Archive for the ‘termination’ Category

Failure to pay deposit by stipulated date: the seller did not waive the breach by cashing a cheque for the deposit after communicating an intention to treat the agreements as terminated

February 11, 2017

In Fast Happy Ltd v Lee Chun Pong Bruce ([2017] HKEC 121) the plaintiffs entered into provisional sale and purchase agreements (‘the agreements’) for the sale of land by the plaintiffs to the defendants. The initial deposit was to be paid in two instalments on dates specified in the agreements.

The cheque for the first instalment was not honoured when presented. The cheque for the second instalment was proffered after the date specified in the agreements. Time was of the essence for making the payments.

The sellers’ solicitors sent an email and a letter to the estate agents handling the transactions terminating the agreements on the grounds of the buyers’ breach. The plaintiffs’ bank then re-presented the cheque for the first instalment of the deposit and it was honoured.

The defendants registered the agreements at the Land Registry and the plaintiffs sought the vacation of these registrations. The defendants argued that the plaintiffs had waived the breach by presenting the cheque for the first instalment of the deposits after the defendant’s breach.

The defendant’s argument failed. The sellers were entitled to cash the deposit cheque and to forfeit the deposit without waiving the breach. This was especially the case since the sellers had by then given clear notice of their intention to treat the agreement as having come to an end.

This was a case where the estate agents were acting for both parties and not only for the sellers. Thus notice of termination given to the agents was an effective way of giving notice to the defendants.

Michael Lower

Implied terms as to termination of contractual licences

January 25, 2013

In Australia Blue Metal Ltd v Hughes ([1963] A.C. 74, PC) ABM granted H a licence to mine certain minerals on a specified portion of ABM’s land. There was no licence term nor any express provision as to how the licence could be brought to an end. ABM gave H notice requiring H to leave the land immediately.

The Privy Council held that this was not a licence coupled with an interest as Hughes had no right to extract any specified quantity of the minerals. This was either a case in which the licence could be terminated at any time on reasonable notice or it could be terminated with immediate effect but Hughes would then have a reasonable period of grace in which to leave. It was unnecessary to decide between these alternatives since either would lead to the same practical conclusion since Hughes had not been required to leave the land immediately and a reasonable period had since elapsed.

The Privy Council rejected the argument that the implied term was that ABM had to specify the notice period in the notice (and that this must be reasonable). There would need to be clear evidence to justify the implication of such a term.

On whether there was an implied term that notice should be reasonable, Lord Devlin said:

‘The question whether a requirement of reasonable notice is to be implied in a contract is to be answered in the light of the circumstances existing when the contract is made. The length of the notice, if any, is the time that is deemed to be reasonable in the light of the circumstances in which the notice is given.’ (p. 99)

On the construction of terms as to notice generally, he said:

‘An express provision about notice can be in any form which the parties care to adopt. If the term is that a contract is to terminate six months (or a reasonable time) after notice given, the notice need amount to no more than an election to terminate. It will automatically take effect after the expiry of six months (or of such period as the court subsequently determines to be reasonable). On the other hand, an express term can prescribe the form and content of any notice to be given and then a notice in the wrong form or with insufficient content will be bad. If the contract is, as here, entirely silent about notice and a term has to be implied, the nature and requirements of the term to be implied must be settled according to the ordinary rules governing the implication of a term. The question then will be whether the necessary implication extends beyond that of a simple notice to embrace a notice in a particular form or with a particular content.’ (pp. 100 – 101)

Contractual licences: implied notice period

January 23, 2013

In Minister of Health v Bellotti ([1944] KB 298, CA) the Minister of Health granted licences of flats to war-time evacuees from Gibraltar. B was one such contractual licensee of the Minister. The Minister purported to terminate the licence on one week’s notice (because of discipline problems). There was no express term specifying a notice period. When B refused to leave the Minister sought an injunction to restrain B from coming to, or remaining on, the premises.

The Court of Appeal held that the implied term as to notice must take into account ‘the whole of the circumstances in which the license came into existence.’ (304). In this case:

‘[I]t must surely be the implied intention of the parties that, if they were turned out by the ministry, they should be given such an opportunity as strangers in the land might require, to enable them to find other accommodation.’ (305 per Lord Greene MR).

One week was not enough. It did not give B a reasonable time to move out (305 -6).

On the other hand, the notice was valid despite the insufficiency of the notice period. A reasonable time to arrange to move out had, in fact, elapsed between the date of the notice and the date of the hearing.

Notice to terminate a licence of land used for a public purpose

January 17, 2013

In The Governing Body of the Henrietta Barnett School v The Hampstead Garden Suburb Institute (93 LRG 470) HGSI had (for many decades) allowed the School to use its land. HGSI then purported to terminate the licence on 9 months’ notice (having been advised that the licence could be terminated at will). It was held that although HGSI was entitled to terminate the licence the notice given was inadequate. Just as in Canadian Pacific Railway Company v The King the fact that peremptory termination of the licence would have an adverse impact on the public was a relevant consideration. In the absence of express provision as to notice, there must be implied into the notice a requirement to give sufficient time to allow the school to make alternative arrangements and to safeguard the public service.

Building contract: interim injunction allowing employer to recover possession in response to alleged breach of contract

January 15, 2013

In Yau Fook Hong Co Ltd v Man Cheong Construction Co ([1981] HKLR 60, HC) Y (the employer) engaged the services of M (the contractor) under the terms of a building contract providing for the construction of a block of flats. Y purported to terminate the contract in response to M’s failure to make adequate progress (the contract conferred such a right of termination). M refused to give back possession of the site. Y sought, inter alia, an interim injunction requiring M to give back possession. M disputed Y’s right to serve a notice to terminate the contract, that the purported notice had been duly served and that Y was entitled to an interim injunction. The injunction was granted since there was a serious question to be tried and damages would be an adequate remedy for the contractor but not for the employers. The employers would be able to honour the undertaking to pay damages should they fail at trial.

Fuad J. thought that it might be difficult for the contractor to persuade the court to follow the line taken by Megarry J. in Hounslow Borough Council v Twickenham Garden Developments Ltd to the effect that there might be an implied covenant not to terminate a contractual licence early and that, if this were present, the court could grant an injunction to prevent premature revocation.

Fixed term lease but landlord required to give one month’s notice to quit

March 29, 2012

林玉芬 v 姜滿盛 ([2012] HKEC 236) concerned an intended fixed-term lease for a term of three months expiring on 28 February 2011. The lease required the landlord to give one month’s notice to quit. The Lands Tribunal held that, on its true construction, this meant that the landlord would not be entitled to recover possession even after the expiry of the fixed term unless notice was duly served. L purported to serve a notice to quit by registered post on 9 March 2011. This attempt failed and the letter containing the notice was returned to the sender. The tenant paid rent for March and April. An application to court to recover possession was served on the tenant on 11 April 2011. The Lands Tribunal held that the application to court was premature since the landlord had no right to possession on 11 April; the landlord had not yet served the necessary notice to quit. It could have been argued that in fact no lease was created since there is a clear doubt as to certainty of term (no certainty as to when the landlord would serve the notice). This would probably have made no practical difference since the court could have given effect to the arrangement as a contractual licence (at least this is the current English view).

A lease can be brought to an end by acceptance of a repudiatory breach

January 20, 2012

A lease is a contract and like any other contract can be brought to an end by acceptance of the other party’s repudiatory breach. Statutory and contractual provisions affecting the right to recover possession apply in such cases as they do to forfeiture.

In Hussein v Mehlman ([1992] 2 EGLR 87) H was the tenant of a house. The landlord was in serious breach of the repairing covenants implied by statute. H sought to bring the lease to an end by accepting the landlord’s repudiatory breaches. He did this by returning the keys and giving back possession of the property. It was held that, as with any other contract, acceptance of a repudiatory breach of a lease brings it to an end. The right to end the lease in this way is subject to the statutory and any relevant contractual provisions that would apply to forfeiture.

Licensee estopped from challenging licensor’s title

July 20, 2011

Where a licensee takes a licence on the basis of a clear understanding as to the title claimed by the licensor then he is estopped from denying that title. The death of the licensor terminates a licence. If a licence fee is paid to a new licensor there is an implied grant of a new licence.

Terunnanse v Terunnanse ([1968] AC 1086, PC) concerned a licence of land in Sri Lanka (then Ceylon). The landowner executed a deed conferring rights on the appellant. The appellant granted a licence to the respondent. The landowner died in 1944. The respondent stopped paying the licence fee in 1953. In his defence, the respondent claimed that the appellant had no title to the land. The Privy Council held that the appellant had made it quite clear to the respondent that he was claiming the licence fee as something that he was entitled to as of right and the payment was clearly made on that basis. The respondent / licensee was therefore estopped from disputing the licensor’s title. The death of the original landowner had terminated the original licence and there had been an implied regrant.