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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Embankment Place Hotels (Blackfriars) Ltd. v Blackfriars Hotels Ltd. & Anor  EWCA Civ 588 (10 April 2003)
Cite as:  EWCA Civ 588
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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR JUSTICE FORBES)
B e f o r e :
LORD JUSTICE RIX
| EMBANKMENT PLACE HOTELS (BLACKFRIARS) LIMITED||Claimant/Appellant|
|(1) BLACKFRIARS HOTELS LIMITED|
(2) SIX CONTINENTS HOTELS (UK) LIMITED
Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
MR J ACTON DAVIS QC (instructed by Messrs Eversheds, Birmingham B3 3AL) Appeared on behalf of the Respondents
(AS APPROVED BY THE COURT)
Crown Copyright ©
"the date on which both of the following have occurred:
(i) the Statement of Practical Completion has been issued; and
(ii) the Certificate of Operability has been issued."
"the statement to be issued by the Employer's Agent under the Building Contract that Practical Completion has occurred."
"the Certificate issued pursuant to the provisions of paragraph 13 of Schedule 2."
"13 Issue of the Certificate of Operability
13.1 The Developer will give at least 8 working weeks notice to the Manager of the date by which it will have complied with all those of its obligations under this Agreement compliance with which shall be required in order to enable the Manager to open and operate the Premises as a fully operational licensed hotel as envisaged by this Agreement
13.2 The Manager shall arrange for its appropriate representatives in conjunction with appropriate representatives appointed by the Developer to carry out all appropriate inspections tests and procedures as are required with a view to their issuing the Crowne Plaza Hotel Opening Certificate, Fire Safety Systems Certificate and Hotel Operating/Occupancy Certificate in accordance with the Crowne Plaza Standard Specification
13.3 In carrying out its obligations under clause 13.2 the Manager and the Developer shall and shall ensure that their respective representatives act in good faith and that any deficiencies, omissions, defects or other circumstances which prevent the issue of any of those certificates shall be notified to the Developer as soon as possible. The Manager shall then arrange for a reinspection as soon as practicable after the Developer has notified the Manager in writing that it considers that the relevant item has been rectified
13.4 Within 2 working days of the issue of the last of the certificates referred to in paragraph 13.2 above the Manager and the Developer shall issue a copy of the Certificate of Operability
13.5 If the Manager and the Developer shall be unable to agree on the issue of the Certificate of Operability the dispute shall be referred at the instigation of either the Manager or the Developer to a suitably qualified and experienced independent surveyor appointed (failing agreement by the parties) by the President for the time being of the Royal Institution of Chartered Surveyors upon the application of either party such person acting as expert to resolve the matter and his decision shall be final and binding on the Owner and the Manager and Developer and his costs relating to this referral (plus VAT) shall be borne by such party as he shall direct. Any failure or refusal on the part of the Manager to arrange for any inspection test or procedure under paragraph 13.2 following reasonable notice from the Developer shall be a dispute for the purposes of this paragraph 13.5."
"Under the terms of the above mentioned Contract and subject to the Contractor having failed to achieve the relevant ceiling heights and floor areas in various locations (and in relation to which the Employer's rights are fully reserved) and completing the outstanding items set out in the schedules attached in accordance with the completion programme, the works were practically complete on:
25 January 2002."
"As of today's date a certificate of Practical Completion has not been issued, but the issue of that certificate is imminent. We therefore give you notice that it will be issued within the next several days and formally request that you instigate those procedures set out in the Development Agreement requisite for achieving the Certificate of Operability.
As we discussed with you, at our meeting on 23rd October, the issues with regard to floor areas and ceiling heights in a small number of areas, remain unchanged. It is therefore very much in your court to look into this matter and tell us how you will approach it so that the matter can be finalised. It is our view that those areas are not substantial and do not affect the profitability or operability of the hotel in any way. We look forward to hearing your views."
Blackfriars House Hotel
We are writing to give notice, on behalf of our client, Embankment Place Hotels (Blackfriars) Limited ('EPH'), pursuant to Schedule 2, paragraph 13.1 of the Development Agreement, of compliance with all of its obligations under the Development Agreement.
This notice is given without prejudice to our client's position that it has previously given valid notices pursuant to Schedule 2, paragraph 13.1 of the Development Agreement."
That letter was written by the solicitors on behalf of Embankment to Blackfriars Hotels Ltd.
"(1) This is not a case of a contractual right to determine which prescribes as an indispensable condition for its effective exercise that the notice must contain specific information. After providing for the form of the notice ('in writing'), its duration ('not less than six months') and service ('on the landlord or its solicitors'), the only words in clause 7(13) relevant to the content of the notice are the words 'notice to expire on the third anniversary of the term commencement date determine this lease'. Those words do not have any customary meaning in a technical sense. No terms of art are involved. And neither side has suggested that anything should be implied into the language. That is not surprising since the tests governing the implication of terms could not conceivably be satisfied. The language of clause 7(13) must be given its ordinary meaning. A notice simply expressed to determine the lease on the third anniversary of the commencement date would therefore have been effective. The principle is that that is certain which the context renders certain: Sunrose Ltd v Gould  1 WLR 20.
(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 HE 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. 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 Munday Ltd  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.
(5) That brings me to the application of this test. The facts are simple. Crediting a reasonable recipient with knowledge of the terms of the lease and third anniversary date (13 January), I venture to suggest that it is obvious that a reasonable recipient would have appreciated that the tenant wished to determine the leases on the third anniversary date of the leases but wrongly described it as the 12th instead of the 13th. The reasonable recipient would not have been perplexed in any way by the minor error in the notices. The notices would have achieved their intended purpose."
"24. However, I have come to the conclusion that Mr Acton Davis' other two points on this aspect of the case are sound. In my opinion, it would not have been impossible to specify a date in the future by which it was anticipated that EPH would have complied with all its relevant contractual obligations. Similarly, it would not have been impossible to specify a date that gave not less than 8 weeks' notice of that compliance to SCH. I agree with Mr Acton Davis that the wording of paragraph 13.1 is perfectly clear. It requires that the Manager be given at least 8 weeks' notice in advance of a particular date (i.e. the date upon which EPH will have complied with all its relevant contractual obligations). None of the letters relied upon by EPH in these proceedings specifies such a date and none of them gives 8 weeks' notice of such a date (or, indeed, any period of notice at all). Indeed, as Mr Blackburn very fairly acknowledged, the letter of 11th April expressly stated that there had been compliance with all the relevant contractual obligations by the date of the letter itself. On any view, the letter of 11th April was therefore not an anticipatory notice of the type required and specified by paragraph 13.1 of Schedule 2.
25. In those circumstances, as it seems to me, none of the letters in question can properly be described as constituting notice 'within the meaning of Paragraph 13.1 of Schedule 2 of the Development Agreement'. It therefore follows that EPH is not entitled to any of the declarations sought in paragraph 1 of the prayer in these proceedings and its claim to that effect must therefore, for those reasons, fail."
"The reasonable recipient would not have been perplexed in any way by the minor error in the notices. The notices would have achieved their intended purpose."
That could not be said of the letter of 11th April 2002. The reasonable recipient would have been perplexed by the omission of a date. Such an omission was not a minor error as the date was important to the Manager to enable him to prepare to run a hotel.
"of compliance with all of its obligations under the Development Agreement."
Is that a notice of past or prospective compliance? Prima facie, in its context it might seem to be that of past compliance and so it was regarded by the judge. However, if such a notice is in truth a notice pursuant to clause 13.1, it is also possible to view it as a notice of future compliance. The matter is uncertain, and an uncertain notice is a dubious basis for a contractual notice.
ORDER: Appeal dismissed; appellant to pay the respondents' costs assessed in the sum of £35,139; permission to appeal to the House of Lords refused.
(Order not part of approved judgment)