Ropemaker Properties Ltd & Anor v Bella Italia Restaurants Ltd & Anor

Contractual notice provisions must be complied with where they govern a unilateral right to terminate. Substantial compliance, actual knowledge, or the absence of an apparent benefit from a formality does not cure non-compliance. Waiver by conduct requires evidence that the entitled party knew of the right and acted in a way inconsistent with insisting on it. An invalid notice under one contractual provision does not necessarily extinguish a separate right to waive a condition precedent. The agreement must be construed objectively, in its commercial and contractual context.

The claim concerned an agreement for lease of a retail unit at a development in Colchester. The agreement was conditional on planning, licensing and neighbouring-unit conditions being satisfied. The defendants argued that the tenant had validly terminated the agreement after the long-stop date because the neighbouring-unit condition had not been satisfied.

The issues included whether the tenant’s termination notice was invalid because it had not been served on the guarantor, whether the guarantor had waived that requirement, whether an earlier invalid notice prevented the landlord from waiving the neighbouring-unit condition, and whether later notices made the agreement unconditional.

1. The tenant’s notice of 16 May 2017 was invalid. Clause 14.2 required written notice to both the landlord and the guarantor. The formal requirements in clause 45.1 applied to personal delivery as well as postal or courier service. A notice delivered personally would still have had to be addressed to the relevant property director, identify the guarantor as recipient, and be copied to the tenant’s conveyancer.

2. The parent-company board minutes did not amount to a written notice determining the agreement. Nor did the email attaching the notice establish valid service on the guarantor. The guarantor had not waived its right to notice by conduct. There was no evidence that it knew of the right or acted with a view to waiving it. The strict approach to contractual notice requirements was supported by [2014] EWCA Civ 382.

3. The reference in clause 13.4 to a notice under clause 15.3 was construed as referring to a notice under clause 13.3. It referred only to a valid notice having effect under that clause. An earlier invalid notice did not deprive the landlord or developer of the right to waive the neighbouring-unit condition before termination. The neighbouring-unit condition was for the landlord’s benefit, as demonstrated by the unilateral power to waive it.

4. The construction of the agreement was governed by objective interpretation, assessed from the perspective of an informed person in the parties’ position when the agreement was made, applying the approach stated in [2009] UKHL 38 and [2015] UKSC 36.

5. The waiver on 1 August 2017 validly satisfied the neighbouring-unit condition. Since the planning and licensing conditions had already been satisfied, the agreement became unconditional by that date. The later termination notice of 26 September 2017 was therefore ineffective.

6. Alternatively, the judge would have held that the notice of 26 May 2017 was effective. The parties’ treatment of the planning permission showed that the planning condition was accepted as satisfied despite any formal irregularity. The licensing condition had been waived under the neighbouring agreement, and that did not alter the material identity of the condition precedent.

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