In the recent case of Anixter Limited v Secretary of State for Transport  EWCA Civ 43, the Court of Appeal clarified the time within which a counter-notice to a Notice to Treat must be served.
And also the meaning of long tenancy which is about to expire was clarified, when the expression is applied to a business tenancy protected under Part II of the Landlord and Tenant Act 1954.
The appellant in the case occupied four commercial units in a business park that was affected by HS2. One of the units was required for HS2’s proposed route and on 8 December 2017 Notice to Treat was served on the appellant under section 5 of the Compulsory Purchase Act 1965 (1965 Act). At the same time a Notice of Making a General Vesting Declaration (GVD) was also served on the appellant under section 6 of the Compulsory Purchase (Vesting Declarations) Act 1981 (1981 Act).
Both Notices were served by HS2 Limited as a precautionary measure given its uncertainty as to whether the appellant’s tenancy was excluded from the effect of the GVD on the basis it could be categorised as a minor tenancy or a long tenancy which is about to expire as such terms are defined in the 1981 Act.
The Notices were signed for as received at the appellant’s offices on 12 December 2017. However, the relevant individual who dealt with property matters at the appellant’s offices was away at the time and did not open the envelopes containing these Notices until 20 December 2017.
The appellant had filed the counter-notices requiring that HS2 acquire all four of its units in mid-January 2018, over 28 days from when they were received at the appellant’s offices but under 28 days from when they were opened and thus from when the appellant first had knowledge of the Notices.
Upper Tribunal (Lands Chamber)
The Deputy President considered that he had no jurisdiction to consider the appellant’s counter-notice on the basis that the relevant regime was as prescribed by the 1965 Act. He held:
- In relation to a counter-notice to a GVD, the relevant provisions of the 1981 Act provide that the 28-day time limit starts on the day when the recipient of the GVD has actual knowledge of the GVD. On the facts of the case the counter-notice to the GVD had therefore been in time; and
- In relation to a counter-notice to a Notice to Treat, the relevant provisions of Schedule 2A of the 1965 Act provide that the 28-day time limit starts on the day when the Notice to Treat is served on the landowner.
The Tribunal found that the appellant’s interest was a long tenancy about to expire within the meaning of section 2(2) of the 1981 because the statutory assumption that any tenant’s option to renew a lease would be exercised did not include the rights conferred on business tenants by the Landlord and Tenant Act 1954.
Accordingly, the constructive Notice to Treat that arose on the making of the GVD had had no effect on the appellant’s tenancy. On the facts of this case, the counter-notice to the Notice to Treat served under the 1965 Act was out of time.
The Court of Appeal was asked to consider:
- Whether the tenancy was a long tenancy about to expire; and
- When time began to run under the 1965 Act.
The Appeal was dismissed. On point 1, Lewison LJ found that the ordinary and grammatical meaning of the words used in section 2(2) [of the 1981 Act] refers to how long the tenancy which was granted still has to run contractually.
The reasons for this included:
- the definition contemplates a tenancy which will expire at some point and the date of expiry of a tenancy is its contractual term date;
- what is to be defined is a type of tenancy and common law does not recognise a tenancy granted for an uncertain period. Section 2(2) of the 1981 Act is, at least in part, designed to eliminate uncertainties;
- the focus is on what is granted and what is granted is what is contained in the lease or tenancy agreement, not what happens to it afterwards. It would be impossible to apply the definition if it was assumed that the tenancy continued for an indefinite period as a result of statutory continuation;
- on the facts of the case at the date of the GVD the only thing that was certain was that the lease had nine months left to run, making it a long tenancy about to expire per the definition. It would impose an unacceptable burden on acquiring authorities were they required to undertake an evaluation of whether (and if so for how long) a tenant might expect to remain in occupation simply in order to decide whether a tenancy was about to expire; and
- where Parliament intended the prospect of continuation or renewal to be considered it said so expressly.
The appellant’s interest was therefore found to be a long tenancy which was about to expire within the meaning of s2(2) of the 1981 Act so that it was excepted from the GVD. Accordingly, the relevant notice was the Notice to Treat served under the 1965 Act.
On point 2, the appellant contended that where an acquiring authority serves a Notice to Treat and makes a GVD, the more generous time limit applicable to the GVD regime should apply to both. This assertion was based on the text of paragraph 551 of the Explanatory Note to the Housing and Planning Act 2016 (2016 Act) which states that the intention of the 2016 Act is to harmonise (as far as possible) the approach to the treatment of material detriment under the vesting declaration and notice to treat procedures… The Court disagreed finding that explanatory words could not override the words of the statute itself.
Notices served under section 5 of the 1965 Act are governed by section 7 of the Interpretation Act 1978 which provides that service by post is deemed to be effected by properly addressing, pre-paying and posting a letter containing a 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.
Per case law authority, service was effected at the time of receipt and there was no further requirement for the served document to come to the attention of the person who would deal with it. As such, service had been effected on the appellant on 12 December 2017 and the counter-notices were served out of time.
Whilst it is possible to feel some sympathy for the appellant (and for other affected landowners served with multiple notices when an acquiring authority is acquiring land by compulsion) the case provides helpful certainty on the treatment of protected tenancies where these are being acquired compulsorily. Business landowners and occupiers should always ensure correspondence relating to compulsory acquisition is seen by the relevant individual within their organisation as soon as possible. As is usually suggested in the covering letter serving a statutory Notice, if you are in doubt professional advice should be sought.