Under what circumstances can a secure tenancy for a fixed term which has not expired by effluxion of time be terminated by a landlord? This was an important question considered by the Supreme Court in Croydon London Borough Council v Kalonga [2022] UKSC 7; [2022] PLSCS 45. Such was the importance of clarity in this area that the case was heard even though the fixed term tenancy in question had expired by effluxion of time. There are thousands of tenancies granted in terms similar to that considered in this case.
Secure tenancies are governed by the Housing Act 1985. Section 82 states:
“82 (1) A secure tenancy which is… (b) a tenancy for a term certain but subject to termination by the landlord, cannot be brought to an end by the landlord except as mentioned in subsection (1A).
(1A) The tenancy may be brought to an end by the landlord –
(a) obtaining –
(i) an order of the court for the possession of the dwelling-house, and
(ii) the execution of the order,
(b) obtaining an order under subsection (3) or
(c) obtaining a demotion order under section 82A
(2) In the case mentioned in subsection (1A)(a), the tenancy ends when the order is executed.
(3) Where a secure tenancy is a tenancy for a term certain but with a provision for re-entry or forfeiture, the court shall not order possession of the dwelling-house in pursuance of that provision, but in a case where the court would have made such an order it shall instead make an order terminating the tenancy on a date specified in the order and section 86 (periodic tenancy arising on termination of fixed term) shall apply.
(4) Section 146 of the Law of Property Act 1925 (restriction on and relief against forfeiture) except subsection (4) (vesting in under-lessee), and any other enactment or rule of law relating forfeiture, shall apply in relation to proceedings for an order under subsection (3) of this section as if they were proceedings to enforce a right of re-entry or forfeiture.”
Ms Kalonga had a flexible fixed-term tenancy granted by Croydon. During the fixed term, as a result of alleged tenant misbehaviour Croydon commenced possession proceedings based on a notice seeking possession. Croydon’s argument evolved to be that there was no need to terminate the fixed term by forfeiture by or in addition to seeking possession on a statutory basis. In a decision upheld by the Court of Appeal, Tipples J held that to bring possession proceedings within the fixed term, Croydon had to bring itself within section 82(1) (b) and show that this was a tenancy of a fixed term “but subject to termination by the landlord”. She was not persuaded that the tenancy had a forfeiture clause and accordingly concluded that it could not said to be subject to determination by the landlord.
The Supreme Court held that in order to bring a fixed-term secure tenancy to an end within the fixed term, it was necessary that the agreement contain a means of early termination such as a break clause or a forfeiture clause and that such a clause had become exercisable. A landlord’s break clause will only become exercisable when the contractual conditions for its exercise are satisfied. A forfeiture clause only becomes exercisable when there has been a qualifying breach of the terms of the tenancy and (in the case of rent arrears) the necessary notice has been served. If there is a forfeiture clause, then the landlord will need to seek termination in lieu of forfeiture under section 82(3) before or at the same time as seeking possession on the statutory grounds.
Importantly for councils like Croydon, unlike Tipples J and the Court of Appeal, the Supreme Court was satisfied that the tenancy being considered contained a forfeiture clause. The booklet containing the terms stated “We may take eviction action at any time if one or more of the grounds of possession… apply” and also “We may seek possession if… you break any of the clauses of this agreement, or if any of the grounds in Schedule 2 of the Housing Act 1985… are breached…”. Such repeated provisions in the tenancy agreement to the ability of Croydon to bring the fixed-term tenancy to an end early constituted forfeiture provisions. Accordingly (although they had not done so) it would have been open to the council to have relied on this wording and sought a termination in lieu of forfeiture (and the tenant could in turn have sought relief).
Elizabeth Haggerty is a barrister
