Michael Gerson Ltd v Greatsunny Ltd

Where a contractual waiver provides for removal of fixtures after termination of a lease, notice may be oral and need not identify the waiver or state that the contractual period has begun, unless the agreement requires those formalities. A clear statement that the lease has been terminated is sufficient.

An appeal cannot turn such an issue into a pure question of law when it challenges factual findings about an oral conversation. An appellate court should respect findings based on the trial judge’s assessment of witnesses and cannot draw contrary inferences without a proper evidential basis.

Michael Gerson Limited leased equipment to a tenant of premises owned by Greatsunny Limited. The equipment became fixtures belonging in law to the landlord. Greatsunny granted a landlord’s waiver protecting Gerson’s title and allowing removal of the equipment within 28 days after termination of the lease.

After the tenant became insolvent and the lease was terminated, Greatsunny’s representative told Gerson during a telephone conversation that the lease had been terminated. The High Court found that this constituted the required notice, although Gerson did not appreciate its significance. Gerson appealed, arguing that the statement was too informal and unclear. The central issue was whether that argument raised a question of law or challenged factual findings about the oral conversation.

1. Appeal dismissed. The High Court’s finding that Greatsunny’s representative told Gerson that the lease had been terminated was open to it on the evidence. The judge was also entitled to infer that the statement had been clearly made.
2. The waiver did not require written notice, a statement that notice was being given under the waiver, or an express statement that the 28-day removal period had begun. It was common ground that it was sufficient to say that the lease had been terminated.
3. The appellant’s argument that the notice was too slight, informal, or parenthetically given was not a pure question of law. It sought either to undermine the trial judge’s factual finding or to invite the Court of Appeal to make new findings about the quality of an oral conversation.
4. The findings that Gerson did not appreciate the significance of the statement concerned his subjective state of mind. They did not establish that the statement itself was unclear or contradict the finding that it had been clearly made.
5. The Court of Appeal could not properly draw contrary inferences from the material relied on. It had not heard the witnesses, whereas the judge below had the advantage of seeing and hearing them. Ground 1 therefore failed in limine, making it unnecessary to determine the remaining grounds. The order was: application refused; appeal dismissed.

• Court of Appeal (Civil Division): [2011] EWCA Civ 416. Dismissed the appeal from the decision of Mr N. Strauss QC, sitting as a deputy judge of the High Court, Chancery Division.
• High Court, Chancery Division: found that oral notice of termination had been given under the landlord’s waiver, with the consequence that the lessor’s rights ended after the contractual period.