Get your notice right!

A recent case (Robert Prow and others v Argyll and Bute Council) serves as yet another reminder of the importance of taking care when drafting notices.

The facts

A lease provided for the rent to be reviewed on 1 October 2010. The rent review clause obliged the landlords to give the tenants 3 months' notice prior to the review date. If the landlords failed to give the requisite notice, they were entitled to review the rent as at the 28th day of any month following the review date by giving 3 months' notice before such date.

The landlords' surveyor wrote to the tenants on 19 July 2010 stating that the landlords wished to review the rent as from 1 November 2010 to £58,000pa. This was an incorrect review date and the letter also incorrectly named a different company as landlord. On 24 August 2010 the landlords' surveyor wrote again to the tenants (on behalf of the correct landlords) giving notice that the landlords required the rent to be reviewed as at 28 November 2010 to £58,000pa.

The question was whether the landlords had sufficiently served their rent review notice.

How do Courts look at notices which contain errors?

When looking at the validity of notices there are 2 steps:

If the answer to the first question is no, that the notice does not comply with the formal requirements of the lease, then you do not go on to apply the reasonable recipient test to construe the notice.

If the answer is yes, you need to consider the "reasonable recipient" test. The question sometimes asked by the Court is whether the recipient was misled or whether the notice "clearly and explicitly" conveyed the necessary information.

The decision

At first instance it was held that the errors in the first notice meant that it failed to comply with the formal requirements of the lease (the first test) and was not an effective rent review notice. However, the second notice did satisfy both the formal requirements of the lease and the "reasonable recipient" test and was valid.

On appeal the tenants argued that the second letter was not a valid notice. They argued that although it was correct to apply the "reasonable recipient" test, the Judge at first instance had erred in concluding that the second letter had cleared up the confusion caused by the first letter. The reasonable recipient test was an objective one and a demanding one, being: "is it plain that the reasonable recipient cannot be misled by it". If there was scope for confusion, the test would not be met. The tenants argued that in this case the recipient was faced with two competing and contradictory notices and two overlapping periods for service. The second letter did not address in express terms all of the errors that had been contained in the first letter. Such confusion was sufficient to conclude that the "reasonable recipient" test had not been met.

The appeal was refused. It was clear that the first invalid notice was superseded by the second notice, which itself complied with the fundamental requirements of the lease and satisfied the "reasonable recipient" test. There was no scope for confusion as a consequence of the issue of both notices, assuming that the reasonable recipient applied his common sense. The notices were served under two different provisions of the lease (the lease had a mechanism whereby if the landlord served an invalid rent review notice he could review on the 28th of any month thereafter) and were not competing notices.

Lessons to be learned

Always carefully check the terms of the lease when serving a notice and make sure that the requirements of the relevant provisions are met. Although the "reasonable recipient" test may be a get out of jail card in some instances this will not always be the case.