Licence — Use of wall space under licence for advertisement hoardings — Purported termination of licence by notice — Appeal by licensees against decision of county court judge holding that the licence had been effectively terminated by the owners of the wall — Licence was for a term certain of three years and continuing thereafter until determined by either party on not less than three months’ notice in writing given after the expiry of the term certain — In the present proceedings the owners had sought an injunction for removal of the hoarding on the site and claimed damages for trespass, on the basis that the licence had been lawfully terminated — The judge decided in favour of the owners and would have granted an injunction, but the licensees offered an undertaking which was accepted; the judge also awarded the owners damages — The licensees appealed
relied in the alternative on two letters by which they contended that the
licence had been terminated — Neither letter was found by the Court of Appeal
to constitute a notice to terminate the licence in accordance with its terms —
It was, however, submitted by the owners, invoking the decision of the Court of
Appeal in Minister of Health v Bellotti, that a notice to determine a licence which gives
insufficient time to the licensee is nevertheless a good notice provided that
it purports to determine the licence — If it does, then, it was submitted, it
will take effect after a reasonable time or after the time contractually agreed
— Held, rejecting this submission, that the Bellotti case had no application to
the present circumstances — Bellotti was a case of a simple revocable licence
with no express provision as to notice, while here there was an express
contractual provision laying down specific requirements for the notice — Hence
the licence had not been effectively terminated by the letters relied on —
Appeal allowed, undertaking given by appellants in lieu of injunction released,
and appellants awarded a small sum as compensation for loss of the use of the wall
since the trial
The following
cases are referred to in this report.
Decro-Wall
International SA v Practitioners in Marketing
Ltd [1971] 1 WLR 361; [1971] 2 All ER 216, CA
Dorling v Honnor Marine Ltd [1964] Ch 560; [1963] 3 WLR 397; [1963]
2 All ER 495; [1963] 1 Lloyd’s Rep 377
Henry
Boot & Sons (London) Ltd v Uttoxeter Urban
District Council (1924) 88 JP 118
Minister
of Health v Bellotti [1944] KB 298; [1944] 1
All ER 238
This was an
appeal by Advertising Sites Ltd, the defendants below, from the decision of
Judge Arun Owen at Clerkenwell County Court in favour of the plaintiffs, the
present respondents, Wallshire Ltd, who sought relief in respect of the use of
hoarding space by the defendants on premises at 118 The Broadway, Muswell Hill,
London N10.
R G Lamb
(instructed by H Montlake & Co, of Ilford, Essex) appeared on behalf of the
appellants; Selwyn Bloch (instructed by Wallace & Partners) represented the
respondents.
Giving
judgment, FOX LJ said: This is an appeal from a decision of Judge Arun Owen at
the Clerkenwell County Court in relation to a claim by the plaintiffs in
respect of the use of hoarding space by the defendants. The plaintiffs are the
owners of freehold premises in Muswell Hill which has a large flank wall
clearly visible from the public road, so it has value as an advertising site.
On July 19
1983 the plaintiffs and the defendants entered into a written agreement. Clause
1 provided that in consideration of £800 per annum payable by the defendants to
the plaintiffs during the term of the agreement the plaintiffs exclusively
licensed the defendants to erect and maintain on the wall advertisement boards
or panels. Rent was to be paid half yearly in advance on January 1 and July 1
in each year. Clause 3 provided as follows:
This
Agreement shall be for a term certain of three years commencing with the date
of erection of the board(s) or panel(s) and shall continue thereafter unless
and until determined either by the Licensor [the plaintiffs] or the Company
[the defendants] on not less than 3 months notice in writing given after the
expiry of the term certain. The Notice given by the Licensor under this Clause
shall be void and of no effect unless it is signed personally by the Licensor,
or should the Licensor be a Limited Company, by one of its Directors, or should
the Licensor be a partnership, by one of its partners.
The term
certain started on August 15 1983. Accordingly, the three-year term was due to
expire on August 15 1986. On July 18 1983, the day before the agreement with
the plaintiffs, the defendants entered into a three-year wayleave agreement
with a third party who owned the premises adjoining the plaintiffs’ premises
and which conferred upon the defendants a right of access over the third
party’s premises to the flank wall of the plaintiffs. There was no other access
to it.
In 1985 the
payment dates for the rentals were altered from January 1 and July 1 to April 1
and October 1. Initially that was done unilaterally by the defendants but was,
so the judge found, acquiesced in by the plaintiffs.
In May 1986 Mr
Kavanagh of the defendants telephoned Mr Ackerman, a director of the
plaintiffs, and inquired if the plaintiffs wished to renew the contract. Mr
Ackerman asked what rent was being offered and Mr Kavanagh said £950 per annum
from October 1 1986. That was incorporated in a letter of May 27 1986 from Mr
Kavanagh to Mr Ackerman. Mr Ackerman, it seems, thought the offer derisory and
the letter was not answered. In a telephone conversation he told the defendants
that the plaintiffs would not enter into a new agreement with them.
After the
letter of May 27 Mr Ackerman made inquiries and found that he could get a much
higher rent than the defendants were offering.
In the present
proceedings the plaintiffs sought an injunction requiring the defendant to
remove the hoarding on the site and claiming damages for trespass. That claim
was based upon the assertion that the agreement had been lawfully terminated.
Apart from a
contention based upon alleged estoppel which is now abandoned, the plaintiffs
contended before the judge that the licence expired on January 20 1987, or
alternatively on March 4 1987. In respect of those contentions the plaintiffs
relied in the alternative upon two letters dated respectively October 20 1986
and December 4 1986. The letter of October 20 1986 is written by the plaintiffs
to the defendants and is in these terms:
The agreement
dated July 19 1983 has expired and will not be renewed by us with you. Your
letter dated July 1 1985 and subsequent communications have established
termination and we request you to remove your hoarding forthwith. We reserve
our rights generally.
The letter of
December 4 1986 is again from the plaintiffs to the defendants and reads:
We acknowledge
your letter of November 28 1986.
By your letter
of July 1 1985, and May 27 1986, and several communications the Agreement came
to an end on its expiry, and we give you notice again that we have no intention
of extending and/or entering with you into a fresh Agreement.
In any case,
payments have not been made by you, nor accepted, which substantiates that our
agreement came to an end.
Without
prejudice to the above, our letter dated October 20 1986 terminates the
Agreement and we expect you to remove the hoarding and unless you do so, we
will place the papers in the hands of our solicitors.
The judge in
his judgment said this:
It is plain
as a pikestaff from the evidence in this case that by this time the defendants
were under no illusions whatsoever as to the plaintiffs’ intentions in respect
of the agreement. They knew full well that the plaintiffs did not want it to
continue and that they were not going to renew under any circumstances.
Against that
background, said the judge, in his view the letter of December 4 was sufficient
notice for the purposes of clause 3 of the agreement. He said:
It states in
terms ‘we give you notice’ and coupled with the stated intention of not
extending and/or entering into a fresh agreement with the defendants, it would
take effect 3 months hence, namely on March 4 1987. As required by clause 3, it
is a notice in writing and is signed by a director of the plaintiff company.
Later he said:
I have
already referred to the wording in the letter of December 4 1986 where the
intention of the plaintiffs is clearly set out; they were not going to extend
or enter into a fresh agreement. And, in the last paragraph of that letter, the
plaintiffs state ‘we expect you to remove the hoarding’.
The judge
concluded:
The
defendants were put on notice that the plaintiffs wanted the agreement ended at
the earliest possible date. The earliest date by which the notice of December 4
1986 could take effect under clause 3 of the agreement was March 4 1987.
He therefore
held that the letter of December 4 determined the agreement on January 4 1987.
From that decision the defendants appeal.
Mr Bloch for
the plaintiffs makes two submissions. First, he says that the letter of
December 4 was, on its true construction, a notice to determine at the expiry
of the three months from the date of the letter. That, he says, results from
the language of the letter itself read in the light of the circumstances of the
case and the terms of the agreement. In approaching the matter it is, I think,
necessary to observe, first of all, that clause 3 obviously attaches importance
to the requirement of three months’ notice to determine. It must be given after
the expiry of the term certain and specifies the mode of signature. From a
commercial point of view that is understandable and, indeed, it is obviously a
matter of importance to the defendants so that the licensees (the defendants)
may know where they stand. The form of agreement came, I understand, from the
defendants’ side. Second, clause 3 plainly requires three months’ notice in
writing to determine the licence. It says so.
Turning to the
letter of December 4, it starts by saying that the agreement came to an end on
expiry. That appears to be an assertion that it has already come to an end. If that
means that it came to an end on the expiry of the fixed term, then it is wrong.
And if it means that it expired upon three months’ notice given by some earlier
document, then it is also wrong. I will return to that latter point in a
moment. Further, if the writer thought that the agreement had already expired
totally, no question of further notice was necessary. The letter then
continues:
. . . and we
give you notice again that we have no intention of extending and/or entering
with you into a fresh Agreement.
That is simply
saying that the plaintiffs would not enter into a fresh agreement; it is not a
three months’ notice to determine the present agreement. The next sentence is:
In any case,
payments have not been made by you, nor accepted, which substantiates that our
agreement came to an end.
That, again, is
merely an assertion that the agreement has already come to an end. It is not a
three months’ notice in writing to end it.
The letter
ends with the statement:
. . . we
expect you to remove the hoarding and unless you do so, we will place the
papers in the hands of our solicitors.
That, again, in
effect is merely asserting that the agreement is at an end. It is not a three
months’ notice to determine an existing agreement.
In approaching
the construction of the agreement I am quite prepared to accept that to produce
a sensible effect in commercial terms the agreement should be construed with
reasonable liberality and without undue technicality. I also take into account
the judge’s finding that the plaintiffs did not want to continue the agreement
and that the defendants knew it. But the fact is that the defendants, no doubt
for the reasonable protection of their business interests, stipulated for not
less than three months’ written notice to determine the agreement, and it is
quite plain that they are entitled to that. The letter of December 4 is, in my
view, not such a notice. It merely contains repeated assertions that the
agreement is already at an end. What is required by the provisions of clause 3
of the agreement is a specific notice to determine upon the expiry of a three
months’ period. In my view, therefore, the argument on construction fails. The
letter is not, and contains no words indicating that it is, a notice to
determine in three months.
Mr Bloch for
the plaintiffs, however, advances a further contention. He says that a notice
to determine a licence which gives insufficient time to the licensee is a good
notice provided that it purports to determine the licence. If it does, then it
takes effect after a reasonable, or the contractually agreed, period of time.
As to that, Mr Bloch relies upon the decision of this court in Minister of
Health v Bellotti [1944] KB 298. That was a case where evacuees
during the war were given simple licences by the minister to occupy a building
and monetary considerations were paid. The minister eventually by letter
required the occupiers to vacate the premises in one week. It was held by the
Court of Appeal that one week was not sufficient notice. The licensees were
entitled to a reasonable time to remove their belongings and find other
accommodation. It was held, however, that the letters were valid notices
revoking the licence and that, since by the time the proceedings were started,
sufficient time had elapsed for the defendants to vacate their rooms, the
minister was entitled to injunctions restraining the defendants from
trespassing upon the property.
The Bellotti
case, in my view, has no bearing upon the present case. Bellotti was a
case of a simple revocable licence. The law requires reasonable notice to be
given in respect of a revocable licence but, if the reasonable time has elapsed
by the time of the hearing, the licence has been revoked and the revocation
becomes effective when a reasonable time has elapsed. The case, in my view, has
no bearing on the present case. It was a case where there was no express
provision as to notice. What we are dealing with here is an express contractual
provision as to the required notice. That, in my view, has to be complied with
as a matter of the contractual terms subsisting between the parties. Thus in
the Bellotti case itself at p 304 Lord Greene MR said:
. . . it
appears to me that where a question arises as to the lawful method of
terminating a licence, the circumstances in which the licence came to be
granted are most relevant to consider. Where a licence is granted under a
contract, it may very well be that the contract will make express provision for
those matters which must be observed . . .
That, it seems
to me, is exactly the position that we have here. The contract did make express
provision for the giving of a notice and, as a matter of contract, it is quite
plain that it must be observed and that the principle of the Bellotti
case is quite different.
The result, in
my view, is that the argument of the plaintiffs on the letter of December 4
fails. Mr Bloch, I think, would also assert that he is entitled to rely upon
the letter of October 20 as far as giving notice to determine on the expiry of
three months. As I understand it, he does not suggest that such an argument can
be sustained upon construction, but he asserts that, as a result of the Bellotti
case, the notice was a good notice upon the expiry of the three months after
the date of the letter. In my view, that fails in respect of the letter of
October 20 for the same reason that it fails in respect of the letter of
December 4. The Bellotti case is not, it seems to me, applicable. I
therefore reject the argument as to the October letter also.
We were
referred to the decision of the Court of Appeal in Henry Boot & Sons
(London) Ltd v Uttoxeter Urban District Council (1924) 88 JP 118. In
my view, that case is not of assistance either. It was a case of a building
contract which could be determined on not less than
section of 70 houses. That was a date which was capable of ascertainment and
the Court of Appeal held that on the evidence the completion of the 70 houses
must take more than 14 days after the giving of the notice, and accordingly it
was held that the notice was a good notice. The Henry Boot case was; it
seems to me, a case concerned with the ability to compute the time involved in
the notice which was actually given. It was held that it was possible so to
compute it. It was not concerned with the question whether any notice had been
given at all, which seems to me to be the issue here.
The result, in
my view, is that the appeal succeeds and that the order of the judge should be
discharged. I should mention that, as I understand it, a fresh notice, without
prejudice, was given on January 14 1988 to expire three months from receipt.
Presumably, in the circumstances (that aspect of the matter has not been gone
into before us) it will take effect on its due date.
The judge
having decided that he would grant an injunction, the defendants offered an
undertaking in the terms of the injunction (or similar terms) which was
accepted. The defendants have as a result suffered loss of use of the wall
since the trial and the plaintiffs are liable to compensate them, since the
relief ordered by the judge and in respect of which the undertaking was given
should not in fact have been granted. As to the computation of that
compensation, the position seems to me to be this. The judge calculated damages
at the trial when he was dealing with damages for the plaintiffs on the basis
of a rental of £2,500 per annum. That was on December 15 last. There is nothing
before us to suggest that that amount is too high. I think, therefore, it is
proper to take £2,500 per annum as a realistic figure for the current market
value of the use of the wall. I do not think it is desirable, in view of the
comparatively small amount which is involved, to order an inquiry as to that
which will involve more costs and time. On the basis of a loss of 106 days at
£2,500 per annum less a rental of £800 a year, that is, as I understand, a
figure of £493.69, and I would therefore award compensation of that amount.
I would,
therefore, allow the appeal, release the defendants from the undertaking and
make the money order which I have indicated.
Agreeing,
SHELDON J said: I add these few words of my own only because we are differing
from the learned judge at first instance, and then only in respect of one
finding among several in what, with respect, I would describe as a particularly
clear and helpful judgment.
As to the
pleas of estoppel raised by the respondents at the trial and in their
cross-appeal to this court — although they have now been abandoned — I find it
difficult to understand how, by any stretch of the imagination, they could, on
the facts as found, be said to have arisen. They do have, however, in my view,
some historical importance.
The more
interesting question was whether, and if so when, the respondents had served an
effective notice to terminate their agreement with the appellants.
For
convenience, I repeat clause 3 of that agreement, which was in these terms:
This
Agreement shall be for a term certain of three years commencing with the date
of erection of the board(s) or panel(s)
which was
agreed as having been August 15 1983
and shall
continue thereafter unless and until determined either by the Licensor or the
Company on not less than 3 months notice in writing given after the expiry of
the term certain. The Notice given by the Licensor under this Clause shall be
void and of no effect unless it is signed personally by the Licensor, or should
the Licensor be a Limited Company, by one of its Directors, or should the Licensor
be a partnership, by one of its partners.
The term
certain of three years nominally came to an end on August 15 1986. By that date
nothing that could have been regarded as an effective method of determination
had been given by either party, although it is suggested on behalf of the
respondents, and presumably believed by them, that earlier negotiations between
the parties had had the result that, notwithstanding clause 3, the licence in
question had come to an end on September 30 1986. That is the unsuccessful
estoppel point.
It was in
these circumstances and in that belief that the respondents wrote their letter
of October 20 1986. It was a short letter in these terms:
The agreement
dated July 19 1983 has expired and will not be renewed by us with you. Your
letter dated July 1 1985 and subsequent communications have established
termination and we request you to remove your hoarding forthwith.
To describe
that letter as a notice to terminate the agreement at some future date, in my
opinion, would be an abuse of language, and the respondents’ contention to that
effect was rightly rejected by the learned judge. Nor was it accepted as such
by the appellants.
On December 4
1986, therefore, the respondents wrote again as follows:
By your letter
of July 1 1985, and May 27 1986, and several communications the Agreement came
to an end on its expiry, and we give you notice again that we have no intention
of extending and/or entering with you into a fresh Agreement.
In any case,
payments have not been made by you, nor accepted, which substantiates that our
agreement came to an end.
Without
prejudice to the above, our letter dated October 20 1986 terminates the
Agreement and we expect you to remove the hoarding and unless you do so, we
will place the papers in the hands of our solicitiors.
The learned
judge held that that letter amounted to an effective notice to terminate the
licence ‘at the earliest date by which (it) would take effect under clause 3 of
the agreement’. I agree, however, with Fox LJ that he was wrong so to do. It
added nothing of significance to the earlier letter of October 20 1986, and to
construe it as a notice to determine the agreement at a future date would
likewise, in my view, amount to an abuse of the English language. In substance
it did no more than repeat that the agreement had already come to an end and
that it would not be renewed. In addition, where the earlier letter had asked
for the immediate removal of the hoarding, this letter contained the further
threat that, if this were not done, solicitors would be instructed.
Mr Bloch,
however, on behalf of the respondents, has submitted that, even if the two
letters in question could not be construed as valid notices within clause 3 of
the agreement, they can be treated as effective notices to terminate the
licence thereby granted within a reasonable time — a reasonable time being the
three months stipulated in clause 3. In support of that submission he has
relied in particular upon the decisions of this court in Minister of Health
v Bellotti and Dorling v Honnor Marine Ltd [1964] Ch 560.
I agree, however, with Fox LJ and for the reasons given by him that those
authorities are of no assistance in the present instance. They were both cases
in which the contract between the parties contained no specific provision for
the termination of the licence thereby granted. The court, therefore, had to
consider whether, on the facts of each case, any, and if so what, terms as to
notice should be implied to enable the licences to be brought to an end and whether,
or to what extent, a document purporting to do so, or even repudiating the
existence of any licences, should be treated as being effective for such
purpose. It did not have to consider the position in which a specific provision
as to notice is contained in the contract itself. It is significant in this
context that in Minister of Health v Bellotti Lord Greene MR at p
304 (in the passage to which Fox LJ has referred) identified the distinction
between these two types of case. The observations of Cross J in Dorling
v Honnor Marine Ltd are also, in my opinion, similarly to be
circumscribed in effect as being limited to those cases in which the licence
contract contains no express provision for its determination. In Decro-Wall
International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361
Salmon LJ (at p 371), Sachs LJ (at p 378) and Buckley LJ (at p 382) all
expressed reservations about treating that decision as other than one on the
unusual facts of that particular case.
In general
terms, in my opinion, where a licence is granted under a contract which makes
express provision for its termination by notice, any document purporting to be
such a notice must, to be effective, comply strictly with the agreed terms —
subject, it may be, to relief by the court (as in regard to notices to quit as
between landlords and tenants) where the notice contains a typographical error
or some other similar inadvertent mistake which must have been appreciated by
its recipient.
It follows, in
my opinion, that neither of the letters of October 20 and December 4 1986 were
or could be regarded as effective notices of termination of the licences
granted to the appellants.
The appeal
was allowed with costs.
