Court of Appeal applies strict interpretation to service of notice requirements

A recent Court of Appeal decision highlights the importance of strictly complying with requirements for serving notices.

In this case, despite there being no doubt that a notice had in fact reached its intended recipient, service was found to be invalid because it had been served on someone who was not authorised to accept service.

What was the dispute about?

In UKI (Kingsway) v Westminster City Council, the appellant, UKI (Kingsway) Limited, owned a building that it redeveloped into office space. A dispute arose between Kingsway and the local council regarding service of the completion notice which would fix the date that the building would be brought into the 2010 ratings list.

Attempted service

The Council had delivered a completion notice by hand to the building, giving it to a receptionist employed by the building management company. The receptionist subsequently scanned and emailed a copy of the notice to Kingsway. Neither the management company nor its employees had authority to accept service on behalf of Kingsway. Kingsway did not carry on business at the premises and had no presence there. The notice was addressed to the “Owner” of the building, but did not identify the owner by name.

When the premises were brought into the list for business rates purpose, from the date that the notice was hand-delivered, the appellant submitted a proposal that the entry be deleted. The matter was transferred to the Valuation Tribunal for determination of whether the notice dated 5 March 2012 had been validly served.

What was the issue?

The relevant statutory scheme (Schedule 4A of the Local Governance Finance Act 1988) provides that, “without prejudice to any other mode of service“, a completion notice may be served by delivering it to the secretary or clerk of the company at their registered office (and addressing it to that secretary or clerk). It also provides that where the name of that person cannot be ascertained by reasonable enquiry, the notice may be addressed to the “Owner”.

Kingsway argued that valid service had not taken place, since none of the prescribed modes of service in Schedule 4A had been complied with. It argued that serving a notice on a party that lacks authority to receive notice amounts to ineffective service. Furthermore it contended that its name could have been reasonably ascertained and so addressing it to the “Owner” was also invalid.

The Council argued that neither the fact the notice passed through the hands of an unauthorised agent, nor the fact it was ultimately received in electronic form should be treated as fatal. It argued that the words in Schedule 4 “without prejudice to any other mode of service” provided for other methods of service.

What did the Valuation Tribunal and the Upper Tribunal previously decide?

The Valuation Tribunal determined that service was not effective as there was no name on the document or envelope. The judge was in particular concerned with the difficulties which might arise if he held that good service was effected in this situation.

The Upper Tribunal reversed this decision, finding that the words “without prejudice to any other mode of service” clearly demonstrate that the provisions were permissive not mandatory and that any mode of service which brings the notice into the hands of the owner would be sufficient.

What did the Court of Appeal decide?

The Court of Appeal found that the notice had not been validly served. It held that it could not be valid service to leave a document with an unauthorised third party and expect that it will be sent on to the authorised recipient.

The court emphasised that the requirements for valid service will depend on the particular statutory regime under which service is required. In this case, the court found that the methods specified in the statute were not exhaustive, and were not even just limited to any other “statutorily identified mode of service”. However, looking at the purpose of giving notice in this case, the time limits for the property owner to appeal against the decision on business rates was linked to the date that notice was given. The court found that this was an important factor, indicating that simply leaving the notice with someone not authorised to accept service would not be sufficient. It made no difference whether or not the property owner eventually received the notice.

Take away points

• This decision highlights the importance of strictly complying with the exact requirements of any statutory (or contractual) mechanism in relation to the manner in which a notice must be served.
• In deciding how strictly to interpret the notice provisions, a court will look at the purpose for which notice is required. For the purpose of business rates, billing authorities should treat service of completion notices in the same manner, and with the same caution, as break notices.
• Service of a notice on an unauthorised third party (even if the notice ends up with the intended recipient) is unlikely to constitute valid service. This is a reminder that it should not be assumed that a solicitor is authorised to accept service on behalf of a client unless this has been confirmed in writing and/or is set out in the contract.

This article was prepared with the assistance of Katrina Roe, Trainee Solicitor at Osborne Clarke.