The Court of Appeal has recently considered the validity of an insurance demand. The issue in dispute in Patel and others v MRD Property Developments Ltd  EWCA Civ 727 was whether or not the landlord had validly served written demand on joint tenants to pay an insurance premium, as required by the lease.
The lease reserved "by way of further rent, the Insurance Rent payable within 14 days of written demand".
The landlord had provided one of the tenants with a copy of the insurance renewal demand from the insurer. When the tenants failed to pay, the landlord drew money from the rent deposit and asked the tenants to top-up the deposit to the required amount. The tenants failed to do so, and the landlord attempted to forfeit the lease for non-payment of rent. The tenants applied for relief from forfeiture or alternatively, a declaration that the lease was not forfeit. Their argument was that simply providing a copy of the insurance renewal demand did not constitute a valid written demand. They argued that the arrears did not include the insurance premium because it had not been validly demanded under the lease and had never fallen due.
The tenants were granted relief from forfeiture in the county court and the landlord appealed. The Court of Appeal unanimously held that the landlord had validly demanded the insurance rent.
The court considered the comments of Lord Steyn in Mannai Investment Co. Ltd v Eagle Star Assurance Co. Ltd  AC 749, (also alluded to in the Scottish case of Prow v Argyll and Bute Council reported in 'Take notice – a recipient may not have to be reasonable') which they considered to be of general relevance to the interpretation of any contractual provision:
"words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language."
The court held that whether a written demand had been validly made should be objectively assessed by the standards of a reasonable person. If a reasonable recipient would, in the circumstances, take the writing to amount to a request for payment, then the writing was sufficient to constitute written demand.
In this case the court held that reasonable persons in the position of the parties would understand that:
- The renewal notice was written notification of the amount due; and
- The landlord was requesting reimbursement for it.
In the circumstances, it was reasonable to construe the renewal notice as a written demand for payment of the insurance rent.
The case provides a useful example of the court looking at the spirit, rather than the letter, of a document. The tenants were not able to benefit from a technical interpretation of the lease: a document can be considered a demand for payment without expressly containing the words ‘please pay’.
To read the decision in Patel and others v MRD Property Developments Ltd click here.