Mannai Inv. Co Ltd v Eagle Star Life Assurance Co Ltd (1997)
Notices exercising a break clause were effective despite the date behind one day out, as it would still have been obvious to a reasonable recipient that the tenant wanted to determine the lease at the end of the period before the break clause.
The Landlord, Eagle Star, owned office premises in London which they leased to Mannai Investment Co Ltd. The lease contained a break clause which allowed the landlord to break the lease by serving 'not less than six months notice in writing .. such notice to expire on the 3rd anniversary of the term commencement date'.
The tenant gave notice to terminate the lease by serving two identical break notices. The notices were correct save that the termination date of the leases were stated as 12 January 1995 rather than 13 January 1995. In this case, the [break] clause did not require the tenant to use any particular form of words. He was simply required to use words which ambiguously convey a particular meaning, namely an intention to terminate the lease on January 13th. The tenant contended that it was clear that the effect of the notices was to determine the lease on 13th January, as this was the only day on which they could have determined. Alternatively, the tenant argued that the notices did not take effect until the moment of time that was both the last moment of January 12th and the first of January 13th, so they did determine the leases on January 13th.
The judge found for the tenant on the second of these two grounds, but the Court of Appeal allowed the landlord's appeal.
On appeal:
HELD: The House of Lords allowed the tenant's appeal. The House concluded that the key test is whether the notice construed against its contextual setting would unambiguously inform a reasonable recipient how and when it was to operate. If so, despite the error in the notice, termination should take effect. The House of Lords ruled that it was obvious to a reasonable recipient with knowledge of the leases and the third anniversary date, that the tenant wished to determine the leases on that date. A reasonable recipient would not have been perplexed by the minor error in the notices.
The following principles were derived from the case:-
1. Notices exercising break clauses will be valid even if they contain errors if they are sufficiently clear & unambiguous to leave a reasonable recipient in no reasonable doubt as how & when they operate;the test is an objective one;
2. Evidence of what the landlord knew is inadmissible but publicly available information is admissible;
3. However - a notice can be so unambiguously wrong that it cannot be saved by any construction.
Citation: Mannai Inv. Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 25 EG 138