The findings of the Supreme Court in UKI (Kingsway) Limited v Westminster City Council  UK SC67 have cast some significant doubt on what were previously thought to be well-established common law principle about the service of notices in relation to property.
In this case the Court determined
that there could still be good service in the following circumstances:
notice could be served when it was not actually delivered to the recipient but
passed via a third party.
even where an agent was not instructed to accept service it may, in certain
circumstances, be considered to be part of the causal chain that amounted to
good service; and
the email receipt of a notice should be considered good service.
The case related to business ratings
completion notices. However, since the
local authority relied on common law service, rather than the statutory methods
of service, there is no reason why the decision should be limited to notices
served in only that respect.
An owner of a newly built or
redeveloped commercial property becomes liable to pay National Non-Domestic
Rates (“Business Rates”) once that property is entered into the ratings list,
assuming that they are not entitled to relief.
The procedure for entering the
property on to a ratings list is set out in Schedule 4A of the Local Government
Finance Act 1988 (“LGFA 1988”). The
local authority serves a “Completion Notice” on an owner if it appears that the
building has been completed or is reasonably expected to be completed within 3
months. The effective date of that
notice then determines when the liability for business rates will begin. A property owner can appeal against a
completion notice on various grounds, including that the notice was not validly
Facts in the UKI case
In the UKI case, the owner was
redeveloping premises at 1 Kingsway, London.
In March 2012 Westminster City Council hand delivered a completion
notice to the Property, to take effect in June 2012.
The local authority had not taken
the time to establish the identity of the owner of the property and so simply
addressed the notice to “Owner, 1 Kingsway, London, WC2B 6AN”. The notice was then left with a receptionist
at the property who was not actually employed by the owner, but by the owner’s
agents. The agents were not authorised
to accept service and the local authority was made aware that they had not
served on the owner. However, the
receptionist subsequently sent a scanned copy of the notice by email to the
Owner. The Owner then subsequently
appealed the notice on the grounds that it had not been validly served.
The Court was asked to determine two issues:
- Could there be good service of the notice when it was done indirectly and through the hands of a third party that had no authority?
- Could a notice be validly served if received in email format?
The judgment emphasised the
“causal link” between the local authority delivering the notice to the Property
and the Owner actually receiving it. It did not matter that the notice had been
left with a receptionist of an agent company or that the local authority had no
control over the receptionist to direct her to forward it to the Owner. It was considered that in passing the notice
on, the receptionist had done nothing more than that which would reasonably be
expected of a responsible employee. An
analogy may be drawn to a friendly neighbour returning post to the correct recipient.
The Court felt that as there was
a clear causal connection between the local authority delivering the notice to
the receptionist of the agent and the Owner’s actual receipt that service could
be considered to be valid under the ordinary principles of causation.
Service by Email
In respect of the second
question, the Court considered the provisions of the Electronic Communications
Act 2000, which enabled specific modification of statutes to permit
communication by electronic means. The
majority of cases for which the 2000 Act has been used relate to service by fax
transmission. However, the Court stated
that it could not see any good reason to distinguish email communication.
Where does this leave us now?
It remains to be seen how this
decision is going to be applied beyond business rates cases. There is some
limitation to the impact, as an owner would actually have to receive a notice,
for the causal link to be complete.
In respect of business ratings notices, in particular, it is now going to be incredibly difficult to raise a challenge on the basis of service grounds. The local authority already had wide-ranging statutory methods of service and, with this additional flexibility, challenging a completion notice on purely service grounds is very unlikely to succeed.
The risk now posed can be
mitigated in the following ways:
- When receiving a notice ensure that advice is taken prior to any acknowledgement of response being made.
serving a notice ensure that you leave yourself enough time to take proper advice
and ensure that the notice has been validly served without falling into an area
that is now ripe for dispute and further litigation.