Secretarial Nominee Co Ltd v Thomas & Ors [2005] EWCA Civ 1008

[2005] EWCA Civ 1008Case No B2/2004/2691
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Central London Civil Justice Centre
DISTRICT JUDGE LANGLEY
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 29/07/2005
Before
LORD JUSTICE AULDLORD JUSTICE RIX
Between
Secretarial Nominee Co LtdAppellant/ ClaimantThomas & orsRespondent/Defendant
Mr Gary Cowen (instructed by Messrs Porter Crossick) for AppellantMr Jon Holbrook (instructed by Messrs Bindman & Partners) for RespondentHearing Hearing date: 23 May 2005
Judgment
[1]The Housing Act 1988 (the “1988 Act”) introduced new concepts into the English law of landlord and tenant in order to make the letting of residential property more attractive to landlords and thus more available to tenants. The concepts were those of the assured tenancy and the assured shorthold tenancy. Previously, tenants under the Rent Act 1977 (and its predecessor acts) had enjoyed greater security of tenure. As a Rent Act tenant they had what was termed a “protected tenancy”. When that tenancy came to an end, they could hold over as a “statutory tenant”. The issue in this appeal arises out of the transitional provisions of the 1988 Act which were designed to ensure that existing protected and statutory tenants did not become worse off than they would have been under the Rent Act when they agreed a new tenancy with their landlord under the 1988 Act.[2]In particular the issue is: If A, a Rent Act tenant, takes a new tenancy agreement after the commencement of the 1988 Act jointly with B, does B thereafter partake in the ongoing protection to which A would have been entitled if he, B, takes a new tenancy by himself (or with another, C), but without A?[3]The 1988 Act came into effect on 15 January 1989. Its transitional provision which is the focus of this appeal is section 34 (1)(b), which allows protected tenancy status to a tenancy entered into after its commencement under the following conditions: – “34. – (1) A tenancy which is entered into on or after the commencement of this Act cannot be a protected tenancy, unless… (b) it is granted to a person (alone or jointly with others) who, immediately before the tenancy was granted, was a protected or statutory tenant and is so granted by the person who at that time was the landlord (or one of the landlords) under a protected or statutory tenancy.”[4]It is submitted on behalf of the landlord, however, that section 34(1)(b) only assists a protected or statutory tenant (a “Rent Act tenant”) where all the joint Rent Act tenants take a new tenancy agreement under the 1988 Act. This is because of a definition provision in section 45(3) of the 1988 Act in the following terms:
“Where two or more persons jointly constitute either the landlord or the tenant in relation to a tenancy, then, except where this Part of this Act otherwise provides, any reference to the landlord or to the tenant is a reference to all the persons who jointly constitute the landlord or the tenant as the case may be.”
[5]The landlord therefore submits that the expression “a protected or statutory tenant” found in section 34(1)(b) must be taken to be a reference to “all the persons who jointly constitute the…tenant”. Where therefore A and B are joint Rent Act tenants, but only A takes a new tenancy under the 1988 Act, he is not within the scope of section 34(1)(b). Similarly, if A and B, joint Rent Act tenants, take a new tenancy under the 1988 Act, but thereafter B, without A, takes a further new tenancy under the 1988 Act, he cannot claim the protection of the transitional provision, because he, in the absence of A, was not “the tenant” and thus not “a protected or statutory tenant” immediately before that tenancy was granted.[6]This appeal therefore raises the question of the scope of the transitional provision contained in section 34(1)(b). It arises in the following circumstances.

The facts

[7]The property concerned is Flat 8, Boston House, Taunton Place, London NW1. The landlord is and has at all relevant times been Secretarial & Nominee Co Limited, who claims in these proceedings for possession of the property. It is the appellant in this court (“SNL”). The defendants include the four joint tenants who made a tenancy agreement with SNL for one year from 1 March 1999, namely Barry Thomas, Lee Braine, Attilia Farinelli and Andrea Caron. The tenancy was expressed to be an assured shorthold tenancy. The rent payable was £1,251.25 per calendar month. No further tenancy was made at the end of the year. On 21 June 2001 SNL served notice seeking possession of the property pursuant to section 21 of the Housing Act 1977, and a further section 21 notice was served on 22 October 2003.[8]Only Mr Thomas (the first defendant, and here the respondent) remains in occupation, and the issue is whether he is a Rent Act tenant within the protection of section 34(1)(b).[9]The history of the tenancies under which the property has been let since 1988 is as follows. It was let under a protected tenancy for a term of one year from 1 August 1988 to three tenants none of whom has been in occupation since 1990. That was the last tenancy agreement to have been made prior to the commencement of the 1988 Act. It was followed by a new one year assured shorthold tenancy which expired in 1990. That was the first tenancy under the new Act. One of the three joint tenants of that tenancy, Mr Marshall, had been a Rent Act tenant under the 1988 tenancy. In 1990 Mr Marshall took another joint tenancy, and on this occasion another of his joint tenants was Ms Sucdev. Mr Thomas arrived as a joint tenant of the next tenancy, which commenced on 1 January 1991: Ms Sucdev was another joint tenant, and there were two others. Since that time Mr Thomas has been a tenant under a succession of annual tenancy agreements, jointly with a shifting variety of other tenants.[10]It is submitted on behalf of Mr Thomas that in 1989 and 1990 Mr Marshall passed the cloak of his Rent Act protection to his fellow joint tenants, who in 1990 included Ms Sucdev; that in 1991 Ms Sucdev similarly passed the cloak of his Rent Act protection, thus acquired through Mr Marshall, to Mr Thomas; and that Mr Thomas has retained his protection ever since. Expressed schematically, where Mr Marshall is A, Ms Sucdev is B, Mr Thomas is C, and all other joint tenants are X, the tenancies have been AX, ABX, BCX, CX. In other words, Mr Thomas’s submission is that where there are a succession of tenancies A, AB, BC, CD, DE and so on, the protection of section 34(1)(b) can be passed on to new joint tenants, ad infinitum.[11]If, however, section 34(1)(b) does not apply, then it is common ground that Mr Thomas’s last tenancy was an assured shorthold tenancy and SNL would be entitled to possession.

The judgment below

[12]The judgment below was given at the Central London County Court by District Judge Langley. The judge found herself pulled between the strong sense that Parliament had not intended to protect any one else other than an original Rent Act tenant – in our case Mr Marshall, although the judge referred to Ms Sucdev in this context – and the text of section 34(1)(b). She did not think that the section 45(3) definition of “the tenant” operated in favour of SNL, apparently because she considered that the language of section 34(1)(b) was within section 45(3)’s exception expressed by the words “except where this part of this Act otherwise provides”. She considered that once a Rent Act tenant was within section 34(1)(b) and thus could give rise to a protected tenancy, all other joint tenants participating in the same tenancy equally became protected tenants, for a joint tenancy could not be both protected and unprotected. She therefore concluded, albeit “with some reluctance”, that Mr Thomas had become a protected tenant, and remained so to this day. In the circumstances SNL’s claim for possession failed.

The submissions

[13]On behalf of SNL, Mr Gary Cowen submitted that section 45(3)’s definition applied to section 34(1)(b), so that only new tenancies which embraced all the immediately preceding joint tenants (albeit with still others) took the benefit of the transitional provision. The judge had been wrong to regard the language of section 34(1)(b) as an express or any exception to the requirements of section 45(3). The judge had not been explicit about what it was in the language of section 34(1)(b) that produced the exception, but Mr Cowen sought to address the submission that has been made for the tenant, Mr Thomas, here and below, which centred around the indefinite article “a” in the phrase “a protected or statutory tenant”. Thus Mr Cowen argued that there was no substantive difference between “a” and “the”, and that in any event the section 45(3) definition was of the term “tenant” rather than “the tenant”. He sought to illustrate this by reference to other instances of “the” and “a” tenant in the 1988 Act. For instance, section 3 begins:
“(1) Where a tenant has the exclusive occupation of any accommodation (in this section referred to as “the separate accommodation”) and – (a) the terms as between the tenant and the landlord…include the use of other accommodation…” (a) the terms as between the tenant and the landlord…include the use of other accommodation…”
[14]Mr Cowen submitted that whether the reference was to “a” or “the” tenant, the section must have intended to refer to all joint tenants.[15]Similarly, section 11, which provides for payment of removal expenses by a landlord to a tenant in certain cases, speaks in subsections (1) and (2) of “the” tenant (“the landlord shall pay to the tenant”; “by agreement between the landlord and the tenant”), but in subsection (3) of “a” tenant (“Any sum payable to a tenant…”).[16]Again, section 13, dealing with increase of rent under assured periodic tenancies, speaks in subsections (2) and (4) of “the” tenant (“the landlord may serve on the tenant a notice”; “Where a notice is served…unless…the tenant refers the notice to a rent assessment committee”), but section 14, dealing with determination of rent by rent assessment committees, speaks of “a” tenant (“Where, under subsection (4)(a) of section 13 above, a tenant refers…”). There is a similar change of language from “the” to “a” in section 14A(1) and section 14B(1).[17]In any event, Mr Cowen submitted that the language of section 34(1)(b) was simply not capable of taking the strain of constituting an example of “otherwise provides” contemplated in section 45(3): for such an example one rather had to look to something like section 8(1)(a)’s “the landlord or, in the case of joint landlords, at least one of them”.[18]Otherwise, section 34(1)(b), which was clearly intended as a merely short-term transitional provision, would lead to a situation, as here, where Rent Act protection could be passed on and on to joint tenants who had never held a protected or statutory tenancy before the commencement of the Act. It was accepted that where Rent Act protected tenant A takes a new tenancy after 15 January 1989 jointly with B, then B, for the sake of A, shares in the protected tenancy AB as long as that lasts or is renewed. However, that is no reason to extend such protection to subsequent tenancies which do not include the same tenants. Thus a subsequent tenancy AB or ABC would be protected, but not a subsequent tenancy B, or BC. Nor would a tenancy A subsequent to AB be protected, which perhaps might seem anomalous, nor a joint tenancy AC subsequent to ABC: but these oddities were to be preferred to a situation where the transitional provisions were construed as extending to a succession of newly joining tenants.[19]On behalf of Mr Thomas, on the other hand, Mr Jon Holbrook submitted that the judge got it right. As long as any of the immediately previous tenants, alone or jointly with others, took a new tenancy, he together with his joint tenants remained protected. Thus, where the pre 15 January 1989 tenancy was AB, a new tenancy taken by A, or AB, or ABC, or AC, or even BC, remained protected. The use of the indefinite article in section 34(1)(b) was decisive and “the key to this appeal”.[20]Mr Holbrook supported that submission with four main reasons. The first was linguistic. The indefinite article connoted that any of several was being referred to. Section 34(1)(b) could have referred to “the protected or statutory tenant”, but use of the indefinite article demonstrated a deliberate intent to refer to any single such tenant and not, in the case of a joint tenancy, to all joint tenants.[21]Secondly, he referred to the legislative history of section 34(1)(b). In its first draft, published as the Housing Bill 1988, it had read as follows:
“it is granted to a person (alone or jointly with others) who, immediately before the tenancy was granted, was the protected tenant (or one of the protected tenants)…”
[22]That draft, with its final parenthesis “(or one of the protected tenants)” plainly intended to embrace a new tenancy granted to any one of the previous Rent Act tenants. The change of language in the 1988 Act’s final legislative form was intended, in its simplified use of the indefinite article, to achieve the same result. When the amendment was introduced (on 13 June 1988) there was no discussion, no suggestion of any intention to alter the meaning or effect of the subsection. On 25 July 1988, Earl Caithness, the government minister in the House of Lords, explained the purpose of the subsection in the following terms:
“We have, in particular, accepted the need to ensure that existing tenants do not lose their protection by virtue of the landlord persuading them to accept a new tenancy, either of the same or different accommodation. Accordingly, under Clause 34(1)(b), any new tenancy granted to an existing Rent Act tenant by the same landlord – whether the accommodation is the same or different – can also be a Rent Act tenancy.”
[23]Thirdly, Mr Holbrook submitted that it is a principle of legal policy that existing property interests of a person should be respected. Clear words would be needed to enable a landlord to deprive a Rent Act tenant of his status by means of granting him a new tenancy under the 1988 Act. Thus, a new tenancy to A, in place of a Rent Act tenancy to AB, ought to leave A, a Rent Act tenant, protected, even though joint tenant B has dropped out. But, under SNL’s submission, A would have lost his protection, and that was anomalous.[24]Fourthly, Mr Holbrook submitted that SNL’s concern about successive new joint tenants being able to pass on protected status ad infinitum (as where there is a succession of tenancies: A, AB, BC, CD etc) was overdone. The landlord did not have to accept new parties (B, C, D) as joint tenants. In any event, he could seek to persuade the Rent Act protected tenants to surrender their old tenancy before taking a new tenancy: in such a case the lessees would not have been Rent Act tenants “immediately before the tenancy was granted”: see Laimond Properties Limited v. Al-Shakarchi (1998) 30 HLR 1099 at 1104/5, 1107. Or, he could offer the property under a 1988 Act assured tenancy as “suitable alternative accommodation”, in which case the court would have a discretion under section 34(1)(c) to find that it was.

Discussion

[25]I confess to finding neither solution of the parties attractive. The obvious purpose of section 34(1)(b) is to extend protection of a Rent Act tenant into the new regime of assured tenancies. There appears to be nothing immediately striking about the subsection to indicate that it is intended to extend its protection to parties who become tenants of the landlord for the first time after the commencement of the new regime. As the Earl of Caithness said, the provision was aimed at protecting “existing tenants”:
“…any new tenancy granted to an existing Rent Act tenant by the same landlord…can also be a Rent Act tenancy”
. This court made the same point in Laimond Properties Ltd v. Al-Shakarchi (1998) 30 HLR 1099 at 1106, where Roch LJ said:
“Sub-paragraph (b) of section 34(1) is clearly designed to shield the tenant who had security of tenure under the 1977 Act and who has been persuaded by his landlord to enter into a new tenancy after January 15, 1989 so as to prevent him from losing the 1977 Act protection. It is designed to defeat an argument that the tenant has lost his 1977 Act protection because he has voluntarily surrendered the tenancy entered into prior to January 15, 1989 which attracted the provisions of the 1977 Act in exchange for a new tenancy which, being post January 15, 1989, did not qualify for that security.”
[26]For the sake of the existing Rent Act tenant, it may be that new, ie post 15 January 1989, joint tenants of the existing Rent Act tenant share in the existing tenant’s good fortune. This was common ground between the parties on this appeal, and was the view of the judge below. This is on the basis that the subsection is drafted in terms of the status of the new tenancy and not merely of the status of the existing tenant (“A tenancy…cannot be a protected tenancy, unless…it is granted to a person…who…was a protected or statutory tenant”) and on the basis that a joint tenancy can only have one status. On this common view, where, after 15 January 1989, an existing Rent Act tenant, A, enters into an assured tenancy with the same landlord as before, but jointly with new tenant B, the new joint tenancy AB is a protected tenancy.[27]One might therefore expect that a Rent Act tenant A should remain protected under a new tenancy under the new regime, together with any joint tenant of his. One might expect on this basis that a succession of tenancies A, AB, ABC, AC, A would all remain protected, essentially out of regard for A. The respondent’s submission would achieve this result.[28]The appellant’s submission would not. Thus tenancies A, AB, ABC would be protected, but tenancies AC and A (second time around) would fail to be protected, because the tenant (the tenants) immediately before the AC tenancy was granted was/were ABC, who do not come through into the new tenancy AC. Similarly A (second time around) does not reproduce the previous tenancy AC. This, however, is anomalous, as can be seen most clearly in the simple form A, AB, A: the first two tenancies are protected, but the third is not, which seems prima facie very odd.[29]So far, then, the respondent’s argument appears to be the better one: whether or not the indefinite article “a” is an express disapplication of the section 45(3) definition (after all, the reference to “a…tenant” merely seems rationally to reflect the premise of “a person…who”, thus “a person…who…was a protected or statutory tenant”), its use is entirely consistent with the function of the transitional provision, which is to protect the original Rent Act tenant who, “alone or jointly with others”, makes a new tenancy after 15 January 1989. As for Mr Cowen’s citations of other uses of the definite and indefinite articles, they appear to take the matter no further: everything depends upon the individual context: “the” tenant can refer back to any tenant embraced by the expression “a” tenant. That does not, it seems to me, assist Mr Cowen’s insistence that every reference to “tenant” must be a reference to all the joint tenants. Moreover, the distinction within section 34(1)(b) itself between “a person…a protected or statutory tenant” and “the landlord (or one of the landlords)” is I think a further pointer that the former phrase is not a reference to all those who comprise a joint tenancy.[30]Where, however, the respondent’s argument appears itself anomalous is in suggesting that the protection of the transitional provision can be passed on ad infinitum in the succession of tenancies, A, AB, BC, CD etc. That is counter-intuitive, for by the time the tenancy BC is reached, A is out of the picture. Is it nevertheless justified by the statute?[31]The suggestion was made from the bench in the course of argument that the expression “a person (alone or jointly with others)” might just be a way of saying “a person or persons”: so that the grant of a new tenancy to AB, following a Rent Act tenancy to A alone, was not protected, since AB, as distinct from A, was not “a person…who, immediately before the tenancy was granted, was a protected or statutory tenant”. However, both parties joined forces in rejecting that approach, and for the same reason. The expression “alone or jointly with others” was designed to cover exactly that situation: A was a person who, immediately before the new tenancy was granted, was a protected or statutory tenant, but who “jointly with others”, viz B, had a new tenancy granted to them. I think that it is right: “a person…who”, and not the possible others covered by the parenthesis “alone or jointly with others”, is the subject of “a protected or statutory tenant” which follows. Moreover, it would be unfortunate if A lost his protection because he had teamed up with B to become AB, or AB lost their protection after engaging with C to become ABC.[32]The essential question in other words is not whether A, AB, ABC, ABCD are a series of protected tenancies, but whether A, AB, BC, CD, DE are.[33]On that question it seems to me that the whole premise of the transitional protection afforded by section 34(1)(b) is that the protected tenant was a Rent Act tenant on the commencement of the 1988 Act on15 January 1989. It seems to me that such a requirement is inherent in the subsection. Thus, section 34(1) begins – “(1) A tenancy which is entered into on or after the commencement of this Act cannot be a protected tenancy, unless – ” it is granted to “a person (alone or jointly with others) who” etc. Thus the section begins with the concept of a person who, after the commencement of the 1988 Act, is both a Rent Act tenant and has entered into a new tenancy. Such a person, moreover, has to have been a Rent Act tenant already before the new tenancy:
“who, immediately before the tenancy was granted, was a protected or statutory tenant”
(emphasis added). That could only be the case, in a transitional provision, where the person who was the Rent Act tenant had been a tenant at the time of the commencement of the Act; and it would only be for the sake of such a person that transitional provisions would be necessary. That is emphasised by the case provided for in section 34(1)(a): a tenancy which “is entered into in pursuance of a contract made before the commencement of this Act”.[34]In my judgment, therefore, the words “and prior to the commencement of this Act” have to be understood (in addition to the express requirement of “immediately before the tenancy was granted”) as inherently qualifying the words “was a protected or statutory tenant”. It is for the sake of such a tenant, and no other that the transitional protection of a protected tenancy is extended. The statutory language shows that the protection is for a particular person.[35]In its own way, this case demonstrates the need to construe “tenant” according to the purpose of the statute, just as in Lloyd v. Sadler [1978] 1 QB 774. That was a case under the Rent Act 1968. One of two joint tenants had left the property to get married and did not intend to return. The remaining tenant stayed until the end of the tenancy. The landlord claimed possession, arguing that the remaining tenant was not a statutory tenant protected by the statute because she was not “the tenant”. Megaw LJ said (at 783B/D) that – “the ordinary law as to joint tenancy does not have to be, and ought not to be, applied in all its strictness…it is permissible for the court to hold, if so to do makes better sense of the relevant statutory provision in its particular context, that one of those persons, by himself, may for certain purposes be treated as being “the tenant”.[36]Here, with Lloyd v. Sadler to guide the draftsman, Parliament has been cautious to speak of “ a person (alone or jointly with others) who…was a protected or statutory tenant”. The protection of section 34(1)(b) is for the person concerned, not for “the tenant”, nor for the sake of the pre-existing tenancy.

Conclusion

[37]For these reasons I would conclude that Mr Thomas is not a Rent Act tenant within the protection of section 34(1)(b) and therefore allow this appeal.[38]I agree.