LibraryWhat is the impact of Spencer v Taylor [2013] drafting Section 21 Notices?

What is the impact of Spencer v Taylor [2013] drafting Section 21 Notices?

After years of believing that the law in relation to Section 21 Notices was fairly settled, the Court of Appeal caused storm in November 2013 by holding that Section 21(1)(b) would apply after a fixed term tenancy has come to an end where a statutory periodic tenancy has been created. Until this decision we had all assumed that after the expiry of fixed term Section 21(4), which is renowned for being cumbersome and confusing for landlords, would apply instead.

In the knowledge that the case was to be appealed to the Supreme Court, legal advisers have been cautious to advise landlords and managing agents to change their notice practices in case the Court of Appeal's decision was not upheld. On 24 July 2014 the Supreme Court refused permission to appeal to Miss Taylor on the basis that no new points of law were raised. This means we can all now start getting a little bolder in relying on Section 21(1)(b) after a fixed term tenancy has come to an end where statutory periodic tenancy has been created.

On a practical note, please consider that the judiciary may not be fully versed on this development just yet and so by relying on Section 21(1)(b) there is a risk of accelerated claims, in particular, being listed for hearing or worse still being struck out! Accordingly, some landlords and managing agents are playing safe by relying on Section 21(4) until they can be confident that local courts are not going to have a problem with a Section 21(1)(b) notice.

The facts of the case

The facts of the case are that Miss Taylor ("the tenant") was granted an assured shorthold tenancy from Mr Spencer ("the landlord") for a fixed term of six months. The landlord gave notice to terminate the tenancy until Section 21(4) and to expiry on "01/01/2012 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 tenant argued that the initial date  "01/01/2012" was incorrect as it did not coincide with the last day of the period of the tenancy, in accordance with Section 21(4). The tenant also put forward that inclusion of both the specific date and the saving provision, without any indication of which date was to take precedence, meant that the notice was defective as there was no clarity as to the day upon possession was sought.

The Court of Appeal dismissed the tenant's appeal, however, in doing so Lewison LJ, the presciding Judge, surprised lawyers by taking his judgment in a completely unexpected direction. With the parties' lawyers firmly focused on arguments as to whether a Section 21 notie could include two alternative dates of expiry, the Court of Appeal held that validity of the notice was governed under Section 21(1)(b) and not under Section 21(4)(a). In making its decision, the Court of Appeal dismissed the widely held opinion that Section 21(2) prohibited the landlord from serving notice under Section 21(1) once the fixed term has expired finding that it contained no such prohibition and instead was merely "permissive language".

In delivery of the judgment, Lewison LJ went on to address the issue regarding the two alternative possession dates. He found that even though the phrasing failed to identify a superior date, the notice would be valid anyhow on the basis that logic would rule out of the dates as ineffective leaving the remaining valid. The judgment stopped short of dealing with the scenario where two valid contradictory dates were given in a notice, one being a fixed date and the other via a saving clause, without any indication as to which date would take precedence. Accordingly, it may be that in such circumstances such notice would be held to be invalid.

So what does this mean practically?

Prior to the Supreme Court refusing permission to appeal, we were advising to err on the side of caution by continuing to serve notice under Section 21(4) where a fixed term tenancy had turned periodic. Now that the Supreme Court have refused permission, it would seem that we can now enjoy the practical benefit of being able to serve notice under Section 21(1)(b) for those fixed term tenancies that have now converted to statutory periodic tenancies.

There is concern that where the tenancy agreement includes a clause creating a contractual periodic tenancy, Section 21(4) will still need to be complied with. Whilst it could be that the decision is held as applicable to periodic tenancies which have become periodic after the fixed term due to a contractual clause it would make sense to eliminate the risk by ensuring that a Section 21(4) is complied with.

Lower Court Judges will now be bound to read Section 21(2) in the same way as the Court of Appeal read it in this case unless the Court of Appeal or the Supreme Court overturns the decision in the future. This will make it practically so much easier for landlords and managing agents in serving notice after the fixed term has expired by giving just two months notice and no more (allowing for service). Of course, landlords should be aware that any notice served in a periodic tenancy which has never been a fixed term will need to comply with Section 21(4).

Court of Appeal rejects Article 8 defence in a private sector

On 24 July 2014, the Court of Appeal handed down judgment in the case of McDonald v McDonald [2014] finding that the tenant could not rely on a defence under Article 8 of the European Convention on Human Rights in defending possession proceedings brought by a private landlord. Whilst this decision was expected to go this way the decision has failed to deal with a number of issues meaning that the issue may be reopened in further cases in the future.