Matt Farrell: Break Notices in Scotland - actual receipt and terms of the notice

Matt Farrell

Break notices are precarious enough, but some recent cases have suggested that there are occasions when actual receipt of a break notice has to be demonstrated for it to be effective. That can create a significant hurdle for the sender, writes Matt Farrell.

In Gateway Assets Limited v C.V. Panels Limited a tenant had a 10-year lease with a break option after five years, provided it gave at least six months’ prior written notice to the landlord. The landlord claimed the tenant served the notice less than six months before the break date, therefore missing the opportunity to break the lease. The tenant subsequently produced another break notice, claiming it had been sent two months earlier.

The main issues were:

  1. whether the earlier break notice was sent by the tenant and received by or on behalf of the landlord; and
  2. if so, whether the earlier notice resulted in the valid exercise of the break option under the lease.

Was the earlier notice sent by the tenant and received by or on behalf of the landlord?

The court decided that the earlier break notice was not sent. The tenant’s sole source of evidence was one witness who claimed to have drafted and sent it, however this was neither supported nor accepted by the court. There was no data to confirm the date of creation of the notice (the computer that created it was destroyed), it was not sent recorded delivery, there was no confirmatory phone call or email and there was no apparent mention to anyone else that the notice had been sent. Both the earlier and later notices contained the same mistakes in the address. The words used in the later notice inferred that the drafter was unaware of the earlier notice and so could not have copied the mistakes. There was a suggestion that the tenant realised the second notice was late and created a new notice retrospectively, on largely the same terms as the one delivered.

Despite deciding that the earlier notice was not sent, the court held that even if it had been sent it had not been received by the landlord or their agents.

In normal circumstances, there is a rebuttable presumption that a letter that has been sent has been received. Here, the landlord was able to rebut this presumption by providing evidence of their mail receipt and distribution systems, verifying that the earlier notice was never received by them.

There was a deemed service clause in the lease which could have been relied upon if a notice was sent by recorded delivery post or registered post. The earlier notice was not sent by either of these means and so deemed service could not be relied upon. The court highlighted that in the absence of a deemed service clause, there must be proof of receipt.

Meantime, in the recent Supreme Court case Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood the court went one step further than the Scottish court and found that a notice is only served when it comes to the recipient’s attention, and not merely when it is delivered to the recipient. While the court did distinguish between notices sent to a recipient’s home address and those sent to a business address – it suggested that the same approach would not be taken for commercial premises - this could potentially put substantial onus on senders (where there is no deemed service provision) to ensure notices are not only delivered, but are actually brought to the attention of the recipient.

Senders of notices should maintain records to show that their notices were served. And if there is a deemed service clause, it should be followed.    Finally, if appropriate, a call should be made to the recipient of the notice to make sure they have received it.

Matt Farrell is a partner at Brodies LLP