Most contracts include a clause specifying the addresses to which notices must be sent. Many cater for changes in addresses too, enabling the parties to notify each other of any alterations in their addresses for service.
But what if a party receiving a change-of-address notice fails to update its records? That was the unfortunate situation that arose in Grimes v trustees of the Essex Farmers & Union Hunt [2017] EWCA Civ 361; [2017] PLSCS 109, leaving the Court of Appeal to decide whether a landlord’s notice was valid.
Tenancy agreements
The tenant had farmed 121 acres of bare land for many years under a succession of tenancy agreements, culminating in two separate tenancy agreements that were both signed at the same time. The parties had originally agreed on a six-year term, but a lease of that length could only be granted by deed. So, to simplify matters, or so they thought, the landlord granted the tenant two consecutive three-year terms.
They dated the first tenancy agreement immediately, and post-dated the second tenancy agreement by three years. However, since neither party took any point about the validity of the agreements, nothing turned on that. The difficulty was that the tenant had been living at a new address for more than a year when he signed the tenancy agreements, but failed to spot that they contained his previous address.
Notice to quit
The tenant gave the landlord his new address soon after signing the agreements. But, at the end of the second term, the landlord directed its notice to quit to the tenant’s old address. So the tenant did not receive it. The tenant claimed that he had been wrongfully dispossessed by the grant of a new tenancy to a third party, which took effect when the leases ended, and that he had suffered loss and damage as a result. The landlord claimed that its notice to quit had validly terminated the tenancy.
The case turned on the meaning of a clause in the tenancy agreements that enabled the parties to serve notices on each other at their addresses given at the beginning of the agreements “or at such other address as has previously been notified in writing”. Had the new address provided by the tenant replaced the address given in the tenancy agreements? Alternatively, was the party serving a notice entitled to choose between them?
Interpretation
The normal meaning of the word “or” is disjunctive, although in a suitable context it can be read conjunctively. For example, in Federal Steam Navigation Co Limited v Department of Trade and Industry [1974] 1 WLR 505 the House of Lords interpreted section 1 of the Oil in Navigable Waters Act 1955, which provided that “if any oil… is discharged… from a British ship… the owner or master of the ship shall… be guilty of an offence”, as meaning that the owner and master were both liable. In addition, the word “or” is sometimes used to express a non-exclusionary alternative equivalent to “and/or”.
So how should the phrase “or at such other address as has previously been notified in writing” be interpreted here? The trial judge read the words literally. In his view, the tenant’s former address remained a good address for service because it was included in the particulars in the tenancy agreement. But the Court of Appeal disagreed. It explained that contractual interpretation “is not a literalist exercise focused solely on a parsing of the wording of the particular clause”. The court must consider the contract as a whole.
Key points
■ A notice to quit was invalid even though it was served at the address given for the tenant in the parties’ lease
■ The parties could not sensibly have intended that the landlord should have the option of serving the tenant at his old address after being notified of a new address for service
If a party moves from an address that he has given as an address for service without notifying the other parties to a contract, he must be taken to accept the risk that notices served at the specified address will not come to his attention. Consequently, notices could have been validly served on the tenant at his old address at any time before he notified the landlord of his new address, even though he no longer lived there. And that would even be the case if the landlord had known that he no longer lived there.
But the parties could not sensibly have intended that the sender of a notice should have the option of serving the recipient at a previous address after being notified of a new address for service. Therefore, the parties must have intended to substitute any new address provided for the address given in the lease. As a result, the notice to quit had not been validly served and the tenancy had not been validly terminated. Consequently, the court awarded the tenant damages in the sum of £31,500, together with interest and costs.
Looking forward
The different approaches to interpretation in this case highlight differences between the more generous approach taken in Rainy Sky SA v Kookmin Bank [2011] UKSC 50 and the stricter approach adopted in Arnold v Britton [2015] UKSC 36; [2015] EGLR 53. The overall purpose of the clause and commercial common sense prevailed here.
There are signs that the Supreme Court may be reasserting “the primacy of language” in contracts, as Lord Sumption acknowledged in an address published on the Supreme Court website shortly before this decision. However, the Court of Appeal might have reached the same conclusion in this case using more traditional canons of construction. In addition, although there may be limits to the Rainy Sky approach to construction, one suspects that commercial common sense will always play a part in interpreting contracts.
Allyson Colby is a property law consultant
