Court of Appeal limits technical defences in section 8 possession claims

24 February 2020

In Pease v Carter [2020] EWCA Civ 175 the Court of Appeal further limited the scope for tenants running defences based on errors in notices. This case is yet another example of Mannai Investment Co Ltd v Eagle Star Assurance Co Ltd [1997] AC 747 being applied by the courts to enable a party in a property dispute to avoid the consequences of an error in a notice or, depending on your point of view, for common sense to prevail over technical legal arguments.

What will the decision mean for you?

The effect of the decision in Pease is likely to be that the reasoning in Fernandez v MacDonald will be confined to s21(4) notices where the saving words are not used. At least until someone thinks of some new technical argument.

What was the issue in Pease v Carter?

The issue was extremely narrow, although the claim formed part of a larger dispute between the landlord and the tenants. The landlord had granted a 6 month assured shorthold tenancy of a property on 1 August 2017. After 6 months, the tenants remained in possession as statutory assured shorthold tenants. The tenants had all but stopped paying rent in April 2018. The landlord served notices on each tenant under s8 of the Housing Act 1988 on 7 November 2018 seeking possession on grounds 8, 10 and 11 of Schedule 2. The notices stated that court proceedings would not begin until ‘after 26 November 2017’ (ie the previous year).

In January 2019 at the first hearing the District Judge raised the issue of the error in the notices and gave the landlord permission to amend them. The tenants appealed on the basis that there was no jurisdiction to do this.

Before HHJ Gargan the landlord conceded that there was no such jurisdiction. However, he argued that the notices were valid because applying the test in Mannai a reasonable recipient would know that 2017 was a typographical error and that proceedings would not be commenced until after 26 November 2018. HHJ Gargan accepted this submission. However, he still ruled the notices were not valid. This was because of the decision of the Court of Appeal in Fernandez v MacDonald [2004] 1 WLR 1027 to the effect that the Mannai principle did not apply to s8 notices. The notices did not comply with the statutory requirement to specify a date not less than 2 weeks from the served of the notices and were not to ‘substantially the same effect’ (a reference to regulation 2 of Assured Tenancies and Agricultural Occupancies (Forms) (England) Regulations 2015). The judge held that it would be just and equitable to dispense with the notices (as he was entitled to do under s8 of the 1988 Act) save that one of the Grounds was Ground 8 in which case such a dispensation was forbidden.

The decision on appeal

The landlord’s appeal was allowed. The argument concerned the interaction of the cases of Mannai and Fernandez. The judgment of Arnold LJ contains a useful summary of the law in this area.

Mannai was a case concerning commercial property. It gave rise to what has become known as ‘the reasonable recipient’ test, to be found in the decision of the majority of the House of Lords:

"the construction of the notices had to be approached objectively, and the question was how a reasonable recipient would have understood them, bearing in mind their context; that the purpose of the notices was to inform the landlord of the tenant's decision to determine the leases in accordance with the break clauses; that a reasonable recipient with knowledge of the terms of the leases and of the third anniversary date would have been left in no doubt that the tenant wished to determine the leases on 13 January 1995 but had wrongly described it as 12 January".

The House of Lords did not hold that this applied to all documents as there would be classes of documents where there needed to be certainty on the face of the document without reference to background matters.

In Fernandez a landlord served a notice under s21(4) of the 1988 Act. This notice was to give the tenant notice of when possession was required; this date had to be the end of a period of the tenancy. The relevant period of the tenancy ended on 3 January; the landlord put 4 January in the notice. Hale LJ strongly implied in her judgment that the notice met the reasonable recipient test. However, she (and the rest of the Court of Appeal) held the notice to be invalid because it did not comply with the express statutory requirements:

  1. In this case, however, a good deal hangs upon the precise question which is to be asked. If the question is simply, what would a reasonable tenant understand by this notice, then a reasonable tenant would understand that the landlord wanted to regain possession on or after 4 January 2003. If the question is what is the purpose of requiring such notice, I would accept that one purpose is to give the tenant at least two month's notice that the landlord will be starting the process of regaining possession once the relevant period of the tenancy has expired, so that the tenant can begin to make plans accordingly.
  2. But if the question is, what does the statute require, the answer is that the statute requires the notice to specify a date which is the last day of the period. The statute does not require the landlord to specify a date on which he requires possession. This is not a notice to quit. The landlord will not get possession without the tenant's consent unless he goes to court. That is why the statute requires the landlord to state that possession is required 'after a date specified in the notice, being the last day of a period of the tenancy'.
  3. This is not a case where the legislation permits a form to be 'substantially to the same effect'. The subsection is clear and precise. Nor is it difficult for landlords to comply. They know when the period ends. Furthermore, this is not a case where the consequences of failure to comply are particularly serious for landlords: a defective notice can be cured the next day. Even if the defect is not noticed until the point is taken in court, a valid notice can then be given. The landlord is not unwillingly and unwittingly saddled with a tenant who has security of tenure, as would be the case with an invalid notice under section 20 of the 1988 Act. One purpose of the subsection may be to alert tenants to the need to look for alternative accommodation, but another is to give the courts a clear and simple set of criteria which trigger their mandatory duty to order possession. The notice in this case was only one day out, but …. [counsel for the landlord's] alternative submission would leave room for all sorts of arguments, uncertainty and inconsistency up and down the country on a matter about which there should be no doubt at all."

Hales LJ therefore held that the notice did not fulfil its statutory purpose.

This kind of problem was avoided in the case of Spencer v Taylor [2014] HLR 9 where, although the landlord, like the landlord in Fernandez, put the wrong date in the notice he added the words "or at the end of your period of tenancy which will end next after the expiration of two months from the service upon you of this notice". The case of Spencer involved a s21(4) notice as opposed to the s21(1) notice in Fernandez. The Court of Appeal held that this was sufficient to ensure that the notice was valid, thus considerably diluting the emphasis on statutory purpose identified by Hale LJ. It went on to hold obiter that the saving words would also have saved a s21(1) notice as in Fernandez.

At [39] Arnold LJ summarised the principles he derived from the authorities:

The conclusions which I draw from this survey of the authorities are as follows:

  1. i) A statutory notice is to be interpreted in accordance with Mannai v Eagle, that is to say, as it would be understood by a reasonable recipient reading it in context.
  2. ii) If a reasonable recipient would appreciate that the notice contained an error, for example as to date, and would appreciate what meaning the notice was intended to convey, then that is how the notice is to be interpreted.

iii) It remains necessary to consider whether, so interpreted, the notice complies with the relevant statutory requirements. This involves considering the purpose of those requirements.

  1. iv) Even if a notice, properly interpreted, does not precisely comply with the statutory requirements, it may be possible to conclude that it is "substantially to the same effect" as a prescribed form if it nevertheless fulfils the statutory purpose. This is so even if the error relates to information inserted into or omitted from the form, and not to wording used instead of the prescribed language.

Arnold LJ went on to distinguish Fernandez as it related to a s21(4) notice which required a date to be inserted which was the end of a period of the tenancy as opposed to a s8 notice which simply required a period of 2 weeks in order to give the tenants time to take advice and order their affairs. In these circumstances the flawed notice both passed the Mannai reasonable recipient test and fulfilled its statutory purpose.