The recent Sheriff Court decision in Scott v Muir and Bain (SD722/10) has again highlighted the necessity of ensuring you meet legal requirements when serving notices relating to leases. In this case, the notice in question was one which sought to irritate, or terminate early, a lease due to a default of the tenant.
The basic law governing such notices has been around for some time, being contained in s4 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985. This legislation was introduced to protect tenants from opportunistic landlords seeking to irritate a lease at the first instance of breach, where such breach could be remedied within a reasonable timescale. It achieved this by introducing the requirement for a ‘pre-irritancy notice’ i.e. a notice to be served on the tenant identifying the breach and allowing the tenant a reasonable period to remedy the breach (to be not less than 14 days in the case of non payments) under threat of irritancy.
The Scott case related to non-payment of sums due under a lease and revolved around whether the information which the landlord had provided in its pre-irritancy notice was sufficient to meet the statutory requirements. If it did, then the irritancy process had been properly carried out. If not, then the whole irritancy would be invalid.
S4(2) of the 1985 Act states that a landlord must, as a first step in irritancy in non payment, serve notice ‘requiring the tenant to make payment of the sum which he has failed to pay together with any interest thereon in terms of the lease within the period specified in the notice’.
In Scott, the notice actually served required the tenant to make payment “of such rent and other monies totalling sterling £7,800 together with interest thereon as provided for in the said lease before”. It went on to say that failure to make payment would mean “said lease may, without in any way prejudicing [the landlords’] whole rights and remedies, be terminated on 11 March 2011”.
The argument put forward by the tenant was that (i) the lumping of all sums due into a headline amount was invalid and a breakdown of how this figure was made up (including the periods in respect of which any unpaid rent related to) should have been provided, as without such detail it would be difficult to confirm the arrears nor to accurately calculate what interest would be payable on them and (ii) the notice failed to provide a date by which payment had to be made (the date after which the landlord may be entitled to terminate being a wholly separate thing). The Sheriff Principal agreed with them on both counts and the pre-irritancy notice was concluded to be invalid.
Good practice when drafting such notices in the future, therefore, would appear to involve (i) providing a full breakdown of any sums which are sought, including the periods to which they relate; (ii) calculating the interest which has accrued to date and providing a daily rate going forward; (iii) specifying the date by which payment is to be made (as opposed to the date from which the landlord would be entitled to irritate); and (iv) specifying that non compliance with the notice would result in the Landlord being entitled to irritate the lease.
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