Landlord and tenant – Flexible tenancy – Possession – Appellant landlord seeking possession of property against respondent tenant with flexible tenancy for fixed term of five years – High Court holding appellant not entitled to end tenancy before expiry of fixed period – Court of Appeal dismissing appeal – Appellant appealing – Whether flexible fixed-term tenancy including forfeiture clause – Whether tenancy without forfeiture clause capable of determination before expiry of fixed term – Appeal allowed in part
The respondent was the flexible tenant of 61 The Crescent, Croydon, Surrey, for a fixed term of five years from 2015. The agreement contained no express provision for re-entry or forfeiture but stated that the appellant landlord could end the tenancy by serving notice seeking possession and applying for a possession order. Furthermore, the landlord might seek possession if the tenant broke any of the clauses of the agreement or for a breach of any of the grounds in schedule 2 to the Housing Act 1985. The booklet accompanying the tenancy agreement stated that action would be taken against tenants who broke the terms of the agreement, including seeking possession.
In 2017, the appellant served notice on the respondent seeking to terminate the tenancy and recover possession of the property for rent arrears and antisocial behaviour. It brought proceedings for possession in the county court under section 82(1A)(a) of the 1985 Act.
The appellant argued that, in the event of default by the tenant, a flexible tenancy could be determined by a landlord before the end of the fixed term under section 82(1A) and the flexible tenancy need not contain a forfeiture clause.
As a preliminary issue, the High Court held that the tenancy agreement did not include a forfeiture clause, and without one the appellant did not have any right to end the tenancy agreement before the fixed term of five years had expired: [2020] EWHC 1353 (QB); [2020] PLSCS 107. The Court of Appeal upheld that decision: [2021] EWCA Civ 77; [2021] PLSCS 21. The appellant appealed.
Held: The appeal was allowed in part.
(1) The critical question was whether the secure tenancy regime in the 1985 Act merely added statutory security to the contractual and proprietary security already conferred by the tenancy itself, or whether it replaced it, and thereby to some extent reduced or removed that contractual and proprietary security. A fixed-term tenancy usually conferred a substantial element of security of tenure as a matter of contractual and proprietary right, which legislation designed to improve tenants’ security should not lightly be construed as having taken away. As between the original parties, the tenant’s right to the secure enjoyment of a fixed term was both contractual and proprietary. As between their successors it might only be proprietary. But in either case they were important rights to security of tenure, enjoyed by tenants under existing tenancies which then became secure tenancies. Parliament was not to be supposed to have taken those security rights away otherwise than by clear express words or a clear necessary implication.
(2) Section 82(1) of the 1985 Act, and in particular the phrases “subject to termination by the landlord”, followed by “cannot be brought to an end… except…”, assumed that, apart from the Act, the fixed-term tenancy could at the relevant moment in time be brought to an end by the landlord under the terms of the tenancy agreement. It was framed in negative terms, as a prohibition upon what the landlord could otherwise then lawfully do. It therefore required the landlord to show, when seeking to use the methods now specified in section 82(1A) that there existed no bar to obtaining possession under the terms of the tenancy agreement. An unexpired fixed term prima facie created such a bar, unless a provision for earlier termination included in the tenancy agreement was by then available. The effect of the bar was that the fixed term was not, at that time, subject to termination by the landlord within the meaning of section 82(1)(b).
(3) Nonetheless, obtaining a termination order in lieu of forfeiture was not the only way in which a landlord could bring about the termination of a fixed-term secure tenancy. If a means of early termination other than forfeiture was available to the landlord under the tenancy agreement, so that the tenancy became “subject to termination” within section 82(1)(b) of the 1985 Act, then the landlord might obtain possession on statutory grounds.
An unexpired fixed term was not subject to termination by the landlord under section 82(1)(b) unless the landlord had an existing right to terminate early under the terms of the tenancy, such as a break clause, which had become exercisable and any requisite procedural steps had been taken.
The exercise of the landlord’s right to forfeit had to comply with section 82(3) and (4) so that, if relief was not obtained by the tenant, a follow-on periodic tenancy ensued under section 86, which qualified under section 82(1A)(a) for termination by a statutory possession order.
(4) A right to determine a lease by a landlord was a right of forfeiture if, when exercised, it operated to bring the lease to an end earlier than it would naturally terminate; and it was exercisable in the event of some default by the tenant, both under the general law and under sections 82 and 86 of the 1985 Act: Clays Lane Housing Co-operative Ltd v Patrick [1985] 17 HLR 188 applied.
All the repeated provisions in the respondent’s tenancy agreement by which the appellant could bring her fixed-term tenancy to an early end, by reason of conduct by her amounting to default, were forfeiture provisions. They fell squarely within the forfeiture test in Clays Lane as a matter of substance, and the respondent had a right under the general law to seek relief from forfeiture in respect of those defaults, a right of which the secure tenancy regime did not deprive her.
(5) The respondent’s fixed-term tenancy had numerous provisions by which the fixed term could be brought to an early end, some being forfeiture provisions and some not. Nonetheless, her secure tenancy was, on the assumed facts, only “subject to termination by the landlord” within section 82(1)(b) of the 1985 Act, when the appellant sought to terminate it early, on forfeiture grounds. Since the appellant had abjured termination under section 82(3) in lieu of forfeiture, the possession claim was bound to fail.
Kelvin Rutledge QC and Riccardo Calzavara (instructed by Croydon London Borough Council) appeared for the appellant; Justin Bates and Anneli Robins (instructed by GT Stewart Solicitors & Advocates) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Croydon London Borough Council v Kalonga
