MW Trustees Ltd & Ors v Telular Corporation

A contractual break notice must be construed objectively, in its commercial context, by asking how a reasonable recipient would understand it. An immaterial error will not invalidate a notice where its purpose and intended operation are sufficiently clear. However, contractual service requirements may be mandatory. A landlord may waive such requirements, or become estopped from relying on them, by giving a clear and unequivocal assurance that the notice is accepted and that the lease may be terminated. The assurance must be intended to affect the parties’ legal relations and must be reasonably understood and acted upon.

The defendant tenant occupied premises under a ten-year lease containing a break clause exercisable on 1 March 2010. The clause required at least six months’ written notice and payment of rent and other sums due. The lease also prescribed the method and address for service.

The defendant sent its break notice to the former landlord. After being informed of the change in ownership, it sent the notice by email to the new landlord’s representative. The representative replied that the notice was accepted and that the landlord was happy for the tenant to break the lease, but asked that the letter be re-addressed. No replacement notice was effectively served.

The landlords sought a declaration that the lease had not been terminated. The central issue was whether the representative’s email waived the contractual service requirement or created an estoppel.

1. The claim for declaratory relief was dismissed. The defendant had successfully terminated the lease.

2. The service provisions were mandatory. They did not provide an additional method of service beyond those specified in the lease or at common law. The original notice was nevertheless sufficiently clear as to the tenant’s intention to terminate. Applying the objective approach in Mannai Ltd v Eagle Star Insurance Co Ltd [1997] AC 749, the fact that it was addressed to the former landlord did not mislead a reasonable recipient. Following Townsend Carriers Ltd v Pfizer Ltd [1977] 33 P&CR 361, the notice did not require the landlord to be named in its contents.

3. The decisive question was the objective effect of the email of 17 August 2009. The words accepting the attached letter and confirming that the landlords were happy for the tenant to break the lease were an acceptance, not merely an acknowledgement of receipt. The surrounding correspondence showed that the landlords understood the tenant’s intention and were considering the consequences of termination.

4. The email represented that the landlords accepted the earlier documentation as effective to terminate the lease. The landlords were therefore estopped from challenging the notice, or alternatively had waived the contractual requirement for fresh compliant service. The defendant reasonably acted on that representation by not serving a further notice before the deadline. The request to re-address the letter did not negate the express acceptance.

5. A landlord receiving a defective notice may remain silent and later challenge it. It must not, however, indicate that the notice is accepted despite its defects and then seek to rely on those defects after the tenant has acted on that assurance.

First-instance decision. No prior or appellate decision is stated in the judgment.