The Court of Appeal held that a superior landlord was not a ‘landlord’ for the purposes of the Housing Act 1988, s21. As such, a superior landlord is unable to serve an effective notice to quit on a sub-tenant who enjoys an assured shorthold tenancy under the Housing Act 1988, and it is the mesne tenant who must serve any such notice.
Facts
K, the respondents, became the registered proprietors of 134 Holloway Road (‘the property’) in 2015. The property was leased to Anthea Investments Ltd (the ‘Agency’) at the time that K acquired the property. The lease enjoyed by the Agency was not an assured shorthold tenancy governed by the Housing Act 1988, and also permitted the sub-letting of the property. The property was sublet to B, the appellants, who did enjoy an assured shorthold tenancy. On 12 January 2016, K served notice to quit on the Agency, stating that possession was required on 19 March 2016. It was common ground that the notice was effective to determine the Agency’s lease, however, B argued that the notice was ineffective to determine the sub-lease and that K could not seek possession against B.
DJ Manners granted possession orders against B, with HHJ Baucher dismissing B’s appeal.
The law and issues
The Housing Act 1988, s21(1)(b) states that a court shall make an order for possession where
‘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.’
The Housing Act 1988, s45 defines a landlord as including
‘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 the possession of the dwelling-house.’
Finally, the Housing Act 1988, s18 provides that an assured shorthold tenancy lawfully granted by a mesne tenant, such as the Agency, would ‘continue in existence as a tenancy held of the person whose interest would, apart from the continuance of the assured tenancy, entitle him to actual possession of the dwelling-house’ once the mesne tenancy has determined.
Therefore, B’s tenancy would not determine with the Agency’s; it was necessary to determine B’s tenancy, otherwise B would continue to enjoy the tenancy under K, the new immediate landlord. Pursuant to the Housing Act 1988, s21(1)(b), K must be the ‘landlord’ in order for the notice served on 12 January 2016 to be effective in determining B’s tenancy. As such, the question for the Court of Appeal to determine was whether K met the definition of a landlord under the Act.
Decision
The Court of Appeal, in a unanimous decision delivered by Newey LJ, allowed B’s appeal and held that K was not a landlord for the purposes of the Housing Act 1988, s21(1)(b) which, in consequence, meant that the notice served on 12 January 2016 did not determine B’s tenancy.
It was agreed by all parties that a party serving notice needed to be a ‘landlord’ on the date the notice was served. K relied on the Housing Act 1988, s45 definition of a landlord and argued that, on the date specified in the notice, K would be entitled to possession of the property, but for the existence of B’s assured shorthold tenancy, and should therefore be considered as the landlord for the purposes of s21(1)(b). K also argued that, once notice was served on the Agency, K should be considered the landlord to B for the purposes of s21(1)(b), as the Agency was no longer able to serve the required two months’ notice on B.
The Court did not accept K’s arguments. As notice was given on 12 January, and possession required on 19 March, there was still time upon the service of the notice for the Agency to serve the required two months’ notice on B. Furthermore, the Act does not state that a mesne tenant cannot give notice under s21 for a date later than that on which its own tenancy ends. Finally, there is also nothing in the Act to suggest that a mesne tenant whose tenancy is terminating within two months is no longer a landlord for the purposes of s21 (see paragraph 19).
Instead, the Court adopted the position that, on the date on which the notice was served, only the Agency was entitled to the possession of the property, but for the assured shorthold tenancy of B. Even if B’s tenancy did not exist, K would not be entitled to possession, given the existence of the mesne tenancy enjoyed by the Agency. Therefore, only the Agency could be described as the landlord of B pursuant to the definition in s45.
Consequently, at the date of the notice, only the Agency could be described as the landlord of B for the purposes of the Housing Act 1988, s21(1)(b). Therefore, the notice from K purporting to determine B’s tenancy was ineffective, and only the Agency could serve an effective notice determining B’s tenancy.
Note
The facts of Barrow are straight forward and raise a discrete issue of law concerning the interpretation of ‘landlord’ in the context of the Housing Act 1988. However, for law students there is fundamental lesson to be drawn from the case regarding the interaction of common law principles and statutory provisions. Whilst it is always import to understand and reason from first principles, it is also important to have an awareness of statutory interventions that may affect that reasoning process. Common law principles dictate that the sub-tenancy enjoyed by B should fall when the mesne tenancy enjoyed by the Agency determines. However, the statutory intervention of the Housing Act 1988, s18 modified that position, and instead caused the superior landlord (K) to become the immediate landlord of the sub-tenant (B) upon the determination of the mesne tenancy. It is because of s18 it was necessary to determine B’s tenancy and not just rely on the determination of the mesne tenancy to achieve that end, and why the dispute as to the meaning of ‘landlord’ really arises.
Finally, Newey LJ deals with an important argument at paragraph 23 of the judgment. K argued that it was undesirable that a superior landlord should have to serve two months’ notice on a mesne tenant, wait for the tenancy to determine, and then repeat the process for the sub-tenant. In effect, a superior landlord could have to wait four months to recover possession of its property where a mesne tenancy and sub-tenancy exists. In response, Newey LJ suggested that a superior landlord could include within its agreement with the mesne tenant a clause requiring the mesne tenant to serve notice upon any sub-tenant when it is itself served with notice to quit. Such clauses would be possible following Newey LJ’s earlier finding, at paragraph 19, that the Act does not prevent a mesne tenant giving notice for a date later than that on which its own tenancy ends. If such clauses were used, a superior landlord would only ever have to wait just over two months before it could recover possession of its property. In any event, Newey LJ did not seem to be of the view that two months’ delay would cause any great hardship to a superior landlord seeking to recover possession, and so it was very much up to them to include such clauses in their agreements with mesne tenants, or run the risk of delay.
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