Saxon Weald Homes Ltd v Chadwick

The question arising on this appeal is whether the respondent tenant, Dayne Chadwick, has an assured shorthold tenancy of the premises which he currently occupies. The appellant landlord, Saxon Weald Homes Limited, says that he has. The tenant says that he has not and that he has an assured tenancy. The answer to this question depends upon the true meaning of a letter sent by the landlord to the tenant dated 11th August 2009.

The background can be shortly stated for present purposes and is this.

On the 11th August 2008 the landlord (which is a registered charity) and the tenant entered in to a written agreement entitled “Probationary Tenancy Agreement.” The property was a one bedroom ground floor flat at 1 Godwin Court, Jockey Mead, Horsham, West Sussex. The occupation by the tenant of the property as tenant started from 11th August 2008 and was a probationary tenancy. As the Tenancy Agreement put it on the front page:

Paragraph 2.2 is in these terms:

If we give you a Notice requiring Possession and we decide to go to Court, you have the right to appeal to us in accordance with our Procedure.”

Unfortunately, quite soon after the tenancy commenced problems emerged. It has been asserted that among other things the tenant held late night parties involving drinking, shouting and swearing; that he played loud music at unsociable times; that he would bang on his ceiling when the resident above walked across the floor; and that he would use foul language and be aggressive to neighbours. It is said that one resident became so distressed and nervous in consequence that she moved out. There were meetings of the tenant with the landlord’s Housing Manager and the tenant’s Support Worker and warning letters were sent, to no avail. It should be noted that it is said that the tenant has suffered from depression and mental health and behavioural problems and his mother had involved herself to try and improve the position: again to no avail.

At all events, by letter dated the 5^th August 2009 the landlord’s solicitors wrote to the tenant in these terms:

The enclosed Notice Requiring Possession was, on its face, dated 7^th August 2009 and sent in accordance with section 21 (4) (a) of the Housing Act 1988 (as amended). It required possession after 11^th October 2009 or not earlier than two months after service of the notice. The printed Notes to the Notice among other things recorded that where an assured shorthold tenancy has become a periodic tenancy, either contractual or statutory, a court must make an order for possession if the landlord has correctly served the notice. As to the enclosed Notice Seeking Possession, that was, on its face, also dated 7^th August 2009. It was stated to be sent in accordance with section 8 of the 1988 Act (as amended). It indicated that the landlord intended to seek possession on Grounds 12 and 14 of Schedule 2 to the 1988 Act (as amended), relying on the tenant’s alleged behaviour and alleged breaches of the Tenancy Agreement for this purpose. The form of that notice made it clear that it was served on the footing that the tenancy was an assured tenancy and that it did not apply if possession was sought on the “shorthold” ground under section 21. So it is an entirely alternative approach as to the basis for seeking possession. Mr Glen (who appeared on behalf of the landlord) said that this Notice Seeking Possession was served as a matter of belt and braces.

It is not disputed that that letter, with the enclosed two notices, was received by the tenant. However, a further letter was then sent by the landlord to the tenant on the 11^th August 2009 (which, of course, was the anniversary of the start of the tenancy). It was not sent by the landlord’s solicitors but by a Housing Assistant employed by the landlord, having authority to send such a letter. It reads as follows:

The right to mutually exchange.

The right to apply for a transfer to another Saxon Weald property.

The right to assign your tenancy in certain circumstances (contact your Area Manager for further information).

The right to make improvements to the property.

The right to acquire (purchase) the property, if eligible.

The tenant went to see the Citizens’ Advice Bureau. They wrote to the landlord alluding to his mental health problems and stating that he was a vulnerable individual. There was further correspondence and resort to internal procedure but in the event the landlord commenced court proceedings on the 11^th December 2009. The landlord relied on its solicitors’ letter, and enclosed Notice Requiring Possession of the 7^th August 2009, as entitling it to possession. In the alternative, the landlord relied on the alleged breaches as constituting grounds for possession. In his amended Defence, the tenant had disputed that section 21 applied, relying on the letter of 11^th August 2009; he also denied most of the alleged breaches, further saying that it would not in any event be reasonable to make a possession order. Throughout the proceedings, it may be added, the tenant has acted by his mother as his litigation friend.

The factual background has to be put in the context of the statutory background. Again, this can be shortly set out.

Section 19A of the 1988 Act (as amended) provides as follows:-

The proceedings below have at all stages proceeded on the footing that the Housing Assistant of the landlord who sent the letter of 11^th August 2009 did so in ignorance of the solicitors’ letter dated 5^th August 2009, with enclosed notices. The letter of 11^th August 2009 was in effect a routine letter of the kind the landlord ordinarily sent out on the anniversary of the commencement of a satisfactorily completed probationary tenancy. The matter came before a Deputy District Judge sitting in Horsham County Court. By written determination, he found that the letter of 11^th August 2009 had been sent in error (he noted the landlord’s evidence that “procedures had been reviewed as a consequence of this case”). He rejected the tenant’s argument that, by reason of the letter of 11^th August 2009 and of the provisions of section 19A and paragraph 2 of Schedule 2A, the tenancy was no longer an assured shorthold tenancy. He found that the prior Notice Requiring Possession, sent in accordance with Clause 2.2.2 of the Tenancy Agreement, had the consequence that the assured shorthold tenancy could not automatically convert to an assured tenancy on the 11^th August 2009 (the anniversary of commencement). He described the landlord’s letter of 11^th August 2009 as, in his view, “not a Notice but really a confirmation of an event that was due to take effect on the first anniversary of the Tenancy Agreement”: he took the view that, by reason of the Notice dated the 7^th August 2009, that could not happen and accordingly he found that the letter of 11^th August 2009 “sent clearly in error” had, as he said, “no effect.” Accordingly the landlord was entitled as of right to an order for possession. In the alternative, the Deputy District Judge considered the alternative basis of claim, based on the alleged behaviour of the tenant. He concluded that he would have found it reasonable to make an outright possession order.

The tenant appealed. Judge Simpkiss, sitting in the Brighton County Court, allowed the appeal by order made on 28^th January 2011. The Judge rejected the landlord’s argument that the letter of 11^th August 2009 was of no effect. He found that it was a notice for the purpose of paragraph 2 of schedule 2A to the 1988 Act (as amended). He said that the letter was “quite plain on its face” and there was no room for another construction in the broader context. Accordingly, notwithstanding it had “not been the intention of other parts of the landlord’s operation”, the assured shorthold tenancy had been converted into an assured tenancy.

It is that decision which is sought to be challenged on this appeal. The Judge in fact also ruled that the Deputy District Judge had given insufficient reasons for his decision to order possession as the alternative ground; and the Judge remitted that aspect to the District Judge for further consideration. No appeal is brought against that part of Judge Simpkiss’s decision: the appeal is against the first part of the decision. Overall, it has to be said that it is rather unfortunate that matters remain unresolved over two years after the events in question.

In granting leave to appeal on 29^th March 2011 the Master of the Rolls indicated that he did so primarily on the ground that, arguably, the letter of 11^th August 2009 was sent by mistake and was or ought to have been appreciated by the tenant to have been sent by mistake (if the evidence justified such a conclusion): he did, however, permit an appeal on all points raised, albeit he described the other points as “weak”. It is to be stressed that, in the event, on the appeal Mr Glen, on behalf of the landlord, has not sought to rely on mistake as independently grounding an argument that the letter of 11^th August 2009 was of no effect as a notice. (Indeed, in fairness to the tenant, it is to be noted that the point was never pleaded nor was he cross-examined before the Deputy District Judge as to his state of mind and understanding.) Mr Glen has made clear for the purposes of this appeal that his case depends entirely upon the true interpretation of the letter of 11^th August 2009.

Mr Glen’s submissions came to this. He submitted that the Judge was in error in failing to give any, or any sufficient, weight to the context and background in which the letter of 11^th August 2009 was sent. The Judge, he said should have asked in accordance with the test propounded in Mannai Investment Co. Limited v. Eagle Star Life Assurance Co. Limited [1999] AC 749 what that letter, set in context, would have conveyed to a reasonable recipient: and had he done so he should have found that the letter was not a notice under the 1988 Act (as amended) but simply an incorrect acknowledgement of a state of affairs that had never existed: because there never had been successful completion of the probationary one year tenancy. He submitted that, given the background, a reasonable recipient would at least have been in doubt as to what the letter intended to convey and so it was insufficient as a notice.

Mr Living, on behalf of the tenant, in his well-focused submissions submitted that the Judge was correct. The 11^th August 2009 letter was indeed plain on its face and clearly was a notice falling within the provisions of paragraph 2 of Schedule 2A to the 1988 Act (as amended). No proper process of construction, on the principles of Mannai or of Investors Compensation Scheme Limited v West Bromwich Building Society [1998] IWLR 896, could yield a different result.

For my part, I am in no doubt that Judge Simpkiss reached the right conclusion.

It is quite true that the Notice Requiring Possession dated 7^th August 2009 was sent in accordance with paragraph 2.2.2 of the Tenancy Agreement and was, under the Tenancy Agreement, indicating that the assured shorthold tenancy would not automatically (as a matter of contract) convert to an assured tenancy after 12 months from the commencement date. But it does not follow from that that the subsequent letter of 11^th August 2009 does not have the effect, by reason of paragraph 2 of schedule 2A to the 1988 Act (as amended), of causing the assured shorthold tenancy to become an assured tenancy. In my view that letter, naturally and objectively read, clearly is a notice for such purpose: indeed the setting out of the rights now acquired confirms that. Mr Glen fairly accepted that the fact that the letter said to the tenant “you are now an assured tenant” was properly to be equated with a statement that his tenancy was no longer an assured shorthold tenancy. He also said in argument that if the words “following the successful completion of your one year starter tenancy” had been omitted from the letter of 11^th August 2009 then it would indeed have been an effective notice under paragraph 2 of schedule 2A of the 1988 Act (as amended). In my view, it is neither possible nor legitimate to rely on those particular descriptive words and then to link them back to the preceding factual history and preceding letter as controverting the plain meaning of this letter on its face.

Mr Glen in fact seemed to assume that this tenant, and any reasonable recipient, would have taken it, given the background, that the letter could not have been intended to convert the assured shorthold tenancy into an assured tenancy. But a tenant ordinarily is not to be expected to enquire into, or think about, a landlord’s reasons for serving an otherwise unambiguous notice in connection with a lease. In any event, as Dame Janet Smith observed in argument, a tenant here might well think that the landlord had simply changed its mind from its previous indicated intention.

The case of Mannai involved an identifiable internal ambiguity within the notice itself. It is wholly different from the present case, where there is no such ambiguity. As the Judge below crisply pointed out, the mistake is not in the wording: the mistake is in the fact that the letter was sent at all.

In Mannai, the House of Lords endorsed the objective test for the validity of a notice as that posed by Goulding J in Carradine Properties Limited v. Aslam [1976] WLR 442:

Mr Glen, however, sought to rely on the case of Barclays Bank plc v. Bee [2002] 1 WLR332; [2001] EWCA Civ 1126. In essence, Mr Glen sought to say that, given the background and given the Notice Requiring Possession of 7^th August 2009, a reasonable recipient would have been left in doubt as to just what the letter of 11^th August 2009 was conveying. But the case of Bee is clearly distinguishable. There, a notice indicating opposition to the grant of a new tenancy under the Landlord and Tenant Act 1954 which (invalidly) failed to state the grounds of opposition was sent in an envelope with an (ostensibly valid) notice stating that the landlord would not oppose the grant of a new tenancy: the accompanying letter in the same envelope stated that there was enclosed a notice to terminate the lease together with a copy requested to be returned. It was – to my mind, unsurprisingly - held that the letter and enclosed two notices had to be considered together and, doing that, a reasonable recipient would have been left in doubt as to the intentions of the sender. But that is quite different from the present case where the letter of 11^th August 2009 was sent subsequently, and distinctly, from the previous letter and notices.

As noted by Aldous LJ at paragraph 23 of Bee, in principle an (ostensibly) valid notice cannot, as a matter of interpretation, be invalidated by reference to extraneous material. In my view, with all respect to Mr Glen’s valiant arguments, that is in substance what the landlord is seeking to do here. It is to be noted that Mr Glen even asserted that his argument would run if the background were that in oral discussion the landlord had shortly before the 11^th August 2009 indicated that it would not be sanctioning conversion: such a scenario, he said, would, as part of the admissible factual matrix, have rendered the letter of 11^th August 2009 ambiguous and of no effect as a notice. That comes close to saying that on a matter of interpretation a prior declaration of intent can defeat the otherwise unambiguous expression of a subsequent written notice: which has never been the law (absent viable arguments of estoppel) and would be productive of unacceptable uncertainty.

In my view, Mr Living neatly summarised the essential flaw in Mr Glen’s argument: that is, that he was not using the factual matrix to make the reading of the letter of 11^th August 2009 clear: rather, he was using it to make it unclear.

I conclude that there is no ambiguity in the meaning or effect of the letter of 11^th August 2009. It plainly suffices to be a notice with the ambit of paragraph 2 of Schedule 2A to the 1988 Act (as amended) and purported reliance on the background to controvert that is misplaced. I think that the Judge was entirely right to conclude as he did and accordingly I would dismiss this appeal.

I should add that Mr Glen’s position was that, by reference to the Tenancy Agreement in this case, an assured shorthold tenancy was capable of automatic conversion into an assured tenancy without the need for any further notice to that effect: he said that the provisions of this Tenancy Agreement complied with paragraph 3 of Schedule 2A for this purpose. Mr Living disputed that: his position was that this Tenancy Agreement of itself could not give rise to such a result under the 1988 Act (as amended), and a subsequent notice under paragraph 2 of Schedule 2A was needed. There is room for debate here. Since, in my view, it is clear that a notice under paragraph 2 was given in this case it is neither necessary nor appropriate to enter into that debate on this appeal.

I agree.

I also agree.