L Batley Pet Products Ltd v North Lanarkshire Council

Landlord and tenant – Notice – Repair and reinstatement – Underlease of commercial premises imposing obligation on respondent tenants to keep in repair – Appellant making oral request before expiry of lease for removal of alterations and reinstatement of premises – Whether written notice required to trigger repairing obligations in underlease or reinstatement obligations under licence for alterations – Appeal allowed In 2007, the appellant acquired the residue of a 25-year headlease of commercial premises in Cumbernauld, Scotland, part of which was underlet to the respondent council for a term expiring in February 2009. The terms of the underlease required the respondents to perform the appellant’s non-monetary obligations under the headlease, which included an obligation “At all times through the period of this lease at the Tenant’s expense well and substantially to repair, maintain and where necessary to renew, rebuild and reinstate and in general in all respects keep in good and tenantable condition the Premises…”. There was also an obligation to obtain the landlord’s prior written consent for any alterations and a further provision requiring that any “notice, request, demand or consent” under the lease be in writing. By a minute of agreement dated April 1998, the appellant authorised certain alterations to the premises on condition that the respondents were to remove the works and reinstate the premises by the expiry or sooner determination of the underlease “if so required by the [appellant]”. The minute further provided that all the respondents’ undertakings and obligations thereunder should be deemed to be incorporated in the underlease and the power of irritancy (forfeiture) contained in the underlease should be construed and have effect accordingly.Before the expiry of the underlease, the appellant’s surveyor made an oral request to the respondents to remove the alterations and reinstate the premises. The respondents did not do so and the appellant brought claims for more than £253,700 for the cost of those works. The respondents disputed their liability, contending that, on the proper construction of the minute of agreement and the repairing obligations in the headlease and underlease, they were not obliged to repair or reinstate the premises where no written request to that effect had been made before the expiry of the underlease. At first instance, the judge held that it was sufficient for the appellant to communicate orally that it wanted the premises to be reinstated, but that decision was subsequently reversed. The appellant appealed. Held: The appeal was allowed. (1) No requirement for written notice to repair and reinstate could be read into the obligations imposed by the underlease and headlease. The repairing obligation under the headlease was an obligation to keep and put the premises in good condition. Clauses of that nature imposed a continuing obligation on the tenant, which did not require any notice from the landlord to activate it: Credit Suisse v Beegas Nominees Ltd [1994] 4 All ER 803; [1994] 1 EGLR 76; [1994] 11 EG 151; [1994] 12 EG 189 and Lowe v Quayle Munro Ltd 1997 SC 346 applied. There was no requirement for notice from the landlord, in writing or otherwise, during the currency of a lease to trigger the obligation. (2) The minute of agreement, properly construed, did not impose a requirement for written notice in relation to the removal of the licensed works. The words “if so required” in the reinstatement obligation contrasted with other provisions of the minute of agreement that expressly required written forms. The parties had stated expressly when a communication had to be in writing and when more informal communication was permitted. No requirement for written notice could be read into the minute of agreement by reference to the provision in the headlease and underlease requiring notices, requests, demands and consents to be in writing. The minute of agreement provided that the respondents’ undertakings and obligations thereunder were incorporated into the underlease, with the purpose of giving to the appellant the power of irritancy of the underlease if the respondents breached their obligations under the minute of agreement. Nothing was incorporated into the minute of agreement. The minute had to be viewed in its context as a document required under the underlease giving the landlord’s consent to alterations. Although both the headlease and the underlease formed part of the factual matrix in which the minute existed, it was a separate contract, the wording of which pointed to the conclusion that writing was not required for communications in all circumstances: Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900 and Multi-Link Leisure Developments Ltd v North Lanarkshire Council [2010] UKSC 47; [2011] 1 EGLR 67; [2011] 04 EG 102 applied. No requirement for written notice was needed in the interests of business common sense. Accordingly, the correct conclusion was that the minute of agreement did not require the appellant to give written notice of its requirement that the licensed works be removed at the end of the underlease. Roy Martin QC and David Logan (instructed by Balfour & Manson LLP) appeared for the appellant; Mark Lindsay QC and John MacGregor (instructed by Ledingham Chalmers LLP) appeared for the respondents. Sally Dobson, barrister