Spencer v Taylor  EWCA Civ 1600
This case was flagged recently on the Arden Chambers eflash service. This flash gave some bare bones details and led to much debate on the internal NL email discussion list. However, we now have the vital transcript and so we can give a proper report.
[Update 11/12/13 – Judgment now on Bailii ]
[Update 1/3/13 – There is a mistake in the transcript as regards the day of the notice. This post has been corrected.]
S granted an Assured Shorthold Tenancy under the terms of the Housing Act 1988 to T on 6 February 2006, a Monday. It was for a fixed terms of 6 months with rent payable weekly. Thus the first day of each period was a Monday and the last day was a Sunday. The fixed term of the tenancy ended on a Saturday. At the end of the fixed term a periodic tenancy arose by way of s5 of that Act and so it would also have been a weekly periodic tenancy running from a Sunday to a Saturday. In October 2011 a notice under s21 of the Act was served giving an expiry date of 1 January 2012 (which was a Sunday) and also including, as an alternative, the usual saving provision of the type approved by the Court of Appeal in Lower Street Properties v Jones  28 HLR 877. In this case it read:
“Or (b) at the end of your period of tenancy which will end next after the expiration of two months from the service upon you of this notice.”
The Law So Far
Section 21 reads, as far as is material to this case:
(1) 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 one 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 the 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.
(2) A notice under paragraph (b) of sub‑section (1) above may be given before or on the day on which the tenancy comes to an end and that sub‑section shall have effect notwithstanding that on the coming to an end of the fixed term tenancy a statutory periodic tenancy arises.
(3) Where a court makes an order for possession of a dwelling house by virtue of sub‑section 1 above, any statutory periodic tenancy which has arisen on the coming to an end of the assured shorthold tenancy shall end without further notice and regardless of the period in accordance with section 5(1A).
(4) Without prejudice to any such right as is referred to in sub‑section 1 above, 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, or in the case of joint landlords at least one of them, has given to the tenant a notice in writing 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, and ‑
(b) that the date specified in the notice under paragraph (a) above is not earlier than the earliest day on which, apart from section 5(1) above, the tenancy could be brought to an end by a notice to quit given by the landlord on the same date as the notice under paragraph (a) above.
In general most commentators (including me) have taken the view that s21(2) is a deciding factor and controls which flavour of notice is to be served under the section. If the notice is being given before or on the day on which a fixed term tenancy ends then a notice complying with s21(1)(b) is appropriate. If the notice is served during a periodic tenancy then a notice complying with s21(4)(a) is appropriate. A s21(1)(b) notice must simply give two calendar months notice while a notice under s21(4)(a) must give two months notice and must expire at the end of a relevant period and must not give less notice that a common law notice to quit.
On that reading of the law the notice in this case should have been seeking to comply with s21(4)(a) as it was served during a periodic tenancy. Further in giving its date of expiry as a Saturday that element of the notice was defective.
A New View
The case came before the Court of Appeal and LJ Lewison gave the leading judgement with which LJ Macfarlane and the President of the QBD agreed without comment.
Surprisingly, LJ Lewison did not simply turn to the second component of the notice, the saving provision and rule the notice as valid on that basis, which he could easily have done.
Instead LJ Lewison embarked on a careful reading of the section. I am going to take this out of order a little as I think the conclusions reached are more useful in this way.
Starting with a view of s21(2), what we have always all seen as a compulsion which prohibits a landlord from using s21(1)(b) once the fixed term has expired was read very differently by the Court. In fact s21(2) was described as permissive rather than as proscriptive. S21(2) states that an s21(1)(b) notice “may be given before or on the day on which the tenancy comes to an end” (emphasis mine). It does not say that such a notice must be given or can only be given but rather that it may be given. LJ Lewison therefore read this as suggestive as opposed to requiring an outcome.
If s21(2) allows an s21(1)(b) notice to be given in a periodic tenancy then does the wording of s21(1) allow for the same conclusion? LJ Lewison felt that it did. S21(1)(a) merely requires that the fixed term of any AST has ended and that no further fixed term has come into existence. S21(1)(b) simply requires that two months notice has been given. Nothing in s21(1) specifies that the notice is only applicable to a fixed term tenancy or cannot be given during a periodic tenancy.
Therefore LJ Lewison rules that the s21 notice was valid as the expiry date of 1 January 2012 on the notice was more than two months from the date of service and under s21(1)(b) this is all that was required.
At this point the notice was valid and the appeal was lost for the tenant. However Lewison LJ went on to review the position under s21(4)(a) in the light of the tenant’s argument that the notice was defective because it essentially gave more than one date, 1 January 2012 and the date calculated under the saving provision. Lewison LJ dismissed this argument. He held that if one date is clearly primary and the other is seen as a fall-back then the position is clear to a reasonable reader of a notice. Additionally, it was clear from the notes on the back of the notice that the 1 January date was wrong and so a reasonable reader would see that this first date was incorrect and so turn automatically to the other.
This case is a bit of a shocker in that it overturns a common belief structure. In summary the position is now that if a tenancy has at some stage had a fixed term then a notice which complies with s21(1)(b) will always be an acceptable means of termination, whether it is being served during a fixed or periodic part of the tenancy. Accordingly, a notice under s21(4)(a) is only for tenancies that were periodic from the outset and have always been so. This means that for the majority of tenancies in England & Wales the s21(4)(a) notice is now irrelevant as almost all of them have at some stage been operating under a fixed term. This also means that for these tenancies cases such as Church Commissioners v Meya, Macdonald v Fernandez, and Lower St Properties v Jones are also all irrelevant as they all deal with aspects of s21(4)(a) notices.
It is also worth noting that Lewison LJ did not bother with a review of the legislative history and what was intended. This was a surprise as it seems almost incredible that this outcome was what the legislation intended. In fact, the entire structure of the Housing Act 1988 has been built around trying to keep the tenancies similar to the common law position. Hence the use of the s21(4)(a) notice and its linking with a notice to quit. Breaking this undermines that intent. I also find it hard to accept a reading of any Act that sets out a piece of legislation as optional in nature.
Finally, it will of course be a great relief to landlords and agents as the vagaries of s21(4)(a) have defeated a great many possession cases over the years.