The Importance of Service – Don’t Double Fault

August 15, 2016

Errors in service may invalidate a notice.  It is vital that any notice that you are required to serve is served effectively.  Service of a notice is a key step (in many instances the primary step) in creating, exercising maintaining or terminating legal rights.

Prior to service you should always check the Lease or contract to see what provisions it contains regarding service.  Typically, leases provide that the services of notices is to be effective if requirements laid down by section 67 of the Conveyancing Law and Property Act 1881 (sometimes as amended by the Recorded Delivery Service Act 1962) are satisfied.  According to section 67 certain rules apply:-

Form: notices must be given in writing;
Method of Service; notices are properly served if:
They are left at the last known place of abode or business in the United Kingdom or for tenants, are left at the premises; or
They are sent by post in a registered letter to the last known place of abode or business in the United Kingdom and they are not returned undelivered (this is often varied as noted above by the amending of Section 67 by reference to the Recorded Delivery Service Act 1962 to allow for posting by recorded delivery).
It is easy to comply with service requirements once you know what they are but the “rub” is in the knowing.

The initial starting point must always be the provisions in the Lease or the contract relating to notices.

While it may seem simple as to how to serve a notice there have been cases in England which have highlighted the importance of accurately following the service provisions in the Lease.

EON UK plc v Gile Sports Limited (2012)

The Lease in this case incorporated the provisions on notices contained in section 196 of the Land and Property Act 1925 (this is the English provision which is the equivalent of section 67 of the Conveyancing Law and Property Act 1881 which applies in Northern Ireland).  As here the statutory reference is a common notice provision used in commercial Leases.

In that case the tenant served notice of a request for assignment by e-mail (not one of the permitted methods under the statutory provision S.196).  The tenant argued that this was valid on the basis that the e-mail was received by the landlord and that the methods of service under the statutory provision are only permissive and not mandatory.  The tenant relied on the wording in the section (this applies to both S.196 and S.67) that service by the methods set out shall be “sufficient” in making that case.  The court however held that service by e-mail was not valid and that section 196 (and by analogy Section 67) requires that service must be in one of the permitted ways, contrary to the generally held view of service under the statutory provision.

This had detrimental effects for the tenant in that by invalidating the notice the court was stating that the tenant had not made a formal request for assignment to the Landlord and so had not started the clock running for the Landlord to consider the request, meaning that the Landlord had not unreasonably refused consent by delay.

Ener – G Holdings plc v Hornell (2012)

This was not a tenancy case but one relating to a breach of warranties.  Again in this instance the service provisions were permissive, not mandatory and therefore service by other means was possible beyond what was stated in the service provisions that “any such notice may be served by delivering it personally or by sending it by prepaid recorded delivery post”.  In this particular instance the notice was served by the buyer in two ways:-

By a process server who visited the property and on finding the home vacant leaving the notice on the table where it was found later that day by the seller
By registered post sent on 30 March 2010 with service deemed to have been effected on 1 April 2010.
An argument was made that service of the notice by the process server was valid on the day he left the notice on the table for the buyer to find despite it not being by one of the two methods specified.  The English Court of Appeal with some difficulty (by a majority of 2-1) agreed, pointing to the fact that the word “may” within the service clause supported that conclusion.  The court went on to say that in the absence of clear words it would seem curious to ascribe to the parties an intention that a recipient who actually received the notice in time should none the less be treated as not having been served.

A number of points arise from the differences in approach by the courts and steps should be taken to avoid any border line case where it is arguable that notice was not served.  The following are useful tips:-

When serving notices ensure service is carried out in strict compliance with the method of service specified in the lease/contract;
Where possible serve by two methods for a belt and braces approach, at least one of which is specified in the lease;
When calculating any time deadlines running from the date of service, always err on the side of caution and if possible allow a degree of flexibility either side
In a more recent case earlier this year the English High Court in Vanquish Properties (UK) Limited Partnership v Brook Street (UK) Limited (2016) had to deal with a separate notice point which related to the need to ensure service on the correct party.  This raises the issue that quite apart from how you serve a notice it is important to know upon whom service can be effected and for that purpose by whom it can be effected.  This case related to a landlord’s break notice which was served by solicitors acting on behalf of Vanquish Properties (UK) Limited Partnership, the Landlord of the property.   VPLP held its interest as Landlord in the context of it being a tenant under an overriding Lease and issue was taken with the service and notice on the basis that a limited partnership (which VPLP was) is in essentially a form of common law partnership and a partnership is simply shorthand for a collection of individual partners.  A limited partnership (unlike a limited company or a limited liability partnership) is not a legal entity in its own right and cannot hold a Lease.  On that basis it could be neither tenant nor by extension landlord.  The landlord/tenant was in fact a separate limited company Vanquish Properties GP Limited which was a general partner of the limited partnership and was (as a limited company) capable of holding the Lease.

On this basis the tenant challenged the validity of the break notice and the court agreed the landlord could only be Vanquish Properties GP Limited (the general partner) and the notice did not state that it was being served on behalf of that entity.  VPLP sought to argue that the defect  in the notice could be cured because a “reasonable recipient” would have understood what was intended but this was also rejected, the court taking the view that, on the contrary, a reasonable recipient would have been confused when it received the notice.  As a consequence of this Vanquish lost the right to break the Lease.

Limited partnership structures have become an increasingly common form of property investment over recent years and it is easy to forget that (unlike limited companies or limited liability partnerships) they are not legal personalities.  It is essential that landlords and tenants fully understand ownership structures before notices are served as the courts have shown that they are unlikely to be forgiving of mistakes.

This article is for information purposes only and any specific queries should be addressed to a member of our Property Department for further and specific legal advice.