Peaceform Ltd. v Cussens & Ors

A contractual notice containing an error may remain effective where, viewed objectively and in context, it leaves a reasonable recipient in no doubt as to its terms and intended operation. The court must consider the notice’s purpose and the contractual context. That approach does not permit the court to select an expiry date from a range of possible dates where the notice does not identify, expressly or by context, which date was intended. The notice was therefore invalid.

The claimant tenant held a 25-year lease from the defendants, the freeholders. Clause 11.1 gave the claimant an option to purchase the freehold, subject to giving at least three months’ notice expiring no later than 6 February 2004.

The claimant’s solicitors served a notice dated 27 August 2003, stating that the notice might expire on 7 November 2003. That date gave less than three months’ notice and was repeated in a later letter. The preliminary issue was whether the notice validly exercised the option.

1. The preliminary issue was answered against the claimant. The notice did not validly exercise the option to purchase the freehold.
2. The court applied the objective approach in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749. A contractual notice need not contain particular information as an indispensable condition unless the contract so provides. An error does not itself invalidate the notice. The question is whether a reasonable recipient, knowing the lease and the option clause, would be left in no doubt as to the notice’s terms.
3. The principles in York v Casey [1998] 2 EGLR 25 and Peer Freeholds Ltd v Clean Wash International Ltd [2005] 1 EGLR 47 did not save the notice. Unlike those cases, the contractual period did not identify a particular expiry date or occurrence. There was no evident basis for choosing 7 December 2003 rather than another permissible date.
4. The reasoning in Keepers and Governors of John Lyon Grammar School v Secchi [1999] 3 EGLR 49 was instructive, although the present decision did not depend on that case.
5. The time-of-the-essence provision did not affect construction of the notice, provided the option was exercised before 6 February 2004. Consequential orders were left to be considered with counsel.