Scottish Court of Session Decisions

The cause called before an Extra Division, comprising Lord Weir, Lord Rodger and Lord Cowie, for a hearing.

At advising, on 14 June 1996, the opinion of the court was delivered by Lord Weir.

OPINION OF THE COURT—This special case is concerned with a commercial sublease of shop premises in the centre of Dundee. The first party were lessees of the premises from the second party. The period of let was ‘from and after the Fifteenth day of September Nineteen Hundred and Seventy Three…until Whitsunday Nineteen Hundred and Ninety Three…’. On 5 April 1993, solicitors for the first party (hereinafter referred to as ‘the tenants’) sent a notice of termination of tenancy by facsimile to the estates department of the second party (hereinafter referred to as ‘the landlords’). A further notice was sent on 6 April in order to correct certain inaccuracies in the description of the premises and of the landlords but for the purpose of this dispute it was common ground that the critical communication is that dated 5 April 1993. In this communication the solicitors stated: ‘On the instructions of our clients Ratners Group Limited plc we serve formal notice of their intention to leave the premises at 2/6 Murray Gate, Dundee at the end of their Lease and that with effect from Whitsunday 1993.’

By letter dated 22 April 1993 the landlords' solicitors wrote to the tenants' solicitors claiming that the notice of 5 April was invalid for two reasons: first, that in terms of sec 37 and Rule of Court 106 of the Sheriff Courts (Scotland) Act 1907 such notice had to be delivered by registered mail and service by facsimile message was incompetent; and, second, that the notice was in any event out of time. The first reason was not argued on behalf of the landlords before us but the second reason proved to be the predominant theme of the submissions and in our judgment is the critical issue in the case.

The question for determination is whether the sublease continued by tacit relocation for a period of 12 months from Whitsunday 1993. It was not in dispute that tacit relocation would occur in the event of inaction on the part of the parties to the sublease thereby giving rise to an inference of implied consent to its continuation for a further year. The landlords took no steps themselves to bring the lease to an end and it was their contention that the tenants ought to have given 40 days' clear notice of their intention to remove prior to Whitsunday 1993. It was agreed that, having regard to the terms of the clause, this meant 15 May. The tenants on the other hand contended that the implied consent of the parties to the continuation of the lease was excluded by their actings. Moreover the notice of termination sent on 5 April was timeous.

In connection with the contention of the tenants that their actings excluded tacit relocation, it is necessary to set out certain facts upon which reliance was placed. These were: (1) The tenants removed from the premises in February 1993 at which date they ceased to use and occupy and trade from the premises. (2) The tenants gave no notice to the landlords of their intention to cease to use, occupy and trade from the premises. (3) The landlords took no steps to call on the tenants to resume using, occupying and trading from the premises.

Counsel for the tenants submitted that in order to avoid the operation of tacit relocation, it was not essential for one of the parties to a lease to take the step of giving notice. He submitted that there might be cases in which the conduct of a party was sufficient by itself to rebut the presumption that renewal of the lease was intended. The actings of the tenants in this case, he said, were of such a character. What was founded on was the act on the part of the tenants of closing down business at the shop premises and removing in February 1993, well before any date when notice was due. This was a clear breach of cl 7 of the sublease which required the tenants to occupy and trade from the premises throughout the whole period of the lease, yet the landlords took no steps to require them to resume their occupation and trading.

Counsel for the tenants referred us to a number of cases and to the literature on the law of landlord and tenant. He submitted that it was a question of circumstances whether a tenant had given sufficient indication that he intended that the lease should not continue. In Gilchrist v Westron Lord Justice-Clerk MacDonald said (at p 366): ‘Now it is a question of circumstances whether a tenant has given sufficient notice of his intention to leave. Formal notice is not necessary but only such notice as will satisfy a court that the landlord was made aware that the tenant did not intend to stay on on the same terms.’

In Smith v Grayton Estates Ltd Lord President Clyde said (at p 354): ‘Tacit relocation is not an indefinite prolongation of a lease. It is the prolongation each year of the tenancy for a further one year if the actings of the parties to the lease show that they are consenting to this prolongation.’

Counsel also referred us to Kirkpatrick's Exx v G & A Kirkpatrick in which it was held that a lease could not be continued by tacit relocation where missives of sale, subsequently reduced, had been entered into between the parties. The view was that the conclusion of missives had shown that the parties had at that time entered into a new and different relationship. This demonstrated, it was submitted, that there was no need for a notice to be given if there had been actings inconsistent with implied consent to the continuance of a lease.

Counsel for the landlords submitted that none of the cases to which we were referred by counsel for the tenants could be regarded as direct authority for the proposition that unilateral actings or conduct of one party can prevent an agreement to continue with the lease which would otherwise be implied. He submitted that the trend of authority, if anything, was the other way. In Rankine on Leases (3rd edn) at p 597 the learned author states: ‘In the case of urban subjects verbal notice however informal is sufficient if seriously made and explicit.’ In McIntyre v McNab's Trs Lord Lyndhurst said (at p 303): ‘My Lords in the case of an English tenancy, under a lease for a certain time, it is not necessary, either on the part of the landlord or on the part of the tenant that any notice should be given, for the purpose of effecting the termination of the interest at the period when it is about to expire; but that is not the case in Scotland. As far as relates to the landlord, it is perfectly clear that where there is a lease for a period of seven years, for instance, as in this case, the interest of the tenant does not expire at the end of the seven years, unless the landlord gives 40 days notice, previous to the expiration of the term, of his intention that the interest should cease; if he omit to give such notice, the interest goes on for another year.’

Lord Lyndhurst then went on to hold (at p 303) that the same rule applied to notice by the tenant. He said that: ‘where a lease is granted to a tenant for a certain term of years, the tenant cannot quit at the expiration of his term, unless he has given 40 days notice, previous to the expiration of that term, of his intention to quit’.

The question whether anything other than notice, however informal, on the part of one party to a lease, is sufficient to prevent the occurrence of tacit relocation has not hitherto arisen directly for consideration. What is clear is that some mode of communicating to the landlord a tenant's intention not to continue with the lease is required. This may be informal in the case of urban subjects such as the shop premises with which we are concerned (Craighall Cast-Stone Co Ltd v Wood Brothers), but it is very difficult to envisage a case where any actings short of some form of notice, whether communicated verbally or in writing, would ever suffice. Counsel for the landlords submitted that on practical grounds this was necessary if only to enable the landlord (or, in an opposite position, the tenant where he had been given notice by the landlord) to make alternative arrangements ahead of the period of ish, and we recognise that there is much force in that submission.

However it is unnecessary to attempt to define the nature and scope of the actings which would effectively communicate the intention of one party to another because it is beyond question that in this case the actings upon which the tenants rely so as to exclude tacit relocation are quite insufficient for that purpose. What is fatally lacking is any statement of fact in the case that the landlords were ever aware that the tenants had ceased their trading operations in February 1993 and it is not open to us to infer that somehow they must have, or should have, become aware of the situation. In our opinion, in so far as the decided cases founded upon by counsel for the tenants can be construed as providing any foundation for the proposition that anything short of notice will do, these do not support the contention that unilateral actings by one party to a lease which are unknown to the other party can prevent the operation of tacit relocation. In this case there is nothing to show that any actings which are founded upon by the tenants were known to the landlords.

In these circumstances the question which then sharply arises is whether the sending of the facsimile message on 5 April 1993 was within the period required by law. Counsel for the landlords submitted that it was out of time and if that is correct then no effectual notice of termination was given. Counsel for the tenants submitted that it was timeous and if that is the case then tacit relocation did not occur. The notice was in fact sent on the 40th day before 15 May and it was agreed that, if the law required 40 clear days' notice, it was out of time.

Counsel for the landlords submitted that it had been hitherto accepted without question that in the case of the lease of urban subjects with a Whitsunday term date the obligation of the parties was to give a minimum of 40 days notice before 15 May. Reference was made to Stair Institutions II ix 38; Erskine Institutes I vi 47. In Bell's Principles sec 1265 it is stated: ‘In order to put an end to the lease notice must be given 40 days before Whitsunday preceding its stipulated termination.’ Professor Rankine in Leases at p 560 goes further by saying: ‘There has been a general agreement in the custom of removings that the period of notice or warning should be at least 40 days…’.

We have already quoted from the speech of Lord Lyndhurst in the case of McIntyre v McNab's Trustees which is to the same effect as the statement in Bell's Principles. The point made by counsel for the landlords was that in none of the relevant decided cases has it ever been suggested that notice could be validly given on the 40th day, that is to say less than 40 clear days before Whitsunday. He founded particularly on the case of Lambert v Smith as being directly in point and finally he referred us to a number of statutes which, in his submission, confirmed what was said to be the common law situation.

Counsel for the tenants submitted that it did not follow that because it was necessary to give 40 days' notice at common law, this must then mean at least 40 days. Our attention was drawn to an instructive article entitled ‘Time’ in the Stair Memorial Encyclopaediavol. 22. The author, in a passage (at para 819) with which we are in general agreement, states: ‘Except where statute has placed the matter beyond doubt, it is essential to look at each time limit independently, and ascertain the computation principles applicable thereto from an examination of the decided cases or by analogy from similar situations.’

Counsel submitted that in the circumstances of this case the principle ‘dies inceptus pro completo habetur’ applied. He referred us to Scott v Rutherford, a case which was concerned with early bankruptcy statutes and to the view of Lord Ivory in the footnote to Erskine's Institutes IV i 41 in relation to the reduction of testamentary deeds under the old law of deathbed, as being illustrative of the application of this principle. The application of the principle to the instant case was that notice given on the 40th day was timeous.

In our opinion, the law has long been settled that 40 clear days' notice is required so as to prevent the operation of tacit relocation in a lease. We note that in a passage from Erskine's Institutes II vi 46 which was cited to us the learned author in turn refers to Craig's Jus Feudale II ix 2 where the requirement of 40 clear days' notice before Whitsunday is stated for removings from both rural and urban subjects. It has never before been questioned that anything less will suffice in this field of law and in the absence of authority to the contrary we consider that it is too late now to seek to challenge the long-established custom. If there had been any doubt about the matter we would have expected this to have been raised long before the present. The only reported decision where the facts approximate to those in the instant case is Lambert v Smith. In that case there was a verbal lease and a verbal notice to remove as at Whitsunday was given to the wife of a tenant on 3 April. The husband was not informed by the wife of this notice until the 5th and it was held that the notice was not communicated to the tenant in due time so as to effectually prevent tacit relocation. Thus, as in the present case, the critical date was 5 April. It was accepted that-the lease could be terminated by any intimation, no matter how informal, 40 days before Whitsunday (per Lord Cowan at p 46). The Lord Ordinary, Lord Barcaple refers (at p 44) to ‘the 4th being the last day on which timely notice could be given’. Lord Benholme (at p 46) stated: ‘To these facts I need only add that notice upon 3 April would have been in due time, but that notice upon 5 April would not have been so.’ The view of Lord Neaves (on p 47) is to the same effect and Lord Justice-Clerk Inglis at p 48 said emphatically: ‘The notice on the 5th of April was of course insufficient…’.

Counsel for the tenants submitted that these observations were all obiter and the point before us was not expressly argued in the case. That may be so but the plain inference from our reading of the case is that the question was treated by the court as being beyond doubt.

Our conclusion on this branch of the argument is that in relation to leases the law is that 40 clear days are required for notice to be given by a party to a lease so as to avoid tacit relocation. The authorities on which counsel for the tenants relied related to special areas of law unconnected with land tenure and, in our view, the rule as to computation of time in these cases cannot be transferred and applied wholesale to the law relating to leases.

Counsel for the landlords drew our attention to a series of statutory provisions relating to removings which, he submitted, confirmed the position concerning timeous notice at common law. Reference was made to the Act of 1555 Cap 39 and to the comments thereon in Erskine II vi 46: ‘The whole process of removing must be used 40 days before Whitsunday.’ Section 4 of the Removal Terms (Scotland) Act 1886 provides inter alia: ‘Notwithstanding anything in this Act contained, in all cases in which warning is required 40 days before a Whitsunday or Martinmas term of removal, such warning shall be given 40 days before the 15th day of May and the 11th day of November respectively.’

Section 37 of the Sheriff Courts (Scotland) Act 1907 provides that for certain categories of heritable subjects notice of termination of tenancy must be given ‘at least 40 days before the 15th day of May when the termination of the tenancy is the term of Whitsunday…’, and a similar provision is to be found in the Sheriff Court Rules for all actions of removing (see Rule 103(2)(c)). In connection with a notice under sec 37 of the Act of 1907 it has been held that notice given on the 40th day prior to 15 May when termination of the tenancy was the term of Whitsunday was not timeously given (McLeod v George p 302).

We do not consider that too much can be inferred from the references to the statutes and to appeal to statute as an aid to ascertaining the common law may not be without its pitfalls. However, what can be said is that there is nothing in these provisions which is inconsistent with our general understanding of the position at common law regarding timeous notice terminating a lease.

Since our conclusion is that 40 clear days' notice before Whitsunday was essential to prevent the operation of tacit relocation, the tenants have—just—failed to meet that requirement. Considerations of equity do not arise in this field of law where precision is required. The result is that the sublease continued by tacit relocation for 12 months from Whitsunday 1993.

We conclude by mentioning that a subsidiary argument was advanced by counsel for the landlords that if the notice was timeous, nevertheless, because of a misdescription of the subjects in the facsimile message of 5 April it was not a sufficient notice. Having regard to the view which we have formed on the main argument, we do not find it unnecessary to express any opinion on this point.

We shall answer the question in the affirmative.