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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Taylor v Lancashire County Council & Anor [2001] EWCA Civ 174 (9 February 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/174.html Cite as: [2001] EWCA Civ 174, [2001] NPC 34, (2001) 82 P & CR DG5

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM PRESTON COUNTY COURT
HIS HONOUR JUDGE GEE

		Royal Courts of Justice Strand, London, WC2A 2LL Friday 9th February 2001

LORD JUSTICE DYSON:

1. This is an appeal from the decision dated 10 September 1999 of Judge Gee sitting at Preston County Court in relation to an arbitrator's award made under the Agricultural Holdings Act 1986 ("the Act"). The arbitration was concerned with disputes which had arisen under an agricultural tenancy agreement dated 19 October 1962 in relation to Pollards Farm, Hutton, Lancashire, between Joseph Taylor as tenant and the Lancashire County Council ("the Council") as landlord. Pollards Farm is a holding which comprises 72 acres of land. By clause 4(13)(i) Mr Taylor covenanted to use the holding "primarily as a Dairy and Mixed Holding", and by clauses 4(20)(b) and (21) not to use it for any other purpose than "agriculture". From the very outset, he used part of the holding for importing, processing, packaging and selling milk and fruit juices that were not produced on the holding. I shall refer to this part of his business as "the importation activities". The arbitrator (Mr David Claxton) found that the importation activities were in breach of clause 4(13)(i). There has been no challenge to that part of his award. Mr Taylor admitted that the importation activities were also in breach of clauses 4(20)(b) and (21).
2. It will be necessary to examine the history of the dealings between the Council and Mr Taylor in relation to the importation activities in a little detail later in this judgment. For present purposes, it is sufficient to state that the Council served on Mr Taylor three successive notices to remedy the breaches of covenant. These notices were purportedly served under Schedule 3 Part 1 Case D of the Act. The first notice was dated 13 January 1994, and required the importation activities to cease within 12 months. The second was dated 27 October 1994. This required the breaches to be remedied within 3 months. The third notice was dated 2 November 1994, and required the breaches to be remedied within 12 months. Each of the notices to remedy was followed up with a notice to quit. Mr Taylor challenged all three of the notices to quit, and Mr Caxton was appointed as arbitrator to determine the disputes arising from those challenges.
3. Mr Claxton published his award on 10 March 1998. In short, he found that the first two notices to quit were of no effect, but that the third notice to quit was valid and effective. He found that the first notice to remedy was invalid since it did not specify the breach of covenant relied on. He also found that it was invalid because the 12 month period specified in it had been "impugned". What he meant by that was that, in the events that happened (to which I shall come shortly), the period for complying with the notice was to be treated as having been suspended until 14 November 1994. As regards the second notice, he found that it was of no effect because 3 months was too short a period in which to remedy the breach. But he upheld the third notice, rejecting the argument advanced on behalf of Mr Taylor that 12 months was too short to remedy the breach.
4. Mr Taylor issued proceedings seeking the removal of the arbitrator for misconduct, an order setting aside or remitting the award on the grounds of his misconduct and/or for error of law on the face of the award. A number of grounds were relied on, not all of which are relevant to the present appeal. The judge disagreed with the finding that the first notice was "impugned". He dealt with the other criticisms of the award, and dismissed the applications.

The history in more detail

5. Before I come to the award and judgment in more detail, I need to set out some of the history a little more fully. The arbitrator found that the Council only became fully aware of the importation activities in February 1990. It first served a notice on 4 May 1990 giving Mr Taylor 8 months in which to remedy the breaches. Mr Taylor accepted that the business would have to move, and he negotiated Supplementary Agreements with the Council in August 1990 and September 1992. The arbitrator held that during the periods of the Supplementary Agreements, which were designed to allow the tenant time for him to relocate his business, the business was to continue at the same level as previously. By the agreements, the Council agreed to withdraw the notice to remedy, and to suspend its enforcement until 31 December 1993. Both agreements contained a term which entitled the Council to rescind them if the importation activities were expanded without the Council's consent. Mr Taylor substantially increased the level of milk production between December 1992 and December 1993, and did not cease the importation activities on 31 December 1993. Thus it was that the Council served the three notices to remedy to which I have referred. The notices to quit relying on failure to comply with the notices to remedy were served on 16 January 1995, 30 January 1995 and 16 January 1996 respectively.
6. Meanwhile, two other things had happened which are of some relevance. First, in January 1993, the Council decided to sell a large number of smallholdings, and Mr Taylor confirmed his interest in buying Pollards Farm. On 14 January 1994, the Council wrote to Mr Taylor indicating that it would sell the holding to him. Three days later, however, it wrote again saying that the earlier letter had been sent in error, and that it would defer a decision as to whether to offer Pollards Farm for sale pending a report on the legal and other issues arising from the importation activities. It was not until 14 November 1994 that the Council made its position clear on the sale issue. By its letter to Mr Taylor of that date, it stated that it would retain ownership of the holding, and would continue to seek to enforce the notice to remedy.
7. Secondly, on 31 August 1993, South Ribble Borough Council served an enforcement notice under the Town and Country Planning Act 1990 on both Mr Taylor and the Council alleging that the unauthorised change of use from Dairy Farm to mixed use of Dairy Farm and the importation activities was a breach of planning control. Mr Taylor appealed against the enforcement notice. An inquiry was held in July and August 1994. By his decision letter dated 13 September 1994, the Inspector allowed the appeal and quashed the notice.

The relevant statutory provisions

8. Section 26 of the Act contains provisions restricting the operation of notices to quit agricultural holdings. The notices to quit that were served in the present case were governed by Schedule 3 to the Act, since these were cases where consent of the Agricultural Land Tribunal to their operation was not required. They came within Case D which provides:

" At the date of the giving of the notice to quit the tenant had failed to comply with a notice in writing served on him by the landlord, being either—

a. …..or

b. a notice requiring him within a reasonable period specified in the notice to remedy any breach by the tenant that was capable of being remedied of any term or condition of his tenancy which was not inconsistent with his responsibilities to farm in accordance with the rules of good husbandry,

and it is stated in the notice to quit that it is given by reason of the said matter "

9. Schedule 3 paragraph 10(1) states that a notice to remedy must be in the prescribed form. Article 9 of the Agricultural Holdings (Arbitration on Notices) Order 1987 SI 1987 No 710 provides:

"Where it is stated in a notice to quit an agricultural holding or part thereof that the notice is given for one or more of the reasons specified in Case A,B,C,D or E and the tenant wishes to contest any question arising under the provisions of section 26(2) of, and Schedule 3 to, the 1986 Act relating to any of the reasons so stated, he shall within one month after the service of the notice serve on the landlord notice in writing requiring the question to be determined by arbitration under the 1986 Act."

10. Arbitrations under the Act are not governed by the Arbitration Acts: see section 84(1) of the Act. Instead, they are governed by Schedule 11 of the Act, which so far as material provides that where an arbitrator has misconducted himself, the county court may remove him (paragraph 27(1)); where the arbitrator has misconducted himself, or there is an error of law on the face of the award, the county court may set the award aside (paragraph 27(2)); and the county court may from time to time remit the award, or any part of the award, to the reconsideration of the arbitrator (paragraph 28(1)).

The arbitration and the award

11. The arbitrator was appointed on 15 March 1995 in respect of the first two notices to quit, and on 18 March 1996 in respect of the third notice to quit. The issues raised before the arbitrator all concerned the validity and effectiveness of the notices to remedy that had preceded the notices to quit. It is necessary to examine the relevant parts of the award. There are five appendices annexed to it. Appendix 1 contains the arbitrator's "findings of fact". It is the main source of the history that I have earlier recounted. As I have already said, he held that the first notice was invalid since it did not specify the breach. He also held that it was "impugned" until 14 November 1994. He found that the letters written by the Council's agent between 13 January and 14 November 1994 "were insufficiently clear in the context of the possibility of a sale to the Tenant. Since less than two months remained from the receipt of the letter dated 14 November 1994 to the expiry of the Notice to Remedy on 12 January 1995, I find that the twelve month period of the Notice was impugned and that the Notice is thus rendered ineffective and invalid" (paragraph 4.10 of Appendix 1).
12. The arbitrator then went on to hold that the period specified in the second notice to remedy was too short, but that the period of 12 months specified in the third notice was reasonable.
13. The second Appendix contains the arbitrator's reasons for the findings in the first Appendix. In deciding what was a reasonable period for compliance, he adopted the approach suggested in Woodfall's Law of Landlord and Tenant Vol 2 page 21/78, viz:

"The extent to which the Landlord is likely to be prejudiced by a prolonged breach of covenant and the degree of likelihood that the Tenant will be likely, as a practical matter, to be able to remedy the breach within the time specified in the Notice are matters which may be relevant as to the length of the reasonable period. The Tenant's personal circumstances may be relevant. Where the Tenant was in breach of an obligation to reside in the Farmhouse because he was in prison, it was relevant to take into account that fact, and also any information which the Landlord had or could have had as a result of making reasonable enquiries at the date of the Notice to Remedy as to the Tenant's likely release date. The Tenant's personal circumstances may then be taken into account together with all other relevant circumstances including the prejudice to the Landlord for the breach remaining unremedied and the decision as to the length of the reasonable period will involve the balancing of such considerations."

14. He then referred to the notice to remedy of May 1990 and the two Supplementary Agreements, and said that the periods allowed to Mr Taylor thereunder more than covered the 3 year period suggested by Mr Mair (the surveyor called on behalf of Mr Taylor) as being necessary to permit the discharge of long-term commitments and the relocation of plant and machinery. The arbitrator observed that Mr Mair had indicated a period of 2 years when giving evidence to the Inspector during the appeal against the enforcement notice, in response to the Council's case that 6 months was sufficient. He rejected Mr Mair's evidence, and held that the search for alternative premises from February 1990 until December 1993 was "half-hearted, sporadic and unduly selective in what was or was not suitable for the relocation of the business". He did not accept that relocation was the only method of remedying the breach. He accepted that the breach could be remedied by stopping the importation activities, but, he said, that "is something which has to be done, given the Tenant's circumstances, in an orderly and business like fashion". He continued:

"Having allowed three and a half years for one form of remedy, the Landlord is entitled, particularly as the Tenant was content with twelve months on the last stay of execution, to require compliance with the Covenants in a period of that length or thereabouts. No contractual obligation for the Tenant extending beyond that period was proved in the course of the Arbitrations. Having disengaged themselves from any contractual obligations, the Tenant and his family would be able to scale down their operation by dismissing staff on appropriate notice and disposing of surplus plant and machinery for which on the evidence put to me in the course of the arbitration there is a market."

Thus it was that he found that a reasonable period was 12 months.

15. He then went on to explain why the period specified in the first notice was to be treated as having been suspended until 14 November 1994 (the "impugnment" point). He found that the Council adopted an "ambivalent" attitude in relation to the enforcement of the notice to remedy. Its position on the enforcement notice was "neutral". And then there was the position in relation to the possible sale of the holding. The arbitrator found that until 14 November 1994 the Council "continued to prevaricate in its dealings with Mr Mair" over the possible sale of the holding. He concluded that "the conduct of the Council amounted to a representation that it would not insist on the strict operation of the Notice to Remedy it had served, that the Tenant relied on that representation and altered his position".
16. The arbitrator then turned to the third notice to remedy. He said:

"It only remains for me to consider whether the period of twelve months specified in it is a reasonable period. You will have noted my consideration of what is a reasonable period at an earlier point in my reasons. There is the argument that part of the period covered by the Notice is impugned on the same principles as the second Notice to Remedy, being affected by the same set of circumstances. If so, this would only reduce the period of 52 weeks to 50 weeks. I still consider that period to be a reasonable period. In considering the period, I have to have regard to the circumstances as they existed at the time the Notice was served. At that time, the position of the Landlord was unequivocal. There was to be no sale and no further indulgence. Given the previous periods of indulgence and dealings between the parties, I hold the period specified in the Third Notice to Remedy, even if reduced to a period from 14th November 1994 until 2nd November 1995, was reasonable and allowed the Tenant to engage in an orderly discontinuance of the use in respect of which the Landlord was entitled to complain under the terms of the Covenants in the Tenancy Agreement"

The grounds relied on in the county court

17. Mr Taylor made application to the county court under paragraphs 27 and 28 of Schedule 11 to the Act. Seven grounds were relied on, all of which were dismissed by the judge. Mr Taylor pursues three of these grounds on appeal before this court. They are as follows:

18. Ground 4: "The arbitrator misconducted himself and/or the proceedings and/or erred in law by failing in relation to the reasonable period relevant for compliance with the third notice to remedy to take any account whatsoever of the evidence of the expansion of the business between the dates of the first and second notices to remedy and the final notice to remedy, which no reasonable arbitrator ought to have done. The evidence of this increase of business was not challenged and highly material. The result is that the arbitrator has misdirected himself by failing to consider the business as it was as at the service of the third notice to remedy".

19. Ground 5: " The third notice to remedy related to a period of 12 months from service and the landlords, the First Respondent, did not rely on anything less. In the light of the arbitrator's findings relating to the first and second references the landlord cannot rely on 12 months but only on 50 weeks. The arbitrator has wrongly, accordingly, allowed the third notice to remedy to be valid".

20. Ground 6: "The arbitrator has misconducted himself/the proceedings and/or erred in law by failing in relation to the third reference to issue coherent reasons. On page 25 of Appendix 2 he deals with the third reference. The second paragraph containing the critical reasoning is incoherent. In particular, in relation to the time the notice was served the arbitrator states that the position of the landlord was unequivocal and that there was to be no sale and no further indulgence. That is in flat contradiction both to his findings in relation to the second reference and to his own, clearly correct, observation in the very same paragraph on page 25 that the third notice to remedy was impugned on the same principles as the second notice to remedy".

Ground 4

18. Mr Derek Wood QC, who appears on behalf of Mr Taylor, submits that, in deciding on a reasonable period of 12 months for the third notice to remedy, the arbitrator mechanically applied the finding that he had made in relation to the first notice to remedy. He simply transposed his finding as to the reasonableness of the period specified in the first notice. He did not give separate consideration to what was a reasonable period for complying with the third notice. In particular, he failed to take into account the evidence of the changes to the business that had occurred between the dates of the two notices. Those changes are not referred to in Appendices 1 or 2 to the Award, but they were the subject of unchallenged evidence, and are referred to in documents included in Appendix 4. Since all the Appendices were expressly incorporated into the Award, it is said that all the voluminous material contained in Appendix 4 also forms part of the Award. I doubt whether this is correct, but I am prepared to assume (without deciding) that it is.
19. The accounts included in Appendix 4 show that there was an expansion in the milk revenue from £2.7M (year ended October 1993), to £4.4M (year ended October 1994) and to £6.8M (year ended October 1995). It is also clear from another document in Appendix 4 that this increase in milk revenue was substantially attributable to an increase in the quantity of imported milk. The figure for bought in milk in January 1994 was 812566 litres, and it rose steadily month by month to 1357690 in October. The figure for home produced milk in January 1994 was 26487 litres, and (with only two exceptions) that figure was not exceeded during the following months. The figure for October 1994 was 17466 litres. It is clear, therefore, that there was a massive increase in the scale of the breaches of covenant during 1994.
20. The judge said that failing to take any account of evidence is not capable of being "misconduct" on the part of the arbitrator, and that ground 4 did not expose any error of law on the face of the award.
21. I would accept that the arbitrator was required to consider the reasonableness of the time for complying with the third notice to remedy by reference to the circumstances prevailing on 2 November 1994. It is true that he did not expressly refer to the expansion of the business between January and November 1994, but in my judgment, there is no reason to suppose that he failed to take it into account. It was advanced on behalf of Mr Taylor as one of the relevant circumstances: it was a prominent part of his case. I do not find it in the least surprising that the arbitrator placed little, if any, weight on the expansion of the business in deciding what was a reasonable time for compliance with the notice. It seems that there was no evidence to show that an increase in the volume of the importation activities would make it more difficult and time-consuming to dismantle the operation.
22. Mr Wood submits that the increase in turnover raised a presumption that it would be more difficult for Mr Taylor to relocate. I cannot accept this. There is no necessary correlation between size of turnover and the period which is reasonably required by a tenant to relocate his business.
23. Having referred to his earlier consideration of what was a reasonable period in relation to the first notice to remedy, the arbitrator said: "in considering the period, I have to have regard to the circumstances as they existed at the time the [third] Notice was served" (my emphasis). That was an impeccable self-direction. He said that at that time the position of the Council was unequivocal: there was to be no sale and no further indulgence. Given the previous periods of indulgence and dealings between the parties, 12 months was reasonable.
24. Despite the words that I have emphasised, Mr Wood submits that the arbitrator must have failed to take the expansion of the business into account. Mr Wood does not contend that no reasonable arbitrator could have found that 12 months was a reasonable period for complying with the third notice. And yet he asks us to infer that the arbitrator failed to take into account the expansion of the business solely from the fact that he did not mention the point. I am not willing to draw that inference. In view of the lack of any evidence that the expansion would in fact make it more difficult and time-consuming to relocate the business, it is not at all odd that the arbitrator failed to mention it. The overwhelming likelihood is that he considered it, and decided that it was not a relevant factor.
25. I do not, therefore, accept the premise on which ground 4 is based, namely that the arbitrator failed to consider the circumstances as they existed at the date of the third notice. In these circumstances, it is not necessary to consider the arguments advanced by Mr Wood that a failure to take relevant evidence into account is misconduct within the meaning of paragraph 27 of the Schedule 11 of the Act.

Grounds 5 and 6

26. The foundation for the arguments under these two grounds is the arbitrator's finding that, by reason of the Council's conduct, the period specified for compliance with the first notice to remedy was suspended until 14 November 1994. It will be recalled that the judge set aside this finding. If the judge was right to do so, then grounds 5 and 6 fail. Was the judge right?
27. As we have seen, the arbitrator found that the conduct of the Council amounted to a representation that it would not insist on the strict operation of the notice to remedy dated 13 January 1994, and that Mr Taylor had relied on that representation and altered his position. The judge referred to Hughes v Metropolitan Railway Company [1887] 2 App Cas 439, and Dun and Bradstreet Software Services v Provident Mutual [1998] 2 EGLR 175, and said that any estoppel had to be founded on a clear and unequivocal representation. He then referred to the arbitrator's finding that the Council's attitude to the planning appeal was "ambivalent", and that it failed to respond "unequivocally" to the question asked by Mr Taylor whether it would rely on the notice to remedy. The judge concluded that, since the arbitrator had found that the Council was ambivalent, he was wrong to find that the first notice was impugned. He added that "at the time the Council served the third notice (2 weeks before the end of the period of impugnment found by the arbitrator) it must have been obvious that it was at the very least hedging its bets. There cannot, it seems to me, have been at the time of service of the third notice, a clear and unequivocal representation by the landlord that it was not going to rely on it".
28. It is necessary to analyse the award in a little more detail. At page 22 of Appendix 2, he referred to the fact that, in preparing Mr Taylor's case in connection with the appeal against the enforcement notice, Mr Mair tried to find out what the Council's attitude to the breaches would be if the appeal were to succeed. He found that the Council did not respond frankly as to what its intentions would be in that event. He held that it was under a duty to give a frank response, and criticised it for failing to do so, and for maintaining a neutral position in relation to the appeal. The arbitrator did, however, also refer to the fact that throughout the period of the Supplemental Agreements, the Council told Mr Taylor that once they had expired, they would enforce the covenants.
29. The arbitrator then referred to the law, and said: "what we are looking for is conduct by the Council inducing the Tenant to believe that the Council would not insist on its strict rights and this may not necessarily be by an express representation or promise" (emphasis added). He considered the position as at the date of service of the first notice to remedy, and said that Mr Mair "formed the view that the Council would at the very least review the position if the Taylors successfully resisted the Enforcement Notice" (emphasis added). He continued:

"There would be no point in Mr Taylor successfully resisting the Enforcement Notice if the Council was going to insist on its Notice to Remedy, whatever the outcome. Therefore, he committed his resources to resisting the Enforcement Notice. I find that Mr Taylor had relied on what was perceived as an assurance by the Council and had altered his position in reliance on it. The question only remains as to whether there was, or there is a need, for there to be a representation or promise by the landlord. In my view, the previous course of dealing between the parties, particularly in connection with the Supplemental Agreements and the warnings throughout those Agreements given by the Council, and the ambivalent attitude adopted by the Council over the planning appeal itself, placed on it, when asked whether it would rely on its Notice to Remedy, an obligation to respond quickly and unequivocally. It did neither. "

30. The arbitrator then referred to some evidence which, he said, explained why the Council did not respond: the Council hoped that the appeal would be dismissed so that the problem would thereby be solved. When it became clear that this was not going to happen, the Council "continued to prevaricate in its dealings with Mr Mair" when he sought to progress the possible purchase of Pollards Farm.
31. He concluded:

"Therefore, I find that the conduct of the Council amounted to a representation that it would not insist on the strict operation of the Notice to Remedy it had served, that the Tenant relied on that representation and altered its position. This is entirely in line with Lord Hodson's observations in Ajayi v Briscoe. At the time when the position became clear to the Tenant in October/November 1994, the Tenant could not resume his position by remedying the breach as the balance of the period of time left on the Notice to Remedy was not reasonable. For this reason, I find that the first notice to Remedy of 13^th January 1994 is on this additional ground also invalid."

32. Mr Wood submits that the judge was wrong to impeach the arbitrator's finding that the conduct of the Council amounted to a representation that it would not insist on the strict operation of the notice to remedy. He says that the arbitrator correctly regarded this as a "classic" Hughes v Metropolitan Railway case. The arbitrator was entitled to treat the Council's conduct in relation to the appeal against the enforcement notice and the possible sale as having led Mr Taylor to suppose that the first notice to remedy would not be enforced. The judge was wrong to hold, in effect, that the conduct had to be tantamount to a clear and unequivocal representation that the notice would not be enforced.
33. In my view, the judge was entirely right. In Hughes, a notice to repair had been served by the landlord on the tenant. The tenant, in a letter, suggested that the landlord might purchase the premises, and he wrote "we propose to defer commencing the repairs until we hear from you as to the probability of an arrangement such as we suggest". The landlord replied in terms which, it was held, "carried with it the intimation that he was satisfied with the footing upon which the matter was put by the letter which he was answering", and which "acceded to the suggestion that the repairs were to be deferred until it was ascertained whether an agreement could be made for the purchase"; the landlord's letter "had the effect of an assent" (Lord Cairns L.C. pages 445 and 447). Lord Selborne (page 450-1) said that the landlord's "accession" to the proposal that the repairs be deferred was "as plain as if he had said in terms: I do not require you forthwith to commence the repairs…I agree that the commencement of the repairs may be deferred as you suggest".
34. The principle enunciated by Lord Cairns at page 448 has been applied in countless subsequent cases:

"It is the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results—certain penalties or legal forfeiture—afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties".

35. It is to be noted that the conduct must be such as to lead one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense or abeyance. It is clear that the principle does not apply if the conduct is merely such as to lead one party to suppose that the other party's strict rights may not be enforced, or may be suspended.
36. Moreover, although Lord Cairns did not say that the act or consent of A which has the relevant effect on the mind of B must be clear and unequivocal, it is plain that the House considered on the facts of Hughes that the landlord's letter did clearly and unequivocally lead the tenant to suppose that he would not insist on the repairs being carried out during negotiations for the purchase of the land. In subsequent cases, Hughes has been interpreted as a case of promissory estoppel, one of whose requirements is that there must be a clear and unequivocal representation to found the estoppel. The Hughes case was the leading authority relied on by Denning J in Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 for the doctrine of promissory estoppel.
37. A number of the authorities were usefully reviewed by this court in Dun & Bradstreet Software Services v Provident Mutual. In that case, leases contained a tenant's break clause permitting the tenant to determine the leases on 24 June 1995 upon condition of paying a six-month penalty rent by that date. Notices were served to determine the leases. The parties then negotiated an agreement, subject to contract, under which the tenant would remain in possession under the existing leases, the leases would be varied and the penalty rent reduced. The agreement was not completed. The tenant remained in possession and did not pay the penalty rent, although it offered the rent after 24 June 1995. The landlord contended that the leases remained in full force because of the failure to comply with the condition of the break clause. The tenant contended that the landlord was estopped from relying on the failure to pay the penalty rent by the date specified in the break clause. This court rejected that contention, and held that there was no clear representation that the obligation to pay the penalty rent was in suspense pending the negotiations to vary the leases.
38. Peter Gibson LJ gave the principal judgment. He rejected the submission that the representation relied on by the tenant did not have to be clear and unequivocal. He held that Hughes was a case on promissory estoppel, and that an estoppel could only be founded on a clear and unequivocal representation. Turning to the facts, Peter Gibson LJ accepted that the landlord had given an assurance to the tenant a few days before 24 June 1995 that it could stay on in occupation after that date even if the agreement was not completed by that date. But he rejected the submission that there was an implicit representation by the landlord that it did not require the tenant to comply with the obligation to pay the penalty rent or complete the agreement by 24 June 1995. It was significant that in the exchanges between the parties there was no mention of whether the payment of the penalty rent should be made on 24 June or should be postponed. Peter Gibson LJ said: "In the absence of a clear representation by the landlord that the penalty rent need not be paid, the claim based on the Hughes case and promissory estoppel must fail".
39. In my judgment, the arbitrator in the present case was right when he said that he was looking for conduct that induced Mr Taylor to believe that they would not insist on their strict rights. He should have added that the conduct had to be clear and unequivocal. But the findings that he made about the Council's conduct towards Mr Taylor did not, and could not, justify the conclusion that "conduct of the Council amounted to a representation that it would not insist on the strict operation of the Notice to Remedy". The whole thrust of his earlier findings was that the Council was refusing to indicate what its attitude would be in relation to the breaches. Thus it would not say what it would do if the appeal were to succeed. A position of neutrality in relation to the appeal carried no implication that the Council would be neutral as regards the notice to remedy. Nor did the Council come off the fence in relation to a possible purchase by Mr Taylor of Pollards Farm. It is instructive to note that the arbitrator found that Mr Mair thought that the Council would at the very least "review the position" if the appeal against the enforcement notice were successful. In my opinion, the most that could be said of the conduct of the Council on the basis of the arbitrator's findings was that it represented that it might not insist on enforcing the notice to remedy. That is why Mr Taylor was prepared to commit resources to resisting the enforcement notice. But in doing so, he must have known that he was taking a chance. The arbitrator's criticism of the conduct of the Council is not that it clearly represented that it would not insist on enforcing the notice to remedy. Rather, it is that it did not make its position clear. It follows that the arbitrator's conclusion that the conduct of the Council amounted to a representation that it would not insist on the strict operation of the notice to remedy did not, and could not, follow from his earlier findings. I doubt whether the earlier findings justified the conclusion that the Council made any representation was made at all in relation to the first notice to remedy. But if any representation could be inferred from those findings, it was no more than that the Council would not necessarily insist on the strict operation of the notice to remedy. Such a representation could not form the basis of an estoppel, or give rise to an equity in favour of Mr Taylor that enforcement of the notice would be suspended.
40. In my judgment, the judge was right to hold that the arbitrator's conclusion on the so-called "impugnment" point was in error. It could not be justified by a proper application of the law to the facts found by the arbitrator. In the result, the first notice was not suspended.
41. Grounds 5 and 6 are predicated on the proposition that the third notice to remedy was suspended until 14 November 1994. Before the arbitrator, it was contended on behalf of Mr Taylor that both the second and third notices were suspended (until 14 November) for the same reasons as it was contended that the first notice was suspended until that date. No additional arguments were advanced. I accept the submission of Mr Morgan QC that the arbitrator did not in fact make a finding as to the effect of the Council's conduct on the enforceability of the second and third notices. But even if the arbitrator had accepted the submission that these two notices were affected by the Council's conduct in the same way as he held in relation to the first notice, he would have been wrong to do so for the reasons that I have just given. Accordingly, the Council was entitled to rely on the full period of 12 months specified in the third notice. It follows that Ground 5 falls away. Furthermore, Ground 6 depends on an alleged inconsistency in the arbitrator's findings as to the date when the Council first made it clear that there would be no sale, and that the notices would be enforced. If (as I have held) there never was conduct sufficient to found an estoppel, it is irrelevant that the arbitrator made inconsistent findings as to the dates when the Council made its position clear. Accordingly, Ground 6 fails too.
42. There is a further point. Even if the arbitrator was right to hold that the conduct of the Council in relation to the appeal and the possible sale gave rise to an estoppel in relation to the first notice, I do not see how that could affect the second or third notice. Once those notices were served, the Council was making it clear that it was insisting on Mr Taylor remedying the breaches of covenant. It cannot sensibly be said that, by reason of its earlier conduct, the Council was implying that it would not enforce the second and third notices to remedy. The notices were not subject to any qualification; there was, for example, no accompanying letter to the effect that they were to be suspended until a final decision had been taken on the question of the sale. In my view, the whole point of the notices was to make it clear that, whatever the position may have been before, the Council did now require the breaches to be remedied. The arbitrator said that "the position became clear to the Tenant in October/November 1994". He must have been referring to the second and third notices. On the facts of this case, I consider that any other finding would have been perverse. Accordingly, I would dismiss Grounds 5 and 6 for this additional reason as well.

Conclusion

43. For all these reasons, I would dismiss this appeal.
44. SIR MURRAY STUART-SMITH: I agree.
45. LORD JUSTICE WALLER: I also agree.

Order: Appeal dismissed with costs; Leave to appeal to House of Lords refused.

(This order does not form part of approved judgment)