Levett-Dunn & Ors v NHS Property Services Ltd

Where a contract identifies a party as being “of” a particular address and incorporates statutory service provisions, the address may be contractually nominated as the party’s place of abode or business. The serving party need not investigate the extent of the recipient’s actual business connection with that address, unless circumstances provide actual knowledge that the address can no longer be used to reach the recipient. Statutory protection for tenants under section 23(2) of the Landlord and Tenant Act 1927 does not generally apply to contractual notices outside that Act. A landlord’s acceptance of keys and steps to protect or market premises are ordinarily equivocal as to surrender. However, granting a lease for actual occupation by a new tenant is an unequivocal act inconsistent with continuation of the former lease and may constitute surrender by operation of law.

The claimants were the landlords of three office leases granted to Wolverhampton City Primary Care Trust, whose statutory successor was the defendant. The leases contained identical break clauses and incorporated section 196 of the Law of Property Act 1925 for service of notices.

The defendant sent break notices by recorded delivery to 75 Tyburn Road, the address stated in the leases for the parties comprising the landlord. The claimants argued that the address was not their place of abode or business, that one named landlord had ceased to hold the reversion, and that the notices had not come to their attention before the contractual deadline. The defendant relied on the contractual description of the address and, alternatively, on estoppel. It also argued that the leases had ended by surrender when the premises were subsequently relet for occupation.

The central issues were whether the notices were validly served and, if not, whether the leases were later surrendered by operation of law.

1. Contractual service address. The notices were validly served. Construed objectively as part of the leases, the description of the landlords as being “of” 75 Tyburn Road, together with the incorporation of section 196 of the Law of Property Act 1925, nominated that address as a place of abode or business for service. The landlords had chosen the address and had not notified the tenant of a replacement address. The tenant was not required to investigate the nature or extent of the landlords’ actual connection with the premises.
2. Statutory protection. Section 23(2) of the Landlord and Tenant Act 1927 was not a provision of general application to every notice served by a tenant. Its statutory context, structure and subsequent incorporation into other legislation indicated that it operated within the scheme of that Act, subject to any contractual incorporation.
3. Actual notice and estoppel. The court distinguished service rules under the Civil Procedure Rules, which concern service on parties who may have no prior relationship with the server. Contractual service provisions must instead be construed in their contractual context. The estoppel argument added nothing because the relevant representation and reliance were matters of contractual construction.
4. Surrender by operation of law. Applying Artworld Financial Corporation v Safaryan [2009] EWCA Civ 303, acceptance of the keys and arrangements to secure the premises were equivocal. Marketing the premises and agreeing heads of terms subject to contract were also equivocal because they were consistent with mitigation. A binding occupational lease to Marstons, however, was unequivocally inconsistent with continuation of the defendant’s leases and would have effected surrender on 13 October 2014 if the break notices had been invalid.
5. Disposition. The claim was dismissed. The defendant was entitled to a declaration that the leases terminated on 10 July 2013.