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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Burman v Mount Cook Land Ltd [2001] EWCA Civ 1712 (20 November 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1712.html Cite as: [2002] Ch 256, [2002] 1 All ER 144, [2001] NPC 166, [2002] 2 WLR 1172, [2002] 1 EGLR 61, [2001] 48 EGCS 128, [2002] HLR 45, [2002] 06 EG 156, [2001] EWCA Civ 1712, [2002] 1 P & CR DG16, [2002] L & TR 19

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
(His Honour Judge Knight QC)

		Royal Courts of Justice Strand, London, WC2A 2LL Tuesday 20th November 2001

LORD JUSTICE CHADWICK:

1. This is an appeal against an order made in the Central London County Court on 20 November 2000 by His Honour Judge Knight QC in proceedings for a new lease brought by the appellant under the Leasehold Reform, Housing and Urban Development Act 1993.
2. Chapter II in Part I of the 1993 Act confers on the tenant of a flat held under a long lease at a low rent, in the circumstances mentioned in section 39(2), the right (exercisable subject to and in accordance with the provisions in that chapter) to acquire a new lease of the flat on payment of a premium. A claim by a tenant to exercise the right is made by the giving of notice under section 42 of the Act. Section 45 of the Act provides for the landlord to give a counter-notice to the tenant. Subsection (2) of that section requires that:

"The counter-notice must comply with one of the following requirements –

(a) state that the landlord admits that the tenant had on the relevant date the right to acquire a new lease of his flat;

(b) state that, for such reasons as are specified in the counter-notice, the landlord does not admit that the tenant had such a right on that date;

(c) contain such a statement as is mentioned in paragraph (a) or (b) above but state that the landlord intends to make an application for an order under section 47(1) on the grounds that he intends to redevelop any premises in which the flat is contained."

In that context "the relevant date" is the date on which notice of the tenant's claim is given to the landlord under section 42 – see section 39(8) of the Act. Section 45(3) of the 1993 Act is in these terms:

"If the counter-notice complies with the requirements set out in subsection (2)(a), it must in addition –

(a) state which (if any) of the proposals contained in the tenant's notice are accepted by the landlord and which (if any) of those proposals are not so accepted; and

(b) specify, in relation to each proposal which is not accepted, the landlord's counter-proposal."

The question in the present case is whether a notice which does not state, in terms, that the landlord does, or does not, admit that the tenant had on the relevant date the right to acquire a new lease of her flat – and which does not state, in terms, which (if any) of the proposals contained in the tenant's notice are accepted by the landlord - is a valid counter-notice under section 45 of the 1993 Act.

3. The appellant, Ms Meera Burman, is tenant of a flat known as 4 Rossetti House, 105-110 Hallam Street, London W1. The respondent, Mount Cook Land Limited, is the landlord in relation to that lease for the purposes of the provisions in Chapter II of Part I of the 1993 Act. It is not in dispute that the appellant holds the flat under a long lease at a low rent; and that, accordingly, she is a "qualifying tenant" for the purposes of those provisions. Nor is it in dispute that she had occupied the flat as her only or principal home for a period in excess of three years in the ten years before the relevant date; so that she was a qualifying tenant who had the right to acquire a new lease – see section 39(2) and (2B) of the Act.
4. On 19 October 1999 the appellant gave notice to the respondent under section 42 of the 1993 Act. That notice complied with the requirements of that section; in particular, it set out the matters required by section 42(3)(b). Those matters include: (i) the premium which the tenant proposes to pay in respect of the grant of a new lease; (ii) the terms which the tenant proposes should be contained in any such lease; and (iii) the date by which the landlord must respond to the notice by giving a counter-notice under section 45 of the Act. In the present case the premium which the appellant proposed to pay for a new lease was £110,000; the terms which she proposed in respect of the new lease were that it should be "[a] lease at a peppercorn for a term expiring 90 years after the term date of the existing lease and otherwise on the same terms as the existing lease subject to any amendments required by Sections 56 and 57 of the Act"; and the date by which the respondent was required to give a counter-notice was 25 December 1999.
5. On 23 December 1999 the respondent, by its solicitors, gave written notice to the appellant. The notice was headed with the description:

"LEASEHOLD REFORM, HOUSING AND URBAN

DEVELOPMENT ACT 1993

Section 45

Landlord's Counter-Notice"

After setting out the names and respective addresses of the appellant and the respondent, the notice continued in these terms:

"TAKE NOTE THAT

1. We have received your notice dated 19 October 1999 claiming a new lease for Flat 4 Rossetti House 106-110 Hallam Street London W1 ("the Notice").

2. The Landlord does not accept the premium proposed by the Tenant.

3. The Landlord's counter-proposal to the premium proposed is £175,000

4. The address in England and Wales at which the Landlord may be given Notice under Part 1 Chapter 2 of the Act is Speechly Bircham 6 St Andrews Street London EC4A 3LX."

6. The notice of 23 December 1999 does not contain a statement that the landlord does, or does not, admit that the tenant had on the relevant date the right to acquire a new lease of the flat. Nor does it contain a statement as to which (if any) of the proposals contained in the tenant's notice are accepted by the landlord; in particular it does not state whether the landlord accepts the tenant's proposal that the terms of the new lease – other than the rent (a peppercorn) and the duration and commencement of the term (90 years from the term date of the existing lease), which are prescribed by section 56(1) of the 1993 Act – should be the same terms as the existing lease; as to which, see section 57 of the Act. On the other hand, the notice does contain a statement that the landlord does not accept the tenant's proposal as to premium; and does specify the landlord's counter-proposal in relation to premium.
7. The appellant took the view that the notice of 23 December 1999 was not a valid counter-notice under section 45 of the 1993 Act. Accordingly, she made application to the Central London County Court on 19 May 2000 for an order under section 49 of that Act. Section 49(1) is in these terms (so far as material):

"Where the tenant's notice has been given in accordance with section 42 but –

(a) the landlord has failed to give the tenant a counter-notice in accordance with section 45(1), or

(b) if required to give a further counter-notice to the tenant by or by virtue of section 46(4) or section 47(4) or (5), the landlord has failed to comply with that requirement,

the court may, on the application of the tenant, make an order determining, in accordance with the proposals contained in the tenant's notice, the terms of the acquisition." [emphasis added].

The effect of the words that I have emphasised is to limit the power the court, when determining the terms upon which the tenant is to acquire a new tenancy on an application under section 49(1), to the proposals contained in the tenant's notice – see the decision of this Court in Willingdale v Globalgrange Ltd [2000] 2 EGLR 55.

8. The respondent denied that the appellant was entitled to an order under section 49 of the 1993 Act; and, by counterclaim in the proceedings, sought a declaration that the notice of 23 December 1999 was a valid counter-notice. That issue came before His Honour Judge Knight QC. He dismissed the appellant's claim and made a declaration that the notice of 23 December 1993 was "a valid and effective Counter-Notice under Section 45(2)(a) of the [1993] Act". He gave the claimant permission to appeal against that order.
9. The reasons which led the judge to the conclusion that he reached appear from paragraph 7 of the written judgment which he handed down:

"I have, therefore, to ask myself the question whether a reasonable tenant could be misled into thinking that the landlord's counter-notice did not admit the right to a new lease? I must determine this question objectively. In my judgment a reasonable tenant would not be so misled. In reaching this conclusion I have taken into account that a reasonable tenant would have a degree of familiarity with the scheme of Ch. II of the Act, in particular the notice and counter-notice provision. Sub-sections (2) and (3) of Section 45 have to be read together. Pars. 2 and 3 of the counter-notice comply with Section 45(3), which are applicable to a Section 45(2)(a) counter-notice. These paragraphs have no application to a Section 45(2)(b) counter-notice, which must state reasons why the landlord does not admit the tenant's right to a new lease. The counter-notice contains no such reasons. In my view the only reasonable conclusion which a reasonable tenant could come to is that the landlord did admit the tenant's right, but did not accept the proposed premium, as to which there was a counter-proposal. Such a counter-proposal would be inconsistent with the landlord not admitting the tenant's right. The statutory scheme does not cater for a hybrid counter-notice, i.e. one which does not admit a tenant's right to a new lease, while at the same time specifying a landlord's counter-proposal. In my judgment a reasonable tenant on receipt of this counter-notice would reasonably conclude that the presence of the landlord's counter-proposal to the tenant's proposed premium, and the absence of any reasons for not admitting the tenant's right to a new tenancy, that the tenant's right to a new tenancy was admitted."

10. The first question for decision on this appeal, as it seems to me, is whether the judge was right to pose the question which, as he thought, he had to decide in the terms that he did: "whether a reasonable tenant could be misled into thinking that the landlord's counter-notice did not admit the right to a new lease?" Implicit in the question posed by the judge is the assumption that a notice served by a landlord in response to a tenant's notice under section 42 of the Act is capable of being a valid counter-notice under section 45 provided that a reasonable tenant, on receipt of the notice, could not be misled into thinking that the right to a new lease was not admitted. To put the point another way, is it right to assume – as the judge did assume - that section 45(2)(a) of the Act requires the landlord's notice to do more than bring home to a reasonable tenant, having a degree of familiarity with the scheme of Chapter II, Part I, that the landlord does not deny the right to a new lease? Or does section 45(2)(a) of the Act require, as a literal construction of the statutory language would suggest, that the landlord's notice must state that the landlord admits that the tenant had on the relevant date the right to acquire a new lease of his flat?
11. The answer to that question is not to be found in the terms of the landlord's notice. The relevant enquiry is what does the statutory language require. The task is to construe the words which Parliament has used in the context of the statutory scheme. It is only when the court has informed itself of the true nature of the statutory requirement that it can sensibly address the second question: does the notice in this case meet that requirement?
12. I turn, therefore, to consider the statutory scheme, of which section 45 is a part. As I have said, section 42 of the 1993 Act provides that a claim by a qualifying tenant to exercise the right to acquire a new lease is made by the giving of a notice to the landlord. Section 45 provides for the landlord to give a counter-notice in response to the tenant's notice. The counter-notice may contain a statement that the landlord does not admit that the tenant had on the relevant date the right to acquire a new lease of the flat – see paragraphs (b) and (c) of section 45(2). In such a case the landlord may apply to the court, within two months of the date of the giving of the counter-notice, for a declaration to that effect – see section 46 of the Act. But, if the landlord does not make an application under section 46 within that period of two months – or subsequently withdraws an application made under that section – the position is as if no counter-notice has been given; and section 49 of the Act applies – see section 46(2) of the Act.
13. Where a landlord who has given a counter-notice which contains a statement that the tenant's right to acquire a new lease is not admitted makes, and does not withdraw, an application to the court under section 46 of the Act, the court may make the declaration sought. In such a case the tenant's notice ceases to have effect on the order becoming final – see section 46(3) of the Act. Or the court may refuse the declaration and dismiss the application. In such a case – save where the counter-notice has contained a statement (under section 45(2)(c) of the Act) that the landlord intends to apply for an order under section 47(1) on the grounds that he intends to redevelop any premises in which the flat is contained – the counter-notice must be declared to be of no effect, and the court must require the landlord to give a further counter-notice to the tenant within such time as is specified in the order – see section 46(4) of the Act. Where, under section 46(4), the court requires a further counter-notice to be given, the counter-notice must comply with requirements of section 45(3) of the Act – that is to say, it must state which (if any) of the proposals contained are accepted by the landlord and which (if any) of those proposals are not so accepted, and must specify, in relation to each proposal which is not accepted, the landlord's counter-proposal – "as if [the further counter-notice] were a counter-notice under [section 45] complying with the requirement set out in subsection (2)(a) of that section" – see section 46(6) of the Act. It is, I think, implicit in section 46(6) that the further counter-notice is not required to state that the landlord admits the tenant's right to acquire a new lease; so as actually to comply with section 45(2)(a) of the Act. That question having been determined by the court on the application under section 46, no such statement is needed.
14. Section 47 of the 1993 Act is directed to the case where a landlord has given a counter-notice under section 45 which contains a statement of intention to redevelop – that is to say, which complies with the requirement set out in section 45(2)(c). In such a case the landlord may apply to the court within two months for an order declaring that the right to acquire a new lease shall not be exercisable by reason of the landlord's intention to redevelop. If no application is made within the two month period – or is made and subsequently withdrawn - the landlord must give a further counter-notice to the tenant – see section 47(5). If an application is made and the court makes the order sought, the tenant's notice ceases to have effect. But, if the application is dismissed, then – as in the case of an application under section 46 of the Act – the counter-notice must be declared of no effect and the court must require the landlord to give a further counter-notice to the tenant within such time as is specified in the order – see section 47(4) of the Act. And, again, where, under section 47(4) or (5), a further counter-notice has to be given, the counter-notice must comply with requirements of section 45(3) of the Act "as if it were a counter-notice under [section 45] complying with the requirement set out in subsection (2)(a) of that section" – see section 47(8) of the Act. There are provisions which have the effect of deferring consideration of an application under section 47 of the Act until after the determination of an application (if any) under section 46, but it is unnecessary to describe those provisions in detail.
15. Section 48(1) of the 1993 Act is in these terms:

"Where the landlord has given the tenant –

(a) a counter-notice under section 45 which complies with the requirement set out in subsection (2)(a) of that section, or

(b) the further counter-notice required by or by virtue of section 46(4) or section 47(4) or (5),

but any of the terms of acquisition remain in dispute at the end of the period of two months beginning with the date when the counter-notice or further counter-notice was so given, a leasehold valuation tribunal may, on the application of either the tenant or the landlord, determine the matters in dispute."

Section 48(2) requires that an application under subsection (1) for the determination of matters in dispute must be made not later than the end of the period of six months beginning with the date on which the counter-notice or further counter-notice was given to the tenant. Section 48(3) provides that where the landlord has given to the tenant such a counter-notice or further counter-notice as is mentioned in paragraphs (a) or (b) of section 48(1) and all the terms of acquisition have either been agreed or determined by a leasehold valuation tribunal, either party may apply to the court for an order for the performance or discharge of any obligations arising out of the tenant's notice. If no application is made under section 48(1) for the determination of matters in dispute, or if no lease is entered into and no application is made under section 48(3) for an order for the performance of the obligations arising out of the tenant's notice, within the time periods respectively prescribed, the tenant's notice is deemed to have been withdrawn – see section 53(1) of the Act.

16. With these provisions in mind, the statutory scheme – following service by the tenant of a notice which complies with section 42 of the Act - may be summarised as follows. (1) A landlord who intends to contest the tenant's right to acquire a new lease must (a) serve a counter-notice which states that the landlord does not admit that right, (b) specify in the counter-notice the reasons why the right is not admitted, and (c) make application to the court within two months of the counter-notice for a declaration that the tenant does not have the right claimed. Failure to take those steps will enable the tenant to apply to the court, under section 49(1), for an order determining that the terms of acquisition shall be in accordance with the proposals contained in the tenant's notice. (2) A landlord who intends to admit the tenant's right to acquire a new lease, but who wishes to advance counter-proposals as to the terms of acquisition, must serve a counter-notice which (a) states that the landlord does admit the right, (b) states which of the proposals contained in the tenant's notice are accepted by the landlord, (c) states which of the proposals contained in the tenant's notice are not accepted by the landlord, and (d) specifies, in relation to each proposal which is not accepted, the landlord's counter-proposal. Again, failure to take those steps will enable the tenant to apply to the court, under section 49(1), for an order determining that the terms of acquisition shall be in accordance with the proposals contained in the tenant's notice. (3) A landlord who intends to resist the acquisition of a new lease on the grounds that he intends to redevelop the premises in which the flat is contained (whether or not he admits the tenant's right to acquire a new lease) must (a) serve a counter-notice which states that the landlord does, or does not, admit (as the case may be) the tenant's right to acquire a new lease and states that the landlord intends to make an application for an order under section 47(1) on the grounds that he intends to redevelop and (b) make an application to the court within two months of the counter-notice for a declaration that the tenant's right to acquire a new lease shall not be exercisable by the tenant by reason of the landlord's intention to redevelop. Failure to take the first of those steps will enable the tenant to apply to the court, under section 49(1) of the Act, for an order determining that the terms of acquisition shall be in accordance with the proposals contained in the tenant's notice. Failure to apply for an order under section 47(1) within the prescribed period of two months leads – in a case where there has been no application for an order under section 46(1) of the Act - to the requirement to serve a further counter-notice which complies with section 45(3). Failure to comply with that requirement leads, once again, to the position in which the tenant can apply to the court for an order under section 49(1) of the Act. (4) A landlord who has served a counter-notice in the appropriate form and who has applied to the court (under section 46(1) of the Act) for a declaration that the tenant had no right to acquire a new lease, or (under section 47(1) of the Act) for a declaration that the right to acquire a new lease shall not be exercisable, or for each of those declarations, but whose applications have been dismissed, must give a further counter-notice which complies with section 45(3) of the Act. Failure to do so leads, once again, to the position in which the tenant can apply to the court for an order under section 49(1) of the Act. (5) It is only where the landlord has served a counter-notice which complies with the requirement set out in section 45(2)(a) (that is to say, a counter-notice which states that the landlord admits that the tenant had on the relevant date the right to acquire a new lease of the flat) - or which is served following the determination by the court that the tenant did have that right or was entitled to exercise that right - that the procedure for the determination by a leasehold valuation tribunal of matters in dispute in relation to the terms of acquisition can be invoked under section 48(1) of the Act. And, in any such case, the counter-notice must comply with the requirements set out in section 45(3) of the Act – thereby ensuring that the matters in dispute are identified and defined.
17. It can be seen that the landlord's counter-notice is integral to the proper working of the statutory scheme. The scheme requires that the tenant must know, by the date specified in his own notice (under section 42(3)(f) of the Act), whether the landlord has given a counter notice in accordance with section 45(1). Absent a counter-notice in accordance with section 45(1), the period of six months within which the tenant can apply for an order under section 49(1) begins to run from that date. Further, if the landlord does give a counter-notice by the date specified in the tenant's notice under section 42, the scheme requires that the tenant must know, from that counter-notice, whether the landlord does, or does not, admit that the tenant had on the relevant date the right to acquire a new lease; and (whether or not the landlord admits that right) must know whether the landlord intends to apply for an order under section 47 of the Act. If the landlord admits the right to acquire a new lease, and does not intend to apply for an order under section 47, the period of six months during which the tenant can apply to a leasehold valuation tribunal under section 48(1) for the determination of any terms of acquisition which may be in dispute begins to run from the date on which the counter-notice was given. If the landlord does not admit the right to acquire a new tenancy – or (whether or not he admits the right) states his intention to apply for an order under section 47 of the Act – the period of two months during which the landlord can apply to the court under section 46(1) or 47(1) (as the case may be) begins to run from the date on which the counter-notice was given; and the tenant needs to know that, because the landlord's failure to make an application before the end of that period of two months will, itself, be an event which determines the period during which the tenant can apply for an order under section 49(1) – see sections 46(2), 47(3) and (5) and 49(3) of the Act.
18. The importance of the landlord's counter-notice to the proper working of the statutory scheme is reflected in the language of section 45(2) and (3) of the Act. The counter-notice must comply with the requirements in one or other of paragraphs (a), (b) or (c) in subsection (2). It must state whether the landlord admits, or does not admit, that the tenant had the right to acquire a new lease. If the counter-notice complies with the requirement in subsection (2)(a) – that is to say, if it does state that the landlord admits the right – subsection (3)(a) requires that it must in addition state which (if any) of the proposals contained in the tenant's notice are accepted by the landlord and which are not so accepted; and subsection (3)(b) requires that it must specify, in relation to each proposal which is not accepted, the landlord's counter-proposal. The words which I have emphasised are mandatory and specific. There is good reason why they should be. The proper working of the statutory scheme requires that the tenant is left in no doubt as to what the landlord admits, how far the tenant's proposals are accepted, and what (if any) are the landlord's counter-proposals. Further, the importance of the statement which subsection (2)(a) requires, as an admission, is emphasised by subsection (5) of section 45 of the Act.
19. In my view the answer to the question "what does section 45(2)(a) of the 1993 Act require?" is not open to doubt. If a notice is to comply with the requirement under that paragraph it must state that the landlord admits that the tenant had on the relevant date the right to acquire a new lease of his flat. Further, the notice must state which (if any) of the proposals contained in the tenant's notice are accepted by the landlord, as well as stating which of those proposals are not accepted and specifying, in relation to each proposal which is not accepted, the landlord's counter-proposal. Section 45(2)(a) must be read in conjunction with section 45(3) of the Act.
20. The question which the judge posed for decision – "whether a reasonable tenant could be misled into thinking that the landlord's counter-notice did not admit the right to a new lease?" – is, I think, derived from the test applied by Mr Justice Goulding in Carradine Properties Ltd v Aslam [1976] 1 WLR 442 – see at page 444G-H - and approved in the House of Lords in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 by Lord Steyn (at page 772C-D), by Lord Hoffmann (at page 780D-E, G), and by Lord Clyde (at page 782A-B). In each of those cases the notice in question was given under break clause in a lease. In the Carradine case the lease could be determined by either party if it (the landlord) or he (the tenant) ". . . shall desire to determine the present demise at the expiration of the first seven or 14 years of the said term and shall give 12 months notice in writing of such its or his desire . . .". In the Mannai case the break clause - clause 7(13) - was in these terms (so far as material):

"The tenant may by serving not less than six month's notice in writing on the landlord or its solicitors such notice to expire on the third anniversary of the term commencement date determine this lease. . ."

In each case the notice contained an error. In Carradine the error was obvious on the face of the notice. The notice, served by the landlord's solicitors and dated 6 September 1974, purported to determine the lease on 17 September 1973 – a date already in the past. Mr Justice Goulding held that the tenant must have seen that there was a mistake; and must have appreciated that the notice was given for termination in September 1975. In Mannai the term of the lease had commenced on 13 January 1992. The tenant gave notice to determine the lease "on 12 January 1995". The third anniversary of the term commencement date was 13 January 1995. The House of Lords held (Lord Goff of Chieveley and Lord Jauncey of Tullichettle dissenting) that what the lease required was a notice sufficient to communicate to the landlord the tenant's desire to terminate the lease on the third anniversary of the commencement of the term; and that (although the date specified in the notice was not the date of the third anniversary of the commencement date) the notice given by the tenant fulfilled that function. But it is important to appreciate that, in neither of those cases, did the break clause in the lease require the notice to be given in any particular form. The relevant question was whether the notice was sufficient to leave the recipient in no doubt as to the information which the giver of the notice wished to communicate. The point is made by Lord Hoffmann in Mannai at page 776B:

"If the clause had said that the notice had to be on blue paper, it would have been no good serving a notice on pink paper, however clear it might have been that the tenant wanted to terminate the lease. But the condition in clause 7(13) related solely to the meaning which the notice had to communicate to the landlord."

Observations to the same effect are found in the speech of Lord Steyn, at page 767E, ("This is not a case of a contractual right to determine which prescribes as an indispensable condition for its effective exercise that the notice must contain specific information") and in the speech of Lord Clyde, at page 781C-D ("But it is not required that the notice should include mention of the date of the intended determination of the lease").

21. The principles reviewed and restated in the Mannai case were applied to the contents of a statutory notice by this Court in York v Casey [1998] 30 EG 110, [1998] 2 EGLR 25. The notice was to be served under section 20(1)(c) of the Housing Act 1988, in advance of the creation of a tenancy, with the object of ensuring that the tenancy should be an assured shorthold tenancy. Section 20(2) of the 1988 Act required that the notice was in the prescribed form; was served before the tenancy was entered into; was served by the person who was to be the landlord on the person who was to be the tenant; and contained a statement that the assured tenancy to which it related was to be a shorthold tenancy. Regulation 2 of the Assured Tenancy and Agricultural Occupancies (Forms) Regulations 1988 (SI 1998/2203) prescribed that form no 7 in schedule 1 to the regulations "or a form substantially to the like effect" should be used. The prescribed form contained a statement, for completion as appropriate:

"You are proposing to take a tenancy of the dwelling known as [ ] from [ ] to [ ]."

In completing the form the landlord's agents inserted in that statement a commencement date of 28 September 1996 (which was correct) and a termination date of 6 September 1996. The latter was an obvious error, being the date of the notice itself and a date before the commencement date. The notice had been sent under cover of a letter which set out the true position; namely that the tenancy was to be for a period of six months from 28 September 1996. Lord Justice Peter Gibson (with whose judgment Mr Justice Bennett agreed) said this, at page 27K:

". . . what the court must do is to see whether the error in the notice was obvious or evident and, second, whether notwithstanding that error the notice read in its context is sufficiently clear to leave a reasonable recipient in no reasonable doubt as to the terms of the notice."

The Court held that it was plain, reading the notice and the letter together, that the intended termination date was 27 March 1997.

22. It is of interest to note the two other cases on notices under section 20(1)(c) of the 1988 Act to which reference is made in the judgment in York v Casey. In the one, Panayi v Roberts [1993] 28 EG 125, [1993] 2 EGLR 51, the decision went the other way. On the facts, this Court (Lord Justice Mann and Lord Justice Ralph Gibson) found that the mistake in the termination date was not obvious. Lord Justice Mann observed:

"The narrow issue is whether a notice which gives a wrong date (here a termination) is "substantially to the same effect" as one which gives the correct date. Authority and evident error apart, I find it difficult to say that it was."

In the other case, Brewer v Andrews [1997] EGCS 19, Lord Justice Auld (with whom Mr Justice Morland agreed) found that there was an obvious error – in that the termination date in respect of a tenancy for one year commencing on 29 May 1993 was expressed to be 28 May 1993. As Lord Justice Peter Gibson pointed out in York v Casey, those cases illustrate the application of the principle to different facts.

23. I have said that it is important to appreciate that in neither of the two cases on notices served under break clauses to which I have referred - Carradine Properties Ltd v Aslam [1976] 1 WLR 442 and Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 - did the break clause in the lease require the notice to be given in any particular form. Had the break clause required the notice to be in a particular form, the result would have been different The point was recognised by Lord Justice Peter Gibson in York v Casey [1998] 2 EGLR 25, at page 27C-D:

"It is of course right, as [counsel] for the defendants has submitted, that one should bear in mind that in a statutory context there may be requirements which have to be observed and without which a notice will be invalid. But the same may be true in the case of a contractual notice. For my part, I can see no material distinction between the approach in a case such as the present and the approach which the House of Lords has said [in Mannai] should be adopted in the case of a notice in a contractual setting."

24. The validity of a tenant's notice under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 was considered by this Court in Keepers and Governors of John Lyon School v Secchi and another [1999] EG 100, [1999] 3 EGLR 49. Section 42(3)(f) of the 1993 Act requires a tenant's notice to specify the date by which the landlord must respond by giving a counter-notice; and section 42(5) requires that that date must be a date falling not less than two months after the date of the giving of the notice. Notices dated 11 February 1997 specified 11 April 1997 as the date by which the landlord was required to serve a counter-notice. One notice was served on the landlord on 12 February 1997; the other notice was served on a third party – who had entered into covenants in the lease to repair and insure the premises – on 23 April 1997. The Court held that the notices were invalid. After referring to the relevant passages in the Mannai case, and to York v Casey, Lord Justice Aldous (with whose judgment Lord Justice Beldam and Lord Justice Tuckey agreed) said this, at pages 51M-52A:

"[Counsel for the appellant landlord] drew attention to the speeches of Lord Steyn and Lord Hoffmann, which, he submitted, made it clear that the conclusion sought to be reached could only be achieved if the error in the notices was obvious and, also, was sufficiently clear to leave the recipient in no reasonable doubt as to its terms. In the present case the date was chosen by the tenants to set the time for the counternotices. The landlord could not know when the notices had been given to the third party and therefore had to rely upon the date in the notices. As it turned out the third party was not given notice until 23 April. It followed that the date for the service of the counternotices could not have been 12 April, as was suggested to be the obvious date to be inferred by the landlord when he received the notices. There was no way in which the counternotices could be construed as requiring the date for the counternotices to be no later than 23 June. It followed that, even applying the principles set out by the House of Lords in the Mannai case, these notices cannot be saved.

I agree with those submissions. It is quite clear, and I think was really conceded by [counsel for the tenant], that if the time for service of the counternotices started to run from the later of the dates upon which notice was given to the landlord and the third party then the principles in Mannai could not be applied. Even if the date for the counternotices only ran from the date of the notices that had been given to the landlord, I do not believe that the notices could have been saved by construing them according to the principles set out in the speeches in the House of Lords. I see no reason why the date of 12 April would be evident as opposed to some other date after 12 April."

25. We were referred, also, to the decision of this Court in Speedwell Estates Limited and Covent Garden Group Limited v Dalziel (unreported, 31 July 2001, neutral citation number [2001] EWCA Civ 1277). The notices, in that case, were notices of the tenants' desire to have the freehold under Part 1 of the Leasehold Reform Act 1967. Paragraph 6 in Part II of Schedule 3 to the 1967 Act required such a notice to be given in a prescribed form; and set out the particulars which it should contain. At the relevant date the form prescribed was Form 1 in the schedule to The Leasehold Reform (Notices) Regulations 1997 (SI 1997/640). The schedule to Form 1 contained nine paragraphs directed to the provision by the tenant of various information. The deficiencies in the forms, as completed by the tenants, included failure to identify the instruments creating the tenancies, failure to provide any information as to the rateable values of the houses on the appropriate day sufficient to show that the rent was a low rent, and failure to provide particulars as to the tenants' occupation of the houses. The Court held that the failure to provide particulars as to the tenants' occupation, and the failure to provide information as to rateable value, was fatal to the validity of the notices.
26. Mr Justice Rimer (with whose judgment the other members of the Court, Lord Justice Pill and Lord Justice May, agreed), after referring to the speeches in the House of Lords in the Mannai case, pointed out, at paragraph 17 of his judgment, that it was important "to emphasise that the House of Lords was not saying that anything less than proper compliance with the terms of a contractual break clause would be sufficient to effect the break". He referred, also, to the passage in the judgment of Lord Justice Peter Gibson in York v Casey [1998] 2 EGLR 25, at page 27C-D which I have already set out. He went on, at paragraph 22, to say this:

". . . I consider that the better approach is to look at the particular statutory provisions pursuant to which the notice is given and to identify what its requirements are. Having done so, it should then be possible to arrive at a conclusion as to whether or not the notice served under it adequately complies with those requirements. If anything in the notice contains what appears to be an error on its face, then it may be that there will be scope for the application of the Mannai approach, although this may depend on the particular statutory provisions in question. The key question will always be: is the notice a valid one for the purpose of satisfying the relevant statutory provision."

In my view, that passage encapsulates, succinctly and accurately, the correct approach. I may add that I think that that is the approach to be adopted not only in relation to notices served under statute but also to notices served under contractual provisions such as those commonly found in leases.

27. I should add that, following completion of oral argument on this appeal, we were referred by counsel to the decision of Mr Justice Templeman in Lewis v MTC (Cars) Ltd [1974] 1 WLR 1499. The case turned on the validity of a notice served by a head landlord under Part II of the Landlord and Tenant Act 1954. Section 25 of that Act enables a landlord to determine a business tenancy to which Part II applies by the service of a notice in the prescribed form. Subsection (6) provides that a notice under that section shall not have effect unless it states whether the landlord would oppose an application to the court for the grant of a new tenancy; and, if so, also states on which of the grounds mentioned in section 30 of the Act he would do so. Paragraph 3 of the prescribed form contained two sentences. The first was in these terms: "[I would not oppose an application to the court under Part II of the Act for the grant of a new tenancy . . . ]". The second sentence, to be used in the alternative, read: "[I would oppose an application to the court . . . under Part II of the Act for the grant of a new tenancy on the grounds that * . . .]". The landlord failed to strike out either sentence; but in the space following the second sentence – which, as Mr Justice Templeman found, was provided so that the statutory grounds of opposition could be set out – the landlord had included the following:

"(a) 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. (b) 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."

As Mr Justice Templeman observed, at pages 1501H:

"No one reading that notice can be in the slightest doubt; the landlord accidentally failed to strike out the first sentence and intended to oppose an application to the court for the reasons set out in the notice."

He went on, at page 1502B:

"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 a true construction, state that which section 25(6) requires to be stated."

It is clear that Mr Justice Templeman's approach was to ask, first, what did section 25(6) of the 1954 Act require to be stated; and then to ask whether, as a matter of construction, the notice did state that which the section required to be stated. That approach is wholly consistent with the later authorities.

28. I return, therefore, to the question posed by the judge in the present case: "whether a reasonable tenant could be misled into thinking that the landlord's counter-notice did not admit the right to a new lease?" In my view that was not the correct question. The correct question is: "does the counter-notice served by the landlord state that the landlord admits that the tenant had on the relevant date the right to acquire a new lease of his flat?". And, if that question is answered in the affirmative, there is the further question: "does the counter-notice served by the landlord state which (if any) of the proposals contained in the tenant's notice are accepted by the landlord and which (if any) of those proposals are not so accepted?".
29. I would hold that the answer to the first of those questions is that the notice served by the landlord in the present case does not state that the landlord admits that the tenant had on the relevant date the right to acquire a new lease of his flat. I would also hold that the answer to the second of those questions (if it arose) was that the notice does not state which (if any) of the proposals for a new lease contained in the tenant's notice are accepted by the landlord. Plainly, the notice does not, in terms, contain either of those statements. I accept, of course, that it would be enough if, upon a true construction of the notice, it could be found to contain such a statement or statements. But I am satisfied that there is no permissible process of construction which leads to that conclusion.
30. The judge held that "the only reasonable conclusion which a reasonable tenant would come to is that the landlord did admit the tenant's right". He reached that view for the two reasons which he gave in the passage at paragraph 7 of his judgment which I have already set out. First, the inclusion of a statement that the landlord did not accept the premium proposed by the tenant, and the landlord's counter-proposal in respect of premium, were consistent with an intention to serve a notice which satisfied the requirement under section 45(2)(a); would have had no relevance to a notice which did not admit the tenant's right; and would be inconsistent with an intention not to admit that right. Second, a notice which did not admit the tenant's right ought to have contained reasons why the right was not admitted – see section 45(2)(b) of the Act. The notice contained no such reasons and so could not be a notice under paragraph (b); so it must be a notice under paragraph (a) of the subsection.
31. I am not persuaded that the reasons given by the judge lead to the conclusion that, on a true construction, the notice in the present case states that the landlord admits the tenant's right to acquire a new lease. The fact that the notice could not be a valid notice under section 45(2)(b) of the Act – nor, as is the case, a valid notice under section 45(2)(c) - does not demand or justify the response that it must be a valid notice under section 45(2)(a). That might be legitimate response if it were accepted that the notice had to be valid under one of the paragraphs in section 45(2) of the Act; but to accept that is to beg the question. The notice is not a valid notice under section 45 of the Act simply because it purports, by its heading, to be given under that section. Further, it does not follow from the fact that the statement that the landlord does not accept the premium proposed by the tenant is consistent with a notice under paragraph (a) of section 45(2) that the notice must be a notice under that paragraph; nor that the notice must be construed as if it contained an admission of the tenant's right. If the notice is otherwise an invalid notice, the inclusion of some of the information which a valid notice would contain does not alter that position.
32. On a true construction, the effect of the notice, as it seems to me, is that it informs the recipient that the landlord has not decided whether to admit, or not to admit, the tenant's right to acquire a new lease; or has chosen not to disclose to the tenant whether the right is admitted or not admitted; and has not decided (or not chosen to disclose) whether – if there is to be a new lease – it accepts, or does not accept, that the terms (other than those as to rent and duration prescribed by section 56(1) of the 1993 Act) are to be the same as those of the existing lease, as proposed in the schedule to the tenant's notice. So construed, the notice does not comply with the requirements of section 45(2) of the Act. It is not permissible, in my view, to read into the notice as served admissions which are not there in order to treat it as a valid notice.
33. For those reasons I would allow this appeal.

SIR MURRAY STUART-SMITH:

34. I agree.
Order: Appeal allowed with an order for a new lease of the premises under section 49 of the 1993 Act on the terms set out in the tenant's notice; the respondents to pay the costs here and below; detailed assessment of those costs; permission to appeal to the House of Lords refused. (Order does not form part of the approved judgment)