Garston v Scottish Widows’ Fund and Life Assurance Society

A contractual break notice containing an incorrect termination date may nevertheless be effective where a reasonable recipient, knowing the lease, would have been left in no doubt about the date the tenant intended. The notice must be read in its contractual and factual context, including accompanying documents. An accompanying request for a new tenancy does not create uncertainty where its intended commencement date is clear. Under section 26(2) of the Landlord and Tenant Act 1954, a request for a new tenancy cannot specify a date earlier than the date on which the current fixed-term tenancy would end by effluxion of time. A break clause does not enable a tenant both to terminate the existing tenancy and obtain a statutory new tenancy from an earlier date.

The plaintiffs held business premises under a 20-year lease commencing on 24 June 1985. Clause 7 allowed the tenant to determine the lease at the expiration of the tenth year on six months’ notice. The plaintiffs’ notices incorrectly specified 9 July 1995 instead of 23 June 1995. Each notice enclosed a request under section 26 of the Landlord and Tenant Act 1954 for a new tenancy beginning on 10 July 1995.

Mr Justice Rattee dismissed the plaintiffs’ originating summons, holding that neither the contractual notices nor the section 26 requests ended the lease: [1996] 1 WLR 834. The appeal concerned the effect of Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd and the construction of the proviso to section 26(2).

1. Appeal allowed. Lord Justice Nourse delivered the judgment, with Lord Justice Mummery and Sir John Vinelott agreeing. The notices in both letters were effective to determine the lease on 23 June 1995 under clause 7.
2. Applying the majority decision in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, the question was whether a reasonable recipient in the defendant’s position, knowing the lease, would have been left in no doubt that the plaintiffs intended to determine the lease on 23 June 1995 but had wrongly described that date as 9 July 1995. The lease identified 23 June as the only possible contractual termination date, while 9 July corresponded to the tenth anniversary of the date of the lease.
3. The accompanying section 26 requests did not alter the result. Read with the notices, a reasonable recipient would have understood the requested new tenancy to be intended to commence on 24 June, the day after termination, although it was incorrectly described as 10 July. The references to the request’s small print, Commercial Properties Ltd v Wood [1968] 1 QB 15, and section 26(4) did not create genuine doubt.
4. For the alternative statutory issue, section 26(1) distinguishes between a tenancy for a term of years certain exceeding one year and one granted for a term of years certain and thereafter from year to year. Section 26(2), read with section 69(1), includes a contractual break notice within notice to quit, but the relevant date for a fixed term exceeding one year remains the date on which the tenancy would end by effluxion of time. The requests for a new tenancy beginning on 10 July 1995 were therefore ineffective.
5. The court regarded this conclusion as consistent with the purpose of Part II of the Landlord and Tenant Act 1954. The Act protects business tenants against eviction after contractual expiry where there is no good reason for eviction. It does not allow a tenant who has chosen to terminate the contractual tenancy to remain on different, more favourable terms. Appeal allowed with costs; the judge’s costs order stood, and leave to appeal to the House of Lords was refused.

• Court of Appeal: Appeal allowed. The notices were held effective to determine the lease on 23 June 1995. The court also agreed with the judge’s reasoning on the section 26 issue.
• High Court, Chancery Division: Mr Justice Rattee dismissed the originating summons, holding that the notices and section 26 requests were ineffective: [1996] 1 WLR 834.