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[View ICLR summary:  WLR(D) 671]
|Neutral Citation Number:  EWCA Civ 2414
|Case No: B5/2017/2928
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AT CENTRAL LONDON
Her Honour Judge Baucher
Claim No. C01EC627
|Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE HENDERSON
LORD JUSTICE NEWEY
LORD JUSTICE LEGGATT
Mr Ben Chataway (instructed by Osbornes Solicitors LLP) for the Appellants
Mr Asela Wijeyaratne (instructed by YVA Solicitors) for the Respondents
Hearing date: 17 October 2018
HTML VERSION OF JUDGMENT APPROVED
Crown Copyright ©
Lord Justice Newey:
- "Assured shorthold tenancies" were introduced by the Housing Act 1988 ("the 1988 Act") and are nowadays commonplace. Such a tenancy cannot be brought to an end by a landlord except by obtaining and executing an order for possession under section 7 or section 21 of the 1988 Act (see section 5(1)). Section 7 (which forms part of Chapter I of Part I) authorises (and in some instances requires) the Court to make a possession order on the various grounds set out in schedule 2 to the 1988 Act (which include, for example, the availability of suitable alternative accommodation, rent arrears and breach by the tenant of an obligation of the tenancy). Typically, however, a landlord will seek possession pursuant to section 21 rather than section 7. The former provision allows a landlord to recover possession as of right if, among other things, a notice has been served in accordance with section 21(1)(b). Section 21(1) is in these terms:
"Without prejudice to any right of the landlord under an assured shorthold tenancy to recover possession of the dwelling-house let on the tenancy in accordance with Chapter I above, on or after the coming to an end of an assured shorthold tenancy which was a fixed term tenancy, a court shall make an order for possession of the dwelling-house if it is satisfied—
(a) that the assured shorthold tenancy has come to an end and no further assured tenancy (whether shorthold or not) is for the time being in existence, other than an assured shorthold periodic tenancy (whether statutory or not); and
(b) the landlord or, in the case of joint landlords, at least one of them has given to the tenant not less than two months' notice in writing stating that he requires possession of the dwelling-house."
- The question in the present case is whether a notice that the respondents, who own the relevant premises, served on the appellants, who are assured shorthold tenants, satisfied the requirements of section 21(1)(b) of the 1988 Act. The respondents maintain that it did. The appellants dispute that on the basis that the respondents were not at the date of the notice "the landlord" within the meaning of section 21(1)(b).
- The proceedings concern a building at 134 Holloway Road in London which contains a number of flats. From 2012, predecessors in title of the respondents leased the building to Anthea Investments Limited ("the Agency") on the footing, as was recorded in the agreements between them, that the Agency was allowed to sub-let the premises, which were "to be used for sub-lettings as residential accommodation". The Agency granted an assured shorthold tenancy of a flat within the building to each of the appellants. Both tenancy agreements provided for a fixed term of 28 weeks, but the appellants afterwards remained in occupation as periodic tenants in accordance with section 5(2) of the 1988 Act.
- In 2015, the respondents became the registered proprietors of 134 Holloway Road, and they thereafter took steps to obtain possession of the property. To that end, on 12 January 2016 they served a document headed "Notice to quit" on the Agency and the building's occupiers stating that possession would be required on 19 March 2016. The document was intended both to determine the Agency's mesne tenancy with effect from the specified date and, as regards the sub-tenants (including the appellants), to constitute a notice under section 21(1)(b) of the 1988 Act.
- It is common ground that the Agency's tenancy (which, since it did not satisfy the requirements of section 1 of the 1988 Act, was not itself an assured tenancy) was terminated with effect from 19 March 2016 and that the appellants were then tenants of the respondents. While the appellants' tenancies would have fallen with the Agency's at common law, section 18 of the 1988 Act provides for an assured tenancy lawfully granted by a mesne tenant (here, the Agency) to "continue in existence as a tenancy held of the person whose interest would, apart from the continuance of the assured tenancy, entitle him to actual possession of the dwelling-house" (here, the respondents) at the end of the mesne tenancy. Further, the notice that the respondents served on the appellants cannot, regardless of its validity, have terminated the appellants' tenancies on the date given in it. As I have indicated, an assured shorthold tenancy comes to an end under section 5 only when a possession order is executed.
- Possession proceedings having been brought by the respondents, the matter came before District Judge Manners, sitting in the County Court at Clerkenwell & Shoreditch, on 21 December 2016. She made possession orders against the appellants, taking the view that "if you are the landlord of the superior tenant, you must be entitled to serve a notice to quit on the inferior tenant at the same time". The appellants appealed, but on 6 October 2017 Her Honour Judge Baucher dismissed the appeal. She said in the course of her judgment:
"I do not consider the language of the statute requires the landlord to be the landlord at the date of the issue of the notice. The essential criterion is whether he is entitled to the premises. In accordance with section 21 that issue has to be determined by the court after the coming to an end of the assured shorthold tenancy. The wording under the statute is 'would be entitled to possession', and thus the relevant date is the date upon which possession is sought. On that date, 19th March, the superior landlord was entitled to possession because the mesne tenancy had expired."
- For present purposes, the key words of section 21 of the 1988 Act are:
"a court shall make an order for possession of the dwelling-house if it is satisfied … the landlord or, in the case of joint landlords, at least one of them has given to the tenant not less than two months' notice in writing stating that he requires possession of the dwelling-house".
Taken at face value, this language might suggest that the Court should be focusing on the position at the date of the hearing and, hence, that it is good enough that the requisite notice has been given by the person who is then the "landlord". However, Mr Asela Wijeyaratne, who appeared for the respondents, did not espouse this interpretation, and he was clearly right not to do so. The construction would make no sense and cannot have been Parliament's intention. It would imply that a notice could have been given by someone who was not the "landlord" (and might, in fact, have had no interest at all in the property) either when the notice was served or on the date specified as that on which possession was required. It would suffice that the person had become the "landlord" by the time the case was before the Court.
- Mr Ben Chataway, who appeared for the appellants, submitted that the identity of the "landlord" for the purposes of section 21(1)(b) of the 1988 Act is to be determined as at the date the notice is given. That conclusion, he said, accords with the language of the section, which directs attention to what is happening on that date; with the common law rule that a notice to quit can be served only by the person in whom the reversionary interest is then vested and not, for example, by someone in whose favour a transfer of the property has been executed but who has not yet been registered as the proprietor (see e.g. Pye v Stodday Land Ltd  EWHC 2454 (Ch)); and with the need for the parties to know where they stand and, in particular, whether a notice is effective.
- Mr Wijeyaratne did not deny that, to be effective, a notice under section 21 of the 1988 Act must be served by the "landlord" as at the date the notice is given. His contention was rather that, in the context of the notice served on the appellants on 12 January 2016, the respondents were the "landlord" within the meaning of section 21(1)(b) at the time of service.
- Mr Wijeyaratne's submissions were founded in large part on section 45 of the 1988 Act, which provides that, in Part I of the Act (which encompasses sections 1-45), except where the context otherwise requires, "landlord":
"includes any person from time to time deriving title under the original landlord and also includes, in relation to a dwelling-house, any person other than a tenant who is, or but for the existence of an assured tenancy would be, entitled to possession of the dwelling-house".
- Very similar definitions were to be found in the Rent Act 1977 and its predecessors. The earliest such provision to which we were taken was section 12 of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 ("the 1920 Act"). Section 12(1)(f) and (g) stated:
"(f) The expressions 'landlord,''tenant,''mortgagee,' and 'mortgagor' include any person from time to time deriving title under the original landlord, tenant, mortgagee, or mortgagor;
(g) The expression 'landlord' also includes in relation to any dwelling-house any person, other than the tenant, who is or would but for this Act be entitled to possession of the dwelling-house…."
- There was reference to section 12(1)(f) and (g) of the 1920 Act in Dudley and District Benefit Building Society v Emerson  Ch 707. In that case, the purchaser of a house had mortgaged it in favour of a building society and subsequently granted a tenancy of the property even though the mortgage had excluded the statutory power of leasing. The mortgagor having defaulted, the building society brought possession proceedings, but the tenant resisted them on the basis that section 3 of the Rent and Mortgage Interest Restrictions (Amendment) Act 1933 ("the 1933 Act") stipulated that, save in specified circumstances, "No order or judgment for the recovery of possession of any dwelling-house to which the principal Acts apply or for the ejectment of a tenant therefrom shall be made or given".
- The Court of Appeal concluded that section 3 of the 1933 Act did not assist the tenant, on the ground that "what the section and the schedule, which is read into it, must be taken to contemplate is a proceeding against the tenant by somebody who may be fairly described … as a landlord" and that the description "cannot be fairly … applied to the mortgagees in their claim against [the tenant]" (per Evershed MR, at 715-716). Evershed MR observed (at 716):
"They [i.e. the plaintiff building society] are not his [i.e. the tenant's] landlords; they never have been. The evidence makes it, I think, tolerably clear that they have never accepted his tenancy as one which binds them, and it is quite clear that there is no contractual relationship between [the tenant] and the plaintiffs, either imported by the statute or otherwise."
- Evershed MR noted that counsel for the tenant had argued that the building society should be treated as within the (part) definition of "landlord" given in section 12(1)(g) of the 1920 Act as a person "who is or would but for this Act be entitled to possession of the dwelling-house", but Evershed MR concluded (at 716-717) that "there must be some limitation put on the words" and (at 718) that the definition was "not sufficient to give to the mortgagees … the right to describe themselves as the 'landlord' for the purposes of this Act".
- In the course of his judgment, Evershed MR said this about section 12(1)(g) of the 1920 Act (at 717-718):
"I think, without attempting any precise statement or definition of what is itself a definition, that the explanation may be found in this: the addition by para. (g) is no doubt an addition to a definition which extends 'landlord' to persons deriving title under a landlord: in certain circumstances, to which I must presently refer, a sub-tenant is entitled to the protection of the Acts; there you would have a case in which a head lessor would be suing for possession against a sub-tenant, and the Act of 1920 makes provision by s. 5, sub-s. 5 , and s. 15, sub-s. 3 , for preserving the right to possession of a sub-tenant, and the sub-tenant becomes, or may become, the statutory tenant of the head landlord. Of course, in such a case as that, in construing the various provisions of the Acts, the landlord, quoad the sub-tenant, is a person not deriving title under that sub-tenant's landlord, but is a person whose title is superior to that sub-tenant's landlord. Furthermore, as I have already intimated, and as is, of course, well known, in certain circumstances (when, for example, an effective notice to quit has been given) the contractual tenancy between A and B may come to an end, and there then is created what is known as a statutory tenancy, B remaining in possession as a 'statutory tenant' of A. It has been said in these courts that a statutory tenancy, as the phrase is commonly used, is a somewhat inapposite expression, for it confers on the so-called statutory tenant no estate or interest in the land. He cannot part with it or dispose of it, and in certain circumstances the right to possession, which is its principal feature, may pass to persons who would be quite different from the persons who would get the benefit of a contractual tenancy when a tenant dies. It would appear, therefore, more than possible that this addition to the definition in para. (g) was put in (and I think something would have had to be put in) to make the word 'landlord' where a statutory tenancy has been created, apply in the relationship being then dealt with by the Act, between the person who would be entitled to possession apart from the Act and the statutory tenant."
- For his part, Somervell LJ, another member of the Court, said this (at 722):
"[Counsel for the tenant] relies, and relies rightly, on the definition of 'landlord' in s. 12, sub-s. 1 (g). I agree with what the Master of the Rolls said, that there must be some limitation on that definition. Some extension of the definition in para. (f) is necessary to meet the situation created by the extension of the benefits conferred by the Acts to sub-tenants. I am not quite sure whether the words of para. (g) are necessary to bring within the scope of the Act what I may call the statutory landlords, because when we get to the expansion of the word 'tenant' it is not thought necessary to use words which cover expressly a statutory tenant. It may be the position between what are called statutory landlords and statutory tenants was thought to be sufficiently covered without these words.
I also think it is clearly necessary that some words should be inserted in the definition in the Act having regard to the fact that in the latter part of this sub-section the word 'tenant' is extended so as to include a widow and other members of the family who may be residing with a tenant who has died."
- Stressing Evershed MR's reference to "a case in which a head lessor would be suing for possession against a sub-tenant", Mr Wijeyaratne argued that Evershed MR and Somervell LJ considered that the definition of "landlord" then to be found in section 12(1)(g) of the 1920 Act was sufficiently wide to enable a superior landlord to sue for possession against a sub-tenant. Similarly, Mr Wijeyaratne said, the respondents fell within the comparable definition of "landlord" in section 45 of the 1988 Act at the date of the notice to the appellants. The fact that the appellants were then sub-tenants was no obstacle. What mattered was that the respondents would, but for the existence of the appellants' assured tenancies, be entitled to possession of the premises on the date specified in the notice. Mr Wijeyaratne recognised that the Agency remained the appellants' "landlord" for other purposes (for instance, the duty of "the landlord" to provide information under section 20A of the 1988 Act) until 19 March 2016, when its tenancy expired, but maintained that the position was different as regards the notice served on the appellants.
- Well though Mr Wijeyaratne advanced his argument, I am unable to accept it.
- In the first place, I can see no basis at all for concluding that the Agency was not a "landlord" of the appellants at the date the notice was served on them for the purposes of section 21 of the 1988 Act. The simple fact is that, until the mesne tenancy came to an end on 19 March 2016, the Agency had a direct landlord-tenant relationship with the appellants. Mr Wijeyaratne suggested that the Agency should not be viewed as a "landlord" for section 21 purposes because it could no longer give the appellants the necessary two months' notice before its own tenancy expired, but (a) the Agency could perfectly well have given more than two months' notice of the 19 March date until a number of days after 12 January, when the respondents gave notice to the appellants, (b) the 1988 Act nowhere says that a mesne tenant cannot give notice under section 21 for a date later than that on which its own tenancy is to end and (c) there is nothing in the 1988 Act, either, to indicate that a mesne tenant whose tenancy is terminating within two months is no longer a "landlord" within the meaning of section 21. Mr Wijeyaratne accepted that the Agency remained a "landlord" in other contexts, but it seems to me that it must also be considered to have been one for the purposes of section 21. It would appear to follow that, were Mr Wijeyaratne correct that the respondents were themselves a "landlord" as regards the notice, "the landlord" would have comprised both the respondents and the Agency and, accordingly, that any notice should have been given by them jointly.
- In fact, however, it seems to me that, at the date of the notice, the respondents were not a "landlord" of the appellants for either section 21 or other purposes. The respondents were not at that time persons who, "but for the existence of an assured tenancy would be … entitled to possession" of the relevant premises. Had the appellants' tenancies not existed, the respondents would still not have been entitled to possession: the Agency, whose tenancy was as yet in being, would have been. Mr Wijeyaratne's submissions in effect involve reading into the definition of "landlord" in section 45 of the 1988 Act words such as "at the date specified in a notice under section 21(1)(b) as that on which possession is required", but there is no warrant for that in the terms of either section 21 or 45. The definition of "landlord" can aptly be understood as simply referring to what the position would be if at the particular time the assured tenancy did not exist. There is no need to look to the future.
- That conclusion is consistent with a passage from the judgment of Nourse LJ, with whom Purchas and Lloyd LJJ agreed, in Appleton v Aspin  1 WLR 410. In that case, a tenant with Rent Act protection undertook not to enforce any right of possession she had against the plaintiff, who had contracted to buy the property. Having noted that the Rent Act 1977 defined "landlord" to include "any person other than the tenant who is, or but for Part VII of this Act would be, entitled to possession of the dwelling-house", Nourse LJ said (at 416-417):
"I would agree that at the time of the signing of the agreement of 11 June 1984 [i.e. that with the tenant] the plaintiff in the present case could not properly be described as someone who, but for section 98(1) [of the Rent Act 1977], would have been entitled to possession of 7, Finch Road. Contractually, he was not entitled to possession until completion of the purchase."
The fact, therefore, that the plaintiff was to be entitled to possession in the future did not make him a person who "but for Part VII of this Act would be … entitled to possession of the dwelling-house".
- With regard to Dudley and District Benefit Building Society v Emerson, Mr Wijeyaratne fairly accepted that the passages on which he particularly relied were obiter. It is, moreover, hard to know what Evershed MR had in mind when he spoke of "a case in which a head lessor would be suing for possession against a sub-tenant". It may be that he was contemplating a situation in which a mesne tenancy had come to an end, with the result that a sub-tenant had become a tenant of the (formerly) head landlord under section 15(3) of the 1920 Act (equivalent to section 18 of the 1988 Act). In the present context, the Court's decision is, I think, principally of interest as helping to explain why it might have been thought appropriate to have a catch-all definition of "landlord" in the Rent Act legislation.
- Mr Wijeyaratne suggested that it would be unsatisfactory if a superior landlord had to wait until the mesne tenancy had been determined before giving notice under section 21 of the 1988 Act. It would, however, be possible for the mesne tenant to give notice in the meantime; a landlord could alleviate any potential inconvenience by providing for that in its agreement with the mesne tenant; and in any event the appellants' construction of the 1988 Act could not necessitate more than two months' delay.
- In short, I agree with Mr Chataway that:
i) To be effective, a notice under section 21 of the 1988 Act must come from the "landlord" at the date that the notice is given;
ii) Where a mesne tenancy exists, the fact that it is to come to an end by the date specified in a section 21 notice will not render the head landlord a "landlord" at the date of the notice;
iii) In the present case, the only "landlord" when the respondents gave notice to the appellants was the Agency;
iv) The notice did not, therefore, satisfy the requirements of section 21(1)(b).
- I would allow the appeal.
Lord Justice Leggatt:
- I agree.
Lord Justice Henderson:
- I also agree.
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