Home Information Cases Warborough Investments Ltd v Central Midlands Estates Ltd & Anor (2006)

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Warborough Investments Ltd v Central Midlands Estates Ltd & Anor (2006)

Summary

A rent review notice was valid and had been properly served by being left at the demised premises. Petition by the claimants for leave to appeal from the decision of the Court of Appeal [2005] EWCA Civ 302

Facts

The claimant lessor (W) sought declarations concerning the validity of a rent review notice that it purported to have served on the defendant lessees (C). The premises demised in the lease were underlet to a supermarket business. The lease provided for upward-only rent reviews every 21 years, and provided that at any time during a set period W could serve notice providing for a rent review. Such notice had to be served either at the demised premises or at the last known address of the lessee. The lessee would be deemed to have agreed to the new rent if he failed to serve a counter-notice within 28 days of receipt of the notice. W had sought advice as to the rent payable for the premises, had calculated the potential new rent, and had decided to serve a rent review notice. It had instructed process servers to serve the notice, and service was effected by the notice being given to a person on the customer services desk at the demised premises. The notice did not, however, reach C, so there was no response by C to it. Two months later, copies of the notice were sent to C's usual address and C purported to serve a counter-notice. C argued the notice (1) was invalid because W had misapplied the formula in the lease for calculating the rent; (2) had not been validly served, firstly because delivery had been accompanied by neither a request to pass the notice to it, nor any explanation of the contents of the documents, and secondly because the absence of a genuine desire on the part of W to communicate the contents of the notices was fatal to the effectiveness of the service.

Held

(1) It was necessary in preparing the notice to use the formula provided in the lease to calculate the rent. While the clause containing the formula was not particularly well-drafted, it was dangerous to rewrite clear words on the basis of a supposed un-commercial effect when the full commercial background against which the lease had been negotiated was not clear. The formula adopted by W was correct. Even if it had not been, a genuine mistake would not have been fatal to the validity of the notice. (2) The authorities established the following principles: that a requirement that a notice be left at premises did not prescribe any particular method of leaving; the method had to be one that would be adopted by a reasonable person minded to bring the document to the attention of the person to be served; no gloss was to be placed on statutory provisions as to service, and in particular, there was no additional implication based on inquiry as to the subjective intentions of the server, unless it was such as to make his use of the service provision an engine of fraud; service was good where the notice was left at the demised premises and there was reasonable ground for supposing that the recipient would pass it on to the tenant: the risk of the tenant's non-availability lay with the tenant and not the landlord; and, where a statute or contract permitted different modes of service, the server was not required to choose between them. Whilst those principles typically applied to statutory methods of service, contractual methods were subject to the same principles. Whilst W's argument that the court would readily adopt a protective interpretation of a contractual provision where the consequences were capable of being draconian was persuasive, there was authority to the contrary, Sun Alliance & London Assurance Co Ltd v Hayman (1975) 1 WLR 177 CA (Civ Div) and Wilderbrook Ltd v Olowu (2005) EWCA Civ 1361, (2006) 2 P & CR 4 followed. Valid service had been effected by W.

Declaration granted in favour of claimant

Chancery Division
Michael Briggs QC
Judgment date
14 June 2006
References

[2006] PLSCS 139, LTL 15/6/2006