the notice was not a valid notice under clause 3.2.2 because it was vague and uncertain
36 The applicant seeks a declaration that the notice was not a valid notice pursuant to clause 3.2.2 of the lease, and is of no effect. The first basis upon which the applicant claims the notice is invalid is that it was vague and uncertain.
37 The applicant relied upon a number of cases as authority for the proposition that a rental increase notice has to be clear and certain to be valid, and that such notices are construed strictly.
38 The first of these cases was Catley v Watson (1983) V ConvR ¶54-003, which involved a notice of rescission served by a vendor upon a purchaser. In that case, "copyright condition 5" of the contract provided for the service of a notice of rescission. Brooking J stated, at 62,115:
"In my opinion, a notice under copyright condition 5 is not valid unless it is, in relation to its essential features as required by that condition, clear and unambiguous. By this I mean, not that its import must be clear beyond the slightest peradventure, but that its terms must be such that a reasonable person, having given it fair and proper consideration, would be left in no doubt as to its meaning. A notice is not unequivocal, in the sense in which such notices are required to be unequivocal in relation to their essential contents, if a reasonable person, having considered the notice as a whole, fairly and properly, might entertain a doubt as to its meaning in relation to some essential matter, even though he would form in his mind a preference for one view, rather than the other of what the notice was intended to convey. It must be possible to say that, after the appropriate consideration, any doubts that may have arisen would have been quieted and the purchaser would not be left in any uncertainty as to the meaning of the notice…". (emphasis added)
39 Plainly, Catley v Watson can be relied upon only by analogy as it concerns the requirements for a valid rescission notice and not the requirements for a valid rental review notice.
40 The applicant also cited the case of Norwich Union Life Insurance Society v Tony Waller Ltd (1984) 270 EG 42. That case dealt with a rent review clause and a notice purportedly served pursuant to that clause. The notice was not addressed to the tenant by its proper title and was flawed in other respects. It was in the following terms:
"Without Prejudice
Dear Sir, 19 Fawkon Walk, Hoddesdon.
We have been instructed by your landlords, the Norwich Union Insurance Group to negotiate with you in connection with the rent review contained in your lease which becomes operative as at September 29 1982.
It is out clients proposal to increase the rental to Ł11,500 per annum exclusive as from this date.
We trust that this increase is acceptable to you and would be obliged if when replying you would enclose the name and address of the solicitors who will be acting on your behalf.
Yours faithfully".
41 In that case, Harman J stated, at 43:
"I have been much impressed with Mr Pryor's argument that this document was in truth equivocal. It is common ground between the parties that no specific form has to be adopted in order to constitute a trigger notice. Mr Wood's submission was that it should be a clear and unequivocal notice giving plain intimation to anyone receiving it of what it was. Certainly, that is, in my view, the desirable state of all such notices. But it being common ground that no special form of words is necessary - no magic formula is involved - the question is: trying to read it as a whole, looking at its confused terminology, its meaningless heading "Without prejudice" and its general ineptitude, is this a document which a tenant looking at it would think was a trigger notice?"
42 His Lordship concluded by finding, at 43, that:
"although there are no magic words or magic formulae to be required before a rent review clause is invoked, … the document does have to be clear and plain to any recipient."
43 The applicant also relied upon the decision of the English Court of Appeal in Shirlcar Properties Ltd v Heinitz (1983) 268 EG 362 ("Shirlcar Properties"). That case also involved a rent review clause and "trigger" notice. The only matter at issue as to the validity of the notice was whether there was any doubt as to its meaning.
44 The body of the trigger notice was in the following form:
"We act on behalf of your Landlords, Shirlcar Properties Ltd, and have been instructed to deal with the rent review on the above premises due as at the 29th September 1981. The rent required as from the review date is Ł6,000 pa exclusive, and we look forward to receiving your agreement.
Yours faithfully".
45 The agent's signature then followed. However, as Lawton J explained at 363:
"a difficulty has arisen because the letter did not end with the signature of the estate agents: under that signature in capital letters which were underlined came the words "subject to contract". Immediately below that, also in capital letters, were the words "recorded delivery". "
46 The tenant submitted that the words "subject to contract" meant that the notice could be read as the commencement of negotiations between the landlord and tenant, with the landlord putting forward a provisional figure which was merely a precursor to the rent review machinery under the lease being activated. Otherwise, it was submitted, the reference to "subject to contract" did not make sense.
47 The Court of Appeal (per Lawton, Kerr and Dillon LJJ) agreed and found the notice to be invalid. The test propounded by their Lordships was whether the reasonable tenant in receipt of such a notice would be in doubt as to its meaning. Lawton LJ, at 364, stated:
"Since there is an argument both ways about this matter and as, in my judgment, it is an argument which is reasonable on both sides, it seems to me that it cannot be said that the tenants, on receiving this letter, would necessarily and reasonably have inferred that it was an effective trigger notice for the purpose of the lease. There is doubt about its meaning and as there is doubt it seems to me that the letter was ineffective for the purposes of the rent review clause in the lease."
48 Lastly, the applicant cited Central Pacific (Campus) Pty Ltd v Staged Developments Australia Pty Ltd (1998) V ConvR ¶54-575 ("Central Pacific"). That case, like Catley v Watson, involved a rescission notice. Callaway JA, with whom Buchanan JA agreed, stated at 66,909 that the relevant approach is to ask:
"whether a reasonable person who had considered the notice as a whole and given it fair and proper consideration would be left in any doubt as to its meaning."
49 In that case it was found that there was no ambiguity in the meaning of the notice, and therefore, the notice was valid.
50 Turning to the application of these principles to this proceeding, the applicant contended that there were a number of features of the notice that would leave a reasonable person in receipt of it in doubt as to whether it was a notice pursuant to clause 3.2.2, or whether it merely conveyed to the reader that a rental review was contemplated, but would take place some time in the near future.
51 In particular, the applicant submitted that the notice would be likely to have conveyed to a reasonable person, reading it as a whole, that a rent review process was to commence on 1 March 2003. That impression was bolstered by the reference in the heading in Mr Allen's letter to a "Rental Assessment" that would commence on that date. Indeed, it was further bolstered by the statement in Mr Allen's letter that "a market review of the rent paid is to take effect from 1 March 2003".
52 The applicant also relied upon the fact that Mr Allen concluded his letter by stating "[i]n due course we will correspond with you regarding the new monthly rental", thereby implying that there would be further discussions regarding the matter. Finally, the applicant noted that the Colliers letter stated that "a market value rental review is due in respect of this property on the 1st of March 2003", once again suggesting that there would be a "review" prior to any notice issuing. Importantly, Mr Allen's letter referred to the Colliers letter, stating that it would "form the basis of" the new rent. That too was said to imply some further step having to be taken before the new rent was fixed.
53 The applicant contended that the impression that a rent review process would commence on 1 March 2003, rather than any actual requirement to pay increased rent, might have been dispelled had the notice referred specifically to clause 3.2.2, and identified itself as a notice issued under that clause. However, nothing of that kind had been said. Rather, there had simply been a vague reference to a review "[u]nder the terms of our lease".
54 The applicant further submitted that another way in which the impression might have been dispelled was if the notice had specifically drawn the applicant's attention to its entitlement, as lessee, to dispute the new rental provided that it did so within 30 days, or alternatively, within the requisite period. The failure to include in the notice any intimation of that type, which might have corrected an otherwise misleading impression, meant that the notice should be regarded as invalid.
55 The applicant acknowledged that there was no formal list of requirements that a notice must satisfy in order to be valid. Nor was there a template that a notice must fit. Rather, each notice must be considered in the light of its own particular circumstances, and the language employed construed in a sensible and practical manner. Nonetheless, it was submitted that where the notice was expressed in terms that were uncertain, it would require features of the kind identified above to counter that uncertainty.
56 In addition, the applicant submitted that the factual matrix within which the notice was sent should be taken into account. This included the alleged telephone conversation on or about 20 December 2002 when, Mr Bertrand maintained, nothing was said by Mr Allen about any rental increase despite either having sent the notice on that very day, or having been about to do so. The implication was that Mr Allen was acting in a manner that was less than forthright in his dealings with Mr Bertrand. In particular, the implication was that Mr Allen hoped that the actual significance of the notice would escape Mr Bertrand's attention, and that he would not appreciate the need to object to the rental assessment figure within the requisite 30 day period. That implication was said to be bolstered by the fact that the notice was sent on virtually the last working day before Christmas, and addressed to the applicant at the Mulgrave premises rather than to Mr Jarman, as would normally be the case.
57 The applicant contended that given that the notice was itself at least ambiguous, the fact that a meeting had been arranged when the notice was sent for a date after the 30 day period (if I accept Mr Bertrand's evidence) lends further weight to the impression that the notice was not a notice pursuant to clause 3.2.2. Rather, the applicant submitted, this supported its contention that the notice was merely an indication that some kind of review process would occur in the future. The applicant contended that a reasonable person in Mr Bertrand's position, reading the notice on 23 December 2002, would have in the back of his or her mind that there was to be a meeting with Mr Allen in early February, and construe the notice accordingly.
58 In addition, the applicant contended that I should also take into account, in considering the factual matrix within which the notice was read, the fact that Mr Bertrand, although a professional and experienced businessman, spoke English as a second language and not entirely fluently.