Trecarrell House Limited v Rouncefield (2020) EWCA Civ 760

It is fair to say this Court of Appeal decision has been widely and keenly awaited. Unfortunately, for reasons I will explain in my comment at the end, I think it leaves us with a lot of further questions.

At issue, as set out in our report of the first appeal in this case, is the effect of a landlord failing to provide a valid gas safety record to a tenant before the tenant takes up occupation of the property. Does this, as was found in the first appeal, and in Caridon Property Ltd v Monty Shooltz, mean that no section 21 notice can ever be served by the landlord, even if a valid gas safety record is subsequently provided?

The principle issue for the Court of Appeal was whether regulation 2(2) of the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015, in conjunction with regulations 36(6) and/or 36(7) of the Gas Safety (Installation and Use) Regulations 1998, meant that a section 21 notice could never be served if the landlord had not provided the tenant with a valid gas safety record before they went into occupation (36(6)) or displayed a copy of the record at the premises before the tenant went into occupation (36(7)). The County Court appeal had held that the wording of the regulations was such that a section 21 notice could not be served in those circumstances. The landlord appealed to the Court of Appeal.

Section 21A Housing Act 1988 (as amended) provides that a section 21 notice “may not be given in relation to an assured shorthold tenancy of a dwelling-house in England at a time when the landlord is in breach of a prescribed requirement.”

Regulation 2 of the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 provides that (for tenancies beginning on or after 1 October 2015):

“2.—(1) Subject to paragraph (2), the requirements prescribed for the purposes of section 21A of the Act are the requirements contained in—

(a)   regulation 6(5) of the Energy Performance of Buildings (England and Wales) Regulations 2012(2) (requirement to provide an energy performance certificate to a tenant or buyer free of charge); and

(b)   paragraph (6) or (as the case may be) paragraph (7) of regulation 36 of the Gas Safety (Installation and Use) Regulations 1998(3) (requirement to provide tenant with a gas safety certificate).

(2) For the purposes of section 21A of the Act, the requirement prescribed by paragraph (1)(b) is limited to the requirement on a landlord to give a copy of the relevant record to the tenant and the 28 day period for compliance with that requirement does not apply.”

Paragraphs (6) and (7) of regulation 36 of the Gas Safety (Installation and Use) Regulations 1998 provides:

(6) Notwithstanding paragraph (5) above, every landlord shall ensure that—

(a) a copy of the record made pursuant to the requirements of paragraph (3)(c) above is given to each existing tenant of premises to which the record relates within 28 days of the date of the check; and

(b) a copy of the last record made in respect of each appliance or flue is given to any new tenant of premises to which the record relates before that tenant occupies those premises save that, in respect of a tenant whose right to occupy those premises is for a period not exceeding 28 days, a copy of the record may instead be prominently displayed within those premises.

(7) Where there is no relevant gas appliance in any room occupied or to be occupied by the tenant in relevant premises, the landlord may, instead of ensuring that a copy of the record referred to in paragraph (6) above is given to the tenant, ensure that there is displayed in a prominent position in the premises (from such time as a copy would have been required to have been given to the tenant under that paragraph), a copy of the record with a statement endorsed on it that the tenant is entitled to have his own copy of the record on request to the landlord at an address specified in the statement; and on any such request being made, the landlord shall give to the tenant a copy of the record as soon as is practicable.”

So, key to the appeal was the meaning of reg 2(2).

The landlord argued that:

i) the import of s.21A was whether a breach of the prescribed requirement continues and in the case of an historic breach whether the words “at a time when” in s.21A have the effect of permitting late compliance with an obligation which under the prescribed requirement has (as in this case) to be performed by a particular time.

ii) That reg 2(2) had the effect of excluding time limits in reg 36(6) generally, or

iii) That reg 2(2) had the effect of disapplying reg 36(6)(b) altogether for the purposes of s.21A, as reg 2(2) stated that the GSR requirement was ‘“limited to the requirement on a landlord to give a copy of the relevant record to the tenant and the 28 day period for compliance with that requirement does not apply”, thus only reg 36(6)(a) was a requirement, as 36(6)(b) had no 28 day limit.

The tenant sought to uphold the judgment below on the same grounds. There was also an issue about whether a subsequent GSR had been provided to the tenant before the s.21 notice was served, which I’ll mention below.

The Court of Appeal lead judgment (on a 2:1 split decision) found as follows.

Reg 2(2) did not disapply reg 36(6)(b) from being a prescribed requirement altogether.

The effect of regulation 2(1)(b) is to make the whole of paragraphs (6) and (7) prescribed requirements for the purposes of s.21A HA 1988.  Regulation 2(2) is a qualification of that provision and clearly excludes the 28 day period mandated under paragraph 6(a).  Late compliance with the landlord’s obligation to provide or display a GSR after each annual check is not therefore a bar in itself to a subsequent s.21 notice.

However, this did not mean that reg 2(2) did not have any bearing on the timing of the reg 36(6)(b) requirement.

The Court of Appeal notes there are indeed sound policy reasons for ensuring that tenants know that they are taking up occupation of premises where they can safely live. However, the apparent disparity in sanction between a breach of 36(6)(a) – where the 28 day time period was disapplied and the landlord could remedy the defect by providing a gas safety record – and 36(6)(b) – a permanent disqualification from serving a s.21 notice – was stark, particularly as 36(6)(b) did not even provide for a potential tenant to be provided with a GSR and hence reassurance before taking up the tenancy.

S.21A was at best a spur to compliance, with the criminal sanctions for breach of the Gas Safety Regulations remaining as the main punishment. The disapplication of the 28 day limit confirms that Parliament did not intend the prescribed requirements to be applied with the same vigour as the gas safety regulations themselves.

The use of ‘at a time when’ in S.21A echoes many other uses of the phrase in housing legislation where retaining or inhibiting the landlord’s ability to serve a s.21. The precise nature and duration of the embargo depends on the specific provision, but each, such as the deposit protection rules at s.213 and 2.5 Housing Act 2004, also provide in some form as to when and how the embargo is to end. S.21A gives no such clear guidance.

The Court of Appeal was not persuaded that for the purposes of s.21A “the obligation to provide the GSR to a new tenant prior to the tenant taking up occupation cannot be complied with by late delivery of the GSR.  Late delivery of the document does provide the tenant with the information he needs.”

A breach of reg 36(6)(b) by failure to provide a GSR at the start of the tenancy could be remedied by way of reg 2(2) of the AST regulations.

It seems to me that the more obvious construction of regulation 2(2) is that it relates back to regulation 2(1)(b) which specifies paragraph 6 as a composite provision without distinguishing between sub-paragraphs (a) and (b).  The reference in regulation 2(2) to “the requirements prescribed by paragraph (1)(b)” is therefore one to paragraph 6 as a whole and so when it says that the prescribed requirement is “limited to the requirement on a landlord to give a copy of the relevant record to the tenant” it is referring to that obligation as it appears both in paragraph (6)(a) and in paragraph (6)(b) but to that obligation alone.  The effect therefore of regulation 2(2) is to remove the 28 day time limit in paragraph (6)(a) and arguably also the requirement in paragraph (6)(b) that a new tenant should be supplied with a copy of the current GSR prior to taking up occupation.  The obligation uplifted by regulation 2(1)(b) is (as the words in parenthesis indicate) no more than the obligation to provide the tenant with the relevant GSR. 

So, the meaning of reg 2(2) was simply that the tenant must be provided with a valid gas safety record as per reg 36(6) but none of the time limits in reg 36(6) applied.

The tenant also argued that a failure to carry out a safety check within 12 months of a previous check, in breach of Reg 36(3)(a) meant that there was a breach of reg 36(6)(a) because (6)(a) requires provision of a GSR ‘made pursuant to the requirements of paragraph 3(c) above’ (ie reg 36(3)(c)) and (3)(c) obligates the landlord to ensure that any record for an appliance ‘so checked’ is made and retained, and ‘so checked’ must refer back to paragraph 3(a) which requires a check at least every 12 months. So, the tenant argued, the requirement for 12 monthly checks is imported into paragraph (6)(a).

This got fairly short shrift from Patten LJ’s lead judgment.

I am not persuaded that a failure to carry out the next safety check within 12 months of the last one means that the landlord cannot comply with paragraph (6)(a) as a prescribed requirement if he serves the tenant with a copy of the record once the check has been carried out.  As Mr Bates submitted, paragraph (3)(a) is not itself a prescribed requirement and if the words “so checked” in paragraph (3)(a) are read in the sense for which Mr Cherry contends then the landlord would have no obligation under paragraph (3)(c) to make and retain a copy of any late inspection nor would regulation 36(5) be workable.  That seems to me to be absurd.

In my view the words “so checked” in paragraph (c) refer back to the phrase “checked for safety” in paragraph (3)(a) and cover every safety check which is carried out.  The obligation imposed on the landlord by paragraph (6)(a) is to give the existing tenants a copy of a GSR which contains all the information specified in paragraph (3)(c).

Lady Justice King agreed with Lord Justice Patten, which settled the appeal. But Moylan LJ dissented, finding that although the regulations were hardly clear, a severe sanction for failing to provide a GSR at the start of the tenancy had a policy justification. Nor would this be the only example of an irremediable breach. Failure to protect a deposit within 30 days could not be remedied. The sanction of an embargo on s.21 was only disapplied by the express statutory means of returning the deposit or at the end of a s.214 claim. So, the words ‘at a time when’ as in s.21A did not, per se, require the breach to be remediable.

Reg 2(2) did remove the 28 day time limit from reg 36(6)(a), but the effect on a plain reading was not to remove the requirement of reg 36(6)(b).

Overall, appeal allowed.

This is not the end of this matter, however. The tenant also raised an issue with the date on which a subsequent gas safety record was provided to the tenant, if it was at all. The tenant argued that this would mean the landlord was not in compliance with reg 36(6)(a) at the time the section 21 was served.

The Court of Appeal remitted the disputed issue of when this record was provided to the tenant to the county court for determination, before the final determination of the appeal.

Comment

Well now, what a lot of trouble a poorly worded regulation can cause, even to the point of a split Court of Appeal.

While it is indeed hard to reconcile the severity of the apparent penalty for a breach of reg 36(6)(b) – no s.21 ever – with reg 2(2)’s loosening of the requirements for compliance with reg 36(6)(a), or with the overarching wording of s.21A – ‘at a time when’ – it has to be said that the majority solution is a slightly tortured reading of reg 2(2).

But then the dissent, while holding to the perhaps more natural reading of reg 2(2) does not, indeed cannot, then deal with the disjuncture in sanction that then results and for which there is no clear policy argument.

But frankly, what a mess the Court of Appeal has left us with. My initial thought on reading the judgment was that a landlord can serve a s.21 after providing the current gas safety record. But then I thought again.

The majority hold that both 36(6)(a) and 36(6)(b) are applied by reg 2(1) and (2), but the time limits disapplied. What does this actually mean?

On reflection, I think it means that a failure to provide a GSR to the tenant at the times specified in reg 36(6)(a) and reg 36(6)(b) can be remedied by late provision of the GSR. But it does not mean that, in particular, a failure to actually have a valid GSR at the start of the tenancy can be remedied by a later GSR. Disapplying the requirement to provide a GSR to the tenant before they go into occupation – reg 36(6)(b) – such that it can be provided later does not mean that a later inspection and gas safety record fulfils that requirement, it means that the gas safety record covering the start of the tenancy can be provided later than ‘before the tenant goes into occupation’.

On the other hand, disapplying the 28 days for providing a GSR after an inspection – Reg 36(6)(a) – does not require the inspection and GSR to be at any particular time (see below on the reg 36(3) argument).

So what I think this means is that in order to be able to serve a section 21 notice, the landlord must provide (however late) the GSR that covered the period of the start of the tenancy, and if beyond the 12 months validity for that GSR, at the very least the current GSR, in order to be able to serve a section 21 notice.

This would mean that not having a valid GSR at the start of the tenancy would remain an irremediable breach, where no s.21 notice could be served.

But Gas Safety reg 36(3)(c) only requires landlords to retain the GSRs for two years. What if the original GSR no longer exists?

It might be, of course, that what the Court of Appeal meant was that only a current GSR had to be provided to enable a section 21 to be served. But that isn’t stated, and, on reflection, I have trouble implying it into what the judgment says, depending on how you interpret ‘the relevant GSR’ in reg 2(2) – I think that has to be the relevant GSR for both 36(6)(a) and (b).

The case before the Court of Appeal was on late initial provision, not a non-existent GSR. And that is what the judgment addresses, but I think it is fair to say it has given us one answer and a whole lot of resulting questions.

We pointed out the reg 2(2) issue back in 2015. It is disappointing that no opportunity has been taken since for a clarifying amendment, such that it has taken 5 years and a trip to the Court of Appeal to reach a resolution, and even then a not at all satisfactory one, despite the best efforts of very able counsel on both sides –  Justin Bates and Brooke Lyne for the landlord and Richard Cherry for the tenant.

On the issue of whether the 12 month requirement is imported into Reg 36(6)(a), we saw this argued (successfully at first instance) in Kaur v Griffith (our note).  I thought the argument was wrong at the time, and I’m afraid I still do. I think that the reading of (3)(c) and (3)(a) would make it impossible to ever have a valid gas safety report again if there had been a late check at any point, because no subsequent report could comply with (3)(a), as the late report would not count as a report. Such a reading would certainly absolve the landlord of the obligation to retain a copy of a report carried out late, or provide one to the tenant, which does not make sense. The position would surely be that a late check and report would be valid, though the landlord would have committed a criminal offence, and the next report would be due 12 months later (ignoring retained expiry dates for simplicity).

As a final plaintive comment, won’t someone (particularly the Court of Appeal) think of those of us who try to do section 21 validity flowcharts? How on earth can I deal with this…