BAILII [Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

Scottish Court of Session Decisions


You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Batt Cables Plc v Spencer Business Parks Ltd [2010] ScotCS CSOH_81 (01 July 2010)
URL: http://www.bailii.org/scot/cases/ScotCS/2010/2010CSOH81.html
Cite as: [2010] CSOH 81, 2010 Hous LR 43, 2010 GWD 25-480, [2010] ScotCS CSOH_81, 2010 SLT 860

[New search] [Printable version] [Help]


OUTER HOUSE, COURT OF SESSION

[2010] CSOH 81

CA31/10

OPINION OF LORD HODGE

in the cause

BATT CABLES PLC

Pursuer;

against

SPENCER BUSINESS PARKS LTD

Defender:

ญญญญญญญญญญญญญญญญญ________________

Pursuer: Sandison QC; Brodies LLP

Defender: Moynihan QC and McBrearty; DLA Piper Scotland LLP

1 July 2010

[1] The pursuers, Batt Cables plc ("Batt") are the tenants of industrial premises at Unit A, Phase 1 Queen Anne Drive, Newbridge ("the premises"). The defenders, Spencer Business Parks Ltd ("SBP"), are their landlords. They are in dispute over whether Batt have validly exercised a break option under the lease of the premises.

[2] In order to achieve a resolution of the dispute at debate, parties agreed the provenance and receipt of documents and invited me to reach a decision on the documents and the pleadings. Batt moved for decree declaring that they had validly exercised their entitlement to terminate the lease and SBP moved to have the action dismissed on the ground that Batt's averments were irrelevant.

Factual background
[3] In 1996 Scarborough Development Company (Glasgow) Ltd and Batt entered into a lease of the premises from 4 August 1995 to 3 August 2020. The lease contained a break clause (clause 2.2) in the following terms:

"Notwithstanding the foregoing...either the Landlords or the Tenants shall be entitled to terminate this Lease on the tenth, fifteenth and twentieth anniversaries of the Date of Entry. The foregoing entitlements to terminate shall only be exercised in terms of this clause by serving written notice to this effect on the other party no less than six months prior to the relevant termination date (time being declared to be of the essence)."

The lease also contained a clause (clause 10) which related to the giving of notice:

"All notices which require to be given in terms of this lease shall be in writing and shall be deemed to be sufficiently given if sent by first class recorded delivery post addressed...in the case of the Landlords, to the Landlords (if a body corporate) at their Registered or Head Office...or (in either case) to such other address as the Landlords may have notified in writing, and any such notice shall be deemed to have been served forty eight hours after the date on which the same was posted (excluding weekends and public and statutory holidays). In proving service, it shall be sufficient to prove that the envelope containing the notice was duly addressed to the Landlords...in accordance with this Clause and posted to the place to which it was so addressed." (my emphasis).

Parties agreed that the only part of clause 10 which was mandatory was that the notice should be in writing. That did not add to the requirements of clause 2.2, which required written notice. The question therefore is whether Batt, in seeking to terminate the lease, served written notice on the other party as required by clause 2.2.


[4] On
8 May 2008 SBP acquired the Lochend Industrial Estate and became the landlords of the premises. On the same day, Dundas & Wilson CS LLP, as agents of the then landlords, wrote to Batt to intimate the assignation to SBP of the landlords' interest in the premises.


[5] On 30 May 2008 Spencer Holdings Plc ("SH"), an associated company of
SBP, wrote to Batt in the following terms:

SPENCER Holdings PLC

Nexus House, Randles Road
Knowsley Business Park, Prescot
Merseyside
L34 9HX

T: 0151 545 2500 F: 0151 545 2534

info@spencerpropco.com www.spencerpropco.com

Batt Cables PLC

Unit A Lochend Industrial Estate

Queen Ann Drive

Newbridge

Edinburgh

Tenant Code: 05-109-1531 30 May 2008

Dear Sir or Madam,

UNIT A LOCHEND INDUSTRIAL ESTATE

We would like to welcome you as a new tenant of Spencer Business Parks Ltd and would like to take this opportunity to let you know about our company and the invoicing arrangements.

Lochend Industrial Estate was sold to Spencer Business Parks Ltd on the 8th May 2008 and will start to invoice you from your next invoice date of 28th May 2008.

Enclosed is a Direct Debit mandate for you to complete and return to us in time for the next payment due. Please could you ensure that you send the original back to us.

Currently we have in excess of 500 tenants and, as landlords, we take our responsibilities very seriously indeed. Rent Collecting is only part of our involvement with our tenants and our philosophy is that good relations are paramount. Our tenants are our customers and they know we are here to offer advice when needed and help in a variety of property-related matters.

In the event of you requiring advise or information, the below listed members of our team will be happy to assist-

Tenancy Issues - Rent Reviews, lease renewals, applications for landlords consent, occupation enquiries

Joe Dempsey BSc Hons MRICS - Tel: 0151 545 2512 - joed@spencerpropco.com

Estate services - Repairs, maintenance, site queries.

Andy Sharp - Tel: 0151 545 2509 - andys@spencerpropco.com

Accounts - Invoice and payment queries.

Steph Caldwell - Tel: 0151 545 2526 - stephaniec@spencerpropco.com

We would to take this opportunity of wishing you every success in the future and trust our association will be a long and happy one.

Yours faithfully,

SIGNED

Philip Duckett BSC (Hons) FCCA

Finance Director.


[6]
SBP enclosed with the letter a direct debit instruction in their favour which Batt completed. At around the same time Batt received and completed a form under the heading "Spencer Business Parks Ltd" in which they were invited to record their tenant details. They did so. They also received and completed a form, again headed SBP, giving occupation details for the purpose of industrial buildings allowance. Thereafter they received monthly invoices from SBP for rent and other charges and annual service charge budget certificates.


[7] On
29 January 2010, Mr Stephen Brown, the financial director of Batt, wrote a letter addressed to Joe Dempsey, SH, at SH's registered office at Nexus House, which was the same address as the registered office of SBP, in the following terms:

"Dear Sir,

Re: Unit A, Lochend Industrial Estate, Newbridge

In accordance with the terms of our lease, please accept this letter as notification that we will be exercising our right to terminate the lease on the fifteenth anniversary (4 August 2010) of the date of entry.

I trust that you will find the foregoing in order.

Yours faithfully

BATT CABLES plc"

The letter was sent by Royal Mail Special Delivery and was received and signed for by "A Dunn" on 1 February 2010. On 29 January 2010 Mr Brown also sent the letter by email to Mr Dempsey at his email address, JoeD@spencerpropco.com, and ascertained that the message had been read at 12.35 hours on that date.


[8] SBP took advice from their solicitors and on
4 February 2010, DLA Piper Scotland LLP ("DLA") wrote to Batt in the following terms:

"On behalf of and as instructed by our clients ...[i.e. SBP] ... we refer to the break notice served by you dated 29 January 2010 addressed to Spencer Holdings Plc ("the Notice"). In terms of the lease ("the Lease"), our said clients have right to the landlord's interest in the Lease. Considering that the Notice has been addressed to Spencer Holdings Plc, our clients consider the Notice to be incorrectly served and therefore invalid. It is our clients (sic) view that the Lease will continue in full force and effect notwithstanding service of the Notice."


[9] Brodies LLP replied by letter dated
18 February 2010, in which they stated that the only mandatory requirements of the Lease for break notices were that they were to be in writing and served on the landlord; there was no mandatory requirement that they be addressed to the landlord. With that the battle lines were drawn.

Other correspondence
[10] In the summons Batt found on various letters which SH sent to them between 2008 and 2010 which showed that employees of that company took an active part in administering the landlords' interest in relation to the premises. While I have come to the view that little turns on this correspondence, I summarise its terms in case the matter comes before another court.


[11] In a letter dated
13 June 2008, Jennie Anders, an assistant accountant, wrote to Batt on SH notepaper to provide information on the service charge budget on the industrial estate and stated that "we" only acquired the estate during the financial year of 2008-2009. She copied that letter to Joe Dempsey among others. On 25 March 2009, Stephen Barry, a surveyor, wrote to Batt on SH notepaper to advise of a visit to the industrial estate of a representative of The Capital Allowance Partnership LLP and signed the letter "for and on behalf of the Landlord". On 29 June 2009, Jennifer Anders, assistant accountant (presumably the same lady as the author of the letter of 13 June 2008), wrote to Batt on paper which bore a logo common to both SBP and SH, enclosing a service charge certificate "issued on behalf of SH." Again she copied the letter to Joe Dempsey.


[12] On
15 September 2009 SH re-registered as a private company. On 11 December 2009, Alexander Taylor wrote to Batt on SH notepaper referring to SH as having been a successful landlord since 1974 and referring to "our" portfolio brochure. He stated that it was a key element of "our" business to have a strong relationship with occupiers and offered a reward if Batt introduced a new tenant to one of "our" units. He attached an introduction form which was to be returned to him at Spencer Property Asset Management, at the address which was also the registered office of SBP and SH.


[13] On
25 February 2010 (which was after the sending of the break notice), Mr Paul Jackson, a director of SH, wrote on SH notepaper to Batt about the 2010 rating revaluation in England and Wales, referring to "our own rating consultants" and "our own Landlords' records". Finally, on 19 April 2010, Kayte Wallace-Hughes, the sales ledger manager of SH, wrote to Batt on SH notepaper sending them their insurance folio and an invoice for the year 1 April 2010 to 31 March 2011. In most of those letters, the writer used the tenant code or reference, which SH had given Batt in their letter of 30 May 2008.

Other matters in the parties' pleadings
[14] Batt, having called on SPB in correspondence to explain Mr Dempsey's role and also why SH wrote the letters referred to above, averred that in the absence of an explanation, they believed and averred that SH were authorised by
SBP to receive correspondence concerning the lease, including notices such as the break notice, and that in any event SBP had given SH apparent authority so to do.


[15] SBP in their defences explained Mr Dempsey's status in the following terms:

"Mr Dempsey is employed by Spencer Property Asset Management Limited, a subsidiary of Spencer Holdings Limited, as a property and asset management surveyor with responsibility for management of properties owned by certain companies in the group, including the defenders. Correspondence relating to the defenders would be dealt with by Mr Dempsey in the first instance. He would personally deal with routine management issues. Matters of substance, including break notices, would be referred by him to a director of the defenders to deal with. On 29 January 2010, Mr Dempsey passed the e mail copy of the pursuers' letter of 29 January 2010 to Mr Spencer, a director of the defenders."

The parties' submissions
[16] Mr Sandison QC, in seeking summary decree, submitted, first, that the break notice complied with the mandatory requirements of the lease in that it was in writing and was served on the landlords. There was no requirement that the notice be addressed to the landlords. In deciding whether the notice was properly served, the appropriate test was what the reasonable recipient in possession of the relevant background information would have understood the notice to mean: Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, Lay v Ackerman [2004] EWCA Civ 184, [2005] 1 EGLR 139. The Scottish case of Ben Cleuch Estates Ltd v Scottish
Enterprise
[2006] CSOH 35; 2008 SC 252 (Inner House) was not authority to the contrary. On a proper understanding the decision in Ben Cleuch turned on the clause in the lease (Clause Seventeenth) which gave mandatory guidance as to the form of service and not on the break clause itself (Clause Fourth (B)). Ben Cleuch did not create any general rule of law that a party charged with giving written notice to another party must address the notice to the latter.


[17] Secondly, Mr Sandison submitted that if the notice was not to be so construed, it was in any event valid as it had been served on either Mr Dempsey or SH, who or which was either expressly or impliedly an agent for
SBP for the purpose of the receipt of such notices. He submitted that a notice was validly served if it was served on an agent who was specifically authorised for the purpose (Ben Cleuch, Lord Reed in the Outer House at para 137) or who had general powers to manage the property (Townsends Carriers Ltd v Pfizer Ltd (1977) 33 P & CR 361; Peel Developments (South) Ltd v Siemens plc [1992] 47 EG 103). SBP's averments, which I set out in paragraph [15] above, amounted to an admission of such agency.


[18] Thirdly, and in any event, Mr Sandison submitted that
SBP by permitting SH to send the letter of 30 May 2008 and the other correspondence, which I have summarised in paragraphs [10] to [13] above, represented to Batt that either or both of Mr Dempsey or SH had a general authority to manage the subjects of lease, including authority to receive notices such as a break notice. SBP in their pleadings did not suggest that the letter of 30 May 2008 or any of the other correspondence was sent without their knowledge and full consent. Accordingly, Batt were justified in relying on the representation in the letter of 30 May 2008 to send the break notice to Mr Dempsey at SH's registered office. Either or both of Mr Dempsey and SH had ostensible authority to receive the notice: Ben Cleuch (Inner House) at para 87, Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd
[1964] 2 QB 480; and Bowstead and Reynolds on Agency (18th ed., 2006), paras 8.013 to 8.020.


[19] Mr Moynihan QC, in inviting me to dismiss the action, submitted that the break notice was invalid as it did not meet the mandatory requirements of clause 2.2 of the lease. To be valid the written notice had to be served on the landlords. That meant that the notice must be addressed to the landlords. As strict compliance was called for, strict compliance would be enforced: Scrabster Harbour Trust v Mowlem plc [2006] SC 469; Ben Cleuch (Inner House) at para 60; and Capital Land Holdings Ltd v Secretary of State for the Environment 1996
SLT 1379. Ben Cleuch was in point and was binding: a notice addressed to a party other than the landlord was not a notice given to the landlord and was therefore invalid. Mannai Investments was distinguishable as it related to the proper construction of a notice served on the correct person. Similarly, Lay v Ackerman did not support the use of the reasonable recipient test to change the identity of the person to whom the notice was given.


[20] In relation to the submissions based on actual agency, he emphasised that there required to be clear evidence of a general agency sufficient to make service of a notice on an agent the equivalent of service on the principal: Lemmerbell Ltd v Britannia LAS Direct Ltd [1998] 3 EGLR 67. There was no evidence of such agency. In relation to the case of ostensible authority, neither the letter of
30 May 2008 nor the other correspondence supported the assertion that SBP had represented to Batt the existence of such agency.

Discussion
[21] There are two issues for determination in this case. First, it is necessary to decide whether the break notice is valid because it was a notice given to the landlords. Secondly, and in any event, because such a notice would be valid if it were given to an agent of the landlords who was specifically authorised for that purpose, it is necessary to decide on the pleadings and documents whether Mr Dempsey or SH had the needed actual or apparent authority to receive the break notice.

(i) The validity of a notice and the "reasonable recipient" test
[22] Leaving to one side any question of agency, I deal first with the question whether it is proper to use the "reasonable recipient" method of construction, which the House of Lords set out in Mannai Investments, to hold the break notice to be valid because a reasonable person in the shoes of Mr
Spencer, on receiving the notice from Mr Dempsey, would have been in no doubt that Batt were giving notice that they wished to terminate the lease by exercising their option to break the lease on its fifteenth anniversary. I am satisfied that it would not be correct to do so and that I am bound by the decision of the Inner House in Ben Cleuch to reject that approach. I set out my reasoning below.


[23] In my opinion the correct approach set out in the authorities can be summarised in the following four propositions.


[24] First, when a contract confers on a party a right, such as an option, by notice unilaterally to alter the rights of the parties and imposes conditions or requirements as to its exercise, the party seeking to exercise that right must comply strictly with those agreed conditions or requirements. See Scrabster Harbour Trustees, Sir David Edward QC at para 43, Ben Cleuch (Outer House) Lord Reed at para 122. The reason for the rule is to enable the parties to be certain whether the event which alters the parties' rights or legal relationship has or has not occurred. See United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, Lord Diplock at p.929 and Lord Simon of Glaisdale at p.945; Muir Construction Ltd v Hambly Ltd 1990
SLT 830, Lord Prosser at pp.833-834.


[25] Secondly, the foregoing proposition is not inconsistent with the approach set out by the House of Lords in Mannai Investments (as Sir David Edward QC summarised it in Scrabster Harbour Trustees at para 47) that

"the courts should interpret and apply commercial instruments in a common sense 'commercial' or 'business' way, eschewing linguistic and legalistic niceties."

Effect will be given to the parties' agreement. Thus as Sir David Edward continued in the same paragraph:

"Where a contract gives one party the right unilaterally to bring the contractual relationship to an end, or to alter it in some other way, then that party must, if he chooses to exercise that right, comply with the conditions for its exercise. If strict compliance with a particular condition is called for, then strict compliance will be enforced."

In Mannai Investments itself, Lord Goff of Chieveley spoke (at pp.755H-756B) of the need to ascertain whether a notice, properly construed, complied with the agreed specification of the notice in the lease and Lord Clyde spoke similarly (at p.780H) of the need to test the validity of a notice against the terms of the power under which it was served. See also Lord Jauncey of Tulliechettle at p.762C.


[26] Thirdly, before the court construes the meaning of the notice by use of the device of the reasonable person in the position of the contractually specified recipient, it must first carry out the test of which Lord Clyde spoke in Mannai Investments. If the notice fails that test because one or more of the contractual requirements for the exercise of the power have not been fulfilled, the court does not go on to apply the reasonable recipient test to construe the notice. That is because it is invalid: Ben Cleuch (Inner House) at para 64.


[27] Thus, fourthly, the fact that a notice finds its way into the hands of the contractually specified recipient and a reasonable person in his shoes would readily appreciate that the sender of the notice intended to exercise the relevant contractual power is nihil ad rem if the notice itself is invalid. As Lord Macfadyen stated in delivering the judgment of the Inner House in Ben Cleuch (at para 64):

"Nothing turns in this case on the construction of the notice. It was invalid because it was not given to the landlord, but to a third party. The stage of considering how the notice would be understood by the recipient is not reached."


[28] Applying that approach to this case, the first question to be addressed therefore is what were the requirements which the break notice had to meet. Clause 2.2 of the Lease, which I set out in paragraph [3] above, imposes four requirements. First, the tenant must give notice; the notice must be given to the landlord; the notice must be in writing; and, finally, the notice must be timely. No issue arises in relation to the third and fourth requirements. As I discuss below, it is the relationship between the first and second requirements that is at the heart of this case.


[29] I am satisfied that clause 10 of the Lease did not add to the requirements of clause 2.2. It repeated the need for notice in writing. Otherwise, as Mr Sandison submitted and Mr Moynihan accepted, the clause merely provided means by which a party serving a notice could prove sufficient service without having to prove receipt of the notice by its contractually specified recipient. In this regard Mr Sandison referred me to EAE (RT) Ltd v EAE Property Ltd 1994
SLT 627, Blythswood Investments (Scotland) Ltd v Clydesdale Electrical Stores Ltd (in receivership) 1995 SLT 150 and Prudential Assurance Co Ltd v Smiths Foods 1995 SLT 369.


[30] Mr Sandison submitted that Ben Cleuch could be distinguished from the present case as in that case the court accepted that the relevant service clause (Clause Seventeenth) was exhaustive, so that the person serving the notice had to serve it either personally, or by leaving it or sending it by first class recorded delivery post at or to the registered office of the company recipient or at or to such alternative address as the recipient had notified. Mr Sandison submitted that it was the combination of that clause and the requirement of Clause Fourth (B), that the tenants were to give the landlords at least one year's written notice of termination, that explained the decision of the Court of Session both at first instance and in the Inner House.


[31] I do not agree. In the Outer House Lord Reed (at para 123) interpreted Clause Fourth (B) as requiring, as a condition precedent to the exercise of the break option, that the tenant give notice to the landlord. He then considered clause Seventeenth and stated (at para 128):

"Reading clauses Fourth (B) and Seventeenth together, it appears to me in the first place that nothing in clause Seventeenth relaxes the condition in clause Fourth (B) that notice must be given by the tenant to the landlord. Clause Seventeenth then specifies the various means by which notice may be 'given', the only one which is relevant for present purposes being "sending the same by first class recorded delivery post...to the registered office of the party". The giving of notice by post involves addressing the letter or envelope containing the notice. In my opinion it is implicit that the letter or envelope must be addressed to the landlord."

In my opinion the same would be the result if Clause Seventeenth had not been prescriptive. If the tenant, who was required to give notice, chose to use the post, he would have to address the letter or envelope to the landlord. In the Inner House it was clear that the court, in upholding the Lord Ordinary's conclusion on this part of that case, saw the answer in clause Fourth (B). At paragraph 60, Lord Macfadyen, delivering the opinion of the court, stated:

"The matter turns, in our opinion, on the proper interpretation of Clause Fourth (B). That clause confers on the tenants an option to bring the lease to a premature end after 14 rather than 25 years. It provides that, in order to exercise that option, the tenants must 'give to the Landlords' at least one year's written notice of termination. It was accepted on the defenders' behalf, rightly in our opinion, that for the break notice to be effective, it required to comply with that requirement.... The dispute was as to whether what occurred constituted such compliance. In our opinion, that dispute can be resolved very shortly: a notice addressed to a party other than the landlord and sent to the registered office of that other party cannot be regarded as a notice given to the landlord."


[32] I see no material difference in meaning between clause Fourth (B) in Ben Cleuch and clause 2.2 in this case. Both required the tenant to give written notice to the landlord. Both required thereby the break notice, if sent by post, to identify in some way the party to whom it was given. Unless the notice identified the landlords or an agent of the landlords, who had authority, actual or ostensible, to receive that notice, it was invalid. I acknowledge that in Ben Cleuch the notice was served on Bonnytoun Estates Ltd as the current landlords and that clause Seventeenth of the lease required postal service to be at the landlords' registered office. Those were differences from the present case; but those differences do not allow me to distinguish the case, having regard to the reasoning of the Inner House.


[33] In my opinion the approach to construction which the House of Lords set out in Mannai Investments and which the Court of Appeal applied in Lay v Ackerman cannot assist Batt in this case. In Mannai Investments the court was addressing an obvious error in the expression of the date of termination of the lease, which the contractually specified recipient of the notice would readily have understood. In Lay v Ackerman the misstatement of the name of the trustees, on whose behalf the solicitors were sending the statutory counter-notice, again would not have caused any misunderstanding on the part of the recipient to whom the counter-notice was correctly sent. In both cases the use of a "commercial" construction enabled effect to be given to the notices. Importantly in neither case did the error in the notice cause a mismatch between the notice and the power under which the notice was given. In Mannai Investments there was no requirement in the power conferred by clause 7(13) of the leases to state in the break notice the date of the third anniversary of the term commencement date. In Lay v Ackerman section 45 of the Leasehold Reform, Housing and Urban Development Act 1993 required the landlords' counter-notice to state certain things, but it did not require it to state the identity of the landlords, to whom the tenant had already given notice under section 42. In that case, the Court of Appeal, in testing the notice against the statutory power under which it was made, held that it was sufficient that the notice was served with the authority of the landlords.


[34] I recognise that on one view the approach of the Court of Appeal in Lay v Ackerman differed from that of the Inner House in Ben Cleuch. In the former case (at para 40) Neuberger LJ applied a three-stage test, which he derived from Mannai Investments, to test the counter-notice against the statutory provision. I add enumeration to his dictum for further clarity:

"[1] One must first consider whether there was a mistake in the information contained in the notice (as there was as to the date in Mannai, and there was as to the landlord, in the present case).


[2] If there was such a mistake, one must then consider how, in the light of the mistake, a reasonable person in the position of the recipient would have understood the notice in the circumstances of the particular case.


[3] Finally one must consider whether, as a result, the notice would have been understood as conveying the information required by the contractual, statutory or common law provision pursuant to which it was served."

In my opinion, I am bound by the decision of the Inner House in Ben Cleuch to treat the question of validity in this case, namely whether the tenants gave the written notice to the landlords, as a separate and prior question to the understanding of the reasonable recipient as to the meaning of the notice. If this case were concerned with an obvious misspelling of the name of the specified recipient, the position would in my view be different and the three-stage approach might well be appropriate. But on the approach of the Inner House in Ben Cleuch, the requirement to give notice to the landlords excludes the indirect giving of notice, contrary to the view of Megarry V-C in Townsends Carriers Ltd in relation to the English law of landlord and tenant. In any event, I do not think that the three-stage approach in Levy v Ackerman would give a different result: the reasonable recipient in the present case, in testing the notice against the contractual power, would have to ask whether Batt had given the written notice to the landlords rather than to someone else. To that question, absent agency, the answer is no.

(ii) Service on an agent of the landlords
[35] Counsel agreed that the break notice would be valid if it had been served on an agent of
SBP who was authorised to receive it.


[36] In my opinion Mr Dempsey had the needed authority for service of the notice on him to amount to service on
SBP. I accept that the case law to which I was referred emphasised that for a notice given to an agent to be valid, it had to be established that the agent had authority to receive it. To demonstrate that the agent was so authorised often means that the person seeking to uphold the notice has to show that the agent was a general agent in the sense that the agent has authority to do anything in relation to the subject-matter of the agency. See Townsends Carriers Ltd v Pfizer Ltd, Peel Developments (South) Ltd v Siemens plc and Lemmerbell Ltd v Britannia LAS Direct Ltd. I accept that in the absence of express authority creating a general agency, there must be clear evidence to support the inference of such agency.


[37] Where, as in Lemmerbell Ltd, the agent sends the break notice and thus seeks to bring the lease to an end, it is clear that there must be evidence of authority which extends to the power to destroy the subject-matter of the agency. But where the agent receives the notice, it is in my opinion sufficient to show that the principal has empowered the agent to receive correspondence and either act on it or initiate action on it within the principal's organisation. There is nothing in the case law to which I was referred which supports the view that an agent who is charged by his principal to receive and process all correspondence relating to the principal does not have power to receive a break notice from a tenant of the principal. It is in my view important to observe that, in contrast to the person giving a break notice which initiates the termination of the lease, the recipient of a valid notice has no discretion to prevent that termination.


[38] In my opinion Mr Sandison is correct in his submission that
SBP's frank averments, which I have set out in paragraph [15] above, are of themselves sufficient to establish that Mr Dempsey had authority to receive the break notice. As he was authorised to handle in the first instance all correspondence relating to SBP, it does not matter, in my opinion, that he was charged on receipt of a break notice to refer such documents to a director of SBP.


[39] I do not attach any importance to the fact that Batt addressed the notice to Mr Dempsey at SH rather than as an employee of Spencer Property Asset Management Ltd. Batt pleads and
SBP admit that the notice which was sent both by post and by email was directed to Mr Dempsey. The notice was given to the person charged with receiving letters addressed to SBP and acting on them, either himself or by referring them to others. Batt were not aware of this express authority at the time; they relied on the letter of 30 May 2008. But Mr Dempsey was the addressee. The fact that the notice referred to his being at SH rather than with another company in the Spencer group of companies is immaterial and would in the context fall within the maxim, falsa demonstratio non nocet.


[40] I am not persuaded that the letter of 30 May 2008 and the other correspondence which emanated from SH, which I have quoted in paragraph [5] and to which I have referred in paragraphs [10] to [13] above, give rise to any inference that
SBP had conferred authority on SH to act as their general agent or in particular to receive break notices on their behalf. The correspondence is consistent with a general laxity within the Spencer group of companies over corporate identity. It is insufficient to support an inference of general agency, particularly in face of (a) the defenders' averment that Mr Dempsey was in fact the employee of Spencer Property Asset Management Ltd and (b) the documentary evidence of the sending of rent invoices and service charge budget certificates in SBP's name. See paragraph [6] above. The letter of 30 May may explain why Batt wrote to Mr Dempsey at SH, but, as I have said, any error as to the identity of his employer does not invalidate the notice.

(iii) Ostensible authority
[41] Finally, I am not persuaded that
SBP by their permitting the sending of the letter of 8 May 2008 and the other correspondence, to which I referred in paragraphs [10] to [13] above, represented or manifested to Batt that either Mr Dempsey or SH were their agents either generally or for the specific purpose of the receipt of break notices. In relation to Mr Dempsey all that the letter of 8 May 2008 stated was that he would be happy to assist with the specified tenancy issues if Batt required advice or information and this was in the context in which the letter mentioned other people who would assist in relation to other matters. Mr Dempsey is not mentioned or a contact in the other correspondence. That correspondence shows, as I have said, a general laxity as to corporate identity but, in the context of the correspondence to which I referred in paragraph [6] above, does not amount to a representation or manifestation by SBP that SH were their agents in any relevant sense.

Conclusion
[42] I am persuaded that on the pleadings and the agreed documents Mr Dempsey had
SBP's actual authority to receive on their behalf the break notice given by Batt. I therefore sustain the pursuers' first plea in law and grant decree de plano in terms of the first conclusion of the Summons. In absence of agreement between the parties as to expenses, I will have the case put out by order to deal with the expenses of the action.


BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII
URL: http://www.bailii.org/scot/cases/ScotCS/2010/2010CSOH81.html