England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE FC3 97/6904/3

IN THE COURT OF APPEAL (CIVIL DIVISION) CHANF 97/0854/3

(MR JUSTICE RATTEE )

Royal Courts of Justice

Strand

London WC2

Thursday, 8 October 1998

B e f o r e:

LADY JUSTICE BUTLER-SLOSS

LORD JUSTICE PETER GIBSON

LORD JUSTICE HUTCHISON

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(1) LEMMERBELL LIMITED

(2) MATTHEW FRASER LIMITED

(FORMERLY MATTHEW FRASER ESTATES LIMITED)

Plaintiffs/Appellants

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BRITANNIA LAS DIRECT LIMITED

(FORMERLY LAS DIRECT LIMITED)

Defendant/Respondent

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(Computer Aided Transcript of the Palantype Notes of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

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JONATHAN GAUNT QC (Instructed by Sebastians, London, EC4Y 1DH) appeared on behalf of the Appellants

DAVID HODGE QC (& MR A MYERS, Solicitor Advocate, on 8 October 1998) I(Instructed by Travers Smith & Braithwaite, London, EC1A 2AL) appeared on behalf of the Respondent

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J U D G M E N T

(As approved by the Court )

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©Crown Copyright

LORD JUSTICE PETER GIBSON: The Plaintiffs, Lemmerbell Ltd. ("Lemmerbell") and Matthew Fraser Ltd. ("Fraser"), appeal from the order dated 22 May 1997 of Rattee J. by which he dismissed the proceedings brought by the Plaintiffs against the Defendant Britannia LAS Direct Ltd. ("Direct"). By those proceedings the Plaintiffs claimed that break notices served on them as landlords under two leases were ineffective to determine the leases.

By a Lease ("the Unit 6 Lease") made on 18 October 1990 between David Lines (therein called "the Lessor", which term was defined to include the person for the time being entitled to the reversion to the lease) and Direct (then called LAS Direct Ltd. and therein called "the Lessee", which term was defined to include the successors in title to the Lessee) Unit 6 Scirocco Close, Northampton (therein called "the Demised Premises") was demised for a term of 15 years from 29 September 1990. By clause 7(x):

"If the Lessee shall desire to determine this Lease on 28 ^th September 1995 and shall give to the Lessor not less than six months nor more than twelve months previous written notice of such desire then the Lessee shall upon that date deliver to the Lessor vacant possession of the whole of the Demised Premises and on such date the present demise shall cease and be void ...."

Thus the conditions for the operation of this break clause are that the Lessee must have the desire to determine the lease and that the Lessee must give the break notice within the specified period. By clause 5(xxi)(d) the assignment of the Demised Premises without the Lessor's consent was prohibited. But it is not in dispute that an assignment without consent would be effective to pass the Lessee's interest to the assignee.

By another Lease ("the Unit 7 Lease") also made on 18 October 1990 between Fraser (then called Matthew Fraser Estates Ltd.) as lessor and Direct as lessee Unit 7 Scirocco Close was demised on similar terms, including a similar break provision in clause 7(x) of that Lease.

On 3 July 1991 Mr. Lines, as a director of Fraser, wrote to "The Life Association of Scotland" at the Edinburgh address given in the Unit 6 Lease for Direct, saying that Unit 6 had been sold to Lemmerbell, but that the rent was being collected by its parent company, Fraser. On 12 August 1992 the solicitors Amery-Parkes, expressing themselves as acting for The Life Association of Scotland Ltd. ("Life") and Direct, wrote to Sebastian Coleman & Co. ("Sebastians"), the solicitors for the Plaintiffs, giving notice that Units 6 and 7 would also be used by employees of Life. Amery-Parkes explained that that Life and Direct were wholly owned subsidiaries of LAS Holdings Ltd., and asked for confirmation that the Plaintiffs had no objection to that use. No response was received. Both leases remained vested in Direct, there being no request for consent to an assignment and no assignment. On 1 September 1993 Mr. Binnie of "The Life Association of Scotland" advised Mr. Lines by letter that "Chesterton" had been appointed managing agents to "The Life Association of Scotland". In fact, as we now know from evidence put in by Direct for this appeal, Life appointed Chesterton International Ltd. ("Chesterton") to provide advice and assistance to Life in relation to its property management activities, the principal object being to assist Life in the disposal of what were called Life's leasehold interests in respect of closed branches. The list appended to Life's agreement with Chesterton of such branches included Units 6 and 7. The agreement was expressed to come into force on 29 September 1993.

On 19 January 1994 Mr. Binnie wrote to Fraser, notifying it that Britannia Life had purchased "The Life Association of Scotland". Fraser was told that the new invoice address was "Britannia Life / Life Association of Scotland c/o Chesterton". Life's name was changed on 1 January 1994 to Britannia Life Association of Scotland Ltd.

On 7 October 1994 Amery-Parkes sent purported break notices in the form of letters in respect of Units 6 and 7 respectively to Mr. Lines, but the letter in respect of Unit 7 was addressed to "David Lines Esq. Matthew Frazer Limited." Each of the two letters said:

"We act on behalf of [Life], successors in title to ... Direct...

We therefore give notice of our Clients intention within clause 7(x) of the lease dated 18th October 1990 between David Harry Lines and ... Direct ... to determine this lease on 28th September 1995."

Mr. Lines was asked to acknowledge receipt to confirm his acceptance by returning a copy duly signed. Apart from the misspelling of Fraser, the notices contained two errors. One was that Life was not the successor in title to Direct. The second was that to the Unit 7 Lease Fraser, not Mr. Lines, was a party. No copy notice was signed or returned by Mr. Lines or by Fraser.

Also on 7 October 1994 Amery-Parkes wrote letters to Sebastians in respect of Unit 6 and Unit 7 respectively. In each they said that they enclosed out of professional courtesy a notice sent to Mr. Lines, as Sebastians had been acting for him on the grant of the lease, and they asked for receipt to be acknowledged. A chasing letter was sent on 25 October. On 27 October Sebastians wrote thanking Amery-Parkes for their letters of 7 and 25 October and saying:

"This letter is not intended nor should it be taken as signifying anything other than the fact that we have received your letters."

On 14 November 1994 Amery-Parkes wrote again in respect of Unit 6 and Unit 7 respectively. They enclosed notices under s.27(1) Landlord and Tenant Act 1954, purporting to terminate the tenancies on 29 September 1995. Such notices were unnecessary if the earlier notices were valid (s.24(2)ibid.). Each notice was addressed to Mr. Lines of "Matthew Frazer Limited", expressed to be given by Life as "the tenant of the above premises holding under a tenancy granted by a Lease dated the 18 ^th day of October 1990 and made between DH Lines of the one part and [Direct] of the other part", was signed by Amery-Parkes as solicitor and agent for "the Tenant" and gave as the name of the Tenant Life "as successor in title to [Direct]". Thus those s.27 notices contained the same errors in respect of the lessee as the break notices. Also on 14 November 1994 Amery-Parkes wrote to Sebastians, enclosing the s.27 notices and asking for an acknowledgement. They added a postscript:

"In view of your letter of 27 ^th October 1994 we must press you to let us know if you find anything wrong with the contracted [sic] notice to determine referred to in that letter. If we do not hear from you on this we shall assume the notice to determine is valid."

No acknowledgment was sent by Sebastians and on 15 March 1995 Amery-Parkes sent a reminder. Sebastians replied on 22 March, thanking Amery-Parkes for their letters of 14 November and 15 March and saying:

"As for your earlier letters, this letter is not intended nor should be taken as signifying anything other than the fact that we have received your letters."

On 23 March Amery-Parkes faxed their response, saying:

"In view of the terms of your letter on 27th October and 22nd March if you have any queries in not accepting what has been served as due notice could you please let us know within the next two working days otherwise we shall take your letter as meaning that the notices are duly accepted and our Client can therefore vacate on 29th September 1995."

This provoked a faxed reply from Sebastians on 24 March:

"Whilst we thank you for your fax of late yesterday, we must say that we are getting a little tired of this correspondence.

We have no standing whatsoever in this matter and we would remind you that when you initially wrote to us it was "out of professional courtesy"......"as you had been acting for (David Lines) on the grant of this Lease"."

On 27 March Amery-Parkes wrote back pointing out that it was the failure of Sebastians to reply to earlier letters which had necessitated their letter, and asking for confirmation as to whether or not they acted for the landlords. Sebastians replied on 3 April 1995 that they were not instructed in the matter. In the meantime on 28 March the time for giving any further notices under clause 7(x) expired.

On 14 April Mr. Lines, as a director of the Second Plaintiff, wrote to Chesterton, saying that the break clause had not been operated by Chesterton's clients. Chesterton replied on 4 May 1995 that its clients had exercised their option to break the leases at the September quarter day. Sebastians on 6 June 1995 wrote on behalf of the Plaintiffs, saying that the break notices were ineffective because they were not served on Lemmerbell in respect of Unit 6 or on Fraser in respect of Unit 7. Only on 25 July 1996 did the Plaintiffs take the point that the notices had not been served by the tenant of each lease, Direct.

On 28 November 1996 the Plaintiffs commenced these proceedings, seeking declarations that the term of the Unit 6 Lease and the term of the Unit 7 Lease continue and remain vested in Direct. Direct counterclaimed for the repayment of £16,000, two quarters' rent, paid, it said, by mistake on 29 September and 25 December 1995. The case was heard by Rattee J. on affidavit evidence from both sides. In the Affidavit of a solicitor for the Plaintiffs, Mr. Tomlinson, he stated the Plaintiffs' position on 4 points, only one of which remains relevant, viz. that in the absence of any assignment by Direct to Life, the notices given by Life were defective. Mr. Shooter, a solicitor for Direct, gave evidence by Affidavit expressed to be in answer to Mr. Tomlinson's Affidavit, but did not answer Mr. Tomlinson's point that the notices had been given by the wrong person and did not suggest that they had been given by Life as Direct's agent. The Plaintiffs accepted that their original objection to the validity of the notices, namely that they were not served on the right landlords, was unsound. The main issues at the trial were whether the break notices were served on behalf of Direct as tenant or, if not, whether the Plaintiffs were estopped from denying that the break clauses were validly operated.

On 22 May 1997 the judge gave judgment in favour of Direct. He found as a matter of inference from the evidence that Life had acted, as least from and after 3 July 1991, as general agent for the Defendant in dealing with Units 6 and 7. The judge inferred the general agency from the following matters in particular:

"(1) As early as July 1991 Mr. Lines, at the request of Life, addressed correspondence relating to the payment of rent to Life, rather than to [Direct the] lessee.

(2) Thereafter demands for rent and insurance premiums in respect of both Units 6 and 7 were addressed by [Fraser], not to [Direct], but to Life.

(3) In November and December 1994, when Fraser wrote letters to [Chesterton] in relation to insurance of units 6 and 7, it headed those letters with the name, not of [Direct], but of Life.

(4) On 3rd January 1995 [Chesterton], who were instructed on behalf of both Life and [Direct], wrote to Mr. Lines on behalf of [Fraser] asking him to address invoices in respect of work to be done on the demised premises for the purpose of making them secure to Life, not [Direct].

(5) There is no evidence of any dealing by either of the Plaintiffs, by Mr. Lines or otherwise, with [Direct] itself in relation to the leases or the demised premises at any time after 3rd July 1991.

(6) Mr. Lines evinced no surprise when, on behalf of [Fraser], he received the notices given in the name of Life as lessee. Although various other objections to the notices were originally raised on behalf of the Plaintiffs, the objection that the notice was not given by the lessee was not raised until 25 July 1996."

In that passage as well as elsewhere in his judgment the judge was treating references in the correspondence to "The Life Association of Scotland" or, from the beginning of 1994, to "Britannia Life Association of Scotland" as meaning Life. The judge also inferred that Mr. Lines as a director of Fraser, which acted as agent for Lemmerbell in relation to Unit 6, at all times from 3 July 1991 onwards dealt with Life as the lessee under the two leases although he knew that in fact the Lessee was not Life but Direct. The judge therefore held that the break notices were effective to terminate the two leases with effect from 28 September 1995 and granted a declaration to that effect. He found it unnecessary to consider Direct's alternative argument on estoppel.

The Plaintiffs now appeal. Mr. Gaunt Q.C. for the Plaintiffs applied to be allowed to adduce further evidence in the form of a second Affidavit of Mr. Tomlinson relating to the general agency point. I have already remarked on the fact that this was not heralded in Direct's evidence. Mr. Hodge Q.C. for Direct did not oppose that application provided that Direct was allowed to answer the Plaintiff's evidence by an Affidavit by a solicitor for Direct, Miss Whitley. Mr. Gaunt did not oppose Direct's request. Accordingly, the further evidence from each side was allowed. This case demonstrates the disadvantages of the Originating Summons procedure by which there are no pleadings and no discovery. The judge did not have as much material as we have had placed before us and this led him to make inferences which I doubt if he would have made if the evidence now before us had been before him.

I turn now to the substantive issues on the appeal. They are three in number:

(1) Was Life the general agent of Direct and did Life in that capacity serve valid break notices?

(2) On the true construction of the notices in the light of the decision of the House of Lords in Mannai Ltd. v Eagle Star Assurance Co. Ltd. [1997] AC 749 were they notices by the Defendant?

(3) Were the Plaintiffs estopped from relying on the fact that the break notices were expressed to be given by Life rather than Direct?

(1) General agency

The judge accepted the submission of Mr. Hodge that a notice to be given by a tenant under a lease can be given effectively in the name of a person other than the tenant if that person has general authority from the tenant in relation to dealings in respect of the tenancy, and that such notice will be no less effective because the agent giving it describes himself as the tenant which he is not.

The judge referred to 3 authorities. The first was Jones v Phipps (1868) L.R. 3 Q.B. 567. In that case the landlords, who were trustees of the marriage settlement of Sir Maxwell Graves, left to him, the life tenant under the settlement, the entire management of a farm. The Court of Queen's Bench inferred that it was with the sanction of the landlords that Sir Maxwell had dealt with the farm on his own and negotiated with the tenant as to the terms and continuance of the holding. It was held that it was incidental to his authority as agent for the landlords that he should determine the tenancy by notice to quit at such time as he should think proper. The tenant had always considered Sir Maxwell to be the legal owner of the farm. The court also held that Sir Maxwell, being a general agent and not one holding a special or limited authority, was able to serve a valid notice to quit in his own name without referring to his agency. Lush J. at the end of the judgment of the court said (at p.573):

"It is clear that the notice must be such as the tenant may act upon with safety, that is, one which is in fact, and which the tenant has reason to believe to be, binding, on the landlord."

In the second case, Harmond Properties Ltd. v Gajdzis [1968] 1 W.L.R. 1858, a notice to quit was served on a tenant by solicitors stating that they were acting "on behalf of your landlord Mr. R.P.Harvey." Mr. Harvey was in fact not the landlord but the general agent of the landlord company of which he was a director. He had carried out the letting and acted as if he were the landlord in every way. This court upheld the decision of the County Court that the notice was valid, the solicitors being the solicitors acting for the landlord company which knew through its director, Mr. Harvey, that they were employed by him to give notices to quit. The notice was held not to be misleading.

In the third case, Townsends Carriers Ltd. v Pfizer Ltd. (1977) 33 P.& C.R. 361, a break notice had been served not by the tenant company but by an associated company not on the landlord company but on an associated company. The tenant and the landlord had consigned the whole conduct and management of the tenancy and of the tenancy itself to agents on their behalf, allowing their respective associated companies to deal with the property as if they were landlord and tenant respectively in respect of matters such as an increase in rent and variations of the lease. Sir Robert Megarry V.-C. therefore held that the break notice had been validly served.

The judge accepted that in the light of the authorities where a notice terminating a tenancy under a break clause is given on behalf of a tenant by an agent having only special or limited authority, it would not be effective unless it states the fact that the giver of the notice is acting as agent for the tenant and identifies the tenant. But he held that on the facts Life was to be inferred to be the general agent of Direct.

None of the authorities seems to me to be close on its facts to the present case, and it is a truism that each case falls to be decided in the light of its own facts. A general agency is an unusual commercial relationship, particularly where a tenant is the principal, the agent having authority to do anything in relation to the subject matter of the agency, even to the extent of destroying that subject matter, without reference to the principal. The inference of such an agency, in the absence of express authority creating the agency, requires clear evidence to support it. The mere payment of rent coupled with occupation does not necessarily indicate that the payer has the tenant's authority to terminate the estate ( Dunn & Bradstreet Software Services (England) Ltd. v Provident Mutual Life Assurance Association , unreported , 9 June 1997).

Mr. Gaunt helpfully set out certain propositions, which he said were to be derived from the cases, on notices given by agents to terminate a tenancy. The more important of those propositions were the following:

(1) Generally the notice must be given by the lessee / lessor. A notice given by someone who is not the lessee or lessor is invalid ( Lemon v Lardeur [1946] K.B. 613, Divall v Harrison [1992] 2 E.G.L.R. 64).

(2) A notice may be validly given by an agent acting on behalf of the lessee / lessor. If it states that it is being given by X on behalf of Y and X is duly authorised, it is valid ( Lemon v Lardeur , Divall v Harrison ).

(3) If the notice is given by somebody other than the lessee / lessor without stating that that person is acting as an agent, it will be valid if

(a) the giver was in fact duly authorised to give it, and

(b) the circumstances are such that the recipient can act upon the notice safely in the knowledge that it will be binding on the principal of the giver ( Jones v Phipps ).

(4) Those circumstances include cases where -

(a) the recipient knows that the giver was authorised to give the notice;

(b) the principal has held out the giver of the notice as authorised to give the notice;

(c) the recipient has been led to believe that the giver of the notice is the principal ( Jones v Phipps , Harmond Properties Ltd. v Gajdzis ).

(5) Otherwise a notice given by a person who is not the lessee / lessor is bad.

Proposition (3) is the crucial proposition in the present case. The court can draw the inference in appropriate circumstances that the giver of the notice had due authority to give it as a general agent, but the circumstances must be such that the recipient can act on that notice safely, knowing that the principal will be bound.

I have already referred to the 6 facts from which the judge inferred that Life was the general agent of Direct and that Mr. Lines dealt with Direct as the lessee although he knew Direct was the lessee. In my judgment in the light of the fuller evidence now before the court those inferences are unsound.

The judge, encouraged, it has to be said, by Mr. Gaunt as well as by Mr. Hodge, assumed that the reference to "The Life Association of Scotland" in the letter of 3 July 1991 from Mr. Lines was a reference to Life rather than Direct. He made the same assumption in respect of other like references in the limited correspondence and other documents put in evidence at the trial. The new evidence shows that "The Life Association of Scotland" was a blanket designation for the companies in the group headed by LAS Holding Ltd., that designation appearing on notepaper used by companies in the group, including Direct and Life. It was used on a letter of 12 November 1990 bearing the address of Units 6 and 7. As this was at a time well before the letter of 12 August 1992 by which Amery-Parkes gave notice that the premises would also be used by the employees of Life, the obvious inference is that this was a letter from Direct. It was also used on a letter of 5 January 1991 with a typed heading bearing the name of Direct. Rent invoices (not seen by the judge) prior to the takeover by Britannia Life Ltd. were also addressed to "The Life Association of Scotland". When Mr. Binnie on 14 April 1993 wrote to Fraser, saying "As you are aware, the Association is your tenant" in respect of units 6 and 7, the Plaintiffs would have had no reason to think that he meant Life rather than Direct, and it is not apparent that he did mean Life.

After the takeover, there is a single rent invoice (to which the judge referred) dated 1 March 1994 and addressed to "Britannia Life Association of Scotland", which appears to have replaced "The Life Association of Scotland" as the new designation, and there are several letters (also referred to by the judge) to and from the Plaintiffs containing references to that designation. But on their face they do not show that Life was thereby intended. There are also 3 invoices to which the judge refers and which are addressed to Life, but they are explained by the express request by Chesterton in the letter of 17 March 1994 (not shown to the judge) that all future rent demands should be so addressed. Chesterton did not explain the reason for that request.

The only letter in all the correspondence which would have revealed to the reader, if highly observant, that it came from Life rather than Direct is a single letter written on notepaper bearing at its head, as usual in prominent print, "The Life Association of Scotland" but containing in tiny print at the foot of the letter the name and details of Life. That letter was addressed to Fraser but commenced with the words "Dear Supplier" and gave the new head office address following "the Company's takeover" by Britannia Life Ltd. The letter is undated and not personally signed but its date appears to be about the beginning of January 1994.

Mr. Hodge argued that that letter was significant when read with a letter of 11 April 1994 from Chesterton to Mr. Lines. This said:

"As you are aware, our clients, Britannia Life Association of Scotland, have now vacated the units, due to internal restructuring of their Company. Under the leases, the tenant has the ability to break the lease with effect from 28th September 1995.

It is my client's intention to action the break clause at the appropriate time, however, I write to enquire as to whether or not an earlier surrender of their leases could be achieved."

Mr. Hodge submitted that all doubt was removed by the letter of 17 May 1994 from Chesterton, requiring invoices to be addressed to Life. This, he said, showed that Direct had allowed Life to have the entire management of Units 6 and 7.

I am not able to accept Mr. Hodge's submission. The undated letter from Life was plainly only a circular and little significance can reasonably be attached to the small print at the foot of such a letter, isolated as that letter is. The letter of 11 April 1994 from Chesterton, referring as it did to "Britannia Life Association of Scotland" as the tenant, was not on its face suggesting that Life was the tenant, and could reasonably be taken by Fraser as a letter from Chesterton on behalf of the true tenant, Direct. It did not indicate to the reasonable recipient that Direct was allowing Life to control Units 6 and 7. The mere fact that Chesterton in its letter of 17 May 1994 required future invoices to be addressed to Life would not indicate to the objective reader of that letter that Life had become the general agent of Direct. That invoices should be sent to Life might have been no more than an administratively convenient arrangement for Direct, giving Life no powers of management. We do not even know if Life paid the rent.

The further evidence now reveals that Direct on 8 October 1993 transferred its business to another company in the group and ceased to trade. We also now know that Life entered into the agreement with Chesterton in 1993, so that references by Chesterton to "Britannia Life Association of Scotland" as its client can now be seen to have been to Life. But it is not suggested that this was known to the Plaintiffs other than by the process of inference, which I have rejected.

It is noticeable that Direct has put in no evidence of its actual administrative arrangements agreed with Life. It is not said that it ever actually appointed Life as its agent. Not a single Board minute has been produced. An agency may however be implied from the course of conduct by the principal and the agent.

Mr. Hodge submitted that the present case was on all fours with the Townsends Carriers case. I do not agree. In that case the tenant's agent had used and operated the demised premises, from early days of the term of the lease the landlord had corresponded with that agent about the premises, and for more than a year before the break notice all demands for rent were addressed to that agent. That agent dealt with the payment of rent, increases in the rent and variations in the terms of the tenancy. Similarly the landlord's agent had been allowed to act as though that agent was the landlord. Neither principal was a dormant company. There is little similarity between the facts of that case and the present case. It has not been shown that Direct consciously allowed Life to manage Units 6 and 7. Direct was dormant since October 1993 and it is not suggested that it was sent copies of any of the communications by Life relating to Units 6 and 7. It is clear that Life considered itself to be the tenant, possibly because of its occupation of those premises. In the agreement with Chesterton Units 6 and 7 were referred to as the leasehold interests of Life. No doubt that is why Chesterton in its letter of 11 April 1994 referred to its client as the tenant intending to operate the break clauses and why Life caused the break notices to be prepared and served. It is not apparent why Amery-Parkes did not disabuse Life or Chesterton of the error. No explanation has been provided why Life was described in the break notices and the s.27 notices as the successor in title to Direct. That description and the evident belief of Life since September 1993 that it was the tenant of Units 6 and 7 are wholly inconsistent with the notion that Life was acting as the agent of Direct in serving the break notices.

Moreover I cannot see how the Plaintiffs could act upon the notices safely as being notices which were in fact, or which they had reason to believe were, binding on Direct. They would have been aware that no consent had been given to any assignment by Direct, but that was not inconsistent with there having been an effective assignment. Without the production to them of an assignment, they could not know if Life was the right person to be giving the notices. If Life was not, they could not know from the notices that Direct desired to give and gave (if it did) the break notices. True it is that the Plaintiffs were very slow to take the point, but the fact that the point was for a long time not taken does not show that there was no point to be taken, given that only the actual lessee could operate each break clause.

I would therefore hold that there was insufficient material from which it could properly be inferred that Life was the general agent of Direct with authority from Direct to give the break notices. Nor for that matter do I think that there is evidence to support the inference that Mr. Lines knowingly dealt with Life as the tenant. On the contrary, the Plaintiffs could not act on the break notices safely in the knowledge that they were binding on Direct. It follows that the break notices served on Life's behalf were not valid.

(2) Construction

Before the judge the Plaintiffs relied on the decisions of this court in Hankey v Clavering [1942] 2 K.B. 326 and Mannai Investment Co. Ltd. v Eagle Star Assurance Co. Ltd. [1995] 1 W.L.R. 1508 as indicating that defects in break notices could not be cured if their wording was clear. Now that the House of Lords in its decision in Mannai has reversed both those cases, Mr. Hodge submits that by a process of construction the defects in the present notices can be cured. In Mannai the break notices had specified the wrong dates, being dates which did not comply with the break clauses. It was held that when construed against their contextual setting the break notices informed the reasonable recipient of the termination of the leases on the correct dates in accordance with the break clauses.

The present case seems to me to bear little resemblance to the type of error addressed in Mannai. There words containing a mere slip, obvious to the reader of the notice when read in context, were construed as meaning what they were plainly intended to mean. In the present case there is no equivalent error : the break notice is not merely given on behalf of Life rather than Direct, but it contains the explanation why it was so given, viz. Life was the successor in title to Direct. I find it impossible to see how in these circumstances it is permissible to construe the break notice as given on behalf of Direct.

Mr. Hodge, however, argued that the reasonable recipient would be left in no doubt that the correct lessee was giving the break notices. He reasoned as follows:

(1) The letter of 7 October from Amery-Parkes purported to give notice under clause 7(x).

(2) That clause gave the Lessee the option to determine the Lease.

(3) Amery-Parkes expressed themselves as acting on behalf of Life as successor in title to Direct.

(4) The Plaintiff lessors knew that they had received no application for consent to an assignment.

(5) They also knew that on 12 August 1992 Amery-Parkes had said that they were acting for Life and Direct and that they were associated companies.

(6) The reasonable recipient would have appreciated that something had gone wrong and that either (a) an unlawful assignment had occurred, or (b) Amery-Parkes were in error in stating that Life was the successor in title to Direct. Therefore the notice should be construed as having been given on behalf of the current lessee.

The first 5 steps and the first sentence of the sixth step are uncontroversial. It is the second sentence of the sixth step that seems to me not to follow from the premises. On the face of each notice Life was said to be the tenant as successor in title to Direct and that, if true, could only have come about as a result of an assignment without consent. But such an assignment would be effective to make the assignee the Lessee for the purposes of clause 7(x). The reasonable recipient could not know in the absence of proof of the assignment whether Life was the Lessee. It might have been. If Life was not in fact the Lessee but Direct was, the reasonable recipient could not know whether Amery-Parkes were authorised by Direct to act for it and to serve the break notice, contrary to the express terms of the notice. To my mind, because it is not obvious from each notice that there was an error in the name of the lessee nor is it obvious who the actual current lessee was nor whether Amery-Parkes were duly authorised by anyone other than Life, it is impossible as a matter of construction to cure what we now know to be the defect by substituting Direct for Life as the person on whose behalf Amery-Parkes were giving each notice.

(3) Estoppel

Mr. Hodge submits that all relevant parties had proceeded on the basis of the underlying assumption that Life was to be treated as the lessee of both Units or had the general authority of Direct to deal with the tenancies on its behalf and that no relevant distinction was to be drawn between Life and the Defendant and conducted their dealings in relation to the tenancies accordingly. He relies therefore on a form of estoppel by convention. But for the reasons already given the requisite basis of fact is not made out.

Mr. Hodge further submits that the Plaintiffs, by failing to instruct their solicitors to reply to the postscript to Amery-Parkes' letter to Sebastians of 14 November 1994, had impliedly represented that they would raise no objection to the validity of the contractual break notices, in reliance on which Direct refrained from serving any further break notices within the period prescribed by clause 7(x) of each lease.

Again I have difficulty with this submission. It appears to imply that the Plaintiffs were under a duty to tell Amery-Parkes what was wrong with their notice. Plainly they were under no such duty, particularly when the notices were professionally drawn and the errors should have been noticed by Amery-Parkes and those for whom they acted. It is not as though the Plaintiffs were withholding information not available to Amery-Parkes and their clients. Further, the very fact that Sebastians by their letters of 27 October 1994 and 22 March 1995 responded so cagily should surely have put Amery-Parkes on notice that there was or might be something wrong with their notices. In my judgment it is impossible to found an estoppel in these circumstances.

The judge, understandably, was impressed by the Plaintiffs' lack of merits and fashioned for Direct a means of escape from the consequences of the mistakes of Life and those acting for Life. In the light of the further evidence that means of escape does not seem to me available. For the reasons which I have given and in acceptance of Mr. Gaunt's submissions I would allow this appeal, set aside the declaration made by the judge and grant the declarations sought in paragraphs (1) and (2) of the Originating Summons.