Fitzhugh v Fitzhugh

A defined contractual expression ordinarily carries the same meaning throughout an agreement unless the document provides a sufficient basis for a different construction. A court cannot alter the wording merely because another construction would be more convenient or commercially sensible. Where a licence required notice by “the Licensor”, that phrase included every person expressly defined as a licensor, including a person who was also a licensee. Practical difficulty or expense did not establish that the clause was unworkable or justify implying a qualification.

Harry Fitzhugh and Anthony Fitzhugh were joint administrators of their late father’s estate and parties to a licence concerning farm land. The licence defined Geoffrey, Harry and Anthony as “the Licensor”, and Anthony and Karen Boddey as “the Licensee”. It provided for termination after grave or persistent breaches if “the Licensor” gave notice and the breaches were not remedied.

Harry’s solicitors gave Anthony and Karen notice of arrears of the licence fee on Harry’s behalf alone. Morgan J held that the notice was effective and declared that the licence had terminated: [2011] EWHC 3553 (Ch). The appeal concerned whether “the Licensor” in the termination clause meant all the licensors, or excluded a licensor who was also a licensee.

1. Appeal allowed. The declaration that the licence had terminated was set aside and replaced by a declaration that the licence had not terminated.
2. The issue was one of contractual interpretation, not application of the common-law rule concerning termination of a periodic tenancy by one of several joint landlords or tenants. The defined phrase “the Licensor” included Anthony in the opening words of the licence and in clauses 1 to 3. There was no sufficient indication that it had a different meaning in clause 4(b).
3. The relevant reasonable person would recognise that Anthony’s duties as a joint administrator required him, where proper justification existed in the interests of the estate, to subordinate his conflicting personal interests and concur in service of the notice. He could do so without prejudice to his personal right to challenge the notice. If he improperly refused, Harry could in principle seek his removal as administrator.
4. Practical difficulty, possible obstruction or unwanted expense did not make the termination machinery unworkable. Although the clause could have been drafted more conveniently, it was not the court’s function to improve the document. Applying Attorney General of Belize v Belize Telecom, [2009] UKPC 10, there was no necessity to imply a term excluding a licensor who was also a licensee.
5. The notice given by Harry alone was therefore ineffective under clause 4(b), despite the finding that the non-payment constituted persistent breaches and that they were not remedied within the specified period.

• Court of Appeal (Civil Division) — Appeal from Morgan J’s High Court judgment declaring that the licence had terminated by notice with effect from 27 February 2006. Appeal allowed and declaration substituted: [2011] EWHC 3553 (Ch).