Taylor v Lancashire County Council & Anor

Promissory estoppel prevents contractual enforcement only where clear and unequivocal conduct or representation leads the other party to suppose that strict rights will not be enforced, or will be held in suspense. Conduct suggesting only that enforcement may not occur is insufficient.

The reasonable time specified in a notice to remedy an agricultural tenant’s breach is assessed by reference to circumstances when the notice is served. Increased turnover does not, without evidence, show that more time is reasonably required to discontinue or relocate a business. An unqualified later notice may itself make clear that the landlord requires the breach to be remedied.

The tenant operated an importation, processing and sale business on an agricultural holding in breach of tenancy covenants. The landlord served three notices to remedy under the Agricultural Holdings Act 1986, followed by notices to quit.

An arbitrator held that the third notice to remedy, requiring compliance within 12 months, was valid. He also found that the period for compliance with the first notice had been suspended because the landlord’s conduct represented that it would not insist on strict enforcement. Judge Gee dismissed the tenant’s applications to set aside or remit the award.

The tenant appealed on the grounds that the arbitrator had failed to consider the enlarged business when assessing the third notice, and that the alleged suspension affected the third notice. The central issue was whether the landlord’s conduct could found an estoppel preventing enforcement of the notices.

Appeal dismissed. Dyson LJ gave the judgment of the court. Waller LJ and Sir Murray Stuart-Smith agreed.

1. Under Schedule 3 Part 1 Case D of the Agricultural Holdings Act 1986, the reasonableness of the period in the third notice to remedy had to be assessed by reference to the circumstances when that notice was served. The arbitrator had correctly directed himself in those terms. The court would not infer that he had ignored the expansion of the tenant’s business merely because he did not mention it. There was no evidence that increased imported-milk turnover made discontinuance or relocation more difficult or time-consuming.

2. The arbitrator’s finding that the landlord had represented it would not enforce the first notice could not stand. The principle in Hughes v Metropolitan Railway Company [1887] 2 App Cas 439, as applied through promissory estoppel, requires clear and unequivocal conduct leading the other party to suppose that strict contractual rights will not be enforced or will be held in suspense. Conduct which indicates only that the rights may not be enforced is insufficient. The landlord’s neutrality about the planning appeal, and its failure to state a position on a possible sale, did not meet that standard.

3. The County Court was therefore right to reject the alleged suspension. The landlord could rely on the full 12 months in the third notice. Independently, the service of the unqualified second and third notices made clear that the landlord required the breaches to be remedied; earlier conduct could not sensibly imply that those later notices would not be enforced.

4. Ground 4 failed, as did Grounds 5 and 6. The appeal was dismissed with costs.

• Court of Appeal (Civil Division): The tenant’s appeal was dismissed. Dyson LJ gave the judgment, with Waller LJ and Sir Murray Stuart-Smith agreeing.
• Preston County Court: Judge Gee dismissed the tenant’s applications to remove the arbitrator and to set aside or remit the award.
• Arbitration: The arbitrator held the first two notices to quit ineffective but upheld the third notice to quit, which followed a valid third notice to remedy.