[View without highlighting]
[Printable RTF version]
||Neutral Citation Number:  EWCA Civ 1513
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
MANCHESTER DISTRICT REGISTRY
(His Honour Judge Howarth)
||Royal Courts of Justice
Friday 18 October 2002
B e f o r e :
LORD JUSTICE MUMMERY and
LORD JUSTICE JONATHAN PARKER
||TRAFFORD METROPOLITAN BOROUGH COUNCIL
||TOTAL FITNESS (UK) LIMITED
Computer Aided Transcript of the Palantype Notes of
Smith Bernal Reporting Limited
190 Fleet Street London EC4A 2AG
Tel: 020 7421 4040 Fax: 020 7831 8838
(Official Shorthand Writers to the Court)
Mr P Chaisty QC (instructed by Messrs Wacks Caller, Manchester) appeared on behalf of the Appellant Defendant.
Mr E Cole (instructed by Messrs Nabarro Nathanson, Sheffield) appeared on behalf of the Respondent Claimant.
HTML VERSION OF JUDGMENT
Crown Copyright ©
- LORD JUSTICE MUMMERY:I will ask Lord Justice Jonathan Parker to give the first judgment.
- LORD JUSTICE JONATHAN PARKER: This is an appeal by Total Fitness (UK) Ltd ("Total"), the defendant in the action, against an order dated 8 February 2002 made by His Honour Judge Howarth, sitting as a High Court Judge of the Chancery Division, in the Manchester District Registry. By his order, the judge granted summary judgment under CPR Part 24 to Trafford Metropolitan Borough Council ("Trafford"), the claimant in the action. The order declared that notices served on Trafford (as tenant) by Total (as landlord), and dated 24 September 2001 and 8 October 2001 respectively, purporting to terminate Trafford's lease of a car park at Goose Green, Altrincham, Cheshire, were invalid for the reasons given by the judge in his judgment leading to the order. In that judgment, the judge concluded that the notices were ambiguous, and that (as he put it at p.25C-D of the transcript of his judgment):
"... a reasonable recipient who had seen [the notices] at the time would have been left in reasonable doubt as to which of two termination dates the notice purported to rely on as being the determining date for the lease."
- The judge accordingly concluded that the notices were invalid.
- The appeal relates only to the second of the two notices, that is to say, the notice dated 8 October 2001. The judge refused permission to appeal, but permission was granted by Lord Justice Carnwath at an oral hearing on 22 April 2002.
- The relevant facts are as follows. Trafford was lessee of an area of land at Goose Green, Altrincham, which was used as a car park. The lease was dated 5 July 1999 and was made between Railtrack plc as landlord and Trafford as tenant. By virtue of various assignments, the reversion on the lease was vested in Total. The term of the lease was six years from 21 May 1999.
- Clause 5.6 of the lease was in the following terms:
"If the Landlord requires the Premises for the purpose of demolition or reconstruction or redevelopment of the Premises or a substantial part of them or for the purpose of carrying out substantial works of construction on the Premises or part of them (whether or not the works of demolition reconstruction redevelopment or construction shall be intended to be carried out by the Landlord) it shall be lawful for the Landlord to determine this Lease at any time by giving the Tenant as much notice as possible but with a minimum of three months' notice in writing."
- Clause 5.8 of the lease provided that, on the expiration of a notice under clause 5.6, the lease should cease and determine. It went on to exclude the right of compensation conferred by sections 37 and 59 of the Landlord and Tenant Act 1954.
- Clause 5.6 of the lease was subsequently varied by an agreement dated 31 March 2000 made between Trafford and the then landlord so as to reduce the minimum period of notice required by the clause from three months to two weeks.
- Total subsequently made three attempts to give notice to Trafford under clause 5.6, as varied. The first notice was dated 24 September 2001; the second was dated 8 October 2001. These are the two notices referred to in the judge's order, the second of which is the subject of this appeal. Each notice was transmitted by fax to Trafford on the date which it bears.
- In separate proceedings (subsequently consolidated) Trafford disputed the validity of both these notices on the ground of internal ambiguity and on other grounds, and applied for interlocutory relief restraining Total from taking possession of the car park pending determination of the issue as to the validity of the notices. At different stages during the progress of the interlocutory applications Total gave undertakings in respect of each notice not to take possession of the car park pending the effective hearing of the interlocutory application in respect of that notice. The interlocutory applications were heard by His Honour Judge Howarth in early October 2001. In a reserved judgment, which was given on 6 November 2001, the judge granted injunctive relief in the terms of Total's undertakings, such relief to continue until trial or further order, on cross-undertakings by Trafford. In the course of his judgment, the judge made certain adverse comments as to the validity of the notices, in the light of which Total decided to serve a third notice. The third notice was dated 14 November 2001. In response to the third notice, Trafford vacated the car park.
- On 29 November 2001 Trafford issued an application for summary judgment under CPR Part 24, seeking declarations that the first two notices were invalid. The evidence in support of the application made it clear that the application was pursued only on the issue as to the `formal validity' of the notices: that is to say, the issue as to whether there is an internal ambiguity in each of the notices which rendered them invalid. The further issues raised in the interlocutory application were to be assumed to have been resolved in Total's favour.
- As I understand the position, the issue as to the validity of the notices remained a live issue, notwithstanding service of the third notice and the subsequent vacation of the car park by Trafford, since it impacted upon the liability of Trafford under its cross-undertakings and on costs.
- As I have already indicated, the appeal relates only to the second notice, dated 8 October 2001. However, since the validity of both the first and the second notices was in issue before the judge, and since his reasons for finding the second notice invalid reflected to a large extent his reasons for making a similar finding in relation to the first notice, it is convenient at this point to set out the terms of both notices.
- The first notice is contained in a fax from Mr Christopher Barr of Total to Trafford dated and transmitted on 24 September 2001. The relevant part of the fax reads as follows:
"In accordance with the terms of [the agreement dated 31 March 2000] as varying [the lease] I hereby give you two weeks' notice of determination of the same and would further confirm for the avoidance of all doubt that the car park, the subject of the Lease, will be closed as at and from Monday the 8th October 2001 ..."
- Thus the first notice purported to give the minimum period of notice prescribed by clause 5.6 of the Lease, as varied.
- The second notice is contained in a fax from Mr Barr to Trafford, which was dated and transmitted on 8 October 2001. The relevant part of the fax reads as follows:
"In accordance with the terms of the Car Park Lease (as varied by the Agreement) and for and on behalf of [the landlord] I hereby give you 17 days notice of determination of the same and would further confirm for the avoidance of all doubt that the Car Park, the subject of the Lease, will be closed as at and from midnight on the 24th October 2001 ..."
- Thus it is clear on any construction of the second notice that it was intended to give more than the minimum notice prescribed by clause 5.6, as varied.
- The case has proceeded on the basis that it is common ground that, if the dates on which the respective faxes were transmitted are excluded from the calculation of the two-week period (in the case of the first notice) and of the 17-day period (in the case of the second notice), the expiry of those periods would have occurred one day later than the date which is stated, "for the avoidance of all doubt", as the expiry date of the notice.
- On that basis, Trafford's case is that there is a fatal inconsistency or ambiguity in each of the notices between, on the one hand, the date on which the stipulated period expires (ie the periods of two weeks and 17 days respectively) and, on the other hand, the date which is expressed, "for the avoidance of all doubt", to be the expiry date of the notice. It submits that that ambiguity is so fundamental as to render the notices invalid. In support of its submissions, Trafford relies on the well-established rule that, in computing the time which has elapsed after the occurrence of a specified event, the day on which the event occurs is to be excluded from the reckoning.
- The existence of this rule was acknowledged by Lord Diplock in Dodds v Walker  1 WLR 1027 HL. At 1029A-C, Lord Diplock said this:
"My Lords, reference to a `month' in a statute is to be understood as a calendar month. The Interpretation Act 1889 says so. It is also clear under a rule that has been consistently applied by the courts since Lester v Garland (1808) 15 Ves Jun 248, that in calculating the period that has elapsed after the occurrence of the specified event such as the giving of a notice, the day on which the event occurs is excluded from the reckoning."
- Trafford submits that this rule (which, at the risk of sacrificing accuracy in the interests of brevity, I will refer to as the rule in Lester v Garland) falls to be applied, in the sense that a reasonable recipient of the notice would have known about it and would have interpreted the notice in accordance with it, with the consequence that in the case of each of the two notices the stipulated period of notice must be taken to start on the next day following transmission of the fax.
- Total's case, on the other hand, is that that approach is misconceived, in that the true question is whether or not, as a matter of construction of each notice, it is intended that the date of transmission be taken into account in computing the stipulated notice period; that, given the statement in each notice that "for the avoidance of all doubt" the notice will expire on a stated day, the only possible answer to that question is that in each case the date of transmission is intended to be included in reckoning the stipulated notice period; and that accordingly there is no inconsistency or ambiguity in the notices.
- In support of its submissions, Total relies strongly on the decision of the House of Lords in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd  AC 749. It is convenient at this stage to refer to that authority.
- In Mannai the issue was whether a notice of termination of a lease which was, on the face of it, one day short, was nevertheless effective. The issue arose in this way. By two leases dated 11 March 1992 office premises and a car park were demised by the landlord to the tenant for a term of 10 years from and including 13 January 1992. Each lease contained a provision entitling the tenant to determine the lease by serving not less than six months' notice to expire "on the third anniversary of the term commencement date". The tenant gave notices under each of the leases. The notices gave more than six months' notice, but were expressed to expire on 12 January 1995. At first instance the judge held that the notices expired at the last moment of 12 January 1995, being the first moment of the following day, and that the notices were accordingly effective. The Court of Appeal allowed the landlord's appeal, holding that the notices were one day short. The House of Lords, by a majority (Lords Steyn, Hoffmann and Clyde; Lords Goff and Jauncey dissenting), allowed the tenant's appeal.
- At p.767G of the report Lord Steyn said this:
"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  1 WLR 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."
- Of course, no question arises in the instant case as to the impact of surrounding circumstances on the construction of the notice since, whatever period was intended by the notice, it was clearly more than the two-week period stipulated by clause 5.6 of the lease, as varied. In that sense, the notice is entirely self-contained, and its meaning is to be extracted from within its four corners.
- Later in his speech, at p.768E-H, Lord Steyn said this:
"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, eg notices to quit, notices to determine licences and notices to complete: Delta Vale Properties Ltd v Mills  1 WLR 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 LJ and adopted by Stocker and Bingham LJJ; see also Carradine Properties Ltd v Aslam  1 WLR 442, 444. That test postulates that the reasonable recipient is left in no doubt that the right reserved is being exercised. It acknowledges the importance of such notices. The application of that test is principled and cannot cause any injustice to a recipient of the notice."
- At p.771A of the report Lord Steyn said that in determining the meaning of unilateral contractual notices the law generally favours a commercially sensible construction. The reason for this is, he said, that a commercial construction is "more likely to give effect to the intention of the parties". Then at p.772C-D Lord Steyn approved the test for the validity of a notice as that which was posed by Goulding J in Carradine Properties v Aslam  1 WLR 442, 444, viz: "Is the notice quite clear to a reasonable tenant reading it? Is it plain that he cannot be misled by it?"
- In the course of his speech, Lord Hoffmann said this (at pp.774D-775A):
"I propose to begin by examining the way we interpret utterances in everyday life. It is a matter of constant experience that people can convey their meaning unambiguously although they have used the wrong words. We start with an assumption that people will use words and grammar in a conventional way but quite often it becomes obvious that, for one reason or another, they are not doing so and we adjust our interpretation of what they are saying accordingly. We do so in order to make sense of their utterance: so that the different parts of the sentence fit together in a coherent way and also to enable the sentence to fit the background of facts which plays an indispensable part in the way we interpret what anyone is saying. No one, for example, has any difficulty in understanding Mrs Malaprop. When she says `She is as obstinate as an allegory on the banks of the Nile', we reject the conventional or literal meaning of allegory as making nonsense of the sentence and substitute `alligator' by using our background knowledge of the things likely to be found on the banks of the Nile and choosing one which sounds rather like `allegory'.
Mrs Malaprop's problem was an imperfect understanding of the conventional meanings of English words. But the reason for the mistake does not really matter. We use the same process of adjustment when people have made mistakes about names or descriptions or days or times because they have forgotten or become mixed up. If one meets an acquaintance and he says `And how is Mary?' it may be obvious that he is referring to one's wife, even if she is in fact called Jane. One may even, to avoid embarrassment, answer `Very well, thank you' without drawing attention to his mistake. The message has been unambiguously received and understood.
If one applies that kind of interpretation to the notice in this case, there will also be no ambiguity. The reasonable recipient will see that in purporting to terminate pursuant to clause 7(13) but naming 12 January 1995 as the day upon which he will do so, the tenant has made a mistake. He will reject as too improbable the possibility that the tenant meant that unless he could terminate on 12 January, he did not want to terminate at all. He will therefore understand the notice to mean that the tenant wants to terminate on the day on which, in accordance with clause 7(13), he may do so, ie 13 January."
- Lord Clyde adopted the same approach to the notice as Lords Steyn and Hoffmann; at p.782A-B he too approved the test posed by Goulding J in Carradine, observing (at p.782D) that the test is an objective one.
- In his judgment in the instant case (much of which was devoted to the question whether it was appropriate in the circumstances to entertain an application for summary judgment), the judge accepted Trafford's submissions and concluded that both notices were invalid. The judge turned to the issue of validity at page 15 of the transcript of his judgment. After referring to the rule in Lester v Garland, the judge continued (at p.16F), referring to the first notice:
"Now if one applies that proposition, a proposition which has apparently been good law from 1808 to 1981, and we can all if we sit down do the arithmetic, but it is between 170 and 180 years, if one applies that proposition to this notice, one excludes 24 September 2001 from the two weeks which have to be given, and according to the first words of the letter are being given, and thus the period starts at the first moment of 25 September, and two weeks then will end on the last possible moment of Monday 8 October and not in accordance with the words of the letter as at and from Monday 8 October 2001, which must in my judgment mean as at and from the first moment on which the date becomes 8 October 2001. In other words, one minute past midnight. Indeed, one second past midnight if one has a stopwatch. Thus, the notice while purporting to give two weeks notice of determination, has in it later a provision that only gives 13 days notice, not two weeks notice."
- The judge then referred to Mannai, concluding (at p.18D) that that case provided no authority for inserting a date in a notice other than the date specified. He continued (at p.18E):
"It seems to me that that is not a matter whereby construction can cure the notice. That is a matter where in reality what the court would be doing would be rectifying the notice and rectification of a unilateral notice, which whilst not I think technically impossible, is not what I am being asked to do in this case. One has to look at a notional reasonable recipient of the notice. A person who Lord Justice Nourse said has been added to the category of various people to whom the law for different purposes gives imaginary life. The man on the Clapham omnibus. No-one ever actually brings him off the omnibus and into court to give evidence. The objective bystander or nosy parker, as sometimes it might be called, in regard to cases where an implied term is being inserted, puts a question to the parties `But if such and such arises, what would you mean?', and they both unhesitatingly give the same answer. We know they are never there and they do not exist, and similarly the reasonable recipient is not the recipient necessarily in each and every case and one could not call someone who is a professional reasonable recipient of notices to give his interpretation of what he would have understood in this particular case. It is a colourful way of describing what the trial judge believes ordinary members of the relevant part of the community concerned would have understood in the context in which this notice was served."
- At p.21B the judge said this:
"Now it seems to me that the first notice is too short. It does not give or may not give, and that is fatal, two full weeks, and it must fail on that ground, and also it seems to me it fails on the ground that there is an ambiguity which cannot be cured, in the case of a break clause of this kind by looking at Mannai principles, and I do not think I need to go into this matter. The notice has to be construed against the background of the terms of the lease, and I accept that. The question is when doing so, does it make an uncertainty on the face of the notice into a certainty, and I do not think it does, for reasons which I have endeavoured to state."
- The judge then turned to the second notice, which (as I have already pointed out) is the only notice with which we are concerned on this appeal. The judge asked himself whether the same considerations applied to the second notice as to the first, and concluded that they did. At p.23B the judge said this:
"One thus cannot, it seems to me, impose a degree of conveyancing failsafe approach to the words of this notice. One has to postulate what a reasonable recipient of it would think, and he would be left, it seems to me, in the same doubt as the reasonable recipient of the first notice would have been left, does the 17 days starting on the next day apply or does midnight as between 24 and 25 October govern the notice? There is a 24 hour period which remains in limbo. Is the recipient of that notice, to use religious analogy, to be left in purgatory for 24 hours? I think the answer is no, and the notice fails for that reason."
- Later, at p.24B, the judge said this:
"Of course, the statement that every person is presumed to know the law, is wrong. A better way of putting it usually in a criminal context is ignorance of the law is no defence, and it seems to me that one cannot predicate that a reasonable recipient of a notice served pursuant to a break clause is ignorant of the law. That it frankly seems to me is to go too far. They may know the law, they may not, and on any view of the matter if you give two methods of calculating the date on which a lease is going to come to an end, it seems to me the giver of the notice has a duty to ensure that those two methods when used lead one to the self-same date, not to a date in one case which is either 24 hours earlier or 24 hours later than the date given by the second method. If you do that, it seems to me that you sow the seeds of confusion and ambiguity in such a way that unless the context of the break clause as in the Mannai case can inevitably lead you to one conclusion, namely that one of the two dates must be the correct one, one leaves the tenant receiving the notice hopelessly and instantaneously confused, to adopt the words of Wilson J from the case of Barclays Bank Plc v Bee [ 1 WLR 332, at p.344] ... and not just Wilson J but also when one looks at the judgment of Aldous LJ who gave the first judgment in the Court of Appeal, the test is was the recipient left in any reasonable doubt by the notice, and on the facts of that case, which were very different from this, the Court of Appeal had no doubt that the tenant was left in reasonable doubt and a reasonable recipient would have been left in that doubt, and in my judgment on the facts of this case, without seeking to in any way lay down guidelines for the future in other and different cases, on the facts of this case, I conclude without any hesitation at all that in the case of each of these notices, a reasonable recipient who had seen them at the time would have been left in reasonable doubt as to which of two termination dates the notice purported to rely on as being the determining date for the lease. Was it in the case of the second notice 24 or 25 October, and in the case of the first notice, was it 8 or 9 October, and for those reasons I have concluded that each of the two notices was a bad notice."
- It is convenient at this point to refer briefly to Barclays Bank v Bee, to which the judge referred in that passage of his judgment. In that case the solicitors for the claimant landlords, who wished to redevelop business premises which were let to the defendant tenants, wrote to the tenants saying that they were enclosing a notice terminating the lease under section 25 of the Landlord and Tenant Act 1954, with a copy which they asked to be returned. In fact, by mistake they enclosed two different notices, one (referred to as document A) stating that the landlords would oppose the grant of a new lease but omitting to state the grounds on which such an application would be opposed, and the other (document B) stating that the landlords would not oppose such an application. The tenants, not unnaturally, sought clarification of the landlords' intentions. The landlords' solicitors wrote back apologising for having sent incorrect notices, stating that it was the landlords' intention to oppose the grant of a new tenancy and enclosing a third notice (document C) which stated the grounds of opposition. The tenant applied for the grant of a new tenancy, and the issue as to the validity of the notices was tried as a preliminary issue. The district judge held that document B was a valid notice, and that the landlords were accordingly precluded from opposing the grant of a new tenancy. The landlords appealed successfully to the judge, whose decision was upheld in the Court of Appeal. The ratio of the Court of Appeal's decision was that although document B, standing alone, was a valid notice, the effect of documents A and B and the covering letter, when taken together, was to leave a reasonable recipient in doubt as to the landlords' intentions. Hence document B was not a valid notice.
- Thus, although the facts of the instant case are different, the question is essentially the same: whether, on its true construction, the second notice would leave a reasonable recipient in any real doubt as to the landlord's intention as to the date of expiry of this notice.
- In this court, Mr Paul Chaisty QC, for Total, submits that the meaning of the second notice would have been perfectly clear to any reasonable recipient. He submits that in applying the rule in Lester v Garland the judge was not applying the "reasonable recipient" test formulated by Goulding J in Carradine and adopted by the House of Lords in Mannai, but rather was embarking on an exercise of looking for doubts and uncertainties which would not have occurred to a reasonable recipient. He further submits that, even if the reasonable recipient is to be treated as being aware of the rule, he would nevertheless have concluded that the fact that a date was specified "for the avoidance of all doubt" would serve to remove any doubts which he might otherwise have had as to the expiry date. He submits that the judge treated a clause expressly designed to remove doubt as being in itself a source of doubt, and that a reasonable recipient would not have viewed the clause in that way. He points out (correctly) that on any basis the second notice gave more than the prescribed minimum two weeks' notice.
- Mr Chaisty submits that, adopting the approach to construction of the notice which was adopted by the majority of the House of Lords in Mannai in relation to the notice the validity of which was in issue in that case, the conclusion must follow that the second notice was valid. He accepts that the instant case is not on all fours with Mannai so far as the facts are concerned, in that in Mannai a consideration of the terms of the leases revealed that there was only one available expiry date, and that was a highly relevant consideration in construing the notices. In the instant case, by contrast, there is no need to have recourse to surrounding circumstances for the purpose of construing the second notice; its true meaning falls to be extracted from within its four corners. But, submits Mr Chaisty, the principles of construction which the majority of the House of Lords adopted in construing the particular notice in Mannai are of general application and extend far wider than the facts of that case.
- For Trafford, Mr Edward Cole submits (as he submitted successfully to the judge) that in reckoning the period of notice stipulated in the second notice the rule in Lester v Garland is of central relevance, in that the reasonable recipient must be assumed to know the law: it cannot be assumed that the reasonable recipient would interpret the notice either in ignorance of, or contrary to, legal principle. Applying the rule, therefore, the conclusion must follow, he submits, that as a matter of construction the stipulated 17-day period expired at midnight at the end of Thursday 25 October 2001. Without more, he asserts, that would have been a valid notice with that expiry date. He submits that there is no room for ambiguity in the reference to the 17-day period. He goes on to submit that the statement that "for the avoidance of all doubt" the car park would close at and from midnight on 24 October (although that statement would, as he accepts, have been effective had it stood on its own) only gave 16 days' notice, reckoned, once again, in accordance with the rule. Mr Cole accordingly submits that the second notice gave two different dates for its expiry, and that on that footing it is invalid. He submits that if the notice were valid, Trafford would have to choose between the two dates, putting it at risk of making the wrong choice.
- Mr Cole submits that the second notice cannot be "rescued" by applying Mannai. He submits that the context in the instant case is materially different from the context of the notice which the House of Lords had to consider in Mannai, for, essentially, the reasons which the judge gave. In the instant case, the recipient of the notice would, he submits, have to guess at its true meaning. He submits that Mannai is not authority for the proposition that anything less than full compliance with the contractual requirements of the clause under which it is served will suffice for a valid notice. In support of this submission he relies on the decision of this court in Speedwell Estates Ltd v Dalziel  EWCA Civ 1277 para 25.
- In that case the validity of notices purportedly given by long leaseholders under the Leasehold Reform Act 1967 was challenged by the landlord on the ground that the notices did not contain the prescribed particulars. The Court of Appeal dismissed the tenants' appeal from the decision of the judge at first instance that the notices were invalid. The leading judgment was given by Rimer J (with whom May and Pill LJJ agreed). In para 25 of his judgment Rimer J said this:
"Secondly, I anyway do not regard the Mannai case as supporting Mr Gerald's approach. The House of Lords did not suggest that anything less than full compliance with clause 7(13) would operate to effect a valid operation of the break clause in that case. The majority held that, on the true construction of the break notice, it had been validly operated: it communicated the information which the clause required. Similarly, in cases such as this one, if the tenant is to exercise his Part 1 rights validly, he has to serve a notice in the prescribed form containing the mandatory particulars. If and to the extent that he does not provide those particulars, it is no answer that it does not matter because the landlord already knows them. In principle, subject only to the saving effect of paragraph 6(3) of Schedule 3 with regard to inaccuracies in the information provided, any omissions either will or may be fatal to the validity of the notice."
- Mr Cole submits that those observations apply equally in the instant case.
- Mr Cole also relies on the decision of the Court of Appeal in Burman v Mount Cook Land Ltd  1 All ER 144. Like Speedwell Estates, that was another case in which a landlord's counter-notice did not meet the requirements of the relevant statute (in that case the Leasehold Reform Housing and Urban Development Act 1993). The leading judgement was given by Chadwick LJ (with which Sir Murray Stuart-Smith agreed). After referring to Mannai, Chadwick LJ said this (at para 23):
"I have said that it is important to appreciate that in neither of the two cases on notices served under break clauses to which I have referred - the Carradine case and the Mannai case - did the break clause in the lease require the notice to be given in any particular form. Had the break clause required the notice to be in a particular form, the result would have been different. The point was recognised by Peter Gibson LJ in York's case  2 EGLR 25 at 27:
`It is of course right, as [counsel] for the defendants has submitted, that one should bear in mind that in a statutory context there may be requirements which have to be observed and without which a notice will be invalid. But the same may be true in the case of a contractual notice. For my part, I can see no material distinction between the approach in a case such as the present and the approach which the House of Lords has said [in Mannai] should be adopted in the case of a notice in a contractual setting.'"
- In paras 25 and 26 of his judgment Chadwick LJ said this:
"We were referred, also, to the decision of this court in Speedwell Estates Ltd v Dalziel  EWCA Civ 1277,  All ER (D) 454 (Jul). The notices, in that case, were notices of the tenants' desire to have the freehold under Pt I of the Leasehold Reform Act 1967. Paragraph 6 in Pt II of Sch 3 to the 1967 Act required such a notice to be given in a prescribed form; and set out the particulars which it should contain. At the relevant date the form prescribed was Form 1 in the schedule to the Leasehold Reform (Notices) Regulations 1997, SI 1997/640. The schedule to Form 1 contained nine paragraphs directed to the provision by the tenant of various information. The deficiencies in the forms, as completed by the tenants, included failure to identify the instruments creating the tenancies, failure to provide any information as to the rateable values of the houses on the appropriate day sufficient to show that the rent was a low rent, and failure to provide particulars as to the tenants' occupation of the houses. The court held that the failure to provide particulars as to the tenants' occupation, and the failure to provide information as to rateable value, was fatal to the validity of the notices.
Rimer J (with whose judgment the other members of the court, Pill and May LJJ, agreed), after referring to the speeches in the House of Lords in the Mannai case, pointed out (at ) that it was important -
`to emphasise that the House of Lords was not saying that anything less than proper compliance with the terms of a contractual break clause would be sufficient to effect the break.'
He referred, also, to the passage in the judgment of Peter Gibson LJ in York v Casey  2 EGLR 25 at 27 which I have already set out. He went on (at ) to say this:
`... I consider that the better approach is to look at the particular statutory provisions pursuant to which the notice is given and to identify what its requirements are. Having done so, it should then be possible to arrive at a conclusion as to whether or not the notice served under it adequately complies with those requirements. If anything in the notice contains what appears to be an error on its face, then it may be that there will be scope for the application of the Mannai approach, although this may depend on the particular statutory provisions in question. The key question will always be: is the notice a valid one for the purpose of satisfying the relevant statutory provision.'
In my view, that passage encapsulates, succinctly and accurately, the correct approach. I may add that I think that that is the approach to be adopted not only in relation to notices served under statute but also to notices served under contractual provisions such as those commonly found in leases."
- Mr Cole accordingly submits that the second notice was invalid as well as the first.
- I can now state my own conclusions.
- In the first place, I derive no assistance from the two cases on which Mr Cole relies, Speedwell Estates and Burman, in which the issue was whether the notice under challenge complied with the requirements of the statute pursuant to which it was given.
- The process of determining whether a notice complies with the requirements of the provision pursuant to which it is given (be that provision statutory or contractual) involves, as a first step, a consideration of what, on its true construction, the notice says. The contents of the notice then have to be matched against the relevant requirements in order to determine whether it meets them. Speedwell Estates and Burman make it clear that, at this second stage, there is no basis in either Carradine or Mannai for, in effect, rectifying any defects or omissions in the notice so as to bring it into line with the relevant requirements.
- In the instant case, however, we are at the first stage; that is to say, the stage of seeing what, on its true construction, the notice dated 8 October 2001 says. If, on its true construction, it gives two different expiry dates (albeit that each one falls after the expiry of the minimum period of two weeks specified by clause 5.6 of the lease, as varied), then a question will arise whether one or other of those dates is to be taken as the operative date, or whether the notice is altogether invalid. But the first step is to construe the notice - and in that context Carradine and Mannai are, in my judgment, of direct relevance. The approach to construction of the notice in issue in Mannai adopted by the majority of the House of Lords is, in my judgment, plainly one which applies equally in the instant case. The fact that in Mannai recourse to surrounding circumstances yielded the important fact that there was only one date on which notice could validly expire (a state of affairs which does not arise in the instant case) does not in my judgment impact in any way on the applicability of the general principles stated by the majority of the House of Lords in that case.
- So in my judgment the judge was right to apply the Carradine test, approved in Mannai, and to ask himself whether the meaning of the notice was quite clear to a reasonable tenant reading it (see p.18G of the transcript of his judgment). However, the issue which has to be addressed on this appeal is whether he answered that question correctly.
- In my judgment, he did not. In the first place, in my judgment the rule in Lester v Garland is of no assistance on the question of construction of the notice. It was entirely open to Total to provide in express terms that in computing the stipulated period of 17 days the date on which the notice was given should be included in the reckoning. The fact that, applying the rule, that would have constituted 16 days' notice rather than 17 is nothing to the point. The rule could only come into play in the context of the reckoning of the minimum prescribed period of two weeks: but, for reasons already given, that issue does not arise.
- In the second place, in my judgment the statement that "for the avoidance of all doubt ... the Car Park ... will be closed as at and from midnight on the 24th October 2001" can only mean that the day on which the notice was given was to be included in reckoning the stipulated 17-day period and that the notice indeed was to expire on 24 October 2001. Had that statement not appeared in the notice, then the conclusion might have followed that an unqualified reference to a 17-day period should, consistently with the rule in Lester v Garland, be construed as a period starting on the day after the day on which notice was given. Similarly, had the statement referred to an expiry date which could not on any basis be reconciled with a 17-day period, then there would be an ambiguity on the face of the notice. But the statement that the notice would expire at midnight on 24 October 2001 (ie after 17 days including the date on which the notice was given) establishes conclusively that the 17-day period was intended to start to run on the day when notice was given. It amounts, in my judgment, to an express provision to that effect. Hence, in my judgment the statement fulfilled its express purpose of removing all doubt as to the expiry date of the notice.
- The judge appears to have proceeded on the basis that a reasonable recipient of the notice, knowing about the rule in Lester v Garland, could only have read the reference to 17 days' notice as meaning a period starting on the day following the giving of the notice, and hence that the subsequent reference to midnight on 24 October 2001 gave rise to an ambiguity. With respect to the judge, that approach seems to me to be entirely misconceived. The reasonable recipient of the notice must be taken to have read the whole of it, including the statement that it was to expire on 24 October 2001. Whether the computation of the 17-day period was or was not to include the day on which the notice was given depends on a consideration of all the terms of the notice, including that statement. In treating that statement as giving rise to an ambiguity, rather than as explaining how the 17-day period was to be computed, the judge seems to me to have been doing precisely what the draftsman of the notice was expressly inviting the recipient of it not to do.
- For my part, in answer to the question posed in Carradine, I have no doubt at all that it would have been quite clear to a reasonable tenant reading the notice (that is to say, reading the whole of the notice) that it expired at midnight on 24 October 2001.
- For those reasons, I would allow this appeal.
- LORD JUSTICE MUMMERY: I agree.
Order: appeal allowed and order below set aside; declaration made in form to be agreed by counsel; respondent to pay costs of appeal, to be subject to detailed assessment, and to pay within 14 days £10,000 on account of appellant's costs; order for costs below relating to the whole action set aside; no order as to costs on application for summary judgment; leave to appeal to the House of Lords refused; counsel to lodge an agreed minute of order.
Copyright Policy |
Donate to BAILII