Landlord and tenant — Housing Act 1988 — Assured shorthold tenancies — Whether section 20(4) has continuous application such that all tenancies granted after original tenancy are assured shorthold tenancies — Whether section 21(4) notice seeking possession must specify date on which possession required — Whether proceedings for possession can be commenced before expiration of section 21(4) notice
By an agreement dated March 28 1989 P was
granted an assured shorthold tenancy of residential premises for a six-month
term. Following certain correspondence P’s request to remain in possession
until March 26 1990 was allowed. A new three-month agreement was then entered
into in April 1990 and a purported notice under section 20(2) of the Housing
Act 1988 was served on P. On July 23 1990 another purported notice under
section 20(2) was served on P and the parties entered into a six-month tenancy
purporting to be an assured shorthold tenancy. A notice under section 21(1) was
served on P in November 1990 enabling the landlord to recover possession at the
end of the term; in fact no steps were taken and P was allowed to remain in
possession and died in February 1992. On his death P’s tenancy vested in the
defendant pursuant to section 18 of the Act. In June 1994 the plaintiff
landlord served a notice under section 21(4) seeking possession at the end of
the period of the tenancy which would end after the expiry of two months after
the notice. Proceedings were commenced just before the notice expired. In the
court below the assistant recorder dismissed the plaintiff landlord’s
proceedings seeking possession of the premises. The defendant appealed and the
plaintiff cross-appealed.
dismissed. On the expiration of the first tenancy in late 1989, P became an
assured shorthold tenant for the second time and the process was repeated
thereafter at intervals until his death. Sometimes he had a fixed term,
sometimes a periodic term. Although the two attempts to create assured
shorthold tenancies in April and July 1990 were ineffective, the term was only
three months in April and a defective notice was served in July, the tenancies
were none the less assured shorthold tenancies by reason of section 20(4).
Accordingly on P’s death an assured shorthold tenancy vested in the defendant.
A notice under section 21(4), which provides that it will expire at the end of
the period of the tenancy which will end after the expiry of two months from
the service of the notice, is a valid notice without specifying a particular
date. Section 21(4) does not require there to be anything in writing as to when
the notice is given. However proceedings for possession cannot be commenced
before the expiration of the section 21(4) notice.
The following cases are referred to in
this report.
Green’s Will Trusts, Re [1985] 3 All ER 455
Sheffield City Council v Graingers Wines Ltd
[1977] 1 WLR 1119; [1978] 2 All ER 70; (1977) 75 LGR 743; [1977] 1 EGLR 76; 242
EG 687; [1977] JPL 789, CA
This was the hearing of an appeal by the
defendant, Rene Jones, and a cross-appeal by the plaintiff, Lower Street
Properties Ltd, from a decision of Mrs Assistant Recorder Phillips in Chicester
County Court given on March 6 1995.
Julie Browne (instructed by WH Matthews
& Co, of Staines) appeared for the appellant; Mark James (instructed by
Buss Murton, of Tonbridge) represented the respondent.
Giving the first judgment, Kennedy LJ said: This is the
defendant’s appeal from a decision of Mrs Assistant Recorder Phillips, sitting
at Chichester County Court, who in a written judgment delivered on March 6 1995
dismissed the plaintiff’s claim for possession of premises known as Orchards,
Lower Street, Pulborough, West Sussex. The assistant recorder also dismissed
the defendant’s counterclaim for a declaration that she acquired a periodic
assured tenancy by succession, and held that the defendant occupied the
premises under a periodic assured shorthold tenancy which she acquired by
succession. It is, of course, the decision in relation to the counterclaim which
the defendant challenges in this appeal, but there is also a cross-appeal in
which the plaintiff seeks an order for possession of the premises forthwith.
The facts which gave rise to the appeal
are not in dispute so I can deal with them briefly. The respondent plaintiff
was formerly Mirod Estates Ltd. In 1988 that company purchased the premises
with a view to developing it. Development could not go ahead at once so Mirod
Estates agreed to allow Mr Charles van Praag and the defendant to live in the
property. On March 20 1989 Mirod Estates Ltd served on Mr van Praag the notice
required by section 20 of the Housing Act 1988 advising him that his tenancy
would be an assured shorthold tenancy, and on March 28 1989 a tenancy agreement
was made between Mirod Estates Ltd and Mr van Praag which the assistant
recorder found, and it is now accepted, did create an assured shorthold
tenancy. It satisfies the requirements of section 20(1) of the Housing Act 1988
in that it was a fixed term tenancy for a term of six months, the minimum
allowed under the Act, and the notice required by section 20(2) had been
served.
That assured shorthold tenancy expired by
effluxion of time on September 27 1989. The evidence before the assistant
recorder was, as she said, unclear as to what happened after the March 1989
tenancy agreement came to an end. Certainly Mr van Praag and the defendant
continued to live in the premises. He lived there until he died in 1992 and the
defendant is still there. Mirod Estates Ltd used a managing agent. A letter of
November 4 1989 from the managing agent to Mirod Estates Ltd suggests that by
then it had already been agreed that Mr van Praag could stay on in the premises
for another three months. The letter pointed out that the three months would
end on December 27 and conveyed Mr van Praag’s request to stay on another three
to six months. In reply Mr Maynard for Mirod Estates agreed to at least another
three months from December 27 1989 if, as expected, an extant planning
application was refused. By early December Mr van Praag was indicating a desire
to stay on until March 26 1990. That was allowed. That was the time at which
rates paid by property replaced by the community charge paid by occupiers, so
Mirod Estates and its agents decided to lower the monthly payment and prepare
another written tenancy agreement. That agreement was sent to Mr van Praag on
April 18 1990 together with what purported to be a notice pursuant to section
20(2) of the 1989 Act. However, as the proposed tenancy was to be only for three
months from April 10 1990 it could not be an assured shorthold tenancy as
defined by section 20(1). The notice was therefore ineffective. The agreement
was, however, signed by Mr van Praag and by Mr Maynard for the Mirod Group, and
it was apparently implemented.
By July 1990 the managing agent Mr Smith
was clearly aware of the fact that in order to comply with the provisions of
section 20(1) of the 1988 Act the tenancy would have to be for a fixed term of
at least six months. On July 23 1990 he wrote to confirm that Mr van Praag’s
tenancy would be extended for a six-month term commencing on July 29 1990. The
notice envisaged by section 20(2) of the 1988 Act was apparently served on July
23 1990, but it was defective, and the third written tenancy agreement was
entered into on July 29 1990 before any valid notice was served. In that
agreement the landlord was again described as the Mirod Group. On November 29
1990 Mr Smith for the landlord served Mr van Praag with written notice
requiring possession on January 29 1991 at the end of the six-month term. The
notice was wrongly dated November 29 1991, but nothing seems to turn on that.
If the tenancy agreement of July 29 1990
did create an assured shorthold tenancy pursuant to section 20(1) of the 1988
Act then the notice of November 29 1990 would have complied with section
21(1)(b) of the 1988 Act and so enabled the landlord to recover possession at
the end of the six-month term, but, in fact, nothing was done in that
direction. The landlord put the house up for sale, but Mr van Praag continued
to live in it and in February 1992 Mr van Praag died. At trial the assistant
recorder found that no new oral tenancy was granted to the defendant at or
about the time of Mr van Praag’s death, so, pursuant to section 18 of the 1988
Act, whatever tenancy Mr van Praag had at death vested in the defendant.
Mirod Estates Ltd changed its name to the
plaintiff’s, Lower Street Properties, in May 1993, and subsequently began the
possession proceedings which brought this matter to court. I have to look at
the possession proceedings later, but it is necessary first to decide what
form of tenancy it was that vested in the defendant when Mr van Praag died.
As I have already indicated, it is now
accepted that when Mr van Praag and the defendant first went into possession of
the premises in 1989 Mr van Praag was an assured shorthold tenant under the
terms of the tenancy which satisfied the requirements of section 20(1) of the
1988 Act. When that tenancy came to an end on September 27 1989 he was allowed
to stay on for three months. That, as both counsel accept, would have given
rise to a further assured shorthold tenancy pursuant to the provisions of
section 20(4) which, so far as material, provides:
… if, on the coming to an end of an assured
shorthold tenancy (including a tenancy which was an assured shorthold but
ceased to be assured before it came to an end) a new tenancy of the same or
substantially the same premises comes into being under which the landlord and
the tenant are the same as at the coming to an end of the earlier tenancy,
then, if and so long as the new tenancy is an assured tenancy, it shall be an
assured shorthold tenancy, whether or not it fulfils the conditions in
paragraphs (a) to (c) in subsection (1) above.
Paras (a) to (c) are those which required
an assured shorthold tenancy (perhaps best described as an originating assured
shorthold tenancy) to be for not less than six months, not to be determinable
by the landlord at least before the end of six months and to have been preceded
by a notice in accordance with section 20(2) warning the tenant of the type of
tenancy agreement he or she is about to enter into.
In the context of the present case the
effect of section 20(4) is to make it clear that Mr van Praag was an assured
shorthold tenant until December 27 1989. What happened then? It is the case for
the appellant that section 20(4) can only operate once, at the end of an
assured shorthold tenancy created pursuant to section 20(1), so that in
December 1989 Mr van Praag became, by virtue of section 5 of the Act, a tenant
under an assured tenancy which was not a shorthold tenancy. If she is right, or
if at any time before he died Mr van Praag became an assured shorthold tenant,
no further assured shorthold tenancy could have come into existence because
section 20(3) prevents the grant of an assured shorthold tenancy to an assured
tenant. But, for the plaintiff/respondent Mr Mark James contends that section
20(4) can operate again and again, and is intended if necessary so to operate
until either the tenant vacates or the landlord brings the situation to an end
by serving notice pursuant to section 20(5). The whole purpose of chapter II of
the 1988 Act was to prevent stagnation in the property market by, among other
things, preventing a tenant who entered as an assured shorthold tenant
acquiring the rights of an assured tenant without the consent of the landlord.
Miss Julie Browne drew our attention
first of all to the wording of section 20(4) and emphasised the word ‘on’. In
my judgment, the wording of the section is of no assistance to her. Indeed, if
section 20(4) was intended to operate as she suggests one would expect to find
after the word ‘tenancy’ in line two of section 20(4) the words ‘which was
granted under paragraph (1) above’. Miss Browne’s own skeleton argument invites
us to read in those or similar words which are not there.
She rightly invites our attention to
other sections in chapter II of the statute, but they only serve to show that
when the draftsman wanted to distinguish between the various types of assured
shorthold tenancy he had no difficulty in doing so (see section 21(1), section
21(4), section 22(1) and section 22(2)(b)) which leads to the obvious
conclusion that section 20(4) was intended to apply to all types of assured
shorthold tenancy, whether originating or derivative. Miss Browne submitted
that the words ‘on the coming to an end of’ are consistently used in the Act in
connection with fixed term tenancies, so section 20(4) must only operate in
connection with a tenancy of that kind, but, in my judgment, that argument
leads nowhere. Section 20(4) specifically states that it operates ‘on the
coming to an end of an assured shorthold tenancy’. Miss Browne further points
out that if my construction of section 20(4) be right a tenant may go on
holding pursuant to section 20(4) for a long time and throughout that period
will be unable to make reference to a rent assessment committee because section
22(1) and (2) make it clear that only an originating assured shorthold tenancy
can make such a reference. That I accept, but it does not cause me to doubt
what is the proper construction of section 20(4). Parliament clearly intended
to give a tenant holding pursuant to an originating assured shorthold tenancy
the right to go to a rent assessment committee, but not to extend that right
any further; no doubt because assured shorthold tenancies are by nature
short-term contracts and if tenants hold over the position is not one in which
the tenant is locked in. He or she can vacate.
Miss Browne also invited our attention to
section 55 of the Housing Act 1980 and Case 19 where the wording differs from
that found in section 20(4) of the 1988 Act but, as the purpose of the earlier
Act is different, I, for my part, was unable to derive any assistance from that
comparison. We also looked at leading text book writers, but none seem to have
focused their attention on the point with which we are concerned.
In my judgment, Mr van Praag became an
assured shorthold tenant, pursuant to section 20(4), for the second time in
late 1989 and the process was repeated thereafter at intervals until his death.
Sometimes he had a periodic tenancy, sometimes the tenancy was for a fixed
term, but always it was an assured shorthold tenancy, and always, as it seems
to me, the tenancy took effect pursuant to section 20(4) because the two
attempts to create an assured shorthold tenancy pursuant to section 20(1) in
April 1990 and July 1990 were ineffective. The result was that when Mr van Praag
died the tenancy which vested in the defendant was an assured shorthold
tenancy.
Eventually in June 1994 the landlord
served on the defendant the notice required by section 21(4) advising the
defendant that possession of the property was required. The service of such a
notice is a pre-condition to the making of an order for possession, and section
21(4) so far as relevant provides that:
… a court shall make an order for
possession of a dwelling-house let on an assured shorthold tenancy which is a
periodic tenancy if the court is satisfied–
(a) that the landlord … has given to the
tenant a notice stating that, after a date specified in the notice, being the
last day of a period of the tenancy and not earlier than two months after the
date the notice was given, possession of the dwelling-house is required by
virtue of this section;
Three points are now taken in relation to
the notice and what followed thereafter:
(1) the notice did not specify the date
on which possession was required;
(2) it was not clear on its face when it
was given, that is to say, served. It only bears the date on which it came into
existence;
(3) proceedings for possession were
started on August 26 1994, one day before the period provided for by the notice
came to an end.
As to the first of those points, the
assistant recorder stated that she would expect to find a date set out in the
notice. As Scarman LJ said in Sheffield City Council v Graingers
Wines Ltd [1977] 1 WLR 1119* at p1126E:
*Editor’s note: Also reported at [1977] 1
EGLR 76
The word ‘specified’ … means no more than
‘made clear’
Similarly, in Re Green’s Will Trusts
[1985] 3 All ER 455 Nourse J (as he then was) said at p460F:
There is plenty of other authority,
including that of common sense, to the effect that ‘specified’ merely means
‘unambiguously identified’ or ‘made clear’.
Because of the wording of section 21(4)
if an actual date is to be given in the notice it must be ‘the last day of the
period of the tenancy’ and there is an obvious risk of a minor arithmetical
error giving rise to the argument that the notice is invalid which no doubt is
why the printed form suggests as a possible form of wording that the notice
will expire ‘at the end of the period of your tenancy which will end after the
expiry of 2 months from the service upon you of this notice’. In my judgment,
that is a form of words which does meet the requirements of section 21(4)
because the tenant knows or can easily
the learned recorder.
I turn to the submission made to us that
the notice does not, on the face of it, show when it was served. I do not
believe this point was taken in the court below and, in my judgment, it is not
a good point. Section 21(4)(a) requires the notice to specify the date when
possession of the dwelling-house is required. That date must be the last day of
a period of the tenancy, and it must be not earlier than the two months after
the date the notice was given, but the subsection does not require there to be
anything in writing as to when the notice was given. That can if necessary be
proved by oral evidence, by agreement, or in any other way considered to be
appropriate.
I come, therefore, to the final point in
relation to the notice. Mr James submits, with some force, that if a landlord
cannot start proceedings to obtain possession until after the date specified in
the notice given pursuant to section 21(4) the tenant will in fact enjoy an
extra period of grace before the case can be listed for hearing. Why should the
landlord not, he asks rhetorically, start proceedings and then if the tenant
surrenders possession as required by the notice the landlord will simply
discontinue and pay his own costs. But if the tenant does not surrender by the
time the matter goes before the judge the statutory requirements will be
fulfilled and the judge will be able to make a possession order.
I have considerable misgivings about such
a course of action. In the first place, from the point of view of the tenant, I
regard it as objectionable that having been given a period in which to leave,
legal proceedings to obtain possession should be instituted against him or her
before that period has expired. It is easy to envisage quite serious and wholly
unwarranted damage being done to the tenant’s credit rating as a result. Of
course, he might at first not discover that proceedings had been commenced, but
if he did discover before the date specified in the notice he might ask the
court to set the proceedings aside as an abuse of process and if he were to do
that an application might well succeed. Second, from the point of view of the
court, it is I believe highly undesirable to add to overburdened lists
contingent litigation. In the present case there is, I believe, an even more
compelling reason for saying that the notice served on June 16 1994 could not
be used to support proceedings commenced on August 26 1994 and that is that the
notice itself said:
The landlord cannot apply for such an
order (ie an order for possession) before the notice has run out.
It may be that if the notice had been
differently worded the landlord could, without offending against any of the
County Court Rules, have started proceedings when it did and in due course
obtain a possession order but this notice, worded as it is, could not, in my
judgment, be used in proceedings begun on August 26 because those proceedings
were themselves in breach of the assurance given in the notice.
For those reasons I would dismiss both
the appeal and the cross-appeal.
Agreeing, Schiemann LJ said: I agree with the order proposed by
Kennedy LJ. I wish to add a few words on the very last point, that is, whether
it is permissible to apply to the county court for an order for possession
under section 21(4) and the County Court Rules Ord 49, r 6 (a) on a date prior
to the date specified in the notice. Mr James, when advancing this ground of
his cross-appeal, accepted that the general rule was that a party could not
recover for a cause of action that only accrued after process was issued. He
went on to submit that this was a rule of practice rather than a rule of law
and could be departed from whenever the justice of the case so required. There
are a number of authorities to that effect. He submitted that the present case
was one such exceptional case because, first, under section 21 of the Housing
Act 1988 it was difficult to talk in terms of a cause of action at all since
the landlord has no right of possession until the court makes an order: section
5(1). He pointed out that section 21(1) and (4) of the 1988 Act both direct the
court to consider at the date of hearing whether the relevant notice has been
served. They do not direct the court to consider whether or not the relevant
notice has expired. Third, unlike section 8(3)(d) of the 1988 Act, there is no
requirement for a notice requiring possession to state that the landlord will
not begin proceedings earlier than the date specified in a notice requiring
possession. As it seems to me, the present is not such an exceptional case and
the second of the points raised is one that operates against Mr James’
contention rather than in his favour.
It must have been parliament’s intention
that the tenant should not be forced to give possession until the expiry of the
two months notice. Yet the court, under the subsection, ‘shall make an order
for possession if it is satisfied that appropriate notices have been given by
the landlord’. There is, as was pointed out, no mention of waiting until the
expiry of the periods referred to in the notice. It seems that the way in which
the court is prevented from making the order under section 21(1)(4) prior to
the date specified in the notice is because it is implicit that the landlord
cannot bring proceedings until after that date. In argument it was common
ground that the court had no power to make such an order prior to that
specified date.
I also would dismiss the cross-appeal and
the appeal.
Phillips LJ agreed and did not add
anything.
Appeal and cross-appeal dismissed.
