[2022] UKSC 7
On appeal from: [2021] EWCA Civ 77
JUDGMENT
Croydon London Borough Council (Appellant) v Kalonga (Respondent)
before
Lord Briggs
Lady Arden
Lord Kitchin
Lord Leggatt
Lord Stephens
9 March 2022
Heard on 12 January 2022
Appellant
Kelvin Rutledge QC
Riccardo Calzavara
(Instructed by Croydon Council Legal & Democratic Services)
Respondent
Justin Bates
Anneli Robins
(Instructed by GT Stewart Solicitors (East Dulwich))
LORD BRIGGS: (with whom Lady Arden, Lord Kitchin, Lord Leggatt and Lord Stephens agree)
Introduction
This appeal raises an important question of construction of the statutory regime governing secure tenancies, now to be found in Part IV (sections 79 and following) of the Housing Act 1985 (“the 1985 Act”). References in this judgment to numbered sections, without more, refer to sections of the 1985 Act. The question relates to the circumstances in which, and the means by which, a secure tenancy for a fixed term which has not yet expired by effluxion of time may be terminated by the landlord. The regime for secure tenancies was first introduced by the Housing Act 1980 (“the 1980 Act”). Its provisions were consolidated in the 1985 Act, which has been materially amended since then, but the question of construction has surprisingly lain dormant since 1980, and its answer is only marginally affected by those amendments.
Prior to 1980, residential tenancies granted by public sector landlords were not the subject of any form of statutory security of tenure, beyond that provided for all residential tenants by section 2 of the Protection from Eviction Act 1977, namely that a right of re-entry or forfeiture could not be enforced against them, while lawfully in residence, otherwise than by proceedings in court, by the statutory regime for notice of and relief from forfeiture in section 146 of the Law of Property Act 1925 (“the LPA”), and by the ragged mixture of general law and statutory provision in relation to forfeiture for non-payment of rent. Nonetheless public sector tenants (at least where the landlord was a local authority) were widely regarded as having a form of de facto security. In its Green Paper on Housing Policy published in June 1977 the Government announced its intention to clothe that de facto protection with the force of law. At para 11.07 it stated:
“At present the lack of statutory security of tenure is the most important respect in which the public sector tenant’s position falls short of that of tenants in the private sector.
Local authority and new town tenants already enjoy a high degree of security in practice, and the Government propose to introduce legislation giving statutory recognition to this ‘de facto’ security.”
Inevitably this took the form of a regime which clothed the millions of existing tenants with statutory security of tenure beyond their existing contractual and proprietary rights, rather than merely providing for a new form of secure tenancy for the future. Although counsel could not offer any reliable statistics, it is very likely that the vast majority of existing public sector tenants had periodic tenancies, which offered no de jure security beyond the typically very short period required for a valid notice to quit. But a sufficient number had fixed term tenancies to make it necessary for specific provision to be made about them as well. A fixed term tenancy provides contractual security of tenure at least for the duration of the term, subject of course to forfeiture and to any other provisions for early termination (such as a break clause) which the tenancy agreement might contain. Quite apart from contract, a fixed term tenancy is also a valuable proprietary right, of which the undisturbed enjoyment of the demised premises for the entire duration of the term is its main element. Although forfeiture represents an inroad into that security, the court’s originally equitable jurisdiction to relieve from forfeiture means that it will not generally be allowed to operate more severely than as security for the performance of the tenant’s covenants. Although relief is discretionary, speaking very generally tenants are relieved from forfeiture if they remedy the breach which led to the forfeiture and (if necessary) undertake to behave properly in the future.
It will be necessary to set out the statutory regime for security of tenure in detail in due course but, in outline, its main elements have always been as follows. First, it defines a secure tenancy by reference to the identity of the landlord (as a public sector rather than private landlord) and by reference to a “tenant condition” which is that the tenant occupies the demised premises as their only or principal home. Secondly it provides that a periodic secure tenancy shall not be brought to an end by the landlord otherwise than as provided for in the 1985 Act. Thirdly it makes the same provision about a fixed term tenancy if it is “subject to termination by the landlord”. Fourthly it provides for a statutory periodic secure tenancy to follow upon the termination of a fixed term tenancy either by effluxion of time or by forfeiture. I will call that a “follow-on” tenancy for short. In that context it makes provision to cut down the right to forfeit from a right of re-entry to a right only to bring the fixed term tenancy to an early end.
The permitted means whereby a secure tenancy may be brought to an end by the landlord were originally two in number: first, by obtaining an order for possession on one of a number of specified grounds (which have been added to over time). Secondly, by obtaining a termination order in lieu of forfeiture, in relation to a fixed-term tenancy. In 2003 a third method was added, namely the obtaining of a demotion order on the ground of anti-social behaviour by the tenant or by someone residing in or visiting the house. Neither the second nor the third method enables the landlord to resume possession. The termination order gives rise to a follow-on tenancy, while a demotion order temporarily replaces the secure tenancy with a demoted tenancy which only provides reduced security of tenure.
The statutory grounds for possession, set out in Schedule 2 to the 1985 Act, may loosely be divided into three groups. Grounds 1 to 8 are mainly based on some default or misconduct by the tenant. If the ground is established, the landlord must also show that it is reasonable to make an order for possession. Grounds 9 to 11 may be loosely described as social housing management grounds. There is no requirement that it should be reasonable to make an order for possession, but the landlord must show that suitable alternative accommodation will be available to the tenant. Grounds 12 to 16 may also be described as management grounds, but they require both that it be reasonable to make an order for possession and that suitable alternative accommodation will be available: see section 84 of the 1985 Act.
The critical question to be determined on this appeal is whether the secure tenancy regime in the 1980 and 1985 Acts merely adds statutory security to the contractual and proprietary security already conferred by the tenancy itself, or whether it replaces it, and thereby to some extent reduces or removes that contractual and proprietary security. Two examples will suffice to illustrate the problem. The first summarises the assumed facts of this case. A secure tenant commits breaches of her fixed term tenancy agreement, sufficient to satisfy one or more of grounds 1 to 8. Can the landlord simply seek possession of the house before the tenancy expires by effluxion of time, or must the landlord also terminate the fixed term by a termination order in lieu of forfeiture (assuming that forfeiture is provided for under the tenancy agreement), and thereby enable the tenant to seek relief?
The second example relates to a five year fixed term tenancy with a landlord’s break clause exercisable by notice expiring at the end of year two. The landlord wishes however to obtain possession for redevelopment purposes at the end of year one. Can the landlord terminate the fixed term at the end of year one, under ground 10, which is available at any time during the tenancy? Or must the landlord first serve a break notice, and wait until the end of year two? A more rigorous example would be a tenancy for four years with no break clause at all. The tenant has five years’ contractual security (subject only to forfeiture). Can a model tenant who commits no breach of the tenancy agreement be removed earlier than at the end of the five years, merely because the landlord wishes to redevelop and cannot reasonably do so without obtaining possession?
I have deliberately framed this question in more general terms than did the parties, focussed as they understandably were on the facts (or rather the assumed facts) of this case. I have added the redevelopment example because a break clause is perhaps the most common means whereby a fixed-term tenancy may be terminated earlier than by effluxion of time, other than by forfeiture. A sound interpretation of the statutory provisions must accommodate both examples. There are other ways in which a fixed-term tenancy may come to an early end under the general law, such as rescission for misrepresentation or failure of a condition. But these are much less common, and their detailed examination does not shed significant further light on the problem.
The Facts
This is a second appeal from a decision of the High Court (Tipples J) on preliminary issues, necessarily on assumed facts about the allegations of rent arrears and anti-social behaviour which underlie the landlord’s claim for possession. Subject to one point the issues are not fact-sensitive, so that the assumed facts may be shortly stated. The appellant local housing authority Croydon London Borough Council (“Croydon”) granted the respondent Ms Kalonga a “flexible” secure tenancy of 61 The Crescent, Croydon, Surrey for a fixed term of five years from 25 May 2015. The tenancy agreement stated that the landlord “may also take eviction action at any time if one or more of the grounds of possession set out in Schedule 2 of these conditions apply”. Schedule 2 set out in layman’s terms some of the statutory grounds for possession in Schedule 2 to the 1985 Act, including rent arrears and anti-social behaviour.
On 2 August 2017, a little over two years into the fixed term, Croydon served notice of its intention to seek possession of the property on the grounds of rent arrears and anti-social behaviour. The notice contained, as required by the Secure Tenancies (Notices) Regulations 1987 (SI 1987/755), a statement in the following terms:
“This Notice applies to you if you are a secure tenant under the Housing Act 1985 and if your tenancy is for a fixed term, containing a provision which allows your landlord to bring it to an end before the fixed term expires. This may be because you have got into arrears with your rent or have broken some other condition of the tenancy. This is known as a provision for re-entry or forfeiture. The Act does not remove the need for your landlord to bring an action under such a provision, nor does it affect your right to seek relief against re-entry or forfeiture, in other words to ask the court not to bring the tenancy to an end. The Act gives additional rights to tenants, as described below.”
Nonetheless in its covering letter Croydon stated that its position was that it did not need to seek to exercise its right of forfeiture, because the words quoted above “are now obsolete in light of the flexible tenancy scheme under the Localism Act 2011 that applies to your tenancy”. Croydon no longer maintains this argument. Rather it submits that there has never, since 1980, been an obligation on the landlord under a secure fixed-term tenancy to terminate the fixed term by forfeiture, before or in addition to seeking possession under the 1980 Act or the 1985 Act.
At no time during the proceedings for possession which followed did Croydon allege that it had forfeited Ms Kalonga’s tenancy. On the contrary, when Ms Kalonga raised the absence of a forfeiture in her Defence, and indeed the absence of a provision for forfeiture in her tenancy agreement, Croydon stated in its Reply that its claim did not rely upon forfeiture.
Following close of pleadings, HHJ Bailey transferred the case to the High Court for the determination of the following preliminary issue:
“as to the correct manner in which to determine a secure flexible tenancy during the fixed term (including whether, and if so how, any principles relating to forfeiture apply).”
That issue was tried before Tipples J in April 2020 ([2020] EWHC 1353 (QB); [2020] 1 WLR 4809). While her judgment remained reserved, the tenancy expired by effluxion of time on 24 May 2020, and a follow-on periodic tenancy ensued, under which Ms Kalonga continues to occupy the property. The result is that the preliminary issue determined by the judge and the subject of this appeal has become academic as between the parties, since there remains no fixed term tenancy to be determined. Nonetheless the proceedings have continued because of the importance of the underlying issues to Croydon, to public sector landlords and to secure tenants respectively. Ms Kalonga’s denial that her tenancy even contained a provision for forfeiture was also litigated as part of the preliminary issue, and remains live on this appeal. It was never of practical significance to her, since Croydon had not relied on forfeiture. But again, not least because her tenancy agreement is in a widely used standard form (at least by Croydon), this court has been invited to decide it.
Tipples J dismissed Croydon’s claim on the main ground that the tenancy agreement did not contain any provision for forfeiture, so that the fixed term could not be terminated early by a claim for possession under the 1985 Act, because it was not “subject to termination by the landlord” within the meaning of section 82(1)(b) of the 1985 Act. Had it contained such a provision, she considered that a possession claim under the Act would have been sufficient, without the landlord having to seek a termination order in lieu of forfeiture. On Croydon’s appeal the Court of Appeal (King, Asplin and Arnold LJJ [2021] EWCA Civ 77; [2021] QB 962) agreed that the tenancy agreement lacked a provision for forfeiture, but its main ground for dismissing the appeal was that the only way in which a fixed term tenancy could be brought to an early end under the 1985 Act was by the use of a forfeiture provision to obtain a termination order in lieu of forfeiture, as provided by section 82(3). That required compliance with section 146 of the LPA and the giving of an opportunity to the tenant to obtain relief. Croydon appealed to this court.
The issues formally raised by this appeal are first whether the existence of a provision for forfeiture in the tenancy agreement and its exercise by obtaining a termination order in lieu of forfeiture under section 82(3) of the 1985 Act is the only way in which a secure fixed-term tenancy can be brought to an early end and, secondly, whether Ms Kalonga’s tenancy agreement contained a provision for forfeiture. As already noted my view is that the underlying question which is determinative of the first issue is whether the 1980 and 1985 Acts leave the fixed term secure tenant’s contractual and proprietary rights to security of tenure intact, as suggested in the statutory text prescribed by the 1987 Notices Regulations, quoted above.
The statutory regime in detail
The preamble to the 1980 Act, by which the secure tenancy regime was first introduced, is as follows:
“An Act to give security of tenure, and the right to buy their homes, to tenants of local authorities and other bodies; to make other provision with respect to those and other tenants; to amend the law about housing finance in the public sector; to make other provision with respect to housing; to restrict the discretion of the court in making orders for possession of land; and for connected purposes.”
That its relevant purpose was to give (rather than take away or replace) tenants’ security rights is consistent with the extract from the 1977 Green Paper. Counsel did not suggest that any other travaux preparatoires were of assistance. Nor did Mr Bates for Ms Kalonga submit with any real force that the statement in the 1987 Notices Regulations, quoted above, or even the identical statement in the earlier 1980 Notices Regulations (SI 1980/339), were of compelling force in the process of statutory construction, even though they coincided with Ms Kalonga’s case. He was right not to do so. The 1980 Regulations post-date the 1980 Act and the 1985 Act is, for the most part, only a consolidating Act, which made no change to the wording of the key provisions, even though their ordering was altered. More to the point, to place much weight on a single small part of delegated legislation as reflective of parliamentary intention in the primary legislation tends to allow the tail to wag the dog.
In what follows I shall focus primarily on the relevant provisions of the 1985 Act, as in force at the relevant time (ie 2017) and currently, even though they have been amended and supplemented after 1985. By that I do not mean to belittle the importance of asking, as a matter of construction, what did the secure tenancy regime achieve when it was first introduced, onto an existing pattern of common law rights enjoyed by public sector tenants in 1980, immediately before the 1980 Act came into force. No-one suggests that, on the critical issues in this appeal, the later consolidation in 1985 or subsequent amendments brought about a relevant change. Much more significant changes have recently been enacted, by the Housing and Planning Act 2016, but any relevant to this appeal have not been brought into force, and there is no current intention by government to do so.
The 1985 Act begins, at section 79, by defining a secure tenancy. It requires only that the landlord condition and the tenant condition (already described) need both to be satisfied at the relevant time. A given tenancy may therefore move in and out of the secure tenancy regime from time to time. Section 79(3) also applies the same regime to licences to occupy a dwelling house, subject to an irrelevant exception. Sections 80 and 81 set out the landlord and tenant conditions. Nothing turns on their detail.
Section 82 is of central importance. It provides as follows:
“82.Security of tenure
(1)A secure tenancy which is either -
(a)a weekly or other periodic tenancy, or
(b)a tenancy for a term certain but subject to termination by the landlord,
cannot be brought to an end by the landlord except as mentioned in subsection (1A).
(1A)The tenancy may be brought to an end by the landlord -
(a)obtaining -
(i)an order of the court for the possession of the dwelling-house, and
(ii)the execution of the order,
(b)obtaining an order under subsection (3), or
(c)obtaining a demotion order under section 82A.
(2)In the case mentioned in subsection (1A)(a), the tenancy ends when the order is executed.
(3)Where a secure tenancy is a tenancy for a term certain but with a provision for re-entry or forfeiture, the court shall not order possession of the dwelling-house in pursuance of that provision, but in a case where the court would have made such an order it shall instead make an order terminating the tenancy on a date specified in the order and section 86 (periodic tenancy arising on termination of fixed term) shall apply.
(4)Section 146 of the Law of Property Act 1925 (restriction on and relief against forfeiture), except subsection (4) (vesting in under-lessee), and any other enactment or rule of law relating to forfeiture, shall apply in relation to proceedings for an order under subsection (3) of this section as if they were proceedings to enforce a right of re-entry or forfeiture.”