UK: The Perils Of Bad Service: Another Notices Case

Yet another case has been heard in the Court of Session relating to the validity of service of notice under a lease. In this case it was a notice to exercise a break option. Although the outcome was positive for the tenant serving the notice, failure to identify the correct recipient meant that they had to endure court proceedings in order to exercise a break which could have cost little more than the price of a Recorded Delivery letter.

The Facts

Batt Cables PLC ("Batt") entered into a lease with Spencer Business Parks Ltd ("SBP"). The lease included a break clause entitling Batt, as tenant, to terminate the lease on the fifteenth anniversary of the Date of Entry. In order to exercise the break option, Batt were required to serve notice on the landlord. When exercising the break option, Batt served a notice of termination on Joe Dempsey of Spencer Holdings PLC ("SH"), an associated company of SBP.

Batt subsequently received a letter from SBP intimating their view that the notice had been served incorrectly and that Batt were locked into their lease.

Batt argued that the notice to quit was compliant given that it was in writing and had been served on the landlord, albeit that it was not addressed to the landlord. They argued that addressing the notice to the landlord was not a mandatory requirement of the lease. A key issue here was the identity of the landlord on whom the notice was to be served. The notice had been served on Mr Dempsey and SH which, SBP argued, invalidated the notice because the correct landlord was in fact SBP.

The Court's Decision

The Court held that the notice was valid, given that it had been served on Mr Dempsey and SH who both had ostensible authority to manage the subjects of the lease as agents of SBP. Mr Dempsey's agency included authority to receive notices. It was sufficient to show that, where an agent received a notice, the principal had empowered the agent to receive correspondence and either act on it or initiate action on it. Mr Dempsey was authorised to handle all correspondence relating to SBP, so he had the requisite authority and service on him of the notice amounted to service on SBP.

Commentary

Despite the tenant's success in this case, it again highlights the importance of taking time to ensure that service of the notice is made on the correct party. Case law involving incorrect service of notices is alarmingly common given the importance of getting service right first time. Best advice is to take legal advice: take early steps to consider whether or not a break option will be exercised, and then engage the help of your solicitors to serve the notice, on time and to the correct party.

Disclaimer

The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.

© MacRoberts 2010

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