The statutory framework

Section 25 and 26 notices (used to terminate business tenancies) are commonly served in reliance on section 23 of the Landlord and Tenant Act 1927 (applied by section 66 LTA 1954). This provides a ‘server-friendly’ regime whereby service may be effective even if the notice is not received, with the risk of non-delivery falling on the recipient. This can lead to a tenant losing its right to renew or a landlord losing its right to oppose renewal.

By contrast, section 196 of the Law of Property Act 1925 (“LPA 1925”), often incorporated into leases, allocates risk differently. Under section 196, service by special/recorded delivery is only effective if the notice is not returned undelivered, placing the risk on the sender.

The issue in Lamba was whether a lease can require compliance with section 196 exclusively, thereby displacing section 23.

The background story

The landlord served a section 25 notice on the tenant by special delivery. The notice was returned undelivered and no further steps to effect service were taken by the landlord.

The lease provided that section 196 LPA 1925 “shall apply” to the service of all notices. The tenant denied receipt of the notice and argued that pursuant to section 196, service had not been effected in accordance with the lease. The landlord contended that section 23 LTA 1927 still applied, such that the notice had been validly served.

The central issue was whether: a) section 23 LTA 1927 operated in addition to the contractual provision; or b) the lease prescribed an exclusive method for service, requiring compliance with section 196 only.

The High Court's decision

The court held that the lease provision made section 196 the exclusive method of service.

Key aspects of the reasoning were:

• Parties are, in principle, free to agree how notices are to be served. There is no rule preventing them from specifying an exclusive contractual method.

• The wording of the clause was mandatory (“shall apply”) and made no reference to alternative or additional methods.

• This distinguished earlier authority (notably Blunden v Frogmore Investments Ltd), where the lease expressly permitted service by section 196 in addition to other methods.

The court held that as the notice had been returned undelivered, service was ineffective and the tenancy had not been validly terminated.

The practical implications

1. Service clauses may be determinative

This decision makes clear that service provisions in leases are not merely procedural. They may displace statutory methods of service and fundamentally alter the allocation of risk between landlord and tenant. A clause incorporating section 196 without qualification may operate as a self-contained mechanism.

2. Increased risk for landlords/tenants serving a notice

Where section 196 applies exclusively:

• special/recorded delivery is ineffective if the notice is returned undelivered;
• landlords cannot rely on deemed service under section 23; and
• failure to re-serve may invalidate the notice entirely.

3. Importance of belt-and-braces service

The case reinforces the need for:

• multiple methods of service (where permitted);
• careful review of the lease before serving any statutory notice; and
• evidence of compliance with the contractual service mechanism.

In summary

• A lease can prescribe an exclusive method for service of notices.

• Where section 196 LPA 1925 is incorporated in mandatory terms, it may displace section 23 LTA 1927. If so, service by special/recorded delivery will fail if the notice is returned undelivered.

• Landlords and tenants must exercise particular care when serving notices such as section 25/section 26 notices and should not assume that statutory “fallback” provisions will apply.

About the Author

Saskia Riches is a Solicitor in our Litigation Team - you can find out more about her by visiting her profile page, or contact her via email: sr@gosschalks.co.uk.