(1) Sackville UK Property Select II (GP) No. 1 Ltd v (1) Robertson Taylor Insurance Brokers Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fancourt |
| Judgment Date | 30 January 2018 |
| Neutral Citation | [2018] EWHC 122 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: PT-2017-000004 |
| Date | 30 January 2018 |
[2018] EWHC 122 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
Royal Courts of Justice Strand, London, WC2A 2LL
Mr Justice Fancourt
Case No: PT-2017-000004
Mark Wonnacott QC & Nicholas Trompeter (instructed by CMS Cameron McKennaNabarro Olswang LLP) for the Claimants
Damian Falkowski (instructed by Duane Morris) for the Defendants
Hearing dates: 17 January 2018
Approved Judgment
BEFORE Mr Justice Fancourt
This is another case about the validity of a notice purporting to exercise a break option in a lease. The Claimants are the landlords and the Second Defendant (“Integro”) is the tenant. The First Defendant (“ Robertson”) is the former tenant.
The Claimants issued a Part 8 claim seeking a declaration that the lease will not determine pursuant to the break option and then issued an application on 13 November 2017 for summary judgment. Although the Defendants' acknowledgment of service suggested that a Part 8 claim was inappropriate because of disputes of fact and impending Part 20 proceedings, in the event the Defendants did not argue that the application should be dismissed for those reasons.
The issues raised in the claim are questions of law based on either undisputed facts or facts that the Claimants are willing to assume in the Defendants' favour for the purposes of this application. The Court would be in no better position to decide the disputed matters after a trial.
The factual background
The lease in issue was granted by the Claimants to Robertson on 14 March 2013 for a term of 10 years from that date at an annual rent of £219,575.03 subject to review (“the Lease”). The demised property is part ground and first floor, America House, 2 America Square, London EC3 (“the Premises”). The Claimants were identified in the Lease as “the Landlord” and Robertson was identified as “the Tenant”.
Clause 1.2.1 of the Lease provides:
“The expressions “Landlord” and “Tenant” shall include their respective successors in title, “Tenant” shall include the personal representatives of the Tenant and any person in whom this Lease may from time to time be vested by whatever means…”
Clause 1.2.5 states that any reference to “the Lease” is deemed to be a reference to the Lease and any deed, agreement or other document supplemental or collateral thereto, or entered into pursuant to the terms of the Lease.
The alienation covenant by the Tenant allows assignment of the whole of the Premises with the prior written consent of the Landlord, subject to various conditions and terms, in reasonably standard form.
The break option is contained in clause 6.10 of the Lease as follows (so far as material):
“The Tenant may terminate this lease on 14 th March 2018 (the “Termination Date”) by giving to the Landlord not less than nine months' prior written notice of such termination expiring on the Termination Date and if such notice is given and the Tenant shall:
6.10.1.1 up to and including the Termination Date have paid the annual rent reserved by clause 2.1 due under this Lease; and
6.10.1.2 on the Termination Date give vacant possession of the Premises;
then on the Termination Date this lease shall absolutely terminate and be of no further effect…”
Shortly after the grant of the Lease, it was duly registered at the Land Registry under title number AGL281940 with Robertson named as proprietor with title absolute.
Following an acquisition of the business of Robertson by the Integro Group, Robertson applied for and was granted licence to assign the Lease to Integro. Licence was granted in a formal deed made on 23 rd March 2017 (“the Licence”). The Licence recited that Robertson was the registered proprietor of the Lease, identified the registered title number and contained a covenant on the part of Integro to apply to register the assignment of the Lease at the Land Registry within ten business days of the completion of the assignment.
By deed made on 29 th March 2017, Robertson assigned the residue of the Lease to Integro (“the Assignment”). The Assignment was signed by the same director on behalf of each of Robertson and Integro. It was in a form appropriate for an unregistered lease, not in Land Registry Form TR1.
Notice of the Assignment (with a certified copy thereof) was given by Integro to the Landlord on 20 th April 2017.
The notice of assignment stated that rent demands and correspondence should be sent in future to Integro.
By letter dated 2 nd May 2017, Integro's then solicitors, EC3 Legal, sent to the Landlord a formal notice purporting to exercise the break option. The covering letter enclosing the notice stated that EC3 Legal acted for Integro “being the Tenant under the Lease” and said that “Our Client now serves Notice to determine the Lease”.
The notice itself was in the following terms (so far as material):
“To: [The Landlord].
From: INTEGRO INSURANCE BROKERS LIMITED whose registered office is 100 Leadenhall Street, London, EC3A 3BP ( Tenant).
Premises: …
We EC3\LEGAL LLP of 4 th Floor, 106 Leadenhall Street, London EC3A 4AA for and on behalf of the Tenant GIVE YOU NOTICE that the Tenant intends to terminate the term of the lease on the 14 th March 2018 in accordance with clause 6 of the Lease…”
The notice was signed “EC3 Legal”, identified as the “solicitors for and on behalf of INTEGRO INSURANCE BROKERS LIMITED”.
On about 17 May 2017, the Landlord's agents sent to Integro at the demised premises a demand for rent and service charge payable on 24 th June 2017.
Integro did not comply with its covenant in the Licence to apply for registration within ten business days of completion of the Assignment. It only did so shortly before 7 July 2017. Integro was registered as proprietor of the Lease at the Land Registry with effect from 7 July 2017.
By letter dated 27 June 2017, the Landlord's solicitors contended that the break notice was invalid as it had been served on behalf of someone who at the time was not the Tenant, just the beneficial owner of the Lease. The letter stated that the Lease would therefore continue until its contractual term date of 13 March 2023.
The evidence
Witness statements on behalf of the Defendants were made by Matthew White, a solicitor at EC3 Legal, and John Owens, a managing principal of Integro, who at the time of the break notice was a director of both Integro and Robertson.
Mr White explains that with effect from 11 December 2015 Robertson was a wholly owned subsidiary of a holding company in the Integro Group and that Integro was also a subsidiary of that holding company. He explains that in his dealings with the Landlord's solicitors in relation to the Licence they understood and accepted that he was acting both for Robertson and for Integro and were aware of the group relationship.
Mr White states that on 18 th April 2017 Mr Owens of Integro instructed him to give notice to terminate the Lease:
“John Owens did not instruct me to serve the break notice on behalf of either Integro Insurance Brokers Limited or Robertson Taylor Insurance Brokers Limited. All John Owens wanted was for the break notice to be served by whichever company was entitled to serve the break notice.”
He then explains that:
“I served the Break Notice in the name of Integro Insurance Brokers Limited as I had assumed wrongly the Lease was not registered at the Land Registry and that by the assignment of the lease the legal tenant was Integro Insurance Brokers Limited. I had received the Landlord's licence to assign the Lease to Integro Insurance Brokers Limited and had given notice of the assignment to the Landlord's solicitors. I did not consider there was any question as to who the tenant was.”
Mr White then states that he considers that it was obvious to the Landlord that the notice was a mistake and that the Landlord was aware that he acted for Robertson and Integro and therefore had authority to serve the break notice in the name of whichever party was suitable. He says he served the break notice in the name of Integro because that was who he thought the legal tenant was.
Mr Owens states in his witness statement:
“I believe that Integro had the necessary authority of Robertson Taylor in respect of service of the notice, given my various roles as described, the fact that Claire and I made the decision, and indeed her own roles, which included being the sole director of Robertson Taylor and chief financial officer of Integro. This being so, when Mr White was acting, our overall intent as a group was clear and he was aware that he was acting in the interests of Integro and Robertson Taylor: our instructions were to effect a termination of the Lease by the service of a break notice.”
The Claimants accept that on this Part 24 application they must proceed on the assumed basis of the Defendants' evidence that, by virtue of group arrangements, Mr White in fact had authority to act and serve any necessary notice on behalf of Robertson and Integro, not just Integro.
The issues
The first question is: by whom, in the circumstances, should the break notice have been given?
The Landlord says: by Robertson, on the basis that Integro at the time was only an equitable assignee, with title to the lease remaining vested in Robertson pending registration of Integro. By virtue of s.27(1)...
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