· Success at trial is no bar to
appeal
· The law governing errors in
notices remains confused, especially as Mannai appears to be being
misapplied
Contrary to the
views of one reader (see Letters, 17 July), the Court of Appeal has recently,
in Clickex Ltd v McCann [1999] 30 EG 96, considered two points of
some significance. The first was whether a tenant was entitled to appeal
against a decision in which the trial judge had refused to grant an order for
possession. The second concerned the more specific question of whether his
tenancy was an assured shorthold under the Housing Act 1988.
It might be thought
that a tenant who has succeeded in resisting a claim for an order for
possession would not wish to appeal. However, this defendant had a very good
reason for wanting to do so. His landlord, claiming that it had granted him an
assured shorthold tenancy and served an appropriate notice to terminate under
section 21 of the 1988 Act, had sought possession.
McCann defended
these proceedings by claiming that the tenancy was not an assured shorthold
tenancy but that, if it were, the notice to terminate had been defective. The
trial judge ruled that the tenancy was an assured shorthold but agreed that it
had not been correctly terminated.
Hence, as Holman J
put it in the Court of Appeal, the tenant’s victory was ‘Pyrrhic and
shortlived’ since the landlord could serve a fresh notice to terminate and
expect readily to regain possession. Accordingly, the tenant understandably
wished to overturn the ruling that his tenancy was an assured shorthold; then,
it would be regarded as a fully assured tenancy, which could only be terminated
on a statutory ground.
The landlord,
having made the point to the Court of Appeal office that the defendant should
not be allowed to appeal against a judgment in his favour because it would be
‘academic’, then chose not to appear. Nevertheless, the court considered the
question and, for the reasons already indicated, accepted that the defendant
had not necessarily achieved all that to which he was entitled, namely a correct
ruling on a point of direct interest to him. The appeal would not, therefore be
academic, and should be entertained.
Private residential
landlords invariably wish to let their properties on assured shorthold tenancies
because they can then regain possession simply by serving two months’ notice
expiring at the end of the tenancy; there is no need to prove either statutory
grounds or that an order for possession is reasonable.
Since the end of
February 1997, the creation of an assured shorthold tenancy has been shorn of
any special requirements; any tenancy that would otherwise fall within the 1988
Act is now automatically an assured shorthold unless a notice to the contrary
is served by the landlord. However, there are many residential tenants like
McCann whose tenancies were granted prior to that time and, for them, the old
rules apply. That which, as in this case, has given rise to most of the
problems, and which the 1997 changes were designed to eliminate, is the
requirement that a tenancy could only be an assured shorthold if a prior notice
was served on the tenant in a statutorily prescribed form (or one to like
effect).
The facts showed
that, in the present case, the landlord had served on McCann a prior notice in
the proper form. In particular, it was served on the day before the tenancy was
expected to commence and correctly stated what was at that time expected to be
the commencement and term date of the proposed tenancy. However, the existing
tenant then failed to move out on the following day (21 December 1995), with
the result that McCann’s tenancy could not start until 8 January 1996. The
dates on the tenancy agreement were altered to reflect this change, but no new
prior notice was served. Hence, the court had to decide whether the prior
notice, which stated dates different from those contained in the ensuing
tenancy agreement, was valid under section 20 of the Housing Act 1988.
Having considered
the three Court of Appeal decisions on this point (Panayi v Roberts [1993]
2 EGLR 51, Andrews v Brewer (1997) 30 HLR 203 and York v Casey
[1998] 2 EGLR 25) together with that of the House of Lords in Mannai Investment Co Ltd v Eagle Star Life
Assurance Co Ltd [1997] 1 EGLR 57, the court concluded that the notice in
this case was invalid.
The error in the
present case was not evident on the face of the notice (as in both Andrews and
York where the notices had given termination dates that preceded the
commencement dates). Here, the notice and the tenancy agreement were in
complete conflict with each other and it would be impossible to determine, by
reference to the documents alone, which was correct. The judge had not been
entitled to take into account the circumstances going beyond the documents
themselves.
The approach
currently being adopted to the question of what errors render a notice invalid
remains unsatisfactory. Both this Court of Appeal and that in York,
while purporting to apply Mannai, accept an ‘evident error’ test which
was roundly condemned by the House of Lords in that ruling. While not
suggesting that this has, in either of these cases, produced an outcome any
different from that which would have resulted from the reasonable recipient
test laid down in Mannai, the confusion could well be storing up trouble
for the future.
It is hard not to
feel sympathy for the landlord in this case; it certainly followed the correct
procedures and was only caught out by the failure of its previous tenant to
vacate (possibly coupled with the fact that these events took place over the
Christmas period). That said, it is hard to agree with our reader that the
tenant was pursuing an ‘ill-founded claim’. He was, on the face of it, merely
seeking to remain in his home.
