Notices – a risky business

Global Publication June 2018

Serving a notice is a risky business and getting it wrong can prove very expensive – even if the error seems inconsequential.

In Ropermaker Properties Limited v Bella Italia Restaurants Limited [2018] EWHC (1002), a landlord entered into a conditional agreement with a prospective tenant and its guarantor for the grant of a lease of a unit in a new development. The tenant and guarantor were sister companies.

The agreement provided that if certain conditions were not satisfied by a long-stop date; “the Landlord or the Tenant may at any time…..give written notice to the other and the Guarantor to determine this Agreement”.

The notice was required to be delivered personally, or sent by prepaid first class post, special delivery or by commercial courier to each party required to receive the notice. A notice sent by email was to be treated as invalid.

The long-stop date passed and the tenant sent written notice to the landlord purporting to exercise its right to determine the agreement. No equivalent notice was sent to the guarantor, but it did receive an email with a copy of the notice served on the landlord.

The landlord argued that the tenant had not terminated the agreement as it had not fully complied with the notice requirements.

The court agreed. What is more, the conditions in the agreement had by now either been satisfied or waived, so that it was unconditional and the tenant was bound to take a lease that it no longer wanted.

The judge admitted that “in reaching this conclusion, I am conscious that non-service of a hard copy of a separate notice on [the guarantor] as sister company of [the tenant]...…is a very technical and unattractive basis on which to invalidate that notice”. However, the agreement required a notice given by the tenant to be given to the guarantor as well as to the landlord, and the unilateral right to determine the agreement required compliance with the terms of the agreement, so that any failure to comply invalidated the notice. “It makes no difference that the requirements were substantially complied with or had no apparent purpose or benefit”.

The choppy waters of serving notices are notoriously difficult to navigate. The only way to reach the shore safely is strictly to comply with contractual (and statutory) formalities, even if they appear to be pointless.



Contacts

Head of Real Estate, London
Knowledge Of Counsel

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