Many leases contain provisions that regulate how the parties are able to validly serve notices on each other (eg by hand, recorded delivery etc). The importance of strictly adhering to these service provisions in leases is well known to both landlords and tenants. Case law is littered with examples of how methods of service that do not comply with the relevant lease provisions render (otherwise perfect) notices invalid. This article examines two recent 2017 decisions concerning the interpretation of service provisions and the burden of proving service:
- Southwark London Borough Council v (1) Runa Akhtar (2) Stel LLC (Southwark)
- Terence Francis Grimes v The Trustees of the Essex Farmers and Union Hunt (Grimes).
The Southwark decision
The landlord, Southwark London Borough Council (SLBC) served notice under section 20B of the Landlord and Tenant Act 1985,on a number of its tenants (relating to future estimated service charges). One of the tenants (Ms Akhtar) argued that she never received the notice and therefore, that it was not validly served on her.
Clause 5(5) of the relevant lease provided that:
"Section 196 of the Law of Property Act 1925 shall apply to any notice under this lease" [emphasis added].
Section 196 provides that notices are properly served if left at the last-known place of abode or business of the recipient in the United Kingdom or, for tenants, are left at the subject property; or are sent by post in a registered letter to the last known place of abode or business in the United Kingdom and are not returned undelivered. The Court considered whether the provisions of section196 would apply to the notice sent to Ms Akhtar.
Notice served "under" a lease
The Court examined the distinction between notices required to be served by the relevant lease and those served pursuant to a statute (i.e. the section 20B notice). It is easy to see that a notice referred to in a lease, even if not required by it, is a notice "under" the lease. However, in this case there was no mention of a section 20B notice in the lease, it being a statutory notice .
The Court held that the word "under" was clearly intended to be wider than "required by" and was wide enough to encompass "in connection with" or "relating to" in this context. Therefore, the s20B notice was served "under" the lease and accordingly, section 196 was applicable.
Presumption of service - s7 of the Interpretation Act 1978
On the basis that section 196 was found to be applicable here, it followed that section 7 of the Interpretation Act 1978 would also apply. Section 7 provides:
"Where an Act authorises or requires any document to be served by post… unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter…".
Ms Akhtar denied ever receiving the section 20B notice. SLBC had sent 15,000 notices in total and had contracted out the task of actually serving the notices to a postal company to whom it provided the notice text and tenant details. SLBC could not, therefore, provide detailed proof that the actual notice to Ms Akhtar had been properly addressed pre-paid and posted. However, as section 7 applied, SLBC was only required to show, on the balance of probabilities, that the notices were properly sent. It was not necessary to show actual evidence of Ms Akhtar's notice being posted to reach this threshold. Evidence that other notices had been received, coupled with evidence of the system used by the contractor, was sufficient to prove proper service in the circumstances.
Interestingly, the Court held that the section 7 presumption that the notices had been served could not be rebutted by Mrs Akhtar's "bare denial" that the notice had been received. The presumption could only have been rebutted by proof that the notices had not in fact been received.
The Grimes decision
The landlord (the Trustees), sent notice to quit an agricultural holding at the tenant's address specified in the particulars of the relevant tenancy agreement, despite the fact that the tenant had moved from that address almost six years before, and had notified the Trustees of his change of address. The Court considered whether the notice was validly served.
The relevant clause in the tenancy agreement stated:
"Either party may serve any notice (including any notice in proceedings) on the other at the address given in the Particulars or such other address as has previously been notified in writing" [emphasis added].
Correct interpretation of "or"?
The judge at first instance decided that the Trustees were entitled to serve on either the address stipulated in the particulars (which the tenant was no longer at, as the Trustees well knew) or the tenant's new address. On appeal, the Court decided that the parties could not have reasonably intended such a literal reading of this provision. It would not make commercial sense for the service provision to be interpreted in this way (giving the Trustees an effective choice as to where to serve the notice) once the tenant had notified the Trustees of his new address.
The Court of Appeal emphasised that the wording of a clause must be considered in the context of the contract as a whole . If the word "or" was taken literally, an 'unscrupulous' landlord could take advantage of such a provision and knowingly serve on the tenant's old address. Further, in the context of a contractual relationship intended to last for six years, there would be little point in enabling a landlord to remain free to serve notice at the address given in the particulars, once notification of a new address was served by the tenant.
Evidence of notification
Contrary to the Trustees' evidence that they never received the notification of change of address, the tenant asserted that he had notified the Trustees of his new address by way of an undated handwritten note enclosed with a payment cheque, although he could not remember whether it was he or his wife who had sent the note to the Trustees.
The Court suggested that, due to its informal nature, the notification was likely to have been overlooked by the Trustees. However, taking into account all of the circumstantial evidence available, the appeal Court could not interfere with the original decision that, on the balance of probabilities, notification of a new address was duly given to the Trustees and the notice to quit was, therefore, not validly served.
The Southwark decision makes it clear that statutory notices (as opposed to other notices such as notices to quit that the lease itself requires to be served) will be served "under" a lease, where they are served for purposes connected with obligations arising under the lease. In light of this decision, if parties wish to limit the applicability of notice service provisions in leases to exclude statutory notices, it is suggested that using the wording 'notices required by this lease' might prevent the broad interpretation applied in Southwark.
Of particular interest is the Court's decision that a mere denial on oath by a recipient of a notice of having received a notice sent by first-class post (not recorded delivery) is not enough to prove that the notice was not delivered. It is difficult to see how a recipient can (ordinarily) prove that a notice was not delivered beyond saying that "I did not receive it", and to that extent, the judgment seems a little harsh.
In our experience, it has been more common for judges to accept the word (on oath) of a recipient that a notice has not been received, over any simple assertion by the sender that a notice has been sent by post, as, to do otherwise would usually mean the sender has to establish that the recipient is dishonest. This means that the possibility of a notice getting lost in the post is one that is often accepted by a Court. However, following the Southwark decision, it may be easier for a sender to establish that a notice has been validly served, even in circumstances where the recipient denies receiving the notice.
Landlords and tenants alike should also take stock of the decision in Grimes. Any notifications of changes in addresses should be noted and stored in such a way that the new address will be apparent to anyone serving a notice under the lease. Serving on a known old address is unlikely to effect valid service. If in doubt, ensure that notices are served on both the address provided for in the lease and any such change of address that you have been notified of.
Finally, both cases also serve as an important reminder for landlords and tenants to ensure that service provisions in leases are carefully adhered to and detailed records of all correspondence sent/received in relation to leases are carefully kept.