Service of a notice is a common mechanism for communicating intention in all kinds of legal documents. It should simplify matters rather than complicate them, but the ever-expanding volume of case-law tells a different story. Peaceform Ltd v Cussens and Greengrass [2006] is the latest addition to the learning on this subject, and is a good example of how to get things wrong.

THE LEASE

The tenant had an option to acquire the freehold, upon giving to the landlord: “not less than three months notice … expiring not later than the 6th day of February 2004”.

THE NOTICE

Notice was given by a solicitor’s letter dated 27 August 2003, which read: “I hereby give you Notice that my clients wish to purchase the freehold… Under the terms of the option you are entitled to not less than three months notice and accordingly I confirm that this notice may be deemed to expire on 7th November 2003.”

This was obviously an error, as 7th November 2003 fell less than three months after the date of the letter.

THE TEST

For ten years now, the validity of erroneous notices has been tested against the decision in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997]:

  • The question is how a reasonable recipient, with knowledge of the surrounding facts and documentation, would have understood the notice.
  • The purpose of the notice must be kept in sight.
  • An erroneous notice may still be valid if it is sufficiently clear and unambiguous to leave the reasonable recipient in no reasonable doubt as to its terms.

This approach frees the court to do justice, but makes for less certainty in the law, and consequently more litigation.

A VALID NOTICE?

The tenant argued:

  • A reasonable recipient could be in no doubt that they intended to exercise the option, and to give not less than three months’ notice.
  • Given that there had been an obvious slip of the pen, the most straightforward way to ascertain the correct date was to substitute December for November.
  • The notice should therefore be construed as having expired on 7 December 2003.

AN INVALID NOTICE?

The landlord countered that there was a range of dates between 28 November and 6 February which could have been intended, and no compelling reason to favour any of them. Because the entire timetable for conveying the freehold depended on the expiry date of the notice, it had to be identifiable with a high degree of certainty.

RANGE OF DATES

For the court, the crucial factor was that the lease did not require that the notice be effective at a particular date, but only before it.

In cases, such as Mannai, where only one effective date was possible, it was easier to infer that that date had been intended.

This notice failed the Mannai test, therefore: it was not sufficiently clear and unambiguous to leave a reasonable recipient in no doubt as to its terms.

LESSONS LEARNED

  • The more pairs of eyes that pass over a document like this, the better.
  • Problems often arise from doing things at the last moment.
  • Mannai continues to invite litigation.

It’s bad enough, you might think, that your solicitor got the notice wrong, without having to go to court to find out whether he got it sufficiently wrong, in order to seek redress from his insurers.