Saxon Weald Homes Ltd v Chadwick [2011] EWCA Civ 1202

[2011] EWCA Civ 1202Case No B5/2011/0362
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BRIGHTON COUNTY COURT
HIS HONOUR JUDGE SIMPKISS
9HM02471
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 26/10/2011
Before
LORD JUSTICE MUMMERYLORD JUSTICE DAVISDAME JANET SMITH DBE
Between
SAXON WEALD HOMES LIMITEDAppellantDAYNE RICHARD CHADWICKRespondent
Mr Philip Glen (instructed by Coffin Mew LLP) for AppellantMr Marc Living (instructed by EJ Moyle) for RespondentHearing Hearing date : 7 th October 2011
Judgment
[1]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 Factual Background

[2]The background can be shortly stated for present purposes and is this.[3]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:
“This means that for the first 12 months it will be a periodic assured shorthold tenancy and you will occupy the property as an assured shorthold tenant.”
It was further stated:
“If at the end of 12 months we have not taken steps to terminate the tenancy it will automatically convert into an assured periodic tenancy and will continue each week until it is ended…”
The net weekly rent was £75.32 with an additional weekly service charge of £1.95.[4]Paragraph 2.2 is in these terms:
“2.2 Becoming a full assured tenant 2.2.1 This tenancy is an assured shorthold tenancy until the provisions set out in sub-clause 2.2.2 come into effect. 2.2.2 This tenancy will become an assured tenancy 12 months after the commencement of this tenancy unless, before that date:- i) we have begun possession proceedings against you; or ii) we have served you with a notice requiring possession Where either i) or ii) apply, the tenancy will continue to be an assured shorthold tenancy until: a) the day after any proceedings are determined (if no possession order is made) or b) the tenancy is ended by a Court Order for possession. iii) if the tenancy converts to a fully assured tenancy, we will send you a letter confirming the change in status of your tenancy, 2.2.3 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.”
As is commonplace, the Tenancy Agreement thereafter imposed various obligations on the landlord and tenant respectively: including, by paragraph 4.16, extensive obligations on the tenant requiring him not to engage in or cause anti-social behaviour.[5]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.[6]At all events, by letter dated the 5th August 2009 the landlord’s solicitors wrote to the tenant in these terms:
“Dear Sir, Our Client : Saxon Weald Homes Limited We are instructed by your above landlord and enclose a Notice Requiring Possession and a Notice Seeking Possession, the contents of both we trust are self explanatory. We would remind you of your right to seek independent legal advice. Given the service of these Notices upon you, you will remain an assured shorthold tenant under your probationary tenancy. Yours faithfully ….”
Our Client : Saxon Weald Homes Limited

Yours faithfully

[7]The enclosed Notice Requiring Possession was, on its face, dated 7th August 2009 and sent in accordance with section 21 (4) (a) of the Housing Act 1988 (as amended). It required possession after 11th 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 7th 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.[8]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 11th 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:
“Dear Mr Chadwick Assured Tenancy I am pleased to inform you that following the successful completion of your one year starter tenancy, you are now an assured tenant. As an assured tenant, you now have the following rights, in addition to those you already enjoy: • 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. Should you have any queries regarding the above, please do not hesitate to contact me. Yours sincerely ….”
It is by virtue of this letter that the tenant says that his tenancy had ceased to be an assured shorthold tenancy and had become an assured tenancy. Assured Tenancy • 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.

Yours sincerely

[9]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 11th December 2009. The landlord relied on its solicitors’ letter, and enclosed Notice Requiring Possession of the 7th 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 11th 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 Statutory Background

[10]The factual background has to be put in the context of the statutory background. Again, this can be shortly set out.[11]Section 19A of the 1988 Act (as amended) provides as follows:- “An assured tenancy which:- a) is entered into on or after the day on which section 96 of the Housing Act 1996 comes into force (otherwise than pursuant to a contract made before that day), or b) comes into being by virtue of section 5 above on the coming to an end of an assured tenancy within paragraph (a) above, is an assured shorthold tenancy unless it falls within any paragraph in Schedule 2A to this Act.” Section 21 is, in the relevant respects, in these terms:- “(1) Without prejudice to any right of the landlord under an assured shorthold tenancy to recover possession of the dwelling-house let on the tenancy in accordance with Chapter I above, on or after the coming to an end of an assured shorthold tenancy which was a fixed term tenancy, a court shall make an order for possession of the dwelling-house if it is satisfied—(a) that the assured shorthold tenancy has come to an end and no further assured tenancy (whether shorthold or not) is for the time being in existence, other than an assured shorthold periodic tenancy (whether statutory or not); and(b) 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. …. (4) Without prejudice to any such right as is referred to in subsection (1) above, a court shall make an order for possession of a dwelling-house let on an assured shorthold tenancy which is a periodic tenancy if the court is satisfied— (a) that the landlord or, in the case of joint landlords, at least one of them has given to the tenant a notice in writing stating that, after a date specified in the notice, being the last day of a period of the tenancy and not earlier than two months after the date the notice was given, possession of the dwelling-house is required by virtue of this section; and (b) that the date specified in the notice under paragraph (a) above is not earlier than the earliest day on which, apart from section 5(1) above, the tenancy could be brought to an end by a notice to quit given by the landlord on the same date as the notice under paragraph (a) above.” Schedule 2A is in these terms:- 1.“(1) An assured tenancy in respect of which a notice is served as mentioned in sub-paragraph (2) below. (2) The notice referred to in sub-paragraph (1) above is one which— (a) is served before the assured tenancy is entered into, (b) is served by the person who is to be the landlord under the assured tenancy on the person who is to be the tenant under that tenancy, and(c) states that the assured tenancy to which it relates is not to be an assured shorthold tenancy. 2. (1) An assured tenancy in respect of which a notice is served as mentioned in sub-paragraph (2) below. (2) The notice referred to in sub-paragraph (1) above is one which— (a) is served after the assured tenancy has been entered into, (b) is served by the landlord under the assured tenancy on the tenant under that tenancy, and (c) states that the assured tenancy to which it relates is no longer an assured shorthold tenancy. 3. An assured tenancy which contains a provision to the effect that the tenancy is not an assured shorthold tenancy.” It is not necessary to set out the precise terms of section 8. That enables the landlord to seek possession, among other things, in the case of breach of the Tenancy Agreement. It is, of course, to be noted that if a tenancy is an assured shorthold tenancy which has come to an end where the landlord has given due notice under section 21 (4) (a) then the court is required to make a possession order. There is no such requirement in the case of possession sought for breaches of the tenancy agreement: in such a case the court retains a discretion if it finds the breaches proved as to whether it is reasonable to order possession.

The Proceedings Below

[12]The proceedings below have at all stages proceeded on the footing that the Housing Assistant of the landlord who sent the letter of 11th August 2009 did so in ignorance of the solicitors’ letter dated 5th August 2009, with enclosed notices. The letter of 11th 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 11th 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 11th 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 11th August 2009 (the anniversary of commencement). He described the landlord’s letter of 11th 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 7th August 2009, that could not happen and accordingly he found that the letter of 11th 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.[13]The tenant appealed. Judge Simpkiss, sitting in the Brighton County Court, allowed the appeal by order made on 28th January 2011. The Judge rejected the landlord’s argument that the letter of 11th 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.[14]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.[15]In granting leave to appeal on 29th March 2011 the Master of the Rolls indicated that he did so primarily on the ground that, arguably, the letter of 11th 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 11th 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 11th August 2009.

The Submissions

[16]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 11th 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.[17]Mr Living, on behalf of the tenant, in his well-focused submissions submitted that the Judge was correct. The 11th 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.

Disposition

[18]For my part, I am in no doubt that Judge Simpkiss reached the right conclusion.[19]It is quite true that the Notice Requiring Possession dated 7th 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 11th 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 11th 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.[20]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.[21]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.[22]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:
“Is the notice quite clear to a reasonable tenant reading it? Is it plain that he cannot be misled by it?”
At p.779G Lord Hoffmann said this:
“The fact that the words are capable of a literal application is no obstacle to evidence which demonstrates what a reasonable person with knowledge of the background would have understood the parties to mean, even if this compels one to say they used the wrong words.”
Mr Glen was wholly unable to say, however, what the letter of 11th August 2009 was on his case intended to mean, on this approach. In effect, he came back to saying there had been an error – which, I repeat, is not in itself advanced as a ground of appeal. In truth this letter more obviously falls under the category of document alluded to by Lord Clyde at p.781D of Mannai : it is a document unambiguously complying with provisions empowering the sending of the notice. It is in fact a point of comment that in the course of her oral evidence the landlord’s Housing Manager stated, when asked about the purpose of such a letter, that it was sent out as a standard letter to tell the tenant that the tenancy is converted from a shorthold to a full assured tenancy. Read objectively this letter is plainly a notification to that effect.[23]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 7th August 2009, a reasonable recipient would have been left in doubt as to just what the letter of 11th 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 11th August 2009 was sent subsequently, and distinctly, from the previous letter and notices.[24]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 11th 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 11th 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.[25]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 11th August 2009 clear: rather, he was using it to make it unclear.

Conclusion

[26]I conclude that there is no ambiguity in the meaning or effect of the letter of 11th 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.[27]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.

Dame Janet Smith DBE:

[28]I agree.[29]I also agree.

Cited in 3 later judgments