Unfixed fixed terms

Livewest Homes Ltd v Bamber (2018) EWHC 2454 (QB)

This was Ms Bamber’s appeal of a decision on a preliminary issue in possession proceedings. The first instance court held that in the circumstances of the case, Livewest were not obliged to give 6 months notice of intention to terminate Ms B’s tenancy, under s.21(1B) Housing Act 1998.

The brief facts – Ms B was granted a 7 year fixed term tenancy by Livewest, a private registered provider of social housing. The tenancy agreement provided for a 12 month ‘starter’ period (extendable to 18 months), and that during the ‘starter’ period there was a break clause:

2.1 “Break clauses”: We may end the fixed term of the tenancy in the following circumstances. These are called “break clauses”.

2.1.1 During the starter period, or extended starter period, we may give you two months’ written notice ending the tenancy. If we do this we will give you our reasons and you will have the right to have the decision reviewed in line with our published procedure …

2.2 Format of notices: A notice under clause 2.1 may be in any written form.

Following accusations of ASB, and about 6 months in to the starter period, Livewest served a notice ending the tenancy and a section 21 notice with two months notice. Livewest then commenced possession proceedings some three months later.

Ms B raised Equality Act and public law defences, which remain to be heard. Ms B’s further defence that the court could not make a possession order because Livewest had not given 6 months notice of intention to terminate the tenancy under s.21(1B) was heard as a preliminary issue. The first instance court decided that s.21(1B) did not apply. Ms B appealed.

S.21(1A) and (1B) state:

(1A) Subsection (1B) applies to an assured shorthold tenancy of a dwellinghouse in England if—

(a) it is a fixed term tenancy for a term certain of not less than two years, and
(b) the landlord is a private registered provider of social housing.

(1B) The court may not make an order for possession of the dwelling-house let on the tenancy unless the landlord has given to the tenant not less than six months’ notice in writing—

(a) stating that the landlord does not propose to grant another tenancy on the expiry of the fixed term tenancy, and
(b) informing the tenant of how to obtain help or advice about the notice and, in particular, of any obligation of the landlord to provide help or advice.

Ms B’s argument, straightforwardly enough, was that the tenancy was for a term certain of 7 years, so s.21(1B) applied.

After a bit of kerfuffle about unserved respondent’s notices, Livewest argued, as they had below (but been found against) that Ms Bamber was left with a statutory periodic tenancy after service of the notice ending the tenancy under the break clause, which meant that there was no requirement to give 6 months’ notice pursuant to section 21(1A) and (1B) because there was no fixed term tenancy for a term certain of not less than two years at the relevant time, and that 2 months’ notice was therefore sufficient notice pursuant to section 21(1)(b) of the Act. Livewest also sought to uphold the first instance decision that s.21(1A) & (1B) didn’t apply for whatever reasons it was that the first instance judge had so found, though nobody seemed sure what they were.

The court decided that there were two issues to determine.

i) Did s.21(1A) and (1B) apply to the starter period?
ii) whether the tenancy became a statutory periodic tenancy on service of the notice ending the tenancy so that sections 21(1A) and (1B) did not apply to these proceedings?

Initially, the Judge considered that his determination on issue i) resolved the matter. This turned out not to be the case. On issue i) the court found:

One possible reason why sections 21(1A) and (1B) did not apply was because of the wording of section 21(1A)(a). This provides that subsection (1B) applies to an assured shorthold tenancy of a dwellinghouse if “(a) it is a fixed term tenancy for a term certain of not less than two years …”. The tenancy agreement was a fixed term tenancy, pursuant to section 45 of the Act, because it was not a periodic tenancy. It is apparent that a fixed term tenancy may contain a break clause, compare Aylward v Fawaz (1997) 29 HLR 408 at 412, and still be a fixed term tenancy. It did seem to me possible that during the starter period the second tenancy agreement was not a “fixed term tenancy for a term certain of not less than two years” (emphasis added). This is because clause 2.1 of the second tenancy agreement expressly provided for a break clause which permitted the service of two months’ written notice to give up possession of the flat meaning that although it was a fixed term tenancy it was not “for a term certain of not less than two years”. This would have meant that during the starter period there was no term certain of not less than two years because possession might be demanded on two months’ written notice. The starter period lasted for 12 months but might be extended by a further 6 months. After the expiry of the starter period (including any extended starter period) the second tenancy agreement would be a “fixed term tenancy for a term certain of not less than two years” notwithstanding the existence of other break clauses entitling earlier termination because more than the simple provision of written notice was required to rely on those other break clauses.

However, after a draft judgment on this basis was circulated, Ms B pointed out that Livewest had conceded that the tenancy was a fixed term of not less than two years in its reply and that whether it was a tenancy of not less than two years term had not been an issue before the court. Following those further submissions, the court reached a determination on issue ii)

Given what is common ground between the parties it is therefore necessary to turn to the issue of whether section 21(1A) applied to require that 6 months’ notice in writing be given pursuant to section 21(1B) by Livewest to Ms Bamber. In my judgment on the giving of 2 months’ notice in the starter period under clause 2.1.1 of the second tenancy agreement, Ms Bamber did not have “a fixed term tenancy for a term certain of not less than two years”. This was because the effect of the service was to leave Ms Bamber with a statutory periodic tenancy pursuant to section 5(2) of the Housing Act. It was common ground between the parties that a statutory periodic tenancy can be brought to an end by service of a notice giving two months’ notice in writing pursuant to section 21(1), and that one notice can both determine a tenancy and satisfy section 21(1), see Fawaz v Aylward.

Mr James (for Ms B) submitted that although it was agreed that the effect of service of the notice under the break clause within the starter period was to create a statutory periodic tenancy, section 21(1B) applied because the words “it is a fixed term tenancy for a term certain of not less than two years” in section 21(1A)(a) should be read as “it was a fixed term tenancy for a term certain of not less than two years” (emphasis added). I do not accept that submission because that is not what the statute has provided. I do not accept that giving effect to the plain words of section 21(1A)(a) in this case creates an absurdity. Livewest was able to create the statutory periodic tenancy by giving notice within the starter period, and the provisions of section 21(1A) and 21(1B) had nothing to do with notice in the starter period. Further if a registered provider wishes to recover possession immediately on the expiry of the fixed term then a notice complying with section 21(1B) will need to be given, this is because the tenancy will remain a fixed term tenancy for a term certain of not less than two years once such a notice has been served until the conclusion of the fixed term. In circumstances where there is a limited supply of social housing it might be expected that registered providers will want to recover possession immediately on the expiry of the fixed term.

Appeal dismissed.

Comment

This is perhaps not the clearest or fully reasoned of judgments. And it appears that the first instance decision was, as the High Court puts it, ‘very cryptically expressed’.

I think it is as well that the High Court had to step away from its first reasons for dismissing the appeal. The idea that a tenancy with a break clause that can be exercised in the first 12 or 18 months is not actually a fixed term until the time the break clause can be exercised has passed is not an attractive one at all. A tenancy for a 7 year term that doesn’t actually crystallise into a fixed term until 12 or 18 months in, but is for a throughly unknown and nebulous term for the first 12 or 18 months, strikes me as a bit of an anathema.

But then, while the eventual finding makes more sense, it leaves me wondering if s.21(1A) and (1B) have any application at all.

The reasoning, as I understand it, is that while there was a fixed term of not less than two years, this was terminated by the notice given under the break clause, so at that point, Ms B did not have a fixed term tenancy of no less than two years, she had a statutory periodic tenancy. S.21(1A) and thus (1B) only applies where it is a tenancy of no less than two years.

But where there are possession proceedings at the expiry of a fixed term (the point of s.21(1B) – court cannot make a possession order unless…) they will always, by definition, be after the end of a fixed term and when a statutory periodic has arisen. It will always be was a fixed term.

Am I missing something? I must be…

 

 

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Assured Shorthold tenancy, assured-tenancy, Housing law - All, Possession and tagged .

5 Comments

  1. I don’t think you are Giles which is why this decision must be wrong. All a landlord has to do is wait till the fixed-term expires and then it can serve a s.21 notice without having had to serve a notice under s.21(1B) six months beforehand.

    I very much doubt that this is what was intended by Parliament. The CJ said that this defeats the whole purpose of the scheme, but the landlord must be a registered provider so you can trust them. If that is right, what is the point of law?

    I agree the drafting isn’t great, but it shouldn’t really be that difficult to glean the intention of Parliament.

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