Whether or not a break notice has been validly served is often disputed. There can be significant consequences for both landlords and tenants for getting it wrong, especially in the case of a one-off break right.
Levett-Dunn was one such case. The Tenant served notice to break its lease, doing so by recorded delivery to the address stated next to the ‘Landlord’ in the parties clause (75 Tyburn Rd, Birmingham). The Tenant was required to give six months’ notice to exercise its break; it did so by recorded delivery several weeks before the required date.
The Lease provided that notices be served in accordance with s.196 of the Law of Property Act 1925. This statutory provision is regularly included as ‘boilerplate’ in modern commercial leases. It provides:
‘(3) Any notice … shall sufficiently be served if it is left at the last known place of abode or business in the United Kingdom of the lessee, lessor …
(4) Any notice … shall also be sufficiently served if it is sent by registered letter [to such address]’
The Lease also provided that where the Landlord comprised more than one individual, service on any one of those parties would deem service on all.
At the date of the Lease, the Landlord comprised three individuals and a company. Of the three individuals, two had not been to 75 Tyburn Rd for over a decade. The third individual continued to use the property, but had transferred his interest in the freehold. The company never conducted any business from 75 Tyburn Rd.
The Landlord therefore disputed the validity of the notice, contesting that 75 Tyburn Rd was not the ‘place of abode or business’ of the current Landlord.
The court found in the Tenant’s favour for several reasons, ruling that it was the last known place of business for the Landlord because:
- the Landlord had not notified the Tenant of an alternative address to which notices should be sent;
- the Lease described the Landlord to be ‘of 75 Tyburn Rd’ which meant that was his address; and
- the Landlord had given the same address in several other leases which post-dated the lease in question, it must have therefore been content that notices would reach him at that address.
In relation to point 1, the court confirmed that it would have to be a clear notification from the Landlord to the Tenant of the new address. Correspondence from a different address would not constitute notification that that would be the address for future notices.
Levett-Dunn v NHS Property Services serves as a warning to landlords to notify their tenants of a change in address, otherwise they bear the risk of a break notice being validly served even though they may not have received it. If landlords do not pro-actively manage the process, they risk losing that carefully negotiated notice period in which to prepare for the prompt re-letting of the premises so as to minimise void rent.
The onus is on landlords to update tenants and not for tenants to check whether an address is current. However, well advised tenants (or landlords) should continue to take reasonable steps to establish the current address to minimise the risk of disputed service.
Landlords should also consider including a specific address (which they are able to monitor) for service in leases.