Interpretation of notices

Recent decisions have offered further clarity on the issue of defective notice which will be of interest to property practitioners.

The process of serving notice is generally subject to the specific formalities stipulated in the originating source that establishes the obligation to serve notice such as a lease, contract, or statute. Failing to comply with these formalities can have significant consequences if the result is that the notice is held to be invalid. 

Statutory notices

Often the need to serve notice comes from legislation. For example, a commercial landlord looking to bring a lease to an end would serve a notice based on section 25 of the Landlord and Tenant Act 1954. The formalities associated with serving this notice are prescribed within the statute. 

Generally where a statute prescribes formalities relating to notices it will state what happens when a party fails to comply with them. However, this is not always the case. 

In A1 Properties (Sunderland) Limited v Tudor Studies RTM Company Ltd (“A1 Properties”) [2024 UKSC 27] the Supreme Court established how the consequences of non-compliance with notice formalities will be determined where the legislation is silent on this matter. It was held that in such circumstances, the court will consider the purpose of the relevant statute and notice, and whether affirming the validity of the notice will cause any prejudice to the intended recipient. In doing so the Supreme Court has evolved aspects of statutory construction and moved away from its previous more rigid approach.

The relevant statute in this case was the Commonhold and Leasehold Reform Act 2002. This requires that when qualifying tenants seek to acquire the right to manage their block of flats, notice must be served on each person who is a landlord under a lease of the whole or part of the premises. In this case, the qualifying tenants in the form of a ‘right to manage’ company failed to serve notice on the intermediate landlord as required by the statute.

The court started off by assessing the purpose of the statutory scheme to determine whether the legislature intended that non-compliance with the service formalities should result in total invalidity of the notice. In this case the court deemed that non-compliance rendered the notice voidable but not automatically void. The voidability of the notice was deemed to turn on the prejudicial nature of affirming the notice on the intermediate landlord.

Turning on the facts, the prejudicial nature of affirming the notice was determined by considering whether the intermediate landlord had been significantly deprived of an opportunity to oppose the qualifying tenants’ application by not receiving the requisite notice. Here, the court decided the intermediate landlord had not been prejudiced as they had no substantive points of opposition against the qualifying tenants acquiring the right to manage. Consequently, the court held that the notice given was not invalidated by the failure to comply with the notice formalities set out in the statute. 

The approach laid out in A1 Properties has since been applied in Zdravka Ivanova Atesheva v Halifax Management Limited [2024 UKUT 314 (LC)]. Here the court assessed whether a tenant’s notice to the First Tier Tribunal (FTT) looking to challenge a rental increase proposed by her landlord was valid despite not being submitted in the form prescribed by The Housing Act 1988 – the tenant having  used email instead of an online form. The court found that the statutory scheme, taking into account the construction of the relevant sections relating to method of service, would not have intended a failure to use the prescribed form to invalidate the tenant’s notice.

The court then considered whether the landlord in this case would be prejudiced by the court affirming the validity of the tenant’s notice and found it would not. The court balanced the detriment that the landlord would face as a result of the tenant’s notice being valid with the detriment that the tenant would face should the notice be invalid. The outcome of this exercise was that the notice was deemed valid. 

Contractual notices

Where a contract is the basis for a notice, any applicable formalities will be found within the contract drafting. The effect of non-compliance with these formalities will depend upon whether the specific formality amounts to an absolute condition for the effective exercise of that notice or not.

Where a contract prescribes formalities associated with the service of notice that constitute an absolute condition for effective service, the failure to comply with them will invalidate the notice and any associated rights. This was established in Mannai Investment Co Ltd v Eagle Star Life Assurance [1997 A.C. 749] (“Mannai”) where the court gave the now well-known example of an absolute condition: ‘if the clause requires notice to be given on pink paper, the notice will not be effectively exercised if given on blue paper regardless of how clear the intention to exercise might be.’

Where a formal requirement does not amount to an absolute condition, the court in Mannai held that whether a notice with minor defects is invalidated by those mistakes depends upon whether the ‘reasonable recipient’ of the notice would be misled by the error. The view was taken that where a notice contains errors, it will still be valid so long as the notice is sufficiently clear and unambiguous that a reasonable recipient would be in no reasonable doubt about how the notice was intended to operate. If the reasonable recipient understands the meaning of the notice then it is likely to be effective.

Mannai v Eagle Star has been tried and tested in cases since. In Mansfield v Weetabix Ltd [1998 1 W.L.R 1263] the importance of clarity  as to the intention behind the notice was emphasised. 

In Standard Life Investments Property Holdings Ltd v W&J Linney [2010 EWHC 480 (ch)] where a tenant purported to exercise a break right but communicated it to a former landlord rather than the current landlord, the notice was deemed to be invalid as the lease specified that the notice was to be served on the current landlord. Similarly, notice was deemed to be invalid when a break notice only referred to one of the two tenants in Prudential Assurance Co Ltd v Exel UK Ltd [2009 EWCA Civ 154]. The courts deemed this notice to be invalid because on the facts the reasonable recipient would not have understood the intention.

Defects in the method of serving notice can also risk invalidating a notice. In Orchard (Developments) Holdings Plc v Reuters Ltd [2009 EWCA Civ 6], serving the lease via fax when the contract specified that notices should be served by hand, registered post or recorded delivery invalidated the notice. Delivery of the notice by the prescribed methods was an absolute condition and resultantly, the notice was not valid. 

Conclusion

Manai has enabled the courts to adopt a reasonableness test in relation to minor defects in contractual notices and the recent decision in A1 Properties has enabled the courts to consider the intention of the legislation and the actual impact of the error on the recipient. Neither approach will save a defective notice where the contract imposes an absolute condition or the legislation is clear as to the consequence of non-compliance with the notice formalities, but the case does still provide a relaxation of the previous approach.