In the recent case of Balgray Limited v William Hodgson, [2016] CSIH 55, the appeal division of the Court of Session, Scotland, examined certain notification requirements under the Agricultural Holdings (Scotland) Act 2003, in particular on whom the particular required notice must be served and where. Whilst the decision focusses on the interpretation and application of notification requirements under this particular statute, the court adopted a similar approach to that taken in a line of contractual notification cases in Scotland going back to the 2008 case of Ben Cleuch Estates Ltd v Scottish Enterprise, [2008] CSIH 1.
The facts and the Scottish Land Court
The crux of this case was that in serving notice under section 72(6) of the Agricultural Holdings (Scotland) Act 2003 on Balgray Limited (“Balgray”), Mr Hodgson’s agents served the notice not to the company, but rather to Mr Paterson who was both director and company secretary of Balgray. The validity and effect of the notice was challenged by Balgray at the Scottish Land Court. The Land Court decided that the notice had been validly served. This was principally on the basis that Mr Paterson was the directing mind and will of Balgray and he had admitted to receiving and understanding the contents of the notice. It followed that Balgray had been given the required notice in time.
The challenge in the Court of Session
Balgray challenged this decision in the Court of Session. The questions for the court were:
- Was the Scottish Land Court in error in concluding that the letter to Mr Paterson should be construed as a notice to Balgray on the basis that the recipient, Mr Paterson, happened to be the controlling mind of the company?; and
- Was the Scottish Land Court in error in failing to acknowledge that the letter was, as a matter of fact, a notice given to another person and was not a notice to the landlord, as required by the statute it was served under?
When considering these questions, the court referred to the case of Ben Cleuch Estates. That case concerned a break option that had been exercised under a lease. Notice was sent to a company of which Ben Cleuch was a subsidiary. The notice eventually found its way into the hands of the directors of both the parent and subsidiary company. Nevertheless, the court held that the notice had not been validly served because it had been sent to another party and not to the Landlord.
It was argued for Mr Paterson that the decision in Ben Cleuch Estates could be distinguished because in that case the break option notice had to be given in writing under the terms of the lease, but the applicable statute did not require this in the present case. Therefore, whilst the letter had been addressed to Mr Paterson and received by him, the notice was effectively communicated to the company by this means, albeit not in writing, because of Mr Paterson’s position within the company.
The court disagreed. It took a straightforward approach, in line with that taken in Ben Cleuch Estates. The fact was that the notice given in the present case was not addressed to the Landlord, Balgray, therefore it was not given to the Landlord.
Conclusions
It is now well settled that notification requirements, whether under commercial contracts such as leases or under statutes such as the Agricultural Holdings (Scotland) Act 2003, will be strictly enforced. Compliance with the ‘spirit’ of these clauses only will not normally suffice, even where the intended recipient becomes indirectly aware of the notification. Typically, this will apply to notifications of claims and termination. In order for such notices to be valid and enforceable it is necessary to carefully consider and fully comply with the specified notification requirements.