SPENCER V TAYLOR: Christmas Cheer for Landlords Part 2 – The Hangover?

 

Further to my first article on this case (see here) I have now received a copy of the case report. In discussing the case report with my colleagues, we have concluded that this decision lends itself to a re-write of Section 21 Notices. I will set out below a brief explanation why this is the case together with further background of the case itself.

As you may already appreciate, there are two forms of Section 21 Notices. Prior to Spencer –v- Taylor, it was established practice that a Section 21(1) Notice could be served at any time during the fixed term tenancy. The Section 21(1) Notice did not have to expire on a particular date, provided at least two clear months notice was given and that the notice did not expire before the last day of the fixed term.

In contrast, a Section 21(4) Notice could be given (and still can be) in two situations. Firstly, where the fixed term tenancy has expired and there is a periodic tenancy continuing. Secondly, it can be given where the tenancy was periodic from the outset.

In both situations, the Section 21(4) Notice has to expire on a particular date as it must expire on the last day of a tenancy period so that possession is required after that specific day.

The decision

The decision of Spencer –v- Taylor alters the position and provides new situations in which a Section 21(1) Notice can be relied upon.

The case itself concerned a six month tenancy which expired and continued as a weekly statutory periodic tenancy. The landlord served the Notice and relied on Section 21 (4) in order to seek possession.

The weekly periodic tenancy ran from a Saturday to the following Sunday. In order to comply with Section 21 (4) therefore, the Notice should have expired on a Sunday ie. the last day of tenancy period. However, the Notice in this case ended on a Saturday and was, therefore, not the last day of the period of the tenancy.

The Notice itself provided:-

“(a) After 1 January 2012 or (b) 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 1st January 2012 was a Saturday, two months after service of the Notice (18th October 2011). As set out above, this is an ineffective date. However, the Notice provided for a saving provision (under (b)) as an alternative which led to a further date of 23rd December 2011.

The tenant argued that Section 21 (2) of the Housing Act prohibited the landlord from serving Notice under Section 21 (1) once the fixed term had expired. However, this is not what Section 21 (2) says. In short, it read “A [Section 21 (1)] Notice ….may be given before or on the last day on which the tenancy came to an end”. It does not say “may only” so nothing is said about the use of such a notice being given after the last day of the fixed term.

The effect

This therefore opened up the ability for a landlord to rely on a Section 21(1) Notice even after the expiry of the fixed term and, under the provisions of Section 21(1) that notice did not need to expire on a particular date and nor did it require any date to be specified in the notice at all.

Therefore, on the facts of the case itself, the landlord had given notice on the 18th October 2011 and the dates provided for within that notice (of which there were two), both gave at least two months notice. Importantly, in Spencer –v- Taylor the possession proceedings were not issued until both of these dates had passed. There was no issue for the Court to decide that the first date was wrong (ie. the specified date as 1st January, which was not the last day of the tenancy period) as the Court had decided that the notice was valid under Section 21(1) (where no specified date was required).

The Court did address the issue of two different dates and stated that the reasonable recipient of a notice (with two different dates) would have looked at the back of the notice itself and the explanatory notes therein and seen from that that the 1st January 2012, being a Saturday, was ineffective, and should then be able to work out the correct date relied on the saving provision. This issue has always been one of confusion for landlords in relying on a Section 21 (4) Notice. It was of little effect within Spencer –v- Taylor and whilst the notice was effective for both the purposes of Section 21(1) and Section 21(4), the Court decided that Section 21(1) prevails.

The caution

However, whilst Spencer –v- Taylor now provides that a Section 21(1) Notice may be served even after the fixed term of the tenancy has run out, this can only be relied upon where the tenancy started out as a fixed term tenancy.

There is an important point to raise in this respect. Whilst the Court have not specified as such, it is arguable that the decision only applies to cases where not only the tenancy started out as a fixed term tenancy but then continued as a statutory periodic tenancy. This is due to the provisions of Section 21(3). It is a technical argument which I will not cover here but it provides a provision whereby a Court could limit the application of Spencer –v- Taylor so that it applies only to tenancies that are now a statutory periodic tenancy following the expiry of a fixed term. Therefore, where there is a contractual periodic tenancy, landlords should still rely on a Section 21(4) Notice. This is also the case where the tenancy was a periodic tenancy from the outset.

The current application of Spencer –v- Taylor is such that Section 21(1) Notice can be used following the expiry of a fixed term (subject to the above provisions). Provided that all possible valid dates that arise out of that notice have gone by before pursuing a claim for possession, the notice should be valid.

The decision, as a Court of Appeal decision, can therefore be relied on although there remains the possibility that it will be overturned by the Supreme Court. Whilst there are the provisos as mentioned above, however, landlords may wish to continue with the “original” way of drafting Section 21 Notices so as to avoid any issues being raised by tenants. Landlords may still, therefore, wish to rely on Section 21(4) Notice albeit caution must be applied in drafting such notices so that the use of two conflicting compliant dates (where a saving provision is used) does not invalidate the notice. Clear notes would need to be included within the Section 21(4) Notice in order to make it clear which date would prevail as the effective date. Even if the Section 21(4) Notice is invalid, it may be valid for the purposes of Section 21(1).

The position is, as ever, not entirely simple. Notices should not confuse tenants and hence the consideration for a re-writing of a Section 21 Notice.

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