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A red letter day for a tenant

A recent Court of Appeal decision highlights the need for social landlords to have stringent processes in place when sending important notices to tenants, writes Karl Anders.

Landlords need to take care when sending notices to tenants, as a mistake can lead to unintended and undesirable consequences, such as the inability to regain possession of the property.

This is the lesson from the Court of Appeal's decision in Saxon Weald Homes Limited v Chadwick [2011] EWCA Civ 1202 where the Court held that a letter sent in error by a landlord's employee was sufficient to constitute notice converting an assured shorthold tenancy (AST) into an assured tenancy. This was the result even though the tenant had earlier been informed of the landlord's steps to take possession of the property for breach of the AST.

The court held that the letter must be “naturally and objectively read” and was clearly a notice for the purpose of converting to an assured tenancy. It was not the tenant's responsibility to enquire into a landlord's reasons for serving an otherwise unambiguous notice in connection with a tenancy.

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Legal background

The key difference between an AST and an assured tenancy is that it is much easier to evict assured shorthold tenants under the section 21 ground for possession (section 21 of the Housing Act 1988 (HA 1988)) by serving a notice under that section. In contrast, a landlord wishing to terminate an assured tenancy must establish one of the grounds for possession set out in Schedule 2 of HA 1988.

An AST can be converted into an assured tenancy if a notice is served in accordance with paragraph 2, Schedule 2A of the HA 1988.

Facts

A housing association tenant (C) had been granted an AST for a probationary period of one year. Towards the end of the year, the landlord of the property sought possession on the grounds of C's alleged anti-social behaviour. The landlord's solicitors duly served notice requiring possession under section 21(4)(a) of the HA 1988 (and for belt and braces a notice under section 8 seeking possession if the tenancy was assured).

However, less than a week later the landlord sent, in error, a letter confirming that C had completed his probationary period and that he was "now an assured tenant". The letter also confirmed that C had acquired a number of new rights as an assured tenant. C argued that this letter constituted notice under the relevant provisions of the HA 1988 and that his tenancy had become an assured tenancy.

At first instance the Deputy District Judge found in favour of the landlord. This decision was later overturned on appeal by a more senior judge in the county court on the basis that the letter was “quite plain on its face” and there was no room for another construction in the broader context. The landlord appealed and the matter came before the Court of Appeal.

Judgment

Under the principle set out in Mannai Investment Co. Ltd v Eagle Star Life Assurance Co. Ltd [1999] AC 749, minor defects in unilateral contractual notices will not necessarily invalidate the notice if the reasonable recipient, with knowledge of the factual and contextual background, would not be confounded by the error.

The landlord argued that the erroneous letter, set in the context of the possession notices already received by C, was no more than an incorrect acknowledgement of a state of affairs that had never existed: i.e. because there had never been a successful completion of the probationary one year tenancy.

The landlord also relied upon the decision in Barclays Bank v Bee [2001] EWCA Civ 1126, which applied the Mannai principle in the context of notices under the Landlord and Tenant Act 1954.

The Court of Appeal did not agree. It held that the principle in Mannai was of no assistance to the landlord, as there was no ambiguity in the letter. By contrast, the facts of the present case were that the letter was unambiguous in its wording and it was consequently valid. The mistake was really in sending the letter at all. It was not C's responsibility to investigate any potentially conflicting correspondence if the most recent correspondence was clear.

Comment

Landlords have always known that problems can arise if notices are served incorrectly. This case shows that the escape route provided by Mannai has its limitations and should operate as a warning to landlords to check their own processes.

The letter mistakenly sent by the landlord's employee was a standard letter sent routinely to tenants on the completion of their probationary period. Landlords who are large-scale organisations are particularly vulnerable to errors caused by poor communication. They should ensure they have stringent procedures in place to avoid such mistakes taking place.

Karl Anders is a Director in Housing Litigation at Walker Morris. He can be contacted by email at This email address is being protected from spambots. You need JavaScript enabled to view it.. Karl is a contributor to Walker Morris' free know-how and update service, reach…®

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