Home Information Cases Hexstone Holdings Ltd v AHC Westlink Ltd (2010)

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Hexstone Holdings Ltd v AHC Westlink Ltd (2010)

Summary

A notice to terminate an underlease was invalid because it had been given by the parent company of the tenant and there was no evidence that the parent company had authority to act as agent on behalf of the tenant.

Facts

The claimant landlord (L) claimed for a declaration that an underlease to the defendant tenant (T) had not been terminated. The underlease gave T an option to terminate it on a specified day by giving six months' notice in writing. T sent an announcement that it had merged with a group of companies and would be changing its name to that of its new parent company. As requested in the announcement L directed future rent invoices to the parent company, which duly paid them. However, the name change did not occur. T then gave notice under the option, which was written on the parent company's notepaper and expressed to be "for and on behalf of " the parent company. L argued that the notice had not been given by T and was therefore invalid.

Held

The notice had clearly been given by the parent company and was not expressed to be given by the parent company as agent for T. There was no evidence that T had made the decision to give the notice or authorised its parent company to act on its behalf. There was no evidence of express authority creating a general agency, and no evidence from which it could be implied. The mere payment of rent coupled with occupation did not necessarily indicate that the payer had the tenant's authority to terminate the legal estate. Even if the parent company had been authorised to serve the notice on T's behalf, the absence of reference to agency on the face of the notice meant that L could not have acted safely in the knowledge that the notice would be binding on T, Lemmerbell Ltd v Britannia LAS Direct Ltd (1999) L & TR 102 CA (Civ Div) applied. The change of name announcement did not alter the position, because the notepaper on which the notice had been written gave the parent company's registration number which was different from T's registration number contained in the underlease, and so clearly indicated that the entity giving the notice was not the original tenant. Accordingly, the notice was invalid and ineffective to terminate the underlease.

Declaration granted in favour of claimant

Chancery Division
Edward Bartley Jones QC
Judgment date
11 June 2010
References

​LTL 14/6/2010 : [2010] EWHC 1280 (Ch)

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