[2024] UKUT 51 (LC)

On our analysis there is no need for us to decide whether the break notice served on 3 October 2022 was valid. There was no need to serve such a notice and the notice served was, whether valid or not, of no effect because of paragraph 30.

In case that analysis is wrong, we revert to issue 2 and ask whether the break notice served by the respondent was valid.

The ground said by the notice to be relied upon was that set out in clause 5.8(b)(v) of the OT Lease; it therefore had to be that the respondent wished to terminate the Site Lease for a reason other than those set out in grounds (i) to (iv), and it had to comply with the notice requirement in clause 5.8(a)(ii). There is no suggestion that the notice period given (of 13 months) was incorrect, but the claimant says the notice was invalid on the basis of the respondent’s own pleaded position in the litigation.

In its Statement of Case, in April 2023, the respondent pleaded that it had referred “erroneously” to the general termination right in clause 5.8(b)(v) but had been entitled to use ground (i), the “Disposal” ground, and that, since there was no requirement to state the ground of termination in the break notice, the break notice remained valid. In an amended Statement of Case, filed in December 2023 (some two months after the expiry of the break notice) the respondent changed its position again; it deleted the word “erroneously” and pleaded that it had relied upon ground (i) but that if in fact it had not been entitled to use the disposal ground then it had relied upon ground (v). The respondent called evidence from Ms Fatima Choudhury Ali, a Senior Legal Counsel, who drafted the break notice; she explained her thinking behind the choice of ground (v). Her evidence was irrelevant; the thinking of an individual lawyer has no bearing on the validity of the notice. On the other hand, Mr Sellar’s evidence about the respondent’s plans to close telephone exchanges, and its specific plans for the Kenton Road Exchange (see paragraphs 8 to 10 above), is of central relevance in assessing the reason why the respondent wished to terminate the lease.

Mr Lees argued that on its own primary case the respondent was not entitled to rely upon clause 5.8(b)(v), because it had pleaded that the reference to ground (v) was a mistake. Moreover, he argued that the correct ground was ground (ii), alteration; we have addressed that point above at paragraphs 93 and 94.

In light of the respondent’s various changes of position Ms Tozer KC argued that the terms of the lease did not require the respondent to state in a break notice which ground it was relying upon, and that the fact that the notice was said (voluntarily) to be given on one ground did not prevent its validity under another. We are wholly unimpressed with that argument and we are surprised that it was seriously pursued. Ms Tozer KC sought to rely upon Biles v Caesar [1957] 1 WLR 156, where the landlord of a tenancy protected by the 1954 Act had opposed the grant of a new lease on the ground at section 30(1)(f) (demolition or substantial construction) and voluntarily gave particulars of the work it planned to do; later it emerged that its plans were rather different, but that did not prevent reliance upon ground (f). That is a long way from a position where the landlord does not have to state any grounds at all. The tenant has to know at the point when the notice is served which ground is relied upon, so that it then knows which of the further provisions in clause 5.8 (c), if any, have to be met. And if the landlord did not have to say which ground it relied upon it would be free to change its mind about the ground it relied upon (as it has done here), to the confusion of all concerned; we agree with Mr Lees that such a situation would be unworkable and commercially absurd, and cannot have been the intention of the parties to the OT Lease. Either it is clear from the express terms of the OT Lease that a ground has to be stated in the break notice, or such a term has to be implied to make the contract workable (Marks & Spencer plc v BNP Paribas Services Securities Trust Co (Jersey) Ltd [2015] UKSC 72).

But the respondent’s argument on that point was unnecessary. The question is whether the notice was valid on the date it was served, and the answer to that question is not changed by the respondent’s later changes of mind, puzzling as they are. As we said above (paragraph 95), the respondent was entitled to serve notice on ground (v), and it did so. Accordingly the notice was valid.