IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM GREAT GRIMSBY COUNTY COURT
(His Honour Judge Reddihough)
Tuesday 10th July, 2001
B e f o r e :
LADY JUSTICE ARDEN DBE
MR JUSTICE WILSON
|BARCLAYS BANK PLC|
|- v -|
|(1) ANDREW JOHN BEE|
|(2) ANGELA ELIZABETH BEE|
Smith Bernal Reporting Limited, 190 Fleet Street,
London EC4A 2AG
Tel: 020 7421 4040
Official Shorthand Writers to the Court)
appeared on behalf of the Appellant
MR M WEST (Instructed by Messrs Tallents Godfrey, Newark NG24 1AQ)
appeared on behalf of the Respondents
Crown Copyright ©
"As you know, the current lease for the premises at 5 Westgate finishes this December. At present the premises as a whole are very badly divided with the bank occupying space above 7A and No 7 extending above the bank on both first and second floors. Also, the ground floor that extends to the rear from below the room you use as a kitchen is in a very poor state and really needs demolishing and rebuilding. The roof over the part you occupy needs re-making.
It is therefore our intention to carry out development work on the property to make the building sound and divide it vertically so that it becomes a much more attractive proposition should we wish to sell all or part of it.
If you would like to renew the lease we could perhaps meet to discuss possible ways of achieving the above aims. We anticipate wishing to start work in 2-3 years time, but will need to know your intentions fairly soon so that appropriate plans can be drawn up."
"In the meantime, as I am unable to advise you on this aspect I would suggest that you consult a solicitor on the procedure for dealing with the renewal of business tenancies.
I will be in touch again as soon as I have something definite to say."
"We are in receipt of copy correspondence between yourself and our Client Mr Bee from the summer, but we have now been instructed by Mr and Mrs Bee to serve Notice upon you, and enclose herewith Landlord & Tenant Act Section 25 Notice. Perhaps you would be kind enough to acknowledge receipt by returning one copy."
"5. If you apply to the court under Part II of the Landlord and Tenant Act 1954 for the grant of a new tenancy, I/we will oppose it on the grounds mentioned in paragraph(s) ... of section 30(1) of the Act. (See notes 4 and 5.)"
"5. If you apply to the court under Part II of the Landlord and Tenant Act 1954 for the grant of a new tenancy, I/we will not oppose your application."
"I am able to acknowledge safe receipt; however, I am not able to confirm the validity of the Notice.
From the copies returned herewith, you will see that you served two Notices which are different and not entirely complete.
Are you able to confirm that your client will not oppose an application to the Court for the grant of a new tenancy."
"Thank you for your letter of 23 December. We apologise for the incorrect Notice submitted.
It is our Client's intention to oppose an application to the Court for the grant of a new Tenancy.
We accordingly enclose forms in duplicate, and should be grateful if you would acknowledge safe receipt."
"5. If you apply to the court under Part II of the Landlord and Tenant Act 1954 for the grant of a new tenancy, I/we will oppose it on the grounds mentioned in paragraph(s) F and G of section 30(1) of the Act. (See notes 4 and 5.)"
"21. Bearing very much in mind practical considerations and the examples set out above, I have come to the conclusion that it is permissible and appropriate to construe or consider an apparently valid Section 25 notice together with the documents which accompany it. In my judgment, it is therefore appropriate in the present case to construe or consider the First Notice [document B] together with the Second Notice [document A] and the covering letter. I reject the submission by the Claimant that the Second Notice and covering letter amount to or include declarations of subjective intention and are inadmissible. They are, to use the words of Lord Steyn in Mannai at page 767H, part of the `relevant objective contextual scene'.
22. Once the Second Notice and covering letter are admitted and read together with the First Notice, then the proper approach must be that set out in the Mannai case; that is, how would a reasonable recipient have understood the First Notice in the light of the accompanying documents. Of course, because the test is an objective one, the subjective understanding or response of the Claimant in the present case is irrelevant.
23. In my judgment, the reasonable recipient of the First and Second Notices, together with the covering letter, would have found the situation confusing and uncertain. It was obvious from the covering letter that the Defendants intended to send duplicates of one and the same Notice. In fact, they sent one Notice stating they would not oppose a new tenancy and another stating that they would oppose it, but not stating on what grounds. A reasonable recipient would respond, in my judgment, by saying `What are our landlords up to? Are they opposing a new tenancy or not? How can we properly respond to this situation?' It follows that I reject the argument of the Claimant, that a reasonable recipient of these documents would conclude that the Defendants were not opposing a new tenancy and that they could rely on the First Notice to the exclusion of the other documents.
24. I therefore conclude that, because of the ambiguity and uncertainty created for the Claimant in relation to the First Notice, that Notice is of no effect and is rendered invalid. For the same reason, the Second Notice is of no effect, although, of course, it would also be invalid because of its failure to state the grounds of opposition. It must follow that, if the First and Second Notices are invalid, then the Defendants were entitled to serve and rely upon the Third Notice, which is a valid Notice."
"... in the prescribed form specifying the date at which the tenancy is to come to an end ..."
"(6) A notice under this section shall not have effect unless it states whether the landlord would oppose an application to the Court under this Part of this Act for the grant of a new tenancy and, if so, also states on which of the grounds mentioned in s.30 of this Act he would do so."
"... on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding;"
"Seeing, therefore, that as soon as the written notice is given, there is a binding contract, I cannot see any room for a notice in the alternative. If a tenant gives a notice that he desires `the freehold or an extended lease', without saying which, there can be no binding contract. The statute simply cannot begin to operate. If I may put it into the form of offer and acceptance, it stands in this way: the landlord, under the compulsion of the statute, whether he likes it or not, makes an offer to the tenant to let him either buy the freehold at a fair price or to take an extended lease of 50 years at a fair rent. In order to accept that offer, so as make a binding contract, the tenant must accept one of these alternatives. If he replies: `I desire to have either the freehold or an extended lease,' then there is no contract because no one knows which it is. It is too uncertain to be a contract. It is just, as if I say: `I offer to sell you my horse for £100 or my cow for £50' and you reply: `I accept your offer.' There is no contract: for the simple reason stated by Lord Wright: When the words "fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract": see Scammell & Nephew Ltd v HJ & JG Ouston  AC 251, 268 HL(E).
"The question is not whether 12 January can mean 13 January: it self-evidently cannot. The real question is a different one: does the notice construed against its contextual setting unambiguously inform a reasonable recipient how and when the notice is to operate under the right reserved?"
"The question is not how the landlord understood the notices. The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual scene."
"... the question is what reasonable persons, circumstanced as the actual parties were, would have had in mind. It follows that one cannot ignore that a reasonable recipient of the notices would have had in the forefront of his mind the terms of the leases."
"That test postulates that the reasonable recipient is left in no doubt that the right reserved is being exercised. It acknowledges the importance of such notices. The application of that test is principled and cannot cause any injustice to a recipient of the notice."
"You ought not to be granted a new tenancy in view of the state of repair of the holding, being a state resulting from your failure to comply with the repairing covenant in your sub-underlease. On the termination of the current tenancy I intend to demolish or reconstruct the premises comprised in the holding and that I cannot reasonably do so without obtaining possession thereof."
"No one reading that notice can be in the slightest doubt; the landlord accidently failed to strike out the first sentence and intended to oppose an application to the court for the reasons set forth in the notice. Indeed Mr Colyer, who appeared for the defendants, did not contend that there was any doubt or ambiguity, but said that the notice did not comply with the Act, because it did not contain the positive statement required by the Act. ... In the present case it would be perverse to turn a blind eye to the clear intention of the landlord as expressed in the notice, with the result that the notice does, in my judgment, on its true construction, state that which section 25(6) requires to be stated."
"In the case of commercial contracts, the restriction on the use of background has been quietly dropped. There are certain special kinds of evidence, such as previous negotiations and express declarations of intent, which for practical reasons it is unnecessary to analyse, are inadmissible in aid of construction. They can be used only in an action for rectification. But apart from these exceptions, commercial contracts are construed in the light of all the background which could reasonably have been expected to be made available to the parties in order to ascertain what would objectively have been understood to be their intention: Prenn v Simmonds  1 WLR 1381, 1383. The fact that the words are capable of literal application is no obstacle to evidence which demonstrates what a reasonable person with knowledge of the background would have understood the parties to mean, even if this compels one to say that they used the wrong words. In this area, we no longer confuse the meaning of words with the question of what meaning the use of the words was intended to convey. Why, therefore, should the rules for the construction of notices be different from those for the construction of contracts? There seems to me no answer to this question. All that can be said is that the rules for the construction of notices, like those for the construction of wills, have not yet caught up with the move to common sense interpretation of contracts which is marked by the speeches of Lord Wilberforce in Prenn v Simmonds  1 WLR 1381 and Reardon Smith Line Ltd v Yngvar Hansen-Tangen  1 WLR 989. The question is therefore whether there is any reason not to bring the rules for notices up to date by overruling the old cases."
"The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual scene."