When is a notice to complete invalid?
Recipients who would prefer not to have received, or who would rather not comply with, a notice will look for any error that might invalidate it. Has the notice been served by, and is it addressed to, the right person? Was it correctly served? Is the timing right? Is the form and content of the notice correct and have any conditions been met?
TBAC Investments Ltd v Valmar Works Ltd [2015] EWHC 1213 (Ch); [2015] PLSCS 141 dealt with a notice to complete, served under the Standard Commercial Property Conditions (2nd edition) (SCPC). Was the notice invalid because it was delivered unsigned? The recipient argued that notices to complete are customarily signed. The notice included space for a signature, and the fact that it had not been signed indicated that it was only a draft. The trial judge disagreed. The SCPC do not require notices to complete to be signed and a reasonable recipient of the notice would have understood that it was intended to be effective.
The notice referred to “a memorandum of sale, and special conditions (including an addendum)” dated 5th July 2012, made between the seller, who was described as a “landlord”, the seller’s receivers, and the recipient of the notice. The notice stated that the recipient had agreed “to take a lease” from “the landlord” acting by its receivers. However, the property was, in fact, freehold and was being sold outright – and it would have been more accurate if the notice had referred to the agreement between the parties as a “sale contract”, which is how the parties had described it.
Recipients who would prefer not to have received, or who would rather not comply with, a notice will look for any error that might invalidate it. Has the notice been served by, and is it addressed to, the right person? Was it correctly served? Is the timing right? Is the form and content of the notice correct and have any conditions been met?
TBAC Investments Ltd v Valmar Works Ltd [2015] EWHC 1213 (Ch); [2015] PLSCS 141 dealt with a notice to complete, served under the Standard Commercial Property Conditions (2nd edition) (SCPC). Was the notice invalid because it was delivered unsigned? The recipient argued that notices to complete are customarily signed. The notice included space for a signature, and the fact that it had not been signed indicated that it was only a draft. The trial judge disagreed. The SCPC do not require notices to complete to be signed and a reasonable recipient of the notice would have understood that it was intended to be effective.
The notice referred to “a memorandum of sale, and special conditions (including an addendum)” dated 5th July 2012, made between the seller, who was described as a “landlord”, the seller’s receivers, and the recipient of the notice. The notice stated that the recipient had agreed “to take a lease” from “the landlord” acting by its receivers. However, the property was, in fact, freehold and was being sold outright – and it would have been more accurate if the notice had referred to the agreement between the parties as a “sale contract”, which is how the parties had described it.
To make matters worse, the notice cited clauses in the contract using the wrong paragraph numbers, and was expressed to be given on a date in 2012, instead of in 2013 when it was served. It also specified a date for completion that fell in 2012 and, even if this were ignored, the period in which the buyer was required to complete was two days too short.
However, the judge ruled that, if there were two possible constructions of the notice, the court was entitled to adopt the interpretation that was consistent with business common sense. In addition, the court must construe the notice objectively and must ask what a reasonable recipient, with all the background knowledge reasonably available at the time when the notice was served, would have understood the notice to mean. The judge did not consider that a reasonable recipient would have been confused.
The buyer also tried to rely on the fact that one of the receivers had been replaced and claimed that the agreement did not cater for this eventuality. It argued that the notice was given on behalf of the current receivers and was, as a result, invalid. However, the judge disagreed. The buyer’s contract was with and the notice had been properly given by the seller. The receivers had simply acted as the seller’s agents. The contract had stated that the seller was “acting by the receivers”, but these words were merely descriptive. They were not words of limitation and were to be interpreted as including successors in office.
Therefore, the notice was valid and the buyer was in default. However, the moral of the story is: if you have to serve a notice, make sure you get it right.
Allyson Colby is a property law consultant
