Jarvis v Evans & Anor (2020) EWCA Civ 854
The question for the Court of Appeal on this second appeal was does failing to be licensed under the Housing (Wales) Act 2014 prevent a landlord from serving any notice seeking possession, or just a section 21 notice?
The first appeal had held that the wording of section 7 Housing (Wales) Act 2014 meant that an unregistered and unlicensed landlord court not serve any notice seeking possession, whether under section 21 or section 8, (our note here). The landlord had sought possession under grounds 8, 10 and 11 Schedule 2 Housing Act 1988 for rent arrears. The landlord appealed.
Under Housing (Wales) Act 2014, landlords have to be registered, and then anyone carrying out certain letting activities also has to be licensed.
Section 7 of H(W)A provides:
“(1) The landlord of a dwelling subject to a domestic tenancy must not do any of the things described in subsection (2) in respect of the dwelling unless—
(a) the landlord is licensed to do so under this Part for the area in which the dwelling is located,
(b) the thing done is arranging for an authorised agent to do something on the landlord’s behalf, or
(c) an exception in section 8 applies.
(2) The things are—
(a) collecting rent;
(b) being the principal point of contact for the tenant in relation to matters arising under the tenancy;
(c) making arrangements with a person to carry out repairs or maintenance;
(d) making arrangements with a tenant or occupier of the dwelling to secure access to the dwelling for any purpose;
(e) checking the contents or condition of the dwelling, or arranging for them to be checked;
(f) serving notice to terminate a tenancy.”
“Authorised agent” is defined in subsection (7) as:
“(a) a person licensed to carry out lettings work and property management work under this Part for the area in which the dwelling is located,
(b) a local housing authority (whether or not in exercise of its functions as a local housing authority), or
(c) in relation to serving notice to terminate a tenancy only, a qualified solicitor (within the meaning of Part 1 of the Solicitors Act 1974), a person acting on behalf of such a solicitor or any person of a description specified in an order made by the Welsh Ministers”.
Contravening s.7(1) is an offence.
And then section 44 H(W)A provides:
“(1) A section 21 notice may not be given in relation to a dwelling subject to a domestic tenancy which is an assured shorthold tenancy if—
(a) the landlord is not registered in respect of the dwelling, or
(b) the landlord is not licensed under this Part for the area in which the dwelling is located and the landlord has not appointed a person who is licensed under this Part to carry out all property management work in respect of the dwelling on the landlord’s behalf.
(2) But subsection (1) does not apply for the period of 28 days beginning with the day on which the landlord’s interest in the dwelling is assigned to the landlord.
(3) In this section, a ‘section 21 notice’ means a notice under section 21(1)(b) or (4)(a) of the Housing Act 1988.”
On the appeal, the landlord argued:
i) A notice under section 8 Housing Act 1988 was not ‘a notice to terminate a tenancy’.
A section 8 notice is merely a preliminary to an application for the Court to make a possession order under section 7 of the 1988 Act. The notice itself does not do anything to the tenancy. Aside from the exceptional cases mentioned in section 5(1)(b)-(d) of the 1988 Act, a landlord cannot bring an assured tenancy to an end except by obtaining and executing a possession order and “the service by the landlord of a notice to quit is of no effect in relation to a periodic tenancy”
ii) If an unlicensed landlord were prohibited from serving a section 8 notice, the landlord could instead issue proceedings seeking possession on any of the schedule 2 grounds other than grounds 7A, 7B and 8 and ask the Court to dispense with the requirement of a notice under section 8(1)(b) of the 1988 Act. The fact that possession can be obtained without any section 8 notice would, Mr Bates (for the appelant) suggested, render a bar on serving one largely meaningless.
iii) section 44 of the 2014 Act specifically states that a notice under section 21 of the 1988 Act may not be given by a landlord who is not licensed. There would have been no need so to provide, Mr Bates said, if section 7(2)(f) had not been limited in the way for which he contended, since a section 21 notice would, like a section 8 notice, have been a “notice to terminate a tenancy”
The Court of Appeal did not agree.
the words “notice to terminate a tenancy” are apt to refer to a section 8 notice. Had the Assembly intended to confine section 7(2)(f) of the 2014 Act to notices which themselves terminated tenancies, it could have said so more explicitly, by speaking, say, of “notice terminating a tenancy” or “notice which terminates a tenancy”. It did not do so. The language it chose to adopt instead is perfectly capable of being understood as encompassing notices which are served in order to bring tenancies to an end but which do not achieve that of themselves. A section 8 notice is of that kind.
Secondly, section 7(2)(f) of the 2014 Act would be all but nugatory if limited to notices which themselves terminated tenancies. The provision would have no application to assured tenancies, which come to an end by the execution of orders for possession, not by the service of notices. (…)
the structure and purpose of the 2014 Act suggest that the Assembly would have wished to apply section 7 to the service of notices under section 8 of the 1988 Act. As section 1 explains, the 2014 Act “regulates … the management of dwellings subject to [domestic] tenancies” and requires landlords to be licensed “to carry out certain kinds of property management activities”. Those activities can be seen from section 7 to include, for example, “collecting rent”, “making arrangements with a person to carry out repairs or maintenance” and, even on Mr Bates’ case, the service of certain notices. Service of a section 8 notice seems to me to fall naturally within the scope of such “property management activities”. Or, putting things slightly differently, why should the Assembly have intended section 7 to apply to, say, a notice to quit but not a section 8 notice, the more so since service of a notice to quit could be expected to be of little significance even in the context of a Rent Act tenancy?
Fourthly, I do not think the fact that a landlord applying for possession on some of the grounds in schedule 2 to the 1988 Act can invite the Court to dispense with the requirement of a section 8 notice lends any real weight to Mr Bates’ construction of section 7(2)(f) of the 2014 Act. There is no question of that possibility rendering a bar on the service of such notices meaningless. The Court cannot dispense with a section 8 notice as regards ground 7A, ground 7B or, more importantly, ground 8 (see section 8(5) of the 1988 Act). Even where there is power to dispense with a section 8 notice, the Court will do so only if it considers that to be “just and equitable” in the particular circumstances.
So, a notice under section 8 would fall under section 7 H(W)A.
Were the consequences just a criminal offence, or would the notice be invalid?
The landlord argued:
argued that non-compliance with section 7 of the 2014 Act does not affect a notice’s validity. Section 7(5) provides that a landlord who contravenes subsection (1) commits an offence and is liable on conviction to a fine. It is nowhere stated, Mr Bates pointed out, that a notice served in contravention of section 7 is ineffective. That criminal and civil consequences need to be distinguished is confirmed, so Mr Bates contended, by section 43. That section stipulates that, without prejudice to the possibility of rent stopping orders and rent repayment orders, “No rule of law relating to the validity or enforceability of contracts in circumstances involving illegality is to affect the validity or enforceability of any provision of a domestic tenancy of a dwelling in respect of which a contravention of this Part has occurred”. Contractual provisions are thus to remain valid and enforceable despite contravention of, for example, section 7.
The tenant and Shelter Cymru intervening, argued that the consequences were both civil and criminal. The Court of Appeal upheld that view
i) Section 7 of the 2014 Act states that a landlord “must not do” any of the things described in subsection (2) unless licensed or arranging for an authorised agent to do something on his behalf or an exception applies. It is true that subsection (5) provides for contravention of subsection (1) to be a criminal offence, but that need not detract from the general bar in subsection (1). Neither in subsection (5) nor elsewhere in section 7 is it said that breach of subsection (1) is to have exclusively criminal consequences;
ii) It is common ground that section 44 of the 2014 Act renders a section 21 notice ineffective if served by a landlord who is not registered or licensed. Failure to comply with a provision stating that a notice “may not be given” thus results in invalidity. Likewise, a section 21 notice given when there has been non-compliance with the regime governing tenancy deposits will be ineffective because section 215 of the Housing Act 2004 stipulates that “no section 21 notice may be given”. If a notice given when a statute has said that it “may not be” or no notice “may be given” can be nugatory, a provision stating that a landlord “must not” serve a notice must also be capable of implying invalidity;
The Assembly would not have wished to leave tenants dependent on local authorities for enforcement and, hence, that it would not have intended a notice served in contravention of section 7 to be effective.
It is plain from the 2014 Act that contractual obligations are not negated by breaches of its registration and licensing regime. Section 43(1) states in terms that “No rule of law relating to the validity or enforceability of contracts in circumstances involving illegality is to affect the validity or enforceability of any provision of a domestic tenancy of a dwelling in respect of which a contravention of this Part has occurred”. More specifically, it is implicit in section 30 that a tenant remains liable for rent unless and until a rent stopping order under the section provides otherwise (at which point “an obligation … to pay an amount stopped by the order is treated as being met” – see section 30(3)(b)). Again, there can be no question of a landlord being excused from maintenance obligations under the tenancy on the basis that section 7(2)(c) bars him from “making arrangements with a person to carry repairs or maintenance” (the more so since section 7(1) leaves a landlord free to arrange for an authorised agent to do something on his behalf). Somewhat cryptically, perhaps, section 43 even refers to the enforceability of a provision of a tenancy being unaffected, which, taken at face value, might indicate that an unlicensed landlord can bring proceedings to recover outstanding rent despite the fact that, by virtue of section 7(2)(a), he is prohibited from “collecting rent” (though it is by no means clear that that means that he is barred from merely receiving rent, say, pursuant to a standing order). Be that as it may, however, what is at issue on this appeal is not the validity or enforceability of any provision of a tenancy, but rather whether a notice served in compliance with a statutory provision is effective. Section 43 does not purport to deal with the impact of breaches of the Act on statutory requirements nor obviously address the validity of even contractual notices.
And finally, section 44 on banning s.21 notices where the landlord was not registered, or where the landlord was unlicensed but had purported to serve a s.21 notice might be regarded as a bit of an oddity, but could be considered as “belt and braces”.
Were does that leave Wales? As far as I can see, it goes something like this.
A landlord who is registered and licensed can serve away to their hearts content.
A landlord who is registered but not licensed can’t serve a s.21 or s.8 notice, but a licensed agent or a solicitor could do so on their behalf.
A landlord who is not registered and not licensed commits a criminal offence, but could (I think) still get a licensed agent or a solicitor to serve valid s.8 notice on their behalf (because section 7 is only about licensed landlords, not registered landlords, and s.44 doesn’t stop service of a s.8 notice by an authorised agent if the landlord isn’t registered, just a s.21 notice).
This is, it has to be said, a somewhat odd state of affairs, but that is where legislative drafting gets you.