Sackville UK Property Select II (GP) No.1 Ltd & Anor v Robertson Taylor Insurance Brokers Ltd & Anor

A break notice under a lease must be given by the person identified in the lease as entitled to exercise the option. An equitable assignee of a registered lease is not necessarily the tenant for this purpose while legal title remains registered in the assignor.

The Landlord and Tenant (Covenants) Act 1995 may transfer the benefit of landlord covenants to an equitable assignee, but does not alter the contractual condition governing exercise of a break option. An undisclosed or unidentified principal can rely on an agent’s act only where the agent intended to act on that principal’s behalf. A misnamed break notice is effective only if a reasonable recipient would understand it as being given on behalf of the correct tenant.

The claimants were landlords of premises let under a 10-year lease to Robertson Taylor Insurance Brokers Ltd. Robertson assigned the residue of the lease to Integro Insurance Brokers Ltd, but Integro was not registered as proprietor until after it served a notice exercising the contractual break option.

The notice identified Integro as the tenant. The claimants sought a declaration that the lease would not determine because the notice should have been given by Robertson and was not, in substance, given on Robertson’s behalf. The central issues were whether Integro could exercise the option as equitable assignee, whether the notice could be attributed to Robertson as an unidentified or undisclosed principal, and whether the notice was valid under the reasonable-recipient test.

1. Summary judgment and declaration. The claimants were entitled to summary judgment. The break notice was invalid, and the lease would not determine under the break option.
2. Identity of the person entitled to exercise the option. Under section 27(1) of the Land Registration Act 2002, the assignment of the registered lease did not operate at law until registration. On 2 May 2017 the legal term remained vested in Robertson, which held it on trust for Integro. Integro was therefore not the successor in title or the person in whom the lease was vested within clause 1.2.1 of the lease.
3. The Landlord and Tenant (Covenants) Act 1995 applied to the equitable assignment. It transferred to Integro the benefit of the landlord covenants and released Robertson from the tenant covenants. However, the Act did not vary the contractual condition that the break notice had to be given by “the Tenant”. The landlord’s contingent obligation to treat the lease as terminated arose only upon valid notice by the person specified in the option.
4. Statutory owner’s powers. Sections 23 and 24 of the Land Registration Act 2002 did not assist Integro. The exercise of a contractual break option was not a disposition of the kind permitted by the general law to which those provisions referred. In any event, the reasoning in Pye v Stodday Land Ltd [2016] 4 WLR 168 was followed.
5. Agency and misdescription. An unidentified or undisclosed principal could take the benefit of an agent’s act only if the agent intended to bind that principal. Neither the solicitor nor Integro intended the notice to be served on behalf of Robertson. The desire to serve a valid break notice was not equivalent to that intention.
6. Even if that conclusion were wrong, a reasonable recipient would have understood the notice as being given on behalf of Integro, not Robertson. The factual circumstances did not make the misidentification sufficiently clear. The reasoning in Lay v Ackerman [2004] EWCA Civ 184 was distinguishable because it concerned a statutory counter-notice and a different statutory context.

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