- A notice terminating a licence may not need to be given by all the licensors, where one of the licensors is also the licensee
- Different principles may apply to statutory notices
Facts of Fitzhugh v Fitzhugh
Fitzhugh v Fitzhugh concerned a dispute between nine siblings over the administration of their father's estate after his death. The claimant and the defendant were appointed as administrators. The defendant and his partner were granted a licence by the administrators to use some adjacent land for keeping animals.
The licence provided that it could be terminated if (among other things) the licensee committed a grave or persistent breach of the licence, the licensor had given written notice to the licensee of the breach and the licensee had failed to rectify the breach within the period specified by the licensor. The licence fee was £1 per year. The claimant explained that his reason for this nominal sum being payable was to make it quite clear to the defendant that he would not be able to claim that, in due course, he had acquired title to the land by adverse possession.
The defendant did not pay the licence fee, even though he was asked by the claimant to do so. The claimant therefore instructed solicitors to write to the defendant and his partner, requiring them to pay the arrears of the licence fee, amounting to £7, within seven working days.
The court decided that the failure to pay the licence fee for seven years amounted to a "persistent" breach which would entitle the licensor to terminate the licence. Although the licensors comprised the claimant and the defendant together, as administrators, the letter was however given on behalf of the claimant alone - since for obvious reasons the defendant would not have concurred in the instructions to solicitors to send it. Under these circumstances, the court had to decide whether the letter validly terminated the licence.
Could notice to terminate be served by the claimant acting alone?
The court ruled that the natural meaning of the licence was that notice had to be given by all the licensors. This would certainly be the case where the licensee was not also one of the licensors. However, it thought that account had to be taken of the fact that there was an overlap between the parties who were the licensor and the parties who were the licensee.
Whenever land is owned by more than one person, it is held on trust by the owners as trustees. If the claimant could not act alone in serving notice, then the claimant would first have to apply to remove the defendant as a trustee. Alternatively, on the defendant's case, the claimant would have to go to court and obtain an injunction forcing the defendant to join in with the giving of the notice.
The court thought that to find that no notice could be given would be an unsatisfactory result which the parties could not have intended. A requirement that it was necessary to remove one party as a trustee, or go to court to obtain an injunction, also was unlikely to be what the parties intended. It therefore ruled that the reference to the licensor in the notice clause in the licence referred to all the persons who together constituted the licensor, apart from any person who was also the licensee. On that basis, notice had validly been given by the claimant alone.
The court thought that this conclusion was reinforced by the fact that, since the claimant and the defendant were joint owners and therefore trustees, the defendant's duty as a trustee was to join in to the notice to himself. By failing to do so he would have been acting in breach of trust. If the defendant was then able to challenge the validity of the notice on the ground that he had not been a party to it, then he would be taking advantage of his own breach.
Things to consider
One of the curious features of this case is that the parties seem to have accepted that the wording of the letter was capable of amounting to a termination of the licence. In fact, the solicitor's letter did not purport to terminate the licence, but rather stated "I am instructed that any further breaches of the licence would result in it being revoked, a course of action which we trust will not be necessary". It might be thought that, when payment was not forthcoming within seven working days, a further letter would be required confirming that the licence had therefore been terminated. However, it may be that the licence provided for automatic determination.
Although, as in Avocet Industrial Estates LLP v Merol Limited, the amount owing was small, this was not a lease where the court would have the power to relieve the tenant against forfeiture. The licence was a contractual document, and the court had no jurisdiction to grant relief against the operation of a termination provision.
Fitzhugh v Fitzhugh should not be relied on in every instance where the person who has to give a notice comprises more than one party. In The Prudential Assurance Company Ltd v Exel UK Ltd (1) and Tibbett & Britten Consumer Group Ltd (2), the court held that a break notice was invalid because it was served by only one of two companies which comprised the tenant. The court in Fitzhugh was also clear that it reached its decision by implying a term, or a qualification, into the contract to the effect that the licensee did not need to join in the notice. The court stated that it would be more difficult to reach this conclusion where a statute required all parties to join in to the serving of a notice.
This means that the case will not necessarily assist in a situation such as the parties in BOH Limited (1) Layhawk Consultants Limited (2) v Eastern Power Networks Plc found themselves. In that case it was argued that the "landlord", for the purposes of the person who has to serve a notice under section 25 of the Landlord and Tenant Act 1954 in order to bring a tenancy to an end, did not include a person who was also the tenant. It was not necessary on the facts for the court to decide the point.
Permission to appeal has been granted in Fitzhugh and so the Court of Appeal may have a further opportunity to opine on the point. The judge closed by commenting that:
"This is an unfortunate dispute, it has cost a lot of money, it has been divisive, ... but it is not my function to provide social services, it is my function to decide points of law".