Highlighting the importance of accuracy in notices served under a lease
In Ropemaker Properties Ltd and another v Bella Italia Restaurants Ltd , the claimant landlord entered into an Agreement for Lease with the defendant tenant and its guarantor. The tenant had attempted to terminate the Agreement by service of notices; the landlord argued that the Agreement had not been validly terminated, was therefore unconditional and bound the tenant and its guarantor.
Conditions precedent in the Agreement for Lease were a number of unconditional dates, including the service of notice by the landlord relating to a ‘neighbouring unit’ condition. The parties disputed whether this condition had been satisfied, or otherwise waived by agreement in writing. The condition was satisfied by the landlord giving written notice to the tenant. Further notice was required to be served by the landlord to the tenant of satisfaction of conditions relating to a neighbouring unit.
The landlord served its first notice on the tenant’s solicitors, rather than the tenant itself. Subsequently, a further notice was served by the landlord which the tenant stated contained inaccuracies as to the satisfaction of conditions and further to that, the landlord purported to waive the ‘neighbouring unit’ condition which the tenant claimed was not possible due to its earlier (albeit invalid) service. During this period, the tenant itself served notice on the landlord to terminate the Agreement, a copy of which was not sent to the guarantor. The tenant then brought its claim to determine the validity of the notices served by the landlord.
The Court held that the notice served by the tenant to terminate the Agreement was not valid as it had not been copied to the guarantor. No circumstances existed whereby the guarantor could have been said to have waived its right to receive notice, and the notice was therefore invalid. Whether or not the notice would in reality serve any purpose or whether the requirement was met later was deemed to have no effect.
In reviewing the landlord’s notices, the Court found that the Agreement had become unconditional, although the landlord’s first notice was held to be invalid. As a result, a second notice to terminate served by the tenant was ineffective as the Agreement was already deemed to be unconditional by the time it was served.
Advice and action for landlords
It is not uncommon for leases and, particularly, Agreements for Lease to contain notice arrangements. Landlords are encouraged to ensure that notice provisions are fully set out, with unambiguous drafting that makes each party’s intentions, obligations and timescales clear.
As this case demonstrates, a party wishing to terminate an Agreement can look very easily to the service of notices to find invalidity; Courts will often adhere to the strict wording and interpretation of a notice provision and where a party doesn’t meet the criteria set out in the document or serves notices containing inaccurate information, a decision is likely to rule that the notice is invalid.
Landlords are encouraged to ensure that notice provisions are fully set out, with unambiguous drafting that makes each party’s intentions, obligations and timescales clear.