What are the consequences of serving a notice under a lease on behalf of the wrong party?

The law is reasonably clear about what happens if a notice under a lease (such as a break notice) misidentifies the recipient, but what happens if the notice misidentifies the sender?

Where a notice under a lease is addressed to the wrong recipient, the notice will almost certainly be invalid.

In Ben Cleuch Estates Ltd v Scottish Enterprise (a decision of the Inner House of the Court of Session) a break notice, which was incorrectly addressed but which was nevertheless received by the correct recipient was invalid because it did not comply with the mandatory requirement in the lease that it must be "given to the landlord". On the unique facts of the case, personal bar operated to prevent the landlord from disputing validity but the lesson from Ben Cleuch is clear: if you address a notice under a lease to the wrong recipient, it will generally be invalid.

But what happens if you address a notice to the right recipient but get the sender's name wrong?

The law on this point is less clear. Two first instance decisions of the Court of Session point in different directions.

In Prow v Argyll and Bute Council, a case concerning a rent review notice, the court came to the same conclusion as in Ben Cleuch. A distinction was drawn between:

(1) provisions of the lease which specify "fundamental requirements", which a notice must meet; and

(2) provisions "which deal with the imparting of information" but do not stipulate an indispensable or fundamental requirement.

The court said that a failure to comply with a category 1 requirement will result in an invalid notice. However, a notice which falls foul of a category 2 requirement may still be valid if it satisfies the "reasonable recipient" test (established in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd). This test involves asking whether the error made would have introduced such uncertainty in the mind of the reasonable recipient that he would feel that he could not safely rely upon the notice. If the answer is yes, the notice will be invalid. Otherwise, the notice stands.

Since, according to the court in Prow, a failure to correctly identify the sender was a category 1 error, the notice was invalid and the court did not need to engage with the reasonable recipient test.

So far, so good. Taken together, Ben Cleuch and Prow say that any notice addressed to the wrong party or which purports to come from the wrong party will be invalid.

However, an altogether different approach was taken in AWD Chase De Vere Wealth Management Ltd v Melville Street Properties Ltd. In this case, the question of whether a notice had been sent on behalf of the correct tenant was treated as a matter of fact (and did not turn simply on the terms of the notice itself). Despite the notice naming a group company of the tenant, instead of the tenant itself, it was accepted that the correct person at the correct organisation had instructed service of the notice and so this was enough to satisfy the fundamental requirement under the lease that the notice had to be sent by or on behalf of the tenant.

The Court moved straight to considering the reasonable recipient test i.e. whether or not the error made would have introduced such uncertainty in the mind of the reasonable landlord that he would feel he could not safely rely upon the notice. It found the error would not have done so and, thus, the notice was valid.

The approaches taken in Prow and AWD Chase could hardly be more different. The first involves an examination of the notice itself whereas the second involves a factual investigation of the circumstances in which the notice was prepared and sent. The test set out in AWD Chase, if correct, requires the court to answer a very different question for errors concerning senders than the Inner House, in Ben Cleuch, has said applies to errors concerning recipients.

For now, therefore, landlords and tenants are left in some considerable doubt as to how the Scottish courts will resolve disputes concerning misidentification of the sender of a notice under a lease. It will, inevitably, take another case to come along before any clarity is provided.

If you have any concerns or questions about a notice under a lease, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies' contact.