You ain’t the boss of me (yet)

Barrow & Anoe v Kazim & Ors (2018) EWCA Civ 2414

When a section 21 notice is served, does the party serving it (or on whose behalf it is served) have to be the tenant’s landlord at that time?

The situation in this second appeal was one that is now not unusual. The previous property owners had granted a lease to Athena Investments Ltd in 2012. The property contained a number of flats. Athena’s lease gave them permission to sub let the flats as ‘residential accommodation’. The flats were duly let by Athena on assured shorthold tenancies, initially of 28 weeks, then continuing as statutory periodic tenancies.

In 2015, Kazim, Kazim and Mustafa (hereafter KKM) became the freehold owners. In January 2016, they served notice to quit on Athena, with possession required on 19 March 2016. This notice was intended, as it stated, to be both notice to quit on Athena and s.21 notice on Athena’s sub-tenants.

The notice to quit, it was generally accepted, took effect to terminate Athena’s lease as of 19 March 2016. By operation of s.18 Housing Act 1988, the sub-tenants then became the direct assured shorthold tenants of KKM.

KKM brought possession proceedings against the sub tenants (including the appellants, Mr Barrow and Ms Amey), based on the ‘s.21 notice’ served in January 2016. The proceedings were defended.

At first instance, the District Judge granted possession, on the basis 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”. On appeal to a Circuit Judge, the appeal was dismissed, with the CJ stating:

“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.”

(I confess to a slight raising of the eyebrow in regard to both these statements as reported.)

The tenants then appealed to the Court of Appeal, on the basis that the statutory language required the person serving (in this instance) the section 21 notice to be the tenants’ landlord at the time of service.

The relevant element of s.21 states:

“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”.

For the tenants, the argument was:

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 [2016] EWHC 2454 (Ch)); and with the need for the parties to know where they stand and, in particular, whether a notice is effective.

KKM argued that the definition of ‘landlord’ at s.45 Housing Act 1988 was capable of encompassing a superior 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”.

KKM traced this definition back to section 12 of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920, and Dudley and District Benefit Building Society v Emerson [1949] Ch 707, in particular a passage of the judgment of Evershed MR, stating, somewhat impenetrably

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.

This reference, it was suggested, meant that the then Court of Appeal had “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”, and thus the 1988 Act definition too.

The Court of Appeal were not convinced.

Athena were the sub-tenant’s landlord at the time of service of the s.21 notice, as Athena’s lease was not terminated at that point. KKM’s argument that Athena couldn’t be a landlord for s.21 purposes because they couldn’t give two months notice prior to its own lease ending got short shrift:

(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.

The conclusion could only be that KKM were not the landlord of the sub-tenants at the date of service of the s.21 notice for either s.21 purposes or any other:

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.

The passages in Dudley were obiter, and it was hard to know what Emerson MR had in mind.

So:

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).

Appeal allowed.

Comment

I have omitted a couple of the more, well, hopeful arguments from KKM, partly because they effectively involved construing words into s.21. The statutory provision is clear – that the landlord has given the section 21 notice (though it can be given by, say, agents on the landlord’s behalf). And the landlord is, effectively, the person entitled to the reversion if it were not for the assured (shorthold) tenancy. This can only be – at the time of service of notice – the person to whom possession would revert is the assured tenancy was not in existence.

In this instance, that was Athena. The head landlord is not ‘entitled to possession of the property’ while the intermediate lease continues, nor would they be ‘but for the existence of the assured tenancy’.

And it would be the same in any ‘rent to rent’ or let to sub-let arrangement. The head landlord cannot serve notice on the sub-tenants until the intermediate lease has been determined. Once that has happened, any assured shorthold sub-tenants become the head landlord’s direct tenants, by way of s.18, and a section 21 can be served (assuming that there aren’t other complications with compliance with the regulatory requirements, of course).

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, Housing law - All, Possession and tagged , .

6 Comments

  1. A related question comes to my mind:
    If landlord L issues valid S21 notice to T and N subsequently becomes the landlord of T, then can N rely on the notice issued by L or does N need to issue a new S21 notice?

    • It would be a foolish L who granted an intermediate tenancy to N in that scenario. L would not be entitled to possession seek possession of the dwelling at the expiry of the s.21, because it would be demised to N.

      Whether N could rely on L’s s.21 in bringing possession proceedings against T is another matter. My instant view is not, but I’d need to think about it.

    • I was thinking of two situations:
      1. L is tenant of N and L’s tenancy ends (as in the article above).
      2. L sells to T.

    • If L sells L’s title to N to N and N wasn’t previously the intermediate lessee, then that is just a change of landlord. Obviously L has no right to seek possession in those circumstances.

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