By Simon Masters, Legal Adviser
June 2012
Following the recent High Court case of Calladine-Smith v Saveorder Limited [2011] EWHC 2501 (Ch) it has become increasingly important for landlords, on receipt of a formal notice to extend the lease under s42 of the Leasehold Reform Housing and Urban Development Act 1993 (“the Act”), to serve a counter-notice in good time and in such a way as to ensure it comes into the hands of the leaseholder or their representative.
Mr Calladine-Smith is a leaseholder who had served on his landlord, Saveorder Ltd, a notice of claim under s42 of the Act to extend his lease. Saveorder Ltd had responded by serving a counter-notice under s45 of the Act. It was proved to the satisfaction of the County Court judge that Saveorder Ltd’s s45 counter-notice had been correctly addressed, stamped and posted to Mr Calladine-Smith, but that it had nevertheless not been delivered to him and therefore that he had not received it.
Ultimately the Court of Appeal had to decide whether Saveorder Ltd’s counter-notice was deemed served on Mr Calladine-Smith. This is important as if the counter-notice is not deemed served within the time period specified in the leaseholder’s s42 notice, the leaseholder is able, under s49 of the Act, to ask the court to make an order that a lease extension be granted on the terms proposed in his s42 notice. This sometimes results in the leaseholder obtaining a lease extension at a more favourable price than they otherwise would obtain.
The Act itself gives little guidance on the service of a landlord’s counter-notice. Section 99 of the Act deals with the service of notices and says:
‘Any Notice required or authorised to be given under this Part (a) shall be in writing, and (b) may be sent by post.’
To help clarify the Act s7 of the Interpretation Act 1978 was applied by the Court:
‘Where an Act authorises or requires any document to be served by post (whether the expression ‘serve’ or the expression ‘give’ or ‘send’ or any other expression is used) then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.’
The question for Mr Justice Morgan, hearing the case, was whether the phrase ‘unless the contrary is proved’ applies just to the addressing, pre-paying and posting of the s45 counter-notice or whether it applies to the delivery and therefore the receipt of the counter-notice. If the latter is true then as Mr Calladine-Smith had proved to the Court that he had not received the counter-notice it would not be deemed served on him.
Ultimately it was decided that the phrase ‘unless the contrary is proved’ does indeed apply to the delivery and receipt of notices. If it applied to the addressing, franking and postage of a notice, Mr Justice Morgan reasoned, the burden of proof would rest entirely with the sender of the notice and the wording of s7 would not make sense.
Furthermore the burden of proof placed on the recipient of the notice to show that the notice was not in fact delivered or received was the ordinary balance of probabilities. Mr Justice Morgan did briefly comment on how this burden would be measured by the Court saying, ‘it is not enough simply to assert that someone did not receive the letter; the court will consider all the evidence and make its findings by reference to the facts which are established including issues as to the credibility of witnesses.’
Accordingly Saveorder Ltd’s counter-notice was not deemed served on Mr Calladine-Smith. The case is therefore useful as a consideration of the case law relating to s7 of the Interpretation Act 1978 and also serves as a warning to landlords to ensure that counter-notices given under the Act have been received by the intended recipients.
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