Sit up and take notice

Sit up and take notice
May 5, 2015

The legislature loves a prescribed notice. Many statutes include detailed provisions as to what information must be included and in what form. Service of an invalid notice can have serious – and expensive – consequences, so is there any way of “saving” a notice which is not strictly compliant with the statutory requirements?

Purposive or literal?

Disputes on residential notices often arise where statute confers a right, such as the right to enfranchise or to acquire the right to manage, and failure to comply with the statutory requirements could prevent the applicant from acquiring the right in question. The current trend in the courts favours an abandonment of a “purposive” approach to the construction of notices, with the emphasis being on what the statute actually requires.

The Court of Appeal recently reviewed the consequences flowing from non- compliance in the case of Osman v Natt [2014] EWCA Civ 1520; 2015 EGILR 11 (see EG 11 April 2015, p85). A group of tenants served a notice under section 13 of the Leasehold Reform Housing and Urban Development Act 1993, claiming the right to enfranchise. The notice did not state the name and address of one of the qualifying tenants, as required by s13(3)(e). The landlord was well aware of the identity and address of that tenant, so the omission caused no prejudice whatsoever. It was argued on behalf of the tenants that the validity of a notice depended on the gravity of the non-compliance and its practical consequences.

But the Court of Appeal said this was the wrong approach. The consequences of invalidity should not depend on the particular circumstances of the parties, their state of knowledge or whether any prejudice was caused, because this would make it impossible to determine validity from the face of the notice. The correct question is what consequence the legislature intended should result from the failure to comply as determined by applying the usual principles of statutory interpretation. This will involve an assessment of the purpose and importance of the requirement in the context of the statutory scheme as a whole.

Integral or ancillary?

There is a distinction to be made between prescribed information that is integral to the proper working of the statutory scheme and information that is “of secondary importance” or “merely ancillary”. In Osman, the missing information was found to “go to the very heart of the right to collective enfranchisement” because the details were necessary to show that the tenants were entitled to enfranchise. By contrast, in Tudor and others v M25 Group Ltd [2003] EWCA Civ 1760; [2004] 1 EGLR 23 (a case in relation to the right of first refusal under the Landlord and Tenant Act 1987), the failure to include the addresses of the tenants signing the notice, as required by section 54 of the Act, did not invalidate the notice because section 54 related to notices under the Act generally and was merely ancillary to the mandatory requirements of the notice in question.

Fatal mistakes

The consequence of non-compliance in Osman was that the notice was of no effect and the leaseholders would have to start again. Sometimes, however, this is not an option and an invalid notice can deprive the notice giver of his rights altogether. For example, the 1993 Act requires a counter-notice to be served by a landlord in response to a notice of claim. An invalid counter- notice is of no effect and would allow the claimant to obtain a new lease or to enfranchise on the terms set out in the initial notice (section 25(1) or section 49(1)).

Similarly, a notice that does not include everything the party serving the notice wants will deprive that party of his right to whatever is omitted, for instance a leaseback of a flat (Cawthorne v Hamdan [2007] EWCA Civ 6; [2007] 1 EGLR 67; Tibber v Buckley [2014] UKUT 74 (LC); [2014] PLSCS 86).

Rescuing a notice

Some notices can be spared from invalidity by a “saving” provision in the statute. For example, section 81(1) of the Commonhold and Leasehold Reform Act 2002 provides that a notice claiming the right to manage (“RTM”) is not invalidated “by any inaccuracy in any of the particulars required” by section 80. Such provisions are strictly construed. It was held in Assethold Ltd v 15 Yonge Park RTM Co Ltd [2011] UKUT 379 (LC); [2011] PLSCS 251 that provision of information which is simply wrong (in that case an incorrect address for the RTM company) is not an “inaccuracy”. An “inaccuracy” might be a spelling mistake or typographical error. Omitting a particular altogether is also not an “inaccuracy” and only inaccuracies in the “particulars required” can be overlooked. Other errors, such as specifying a date for service of a counter-notice which is earlier than that required by the statute, cannot be saved (Moskovitz v 75 Worple Road RTM Co Ltd [2010] UKUT 393 (LC); [2011] 1 EGLR 95).

In enfranchisement claims an application can be made for leave to amend a notice to include property that has been omitted or to exclude property that is wrongly included. In the latter case, the notice will be invalid unless and until the court allows the amendment (Howard de Walden Estates Ltd v Malekshad [2003] EWHC 3106 (Ch); [2003] PLSCS 293).

If all else fails, it may be possible to rely on “the reasonable recipient” test in Mannai Ltd v Eagle Star Insurance Co. Ltd [1997] UKHL 19; [1997] 1 EGLR 57 if the error in the notice and its true meaning are obvious and the reasonable recipient would not be misled. However, this is a high-risk strategy and it is always better to make sure the notice complies with all the statutory requirements in the first place or, if in doubt, accept that the notice is invalid and serve a new one wherever possible.

Published in Estates Gazette, 2nd May 2015, Practice & Law, Residential View column.

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