The NHS was the tenant of three floors of a building in Wolverhampton for a term of ten years from 11 July 2010. The landlords were described in the three leases as "Frederick Levett-Dunn, Simon Levett-Dunn, Howard Evans and Barnett Waddingham Trustees Limited all of 75 Tyburn Road, Erdington Birmingham B24 8NB". The individuals were trustees of a pension scheme and the address given was central to the case.
The tenant could break the leases at specific dates on not less than six months' prior written notice. All notices were to be served in accordance with section 196 of the Law of Property Act 1925, which provides that a notice is sufficiently served if: "it is left at the last known place of abode or business in the United Kingdom of the relevant party".
The tenant wanted to bring the leases to an end on 10 July 2013 and so notice had to be given before 11 January 2013. Four notices addressed to each of the "landlords" were delivered by recorded delivery on 19 December 2012 to 75 Tyburn Road. The notices were followed up by an email to the managing agent, which was not responded to until the time for service had expired, by which time the landlords disputed service.
Shortly before 10 July 2013, the tenant contacted the managing agent to arrange to return the keys to the property. The agent responded to say that the keys would be accepted without prejudice to the landlords' contention that the notices were not effective. On 13 October 2014, the landlords let the property to a new tenant.
The landlords argued that the notices were ineffective because:
- 75 Tyburn Road was not the "place of abode or business" of any of the current landlords.
- Simon Levett-Dunn had by that date ceased to be one of the landlords so any notice served on him did not bind the current landlords.
- The notices did not come to the attention of the landlords until after the time limit for service had expired.
The tenant argued that:
- Section 23(2) of the Landlord and Tenant Act 1927, which deemed service on an original landlord's address as good service unless the tenant had been informed of the change, was of general application and not just for the specific purposes of that Act;
- The e-mail from the managing agents and/or the acceptance of the keys and/or the re-letting was sufficient to demonstrate a surrender of the lease by operation of law.
The judge found that section 23(2) of the 1927 Act was not of general effect. He considered a number of cases about service but it was not appropriate to draw any analogy with them because they dealt with the interpretation of service under the Civil Procedure Rules (i.e. service of proceedings). The case had to be considered in the context of an existing contractual relationship where the parties should be taken to have agreed practical arrangements regarding service.
The leases conveyed two relevant pieces of information: that the landlords may be served at their last known place of abode or business and that the landlords' address was 75 Tyburn Road. If a person chooses to describe a place as his place of business or abode for that particular purpose then it is not for the person he tells to look behind that statement to investigate the extent and the nature of the business activity carried on there. Any reasonable person considering those two statements would understand them to mean that the address given was stated as being a place of abode or business for the purposes of the service clause.
The Judge emphasised that the principal purpose of a service provision is to set out a practicable method by which a party serving a notice can be reasonably sure how he should do so and the person to be served can be reasonably sure that he will receive it. If circumstances change, then the receiving party has the power to inform the other party of a new address. If he does not do so, it is not unreasonable that any risk that the documents do not in fact find their way to him should fall on him. On the construction of the lease, the landlords had nominated an address as their place of abode or business and the tenant was entitled to continue to treat it as such until it acquired actual knowledge that the landlords could no longer be reached there.
The tenant was therefore entitled to a declaration that the notices were valid and the leases had been terminated on 10 July 2013.
The Judge went on to consider whether or not there had been a surrender by the acceptance of the keys. It was said that the email regarding the keys was an equivocal act and it could not be said the landlords had taken back possession of the property by it. However, the grant of the new lease was an unequivocal act of recognition that the lease was no longer continuing. This reasoning is consistent with the recent case of Padwick Properties Ltd v Punj Lloyd Ltd commented on by Emma Humphreys.
Well-advised parties seeking to exercise a break option will usually instruct solicitors who will carry out all proper due diligence with regard to service so that the events in this case will hopefully be rare. However, the decision should serve as a warning to landlords to keep their tenants notified of any change of address for the service of notices.