Assured shorthold tenancy — Housing Act 1988 — Errors in section 20 notice relating to termination date of tenancy and identity of landlord — Whether section 20 notice valid
In 1996 the
plaintiff owners sought to let a dwelling-house; they employed agents. On
August 17 1996 the second defendant expressed an interest in taking the
property on a ‘six month shorthold tenancy agreement’ in a fax to the agents.
The agents replied on September 6 that they had the ‘landlords’ instructions to
offer an assured shorthold tenancy for six months from September 28; they
enclosed a notice in standard form published by law stationers conforming with
the prescribed form of notice of an assured shorthold tenancy for the purposes
of section 20(1)(c) of the Housing Act 1988. However, in the notice the
termination date of the tenancy was incorrectly stated as ‘6th September’. The
notice also gave the names of both plaintiffs as the landlords. A tenancy
agreement was completed by the agents in which only the name of the first
plaintiff appeared as the landlord. The agreement was not signed by the
defendants. Following the service of a notice under section 21 of the 1988 Act,
in which both plaintiffs were described as ‘your landlords’, the plaintiffs
commenced proceedings for possession. On the hearing of a preliminary point,
the county court judge held that the section 20 notice was invalid. The
plaintiffs appealed.
material distinction between the approach to the validity of notices in a case
involving a notice in a statutory context, such as the present, and the
approach which the House of Lords in Mannai Investment Co Ltd v Eagle
Star Life Assurance Co Ltd [1997] 1 EGLR 57 has said should be adopted in a
contractual setting. A court must see whether the error in a notice was obvious
or evident and, second, whether notwithstanding that error the notice read in
its context is sufficiently clear to leave a reasonable recipient in no
reasonable doubt as to the terms of the notice. The error relating to the
termination date in the section 20 notice was evident, preceding the
commencement date and being plainly the date of the notice. The letter
accompanying the notice makes clear beyond doubt that what was contemplated was
a tenancy of six months certain. It was not relevant that the specified rent
was intended to be paid on the first day of each month, because a reasonable
recipient would understand that the last payment for March 1997 would be reduced
to reflect the loss of three days. The uncompleted tenancy agreement, in
reference to the first plaintiff only as the landlord, did not affect the
validity of the section 20 notice.
The following
cases are referred to in this report.
Brewer v Andrews [1997] EGCS 19
Carradine
Properties Ltd v Aslam [1976] 1 WLR 442;
[1976] 1 All ER 573; (1975) 32 P&CR 12
Delta
Vale Properties Ltd v Mills [1990] 1 WLR
445; [1990] 2 All ER 176
Ellis v Rowbotham [1900] 1 QB 740
Germax
Securities Ltd v Spiegal (1978) 37 P&CR
204; [1979] 1 EGLR 84; 250 EG 449, CA
Mannai
Investment Co Ltd v Eagle Star Life Assurance Co
Ltd [1997] AC 749; [1997] 2 WLR 945; [1997] 3 All ER 352; [1997] 1 EGLR 57;
[1997] 24 EG 122; 25 EG 138, HL
Panayi v Roberts [1993] 2 EGLR 51; [1993] 28 EG 125; (1993) 25 HLR
421, CA
Yamaha-Kemble
Music (UK) Ltd v ARC Properties Ltd [1990] 1
EGLR 261
This was an
appeal by the plaintiffs, Michael York and Janet Truro Ross, against a decision
of Judge Thompson, sitting in County Court, in possession proceedings by the plaintiffs
against the defendants, LG Casey and RP Casey.
Michael Barnes
QC (instructed by SJ Cornish, of Tiverton) appeared for the appellant
landlords; Mark Wonnacott (instructed by Goldbergs, of Plymouth) represented
the respondent tenants.
Giving judgment,
PETER GIBSON LJ said: The plaintiffs, Michael York and Janet Ross,
appeal from the decision of Judge Anthony Thompson QC on September 30 1997 in
Truro County Court, whereby he allowed an appeal by the defendants, Mr and Mrs
Casey, from the order of deputy district Judge Braga made on August 13 1997.
The Deputy District judge on a preliminary issue, which had been requested by
the plaintiffs, relating to a notice served on the defendants purportedly under
section 20(1)(c) of the Housing Act 1988, held that the notice was valid. The
judge held that the notice was invalid. He gave leave to appeal.
Before I state
the facts it is convenient to set out the statutory background to this case.
The Housing Act 1988 introduced assured tenancies. An assured tenancy is any
new tenancy under which a dwelling-house is let as a separate dwelling-house.
An assured tenancy enjoys a measure of security of tenure. There is a species
of assured tenancies, assured shorthold tenancies, created by section 20. Such
a tenancy enables the landlord to obtain possession at the end of the term of
the tenancy, section 21 providing that the court shall make an order for
possession when the term ends. There is, therefore, no statutory security of
tenure for the tenant and the landlord is not required to prove any grounds for
possession, such as he has to do in the case of an assured tenancy, not being
an assured shorthold tenancy. The only requirement in the case of an assured
shorthold tenancy is that the landlord, seeking to obtain possession, must give
to the tenant not less than two months’ notice in writing specifying that he
requires possession. The conditions for an assured shorthold tenancy to be
created are to be found in section 20 which, so far as material, reads:
(1) … an
assured shorthold tenancy is an assured tenancy —
(a) which is
a fixed term tenancy granted for a term certain of not less than six months;
and
(b) in
respect of which there is no power for the landlord to determine the tenancy at
any time earlier than six months from the beginning of the tenancy; and
(c) in
respect of which a notice is served as mentioned in subsection (2) below.
(2) The
notice referred to in subsection (1)(c) above is one which —
(a) is in
such form as may be prescribed;
(b) is served
before the assured tenancy is entered into;
(c) is served
by the person who is to be the landlord under the assured tenancy on the person
who is to be the tenant under that tenancy and
(d) states
that the assured tenancy to which it relates is to be a shorthold tenancy.
By regulation
2 of the Assured Tenancy and Agricultural Occupancies (Forms) Regulations 1988
(SI 1988/2203) the relevant form prescribed is form no 7 in Schedule 1 to the
regulations ‘or a form substantially to the like effect’. That form requires
the landlord and the tenant under the proposed tenancy to be named and contains
a statement:
You are
proposing to take a tenancy of the dwelling known as [and then a space for the property intended to be the subject of
the tenancy is provided] from [then a space is provided for the day,
month and year for the commencement date of the term of the tenancy] to [and
then a space is provided for the day, month and year for the end of the term of
the proposed tenancy] …
A side note
reads:
The
tenancy must be for a term certain of at least six months.
Para 2 of the
notice is in this form:
This notice
is to tell you that your tenancy is to be an assured shorthold tenancy.
Provided you keep to the terms of the tenancy, you are entitled to remain in
the dwelling for at least the first six months of the fixed period agreed at
the start of the tenancy. At the end of this period, depending on the terms of
the tenancy, the landlord may have the right to repossession if he wants.
The relevant
provisions of the Act have been amended by the Housing Act 1996, but this case
is concerned with the statutory provisions before amendment.
In 1996 the
plaintiffs, as the owners of the property, sought to let it through Kivells,
who are surveyors and estate agents in Launceston. There was an exchange of
faxes in August 1996 between Kivells and the defendants in Eire. On August 17
the second defendant, Mrs Casey, faxed a letter to Kivells in which she
expressed her interest in the property and said:
We understand
that the letting terms would be a six month shorthold tenancy agreement at a
monthly rental of £500 with a £500 deposit.
She asked how
Kivells wished to proceed. Kivells replied by fax, on August 20, that they were
in contact with ‘the landlords’ and awaited their confirmation of instructions.
On September 6 1996 Kivells wrote to the defendants about the property. They
said:
We write to
confirm that we have the Landlords instruction to offer you an Assured
Shorthold Tenancy of the above premises for six months from the 28th September
1996.
The rent will
be £500 per calendar month, payable in advance on the first day of each month.
Due to your Tenancy commencing on the 28th day of the month, we would be
grateful if your first rent payment could include the three days up to the 1st
October plus one full months rent making a total of £549.18 …
Enclosed
herewith is a Notice informing you that the Tenancy you are about to take is an
Assured Shorthold Tenancy. A Copy is attached for you to sign and return to us
as proof of receipt. We shall then prepare the Shorthold Tenancy Agreement and
forward it to you and the Landlord for signature prior to the start of the
Lease.
The reference
in the first sentence cited to the ‘Landlords instructions’ contained no
apostrophe, but it will be noted that the reference in the last sentence cited
was to the landlord in the singular. The notice enclosed was on a standard form
published by law publishers, conforming with the prescribed form no 7 as a
notice of an assured shorthold tenancy. It was filled in, it would appear, by
Kivells.
There are two
features of the notice which should be observed. The first is the term of the
tenancy. The dates from and to which the tenancy is to run are expressed to be
‘from 28th September 1996’, which was obviously correct as conforming with the
accompanying letter, ‘to 6th September 1996’, which was the date of the notice
and obviously incorrect. September 6 1996 appears three times in the notice:
twice where the notice was intended to be signed and also, as I have stated, as
the termination date for the tenancy. That date for the end of the tenancy was
obviously an error, preceding, as it did, the specified commencement date and
not according with the accompanying letter referring, as we have seen it did,
to the tenancy being of six months from September 28.
The second
feature of the notice is that the names of the landlords are given as both
plaintiffs. On September 9 both defendants acknowledged safe receipt of the
notice by signing a copy, and that was received by Kivells on September 12
1996. There is a tenancy agreement in the bundle of documents that has been put
before us, dated September 24 1996, apparently drawn up as indicated in the
letter of September 6 by Kivells. This was on a standard form produced by law
publishers. It has been filled in with a date which I have given, September 24,
the term certain is said to be of six months with a commencement date of
September 28. Against ‘landlord’ has been typed the name of only the first
plaintiff, Mr York. Against ‘tenant’ have been typed the names of the
defendants. That agreement was not signed by either party.
It was pleaded
by the plaintiffs that by a letter dated September 30 1996 Kivells submitted to
the defendants for signature an assured shorthold tenancy agreement for six
months, starting on September 28 1996, and that the defendants did not sign
that agreement despite requests to do so. In the defence of the defendants
those averments are admitted.
On January 21
1997 a notice under section 21 requiring possession was served by Kivells on
behalf of the plaintiffs, who were described as ‘your landlords’, on the
defendants requiring possession on March 27 1997. The defendants denied that
the plaintiffs were entitled to possession. Proceedings were therefore
commenced. The preliminary issue, as to the validity of the notice, was
determined by the deputy district judge in the way I have indicated and on
appeal by the judge against the plaintiffs.
The only issue
before the court, therefore, was the validity of the notice served under
section 20(1)(c), no evidence having been adduced or admitted on the hearing of
that preliminary issue. The defendants pleaded that the notice was defective in
that the termination date was given as September 6 1996 and, second, that only
Mr York was named as landlord. Plainly the second point is not correct, as it
does not accord with the actual notice. But the question of the termination
date and who was the landlord or who were the landlords were the two points
which were the subject of argument and decision in the courts below. The judge
found that there was an element of uncertainty in the notice relating to the
termination date of the tenancy and to the landlord of the premises. He
accordingly found for the defendants.
Before I deal
with each point in turn, it is convenient to consider the relevant principles
to be applied. The law on the effect of errors in notices served by landlords
on tenants or vice versa has recently been reviewed and restated in Mannai
Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749*.
In that case, leases contained a break clause enabling the tenant to determine
each lease by serving not less than six months’ notice in writing, such notice
to expire on the third anniversary of the commencement date of the term of the
lease. By letters dated June 24 1994 the tenant gave notice to determine the
leases on January 12 1995, although the third anniversary of the commencement
date was January 13 1995. The House of Lords, by a majority, held that the
notices were effective to determine the leases on
unambiguously inform a reasonable recipient how and when it was to operate. It
would have been obvious to a reasonable recipient that the notices contained a
minor misdescription and that the tenant had sought to determine the leases on
the third anniversary of the term’s commencement. That majority decision of the
House of Lords was made against a background in which there had been some
decisions going one way and some decisions going the other way.
*Editor’s
note: Interbulk Ltd v Aiden Shipping Co Ltd
The notices in
question in that case were described by Lord Steyn, at p768, as belonging to
the general class of unilateral notices served under contractual rights
reserved. But one of the authorities referred to by Lord Hoffmann, in agreeing
with Lord Steyn, was Germax Securities Ltd v Spiegal (1978) 37
P&CR 204*. It is clear from what Lord Hoffmann said that he was not
distinguishing between the test which he was adopting and that which was
applicable to the case of a statutory notice. He said, at p780, that in Carradine
Properties Ltd v Aslam [1976] 1 WLR 442 Goulding J, at p444G, had
said that the test for the validity of a notice was:
*Editor’s
note: Also reported at [1979] 1 EGLR 84
Is the notice
quite clear to a reasonable tenant reading it? Is it plain that he cannot be
misled by it?
He referred to
that test as having been approved by this court in Germax Securities Ltd v
Spiegal. He said:
as will be
apparent from what I have already said, I think that it was the right test to
adopt.
It is of
course right, as Mr Mark Wonnacott, for the defendants, has submitted, that one
should bear in mind that in a statutory context there may be requirements which
have to be observed and without which a notice will be invalid. But the same
may be true in the case of a contractual notice. For my part, I can see no
material distinction between the approach in a case such as the present and the
approach which the House of Lords has said should be adopted in the case of a
notice in a contractual setting.
The test
adopted by Lord Steyn, at p768, was that suggested by Slade LJ in Delta Vale
Properties Ltd v Mills [1990] 1 WLR 445, at p454, that is to say
whether the notices were:
sufficiently
clear and unambiguous to leave a reasonable recipient in no reasonable doubt as
to how and when they are intended to operate.
Notwithstanding
the presence of an error in the notices, Lord Clyde, at p782, also referred to
that test with approval, saying:
The standard
of reference is that of the reasonable man exercising his common sense in the
context and in the circumstances of the particular case. It is not an absolute
clarity or an absolute absence of any possible ambiguity which is desiderated.
Lord Hoffmann,
at p780, cautioned against allowing one party to take an unmeritorious
advantage of another’s verbal error, conferring an adventitious bonus upon
which no one could have relied.
We were
referred by Mr Michael Barnes QC, for the plaintiffs, to two decisions relating
to section 20, which he submitted adopted a similar test to that approved in Mannai.
In Panayi v Roberts [1993] 28 EG 125*, a notice served under
section 20(1)(c) stated that the tenancy would run from November 7 1990 to May
6 1991, that is to say a six-month term. In contrast the tenancy agreement
entered into the same day was for a term certain of one year from November 7
1990. Mann LJ, with whom Ralph Gibson LJ agreed, said:
*Editor’s
note: Also reported at [1993] 2 EGLR 51
There is a
statutory precondition that a notice should have been served in the prescribed
form. The prescribed form requires for completion a specification of the date
on which the tenancy in respect of which a notice is served both commences and
ends. The narrow issue is whether a notice which gives a wrong date (here a
termination) is ‘substantially to the same effect’ as one which gives the
correct date. Authority and an evident error apart, I find it difficult to say
that it was. By ‘evident error’ I mean an error which would have been evident
to a person with the ordinary qualities of the addressee. I would exclude a
quality of obtuseness as being extraordinary. The writing of ‘1793’ for ‘1993’
would be an evident error. The writing in this case of ‘May’ rather than
‘November’ in my judgment would be a perplexity rather than an evident error to
an ordinary recipient proposing and taking a tenancy of [and then the name of
the property is given] …
Accordingly,
Mann LJ held that there had been no proper notice and that no assured shorthold
tenancy was created. Mann LJ also said:
A notice with
an incorrect date is not substantially to the same effect as a notice with the
correct date and in this case the mistake was not obvious.
He also said:
I wish to
give no encouragement to arguments which are based on what were described to us
as ‘slips of the pen’ and which I have exemplified as ‘1793’ for ‘1993’.
However, an insistence on accuracy seems to me likely to simplify the task of
the county court and, more importantly, to enable tenants to know with
certainty of their status.
In Brewer v
Andrews, unreported February 17 1997*, the landlord served a notice
under section 21(c) in which it was stated that the tenancy would commence on
May 29 1993 and end on May 28 1993. Auld LJ, with whom Morland J agreed, said
that the termination date was obviously wrong and clearly a clerical error.
Applying the test of ‘evident error’ in the Panayi case, he said that
this did not vitiate a notice under section 20. In that case the tenancy
agreement entered into was for a term of a year from May 29 1993. Mr Barnes
accepted that the error in that case was more obvious than it is in the present
case, the error being of the final digit in the year for the termination of the
tenancy.
*Editor’s
note: Reported at [1997] EGCS 19
I agree with
Mr Barnes, however, that the test posed and applied in those cases accords with
the test found to be appropriate in the Panayi case. Accordingly, what
the court must do is to see whether the error in the notice was obvious or
evident and, second, whether notwithstanding that error the notice read in its
context is sufficiently clear to leave a reasonable recipient in no reasonable
doubt as to the terms of the notice.
I now return
to the two suggested uncertainties. First, the termination date. There can be
no doubt, as the judge himself held and Mr Wonnacott properly conceded, that
the error was evident, the termination date preceding the commencement date and
being plainly a repetition of the date of the notice. But the real question is
whether the termination date was sufficiently clear. Again, Mr Wonnacott
properly concedes that, if one looks only at the first sentence, which I have
cited from the letter of September 6 1996 accompanying the notice, there could
be no doubt that the termination date was intended to be March 27 1997.
However, he submitted, and the judge accepted, that there was an uncertainty in
the notice as a result of the requirement in the accompanying letter, in
respect of the payment of rent. Mr Wonnacott argued correctly that the
Apportionment Act 1870 only applies to rent payable in arrears. The effect of
the obligation to pay rent of £500 per calendar month in advance on the first
day of each month meant, he submitted, that the obligation on March 1 1997 was
to pay £500 in advance for the whole month and that therefore suggested a
termination date not of March 27 1997, but of March 31 1997, the natural
inference being that the obligation to pay £500 then gave the tenant the right
to occupy for the whole of the month of March. He submitted that it was obvious
that this created a perplexity, to use Mann LJ’s term. He prayed in aid the
fact that counsel for the plaintiffs, who appeared before the judge, apparently
accepted that there was that obligation to pay £500 on March 1 1997.
Ingenious
though the argument is, I do not accept for one moment that any reasonable
recipient of the letter and notice would believe that the clear offer of a
six-month tenancy would, or might by reason of the reference to the mechanics
of payment, be extended to an offer of a term of six months plus a few days to
the end of March. To my mind the letter makes clear beyond doubt that what was
contemplated was a
payment of a total of £3,000 rent. The first payment, it was requested, should
be not only of £500 for the month of October, but of an extra £49.18 for the
three days up to October 1. Nothing is expressly stated as to what is to happen
on March 1 1997, other than the general statement of £500 per calendar month,
payable in advance on the first day of each month. But that rent is expressed
to be at a particular rate, £500 per calendar month. For my part it is only
commonsense, which would have been obvious to the reasonable recipient of the
letter, that just as the first monthly payment was to be increased by the rent
for the extra three days, so the final monthly payment should be reduced by
that extra payment, so that in effect the tenant would only be required to pay
£500 less £49.18. It is not a question of applying the Apportionment Act. So
far as that is concerned, the usual authority cited on apportionment affecting
rent in advance, Ellis v Rowbotham [1900] 1 QB 740, was a case
where the plaintiff had let and the defendant had taken a tenancy of premises
at a rent payable quarterly in advance. The tenancy agreement had provided that
if rent should be in arrears for 14 days the plaintiff could regain possession
by re-entry. A quarter’s rent became in arrears. The plaintiff gave notice and
re-entered. The plaintiff sued for the unpaid rent which was due for the whole
quarter during which the plaintiff had re-entered. As AL Smith LJ said, the
rent became due long before the need to have recourse to the Apportionment Act
could arise. That decision and the principle governing the question of
apportionment for rent payable in advance do not, in my judgment, impinge on
the present case. Accordingly, I reject Mr Wonnacott’s argument on this point
and respectfully disagree with the judge.
Second, the
landlords. The judge described this point as a more substantial one. He
regarded the letter of September 6 1996 with its reference to ‘the Landlord’ in
the singular, and the unsigned tenancy agreement referring only to the first
plaintiff as the landlord, as creating an element of uncertainty. He found
assistance in Yamaha-Kemble Music (UK) Ltd v ARC Properties Ltd
[1990] 1 EGLR 261. He said that, following that authority, as both plaintiffs
were shown in the section 20 notice as the landlords, but the draft tenancy
agreement, pursuant to which the defendants entered into possession of the
property and paid the rent, was only in the name of the first plaintiff as
landlord, the notice was bad.
I should
observe that although the judge appears to have found as a fact that it was
pursuant to the draft tenancy agreement that the defendants entered into
possession and paid the rent, there was no evidence, in my judgment, on which
he could make those findings. They are not even pleaded by the defendants. All
that we know is that it was contemplated in the letter of September 6 1996 that
Kivells would prepare an agreement and forward it to the defendants, as well as
the landlords, for signature prior to the start of the lease. Although it
appears from a fee note of September 4 1996 that the defendants were sent a
bill, apparently by Kivells, for fees in respect of drawing up the agreement,
and although Kivells sent that agreement to the defendants, the defendants did
not sign the agreement notwithstanding requests to do so. In those
circumstances it seems to me far from clear, and certainly the judge was not
entitled to assume, that the terms on which the defendants were tenants were
those of the tenancy agreement, as distinct from the terms of the letter of
September 6 and the notice which it accompanied. There is no doubt but that the
statutory requirements are that the section 20(1)(c) notice should name the
intended landlord and that the intended landlord should serve the notice as
required by section 20(2)(c). The plaintiffs had instructed Kivells to agree
the tenancy, ‘the landlords’ in the plural being referred to in the fax of
Kivells of August 20 1996, in the section 20(1)(c) notice both plaintiffs are
named as ‘the landlords’.
Whether
Kivells, in referring to ‘the Landlord’ in the singular in the letter of
September 6 1996 in the same sentence as the reference to the shorthold tenancy
agreement, had in mind that in the form of tenancy agreement which they were to
use ‘landlord’ is referred to in the singular, I do not know. The first
reference in the letter of September 6 1996 to ‘the Landlords instruction’, as
I have already pointed out, leaves it uncertain whether Kivells intended
‘Landlords’ to be singular or plural.
For my part, I
cannot see anything to cast real doubt on the validity of the notice in this
regard. The uncompleted tenancy agreement was not drafted contemporaneously
with the letter or the notice. Indeed we know that it was dated September 24
1996 and not sent to the defendants until it was enclosed with the letter of
September 30 1996. It would therefore be surprising if that particular matter
to be found in the uncompleted tenancy agreement could affect the validity of
the notice served. That was sent on September 6.
In my
judgment, therefore, there is really nothing in this point to make the notice
one of which it could be said that it created a perplexity. The Yamaha-Kemble
case seems to me to have no relevance whatsoever. That was a case where the
defendant served a notice on the plaintiff tenants purportedly under section 25
of the Landlord and Tenant Act 1954. The defendant had been the landlord, but
shortly before serving the notice the defendant had assigned its interest in
the property in question to its parent company, and so had ceased to be the
landlord. As section 25 required the landlord to serve the notice, the notice
was held by Aldous J to be invalid. I cannot see that that has anything to do
with the present case, where the plaintiffs through their agents served the
section 20(1)(c) notice on the proposed tenants, and the plaintiffs were
correctly described in the notice. The reference to ‘the Landlord’ in the
singular in the accompanying letter is too slight a contra-indication to affect
the conclusion that there was in reality nothing to perplex the defendants.
Accordingly,
despite the well sustained argument of Mr Wonnacott, and in agreement with the
arguments of Mr Barnes, I would allow the appeal and restore the order of the
deputy district judge.
BENNETT J agreed and did not add anything.
Appeal
allowed with costs.
