Nyree Applegarth, Head of Property Disputes, looks at a recent case which finally brings some clarity over whether lease assignment applications for consent can be submitted by email.
In the current climate, lease assignments are a hot topic as many business occupiers might be deciding to leave their current premises to relocate to bigger premises - or perhaps they want to wind down their business altogether.
They may be looking to transfer their lease to a new party and, that being the case, they will need to make sure that they have complied with all of the lease and statutory requirements when making a valid application to their landlord.
One of the easiest things to get wrong is the method by which an application is submitted to the landlord or its advisers. Usually, the lease will prescribe how an application has to be made and if a valid application has been submitted, this places the landlord under an obligation to respond within a reasonable period of time. The methods of service therefore need to be closely followed.
The issue of the method of service of an application has recently been examined in the case of Gabb -v- Farrokhzad. In that case, Mr Gabb had been trying to sell the long leasehold interest in his residential flat for some time and issued proceedings against his landlord Mr Farrokhzad. The tenant claimed that the landlord’s conduct had been unreasonable and sought a declaration that he could assign his lease without consent and that he was entitled to damages under s4 of the Landlord and Tenant Act 1988.
The Landlord and Tenant Act 1988 (‘the 1988 Act’) provides that a request for consent has to be written and served. In this case, some of the requests were submitted by email and the Court was asked to consider whether an email communication was a written communication and, secondly, whether a communication by email had been served?
Both sides accepted that emails were communications in writing but the landlord challenged the validity of the application on the basis that it had not been served in accordance with the 1988 Act.
The meaning of the term ‘service’ has never been properly defined but regard was given to an approach adopted in Sun Alliance Co -v- Hayman [1975] 1 WLR177 Court of Appeal which ruled that according to the ordinary and natural use of the English words, giving a notice means causing a notice to be received. A notice may be served upon a person by various mechanisms and the effect of that provision is that if a notice is served by any of those methods, it is in law treated as given and received.
Counsel for the landlord sought to argue that the term ‘served’ was restrictively defined. In the absence of any other provision a notice was regarded as served for the purposes of section 1 (3) of the 1988 Act if it had been served in a manner provided for by the Landlord and Tenant Act 1923.
The 1923 Act provided that a notice was served if it was in writing and was served on the person either personally or by leaving it for him at his last known place of abode in England or Wales, or by sending it through the post in a registered letter.
The Landlord argued that in respect of a communication required by a lease that does not explicitly provide for a mode of service, the provisions of section 1 (3) of the 1988 Act could only be triggered if a document was served by one of the methods prescribed by s23 of the 1923 Act. On the opposite side the barrister for the tenant argued that section 5 (2) of the 1988 Act effectively provided the server of a notice with a choice.
They could serve notice in any way which was effective under the lease and choose to serve notice in a form that complied with the requirements of s23 unless the notice which they were serving was of a kind where the lease made a different provision as to service.
If the lease, for example, said that a communication had to be served by registered post then the communication could only be served by that method to be effective. However, the argument was that if the lease was silent about the method of service then the communicator had a choice.
The question for the court was, therefore, whether in circumstances where the lease did not make an explicit provision regarding how a notice was to be served, it had to be disregarded under the 1988 Act because it had not been served by one of the methods prescribed by s23? The court found that that was patently unfair on the tenant. The court found that if it can be demonstrated as a matter of evidence that a request for consent has been intentionally sent by the tenant and knowingly received by the landlord, then it remained a valid request, even if it had not been served to comply with the s23 criteria.
This is some welcome clarification from the courts but also means that landlords need to now be careful if they are receiving requests by email. Landlords need to make sure that are responding to email requests within a reasonable period of time and not simply sitting on any requests simply because they have been received by email.
