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Anthony and Harry Fitzhugh were the two surviving administrators
of their father's estate. In 1998, the then administrators
(Anthony, Harry and another brother) transferred a house to Anthony
and his partner. At the same time, they granted Anthony and his
partner a licence to use farm outbuildings and various fields. The
three administrators were defined as the Licensor and Anthony and
his partner were defined as the Licensee. The licence fee was
£1 a year and there was a right for the licensor to terminate
if the licensee committed any grave or persistent breaches. Anthony
failed to pay the annual licence fee. Eventually a firm of
solicitors writing "on behalf of all the family members of the
late Harry Fitzhugh Senior regarding his estate" wrote to
Anthony and his partner requiring them to pay the £7 arrears
of licence fees within seven working days. This was not done, so
Harry commenced proceedings for possession of the land. The
question for determination was whether the notice was properly
served.
The High Court held that the notice was effectively served. In
the judge's view, to hold that no notice could be given would
be an unsatisfactory contractual result which the parties could not
have intended. The solution was to construe the reference to the
Licensor as referring to all persons who were together the Licensor
apart from any person who was also the Licensee.
The Court of Appeal disagreed and allowed Anthony's appeal.
Anthony was expressly described as one of the individuals making up
the Licensor. A "reasonable person having all the background
knowledge" would regard it as improbable that in a short,
professionally drawn up document, the Licensor was intending to
mean one thing in the opening words and another in the right to
terminate. There was nothing to suggest that there should be any
change in meaning or that something had gone wrong with the draft.
The reasonable person might well also foresee the potential for
practical difficulty in the event (as happened) that Harry wanted
to serve a notice on Anthony – and that Anthony would
refuse to join in the service. Anthony's duties as an
administrator would require him to subordinate his own conflicting
personal interest and so concur in service of the notice. He could
concur expressly without prejudice to his right in his personal
capacity to dispute the justification for the notice and it would
be open to him to dispute its justification in proceedings brought
against him. Alternatively, if Anthony were to decline to join in
the giving of any notice, it would in principle be open to Harry to
seek his removal as an administrator. The reasonable man would
therefore be likely to conclude that, although this interpretation
of licensor might give rise to practical difficulties, it would not
render the machinery of the licence unworkable. It was not part of
the function of the court to improve the document it was called on
to construe, nor did it have any power to do so.
Comment. Note the need to think through the
implications wherever a person might be a party on both sides of a
transaction in different capacities. In particular, make sure that
mechanisms such as notices cannot be thwarted by the recipient of
the notice refusing to join in the giving of the notice. Perhaps
the court was swayed by the fact that the sum due was just
£7, not that there was any indication in the judgment that
failure to pay was anything other than a material breach.
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