Restructuring & Insolvency analysis: In this case, the court held that a landlord’s failure to provide its tenant with a valid address for service of notices, in accordance with section 48 of the Landlord and Tenant Act 1987 (LTA 1987) (a section 48 notice) had the effect that the rent payable by the tenant was not ‘due’ at the time the landlord presented a bankruptcy petition against the tenant. The bankruptcy petition was therefore dismissed, and the matter listed for a disposal hearing to include ‘any consequential orders’ to which it is assumed means a costs order against the petitioner landlord. It was also considered of no significance that the landlord had actually served a valid section 48 notice but only after it had issued a petition against the tenant. The requirements of LTA 1987, s 48 therefore cannot be complied with retrospectively. Written by Chris Adams, partner at Gosschalks LLP.

Sunset Ltd and another company v Al-Hindi [2023] EWHC 2443 (Ch), [2023] All ER (D) 21 (Oct)

What are the practical implications of this case?

This case highlights the need for petitioners to ensure that they have followed the correct procedure before issuing a petition.

In this case, what might appear at first to be a minor defect (capable of rectification) was considered by the court to be enough of a reason to dismiss the petition, leaving the landlord having to consider commencing the whole process again. At the time the landlord became aware of the defect, the correct action should have been to seek dismissal of the petition at that point and start the process again.

Most tenancies will state an address for service of the landlord in England and Wales. However, it is becoming more and more common for registered offices to be in places which are out of the England and Wales jurisdiction, such as Jersey. Care therefore needs to be taken by both landlords and tenants in these types of situations. Landlords need to ensure that either the tenancy is clear in providing an address for service that is within England and Wales and, if not, serve a section 48 notice prior to taking any action against its tenant. Tenants (faced with a petition, as an example) should check any tenancy agreements relied upon by the landlord and ensure that LTA 1987, s 48 has been properly complied with. If it hasn’t, the decision in this case gives the tenant a defence to the petition.

What was the background?

In a very standard situation, a landlord issued a petition against its tenant due to a failure to pay rent due under a lease. The petition was issued on 23 June 2022 based upon a failure by the tenant to comply with a statutory demand dated 29 March 2022. The tenant sought to dispute the petition on various grounds including that the debt relied on was not due and payable because of a failure by the landlord to serve upon the tenant a valid section 48 notice.

LTA 1987, s 48 states: ‘(1) A landlord of premises to which this Part applies shall by notice furnish the tenant with an address in England and Wales at which notices (including notices in proceedings) may be served on him by the tenant.’

In this particular case, the address for service given in the tenancy agreements was an address in Jersey, and so not in England and Wales. The landlord had therefore failed to comply with the provisions of LTA 1987, s 48 by not providing the tenant with a valid address for service of notices within England and Wales. The landlord attempted to rectify the position by retrospectively serving a valid section 48 notice, on 6 February 2023, many months after presentation of the petition and the service of the statutory demand on which the petition was based.

What did the court decide?

The court sided with the tenant and dismissed the landlord’s petition. The tenancy agreement did not give an address in England and Wales for the landlord meaning LTA 1987, s 48 was not complied with until 6 February 2023, by which time it was too late to have retrospective effect.

Further, the fact subsequent letters and court documents stated an address in England and Wales for service were given for a specific purpose and did not suggest that they were addresses at which notices may be served on the landlord generally. Put simply, the provision of a solicitor’s address for service in connection with a set of proceedings does not imply that those solicitors are authorised to accept service of any other notice on behalf of their client.

Finally, the fact the landlord did serve a valid section 48 notice ‘after-the-event’ did not assist the landlord. The landlord’s failure to serve a section 48 notice meant that the debt could not be treated as due at the time the petition was presented. Nor was it due at some ‘future, certain time’ as a compliant notice might never had been served on the tenant. The later service of a section 48 notice did not therefore cure the defect and the position could only be considered as at the time the petition was presented. Further still, the statutory demand served by landlord was also considered defective as it was not served at a time when the debt was payable immediately.

Case details

• Court: Business and Property Courts of England and Wales, Insolvency and Companies List (ChD)
• Judge: Insolvency and Companies Court Judge Mullen
• Date of judgment: 5 May 2023

Chris Adams, is a Partner at Gosschalks LLP. If you have any questions regarding this issue, or any insolvency or restructuring matters, please feel free to contact Chris directly on cha@gosschalks.co.uk