Brown & Root Technology Ltd v Sun Alliance and London Assurance Company Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MUMMERY,SIR RALPH GIBSON,LADY JUSTICE BUTLER-SLOSS |
| Judgment Date | 19 December 1996 |
| Judgment citation (vLex) | [1996] EWCA Civ J1219-2 |
| Docket Number | CHANF 95/1118/B |
| Court | Court of Appeal (Civil Division) |
| Date | 19 December 1996 |
[1996] EWCA Civ J1219-2
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(HIS HONOUR JUDGE PAUL BAKER QC)
Royal Courts of Justice
Strand
London WC2
Lord Justice Butler-Sloss
Lord Justice Mummery
Sir Ralph Gibson
CHANF 95/1118/B
MR KIM LEWISON QC (Instructed by Vanderpump & Sykes, Middlesex, EN2 7JB) appeared on behalf of the Appellants
MR NICHOLAS DOWDING (Instructed by Bates & Partners, London, WC2R 3JF) appeared on behalf of the Respondent
This is an appeal from an order of His Honour Judge Paul Baker QC (Sitting as a High Court Judge) on the 16th June 1995 in proceedings brought by lessees of office premises against the lessors for a declaration that the lease would determine in consequence of the service of a notice by the lessees pursuant to the provisions of a break clause.
The judge made a declaration that "on the true construction of the lease dated the 24th July 1989 made between (1) the Defendant (2) the 1st Plaintiff (then known as Brown & Root Vickers Limited) and relating to 150 The Broadway, Wimbledon, London SW19:-
(1) The 1st plaintiff was not entitled to serve the notice of determination dated 19th September 1994;
(2) The lease will not determine pursuant to that notice."
The lessees served a Notice of Appeal dated the 26th July 1995 on the ground that the judge had erred in law in his construction of the relevant provisions of the lease. The lessors served a respondents' notice dated the 3rd August 1995 contending that the judge's decision should be affirmed on an alternative ground of estoppel.
The Background Facts
As appears from the affidavit evidence sworn in support of and in opposition to the lessees' originating summons, there has never been any dispute about the relevant facts.
On the 24th July 1989 the lessors, Sun Alliance & London Assurance Limited ( Sun Alliance) granted a lease for a term of 25 years from the 24th June 1989 at an initial rent of £1.3m per annum, with 5 yearly reviews, to the 1st appellant,Brown & Root Technology Limited ( Technology ), known as Brown & Root Vickers Limited until a change of name on the 1st June 1993. Technology was, at the time of the grant of the lease, a partly owned subsidiary of the 2nd appellant, Brown & Root Limited (B&R). The appellants are members of a group of engineering companies. The premises consisted of offices at 150 The Broadway, Wimbledon, London SW19. Technology were registered as the proprietors of the lease on the 17th August 1989 and have remained so registered.
Clause 8.1 of the lease entitled the lessees to give notice to terminate the lease by serving not less than 12 months notice expiring at the end of the 7th year. That notice would be effective to determine the term upon what was defined as "the first determination date". Technology subsequently purported to serve such a notice, but its effectiveness is disputed by reason of the provisions of clause 8.4 of the lease—
"the provisions contained in this sub clause 8.1 of this clause shall be personal and of benefit only to Brown & Root Vickers Limited and shall not be capable of being assigned or otherwise dealt with by the said Brown & Root Vickers Limited with the intent that the rights vested in the lessee under sub clause 8.1 shall cease to have effect upon the assignment of the lease by the lessee."
In 1993 Technology became a wholly owned subsidiary of B&R. At the end of May 1993 it was decided that B&R would take a transfer from Technology of their business and assets, including the lease. Sun Alliance granted a licence to assign. The necessary conveyancing documents in proper form were executed on the 10th December 1993. Technology gave up the property on that date. The records of Sun Alliance were altered so that B & R replaced Technology as the recorded tenant. Rent was invoiced to and paid by B & R,who had already started to pay the rent to Sun Alliance. There was an exchange of letters on the 13th December. B&R's letter to Sun Alliance's solicitors stated—
"I refer to our previous correspondence in the matter and confirm that completion of the licence and assignment occurred on the 10th December by way of telephone exchange.Please forward to me as soon as possible the tenant's signed counterpart of the licence to assign."
Sun Alliance's solicitors' letter stated—
"We now enclose the licence duly dated 10th December last as agreed and have dated our copy of the transfer with the same date. There is accordingly no need to register the transfer as we are now closing our file." (That was a reference to the requirement in a clause of the lease to register particulars in the lease).
The transfer of the lease, which was registrable, has never in fact been registered at Her Majesty's Land Registry in the name of B&R. Owing to unresolved stamp duty problems B&R failed to submit the transfer for registration.
On the 19th September 1994 Technology served a notice on Sun Alliance purporting to terminate the lease at the expiry of the 7th year ( 24th June 1996). Sun Alliance refused to accept that Technology's notice was valid and effective to terminate the lease. The Judge's Decision
The issue for decision by the judge was whether there was an "assignment of the lease by the lessee" within the meaning of clause 8.4 of the lease. If there was an assignment, Technology were not entitled to serve the break notice,as the right to serve such a notice under Clause 8.1 ceased to have effect upon an assignment.
The judge upheld the contention of Sun Alliance that the lease was not effectively terminated by service of the notice, as there had been an assignment of the lease by Technology on the 10th December 1993. He accordingly refused to make the declaration sought by Technology and B&R that, on the true construction of the lease, the lease would determine on the 24th June 1996 in accordance with Clause 8.1 and made the order already referred to.
The judge's reason for finding in favour of Sun Alliance, as explained in his judgment now reported in [1996] 1 Ch.51, was that the assignment of the lease by Technology to B&R took place when it was completed; and it was completed on the 10th December 1993 when Technology gave up the property subject to the lease and, having done all in their power to vest the lease in B&R, became a bare trustee for B&R of the legal title to the lease. B&R were the assignees of the lease, even though the legal estate had not been effectively transferred by entering the name of B&R in the Land Register as the legal proprietor. The judge referred to the relevant provisions of the Land Registration Act 1925,in particular Section 22(1), which relates to the registration of dispositions of leaseholds—
"A transfer of the registered estate in the land or part thereof shall be completed by the Registrar entering on the register the transferee as proprietor of the estate transferred, but until such entry is made the transferor shall be deemed to remain the proprietor of the registered estate: and where part only of the land is transferred notice thereof shall also be noted on the register."
After reviewing the authorities, on which the judge commented that none were "directly in point", he concluded at page 67 H to 68 A
"…………….I accept, in effect, the defendant's submissions that, where it is necessary to fix a date on which the assignment takes place, that date, in my judgment, is the date on which it is completed. The tenant/assignor gives up the property on that date: he has no control over the stamping of the transfer, or its submission to the Land Registry. He becomes a bare trustee for the assignee as regards the legal title. The landlord, a fortiori, has no such control. There is no ground for suggesting that either the assignor or the landlord could compel the assignee to submit the transfer for registration."
The judge rejected the submission of Technology and B&R which started from the provisions of the Land Registration Act and was summarised as follows by the judge at page 65 B
"It is said here that the assignment means the assignment of the legal estate and does not occur until the name of the assignee is...
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