Notice Terminating Licences

In the case of Fitzhugh –v- Fitzhugh [2012] EWCA Civ 694, a licence was granted to the defendant and his partner to use some land for grazing animals. The licence was granted by the claimant and the defendant (note two parties), who together were the administrators of their father's estate.

 

The agreement provided that it could be terminated by the licensor in the event of a breach by the licensee and which such breach was not remedied – such as non-payment of the licence fee. The defendant (both the licensor and licensee) did not pay the annual fee required under the agreement. The claimant (alone) gave notice to terminate the licence. The High Court held that the notice was valid, even though the agreement defined the 'licensor' as comprising both the claimant and the defendant. The defendant appealed against this decision contending that the Licensor was both the claimant and the defendant.

 

The Court of Appeal allowed the appeal. The defendant was expressly defined as one of the individuals making up the 'licensor'. The Court of Appeal determined that it was improbable that in a short and simple professionally drawn document the defined term was intended to mean one thing in one part of the document but something different somewhere else. Since the document was workable, even if its working may prove cumbersome or expensive (see below), it was not necessary to imply a term that in the termination provision 'licensor' was to be read as excluding any person who was also the licensee.

 

The notice was therefore deemed to be invalid as it had not been served by all the licensors, or the Claimant and the Defendant.

 

Although this strikes as a difficult hurdle for the Licensor to jump in having to ensure the licensee agrees with the notice to terminate in order to serve it, therefore to some extent negating the need to rely upon any such notice. It demonstrates the need to have termination provisions in licence and tenancy agreements properly drafted. The parties could have avoided this result by expressly providing that notice to terminate could be given by the licensor, other than any licensor who was for the time being a licensee. At Benchmark Solicitors we can assist with all landlord and tenant matters to ensure your agreement reflects what you wish it to achieve. We can also assist you to enforce your rights under any existing agreement.

 

However in this case the claimant was not left entirely without a remedy. The court ruled that the defendant's duties as an administrator would require him to ignore his own personal interests and agree with service of the notice. If he did not do so, it would be open to the claimant to seek his role of an administrator being removed (if necessary by court proceedings). This would then enable the claimant to act alone.

 

Removing the defendant as administrator would take time and could be expensive. It would also have consequential effects upon the parties as the licensee would be entitled to remain on the land up until he was removed as an administrator and a valid notice was served.