination on the tenant’s part
could only be exercised by Pfizer Ltd giving the appropriate notice to
Townsends. This had not been done. The notice given by Unicliffe to Wilkinson
Transport was thus nihil ad rem. If Townsends’ counsel were right, the
case would provide an awful warning to those concerned with associated
companies to make sure they used the right notepaper. Apart from the point
mentioned no attack had been made on the validity of the notice.
On behalf of
the defendants, Mr Blackburne had said that, although the demise was to Pfizer
Ltd, the premises were used and operated by Unicliffe Ltd. From early days
Townsends corresponded with Unicliffe about the premises and from early 1974
all demands for rent were addressed to Unicliffe Ltd. By the middle of 1974
Wilkinson Transport Ltd had come on the scene and thereafter rent demands and
correspondence were sent to Unicliffe Ltd, not by Townsends, but by Wilkinson
Transport Ltd. Throughout subsequent correspondence, Wilkinson Transport and
Unicliffe Ltd dealt with the demised premises as if they were landlord and
tenant respectively. In those circumstances, Mr Blackburne had submitted, the
maxim qui facit per alium facit per se had a just and beneficial
operation. Townsends had allowed Wilkinson Transport to deal with the demised
premises as if they belonged to them; similarly, Pfizer Ltd had allowed
Unicliffe to act as if they were the tenants. In those circumstances, Wilkinson
Transport had been clothed with full authority by Townsends to act as
Townsends’ agents, and Unicliffe Ltd were clothed with full authority by Pfizer
Ltd to act as their agents in relation to the tenancy of the demised premises.
There was no question of Wilkinson Transport having only
sent by an authorised agent of the tenant to an authorised agent of the
landlord, and on simple principles of agency was therefore valid.
Alternatively, it was said that the landlord would be estopped from denying the
validity of representations which he had allowed another person to make and on
which the tenant had acted.
Mr Speed for
the plaintiffs had said that the facts did not support this argument, but it
seemed to his Lordship that the factual basis for Mr Blackburne’s arguments did
exist, and as for the arguments themselves, he accepted them in their
essentials. Mr Speed had been constrained to agree that his was a strict and
technical contention and from first to last he (his Lordship) had said he could
see no trace of merit in it. That, of course, did not conclude the case. A
claim, though devoid of merit, might be soundly based in law. But it seemed to
him that Mr Blackburne’s arguments provided grounds that were both sound in law
and just in result. No authority cited had been directly in point but such
authority as there was seemed to provide at least some support for the defence.
He could see no reason why an agent who had the power to give an effective
notice should not have the power to receive a notice.
If a landlord
and a tenant had expressly or by implication each respectively consigned the
management of the reversion and the tenancy to agents on their behalf, what was
done in relation to the tenancy as between the landlord’s and tenant’s agents
would be as validly done as if it had been done between the landlord and the
tenant themselves. And in a case where one party had acted to its detriment,
the other party would be precluded from asserting that it was not bound by what
had been done.
When those
principles were applied to the facts of this case, it followed that the
plaintiffs’ claim failed and would have to be dismissed.
