Dead end street

It is difficult to credit that a Court of Appeal judgment, made before major relevant amendment of the legislation under consideration, and in which one lord justice said nothing while the other twoactually disagreed on the point in question, has nevertheless survived as an authority which delays court proceedings and frequently results in increased financial losses for a significant number of litigants. Further, the decision of Lower Street Properties v Jones [1996] 28 HLR 877 does not appear to have been the subject of challenge in any subsequent reported High Court case.

The issue for consideration is whether the landlord of residential premises let on an assured shorthold can commence possession proceedings during the currency of his two month section 21 notice, or has to wait until it has expired. The disadvantaged litigants are private landlords who are unable to recover possession of their properties at the earliest possible time after termination of the tenancy and are often as a result left with defaulting tenants in occupation and rent arrears accumulating as the court process moves forward.

Lower Street was decided before the Housing Act 1988 was amended, with effect from 26 February 1997, by its 1996 successor. Even before amendment, there was a good argument to be made that proceedings could lawfully be issued before expiry of the section 21 notice. As a periodic assured tenancy, including a statutory periodic tenancy, could not be brought to an end except by the landlord obtaining a court order (section 5(1)), how could it be said that the landlord's cause of action crystallised at an earlier date?

Obviously, it was necessary to serve an effective notice, but expiry of the notice did not end the tenancy and arguably no cause of action arose until the court order was made. In Lower Street, where the proceedings were commenced on the day before expiry of the notice, Lords Justice Kennedy and Schiemann disagreed on that submission, but, as the notice itself provided that no action could be commenced until after it had expired, the appeal was lost.

By inserting into the 1988 Act a new section 19A, the 1996 Act enacted that assured tenancies entered into after the commencement date would take effect as shortholds without any further formality. So, instead of it being necessary to give a preliminary notice to create a shorthold, it became necessary to do so to create an assured tenancy. As pre-1996 Act shortholds had to be for a fixed term of not less than six months, the amended legislation had to deal with the consequences of section 19A for periodic tenancies and shorter fixed terms. It did so by adding to section 21 subsections 5 to 7.

The amended section 21(5), which came into force after the decision in Lower Street, provides that 'where an order for possession under subsection 1 or 4 above is made [the order] may not be made so as to take effect earlier than'¦ (a) six months after the beginning of the tenancy' or in the case ofa 'replacement tenancy', six months after the beginning of the original tenancy '“ see subsections 6 and 7.

It is obviously the draftsman's intention that not only can proceedings be issued, but possession orders can be made before the statutory minimum period of six months has run its course. There is nothing to suggest that such proceedings may only be issued after expiry of the section 21 notice. Of course, no court order can be made before the notice has expired and no such order can take effect within the prescribed minimum period. This applies whether the tenancy is for a fixed term (subsection 1) or periodic (subsection 4).

In the way

So, how does Lower Street get in the way? Kennedy LJ had 'considerable misgivings' about the landlord's submissions to the effect that proceedings could be issued (under the pre-1996 Act regime) before the expiry of the section 21 notice, but accepted there was nothing in the (then current) rules of court to prohibit such issue. He decided the case against the landlord on the ground that the section 21 notice in that case had specifically stated that proceedings would not be commenced before the expiry date given.

Schiemann LJ accepted there was no requirement in the then prevailing legislation that the landlord must wait, but ruled: 'The way in which the court is prevented from making the order'¦ prior to the date specified in the notice is because it is implicit that the landlord cannot bring proceedings until after that date.'

Although he gave no further explanation of that implication, he presumably had in mind that the landlord's cause of action would not accrue until the notice had run its course. He added that 'in argument it was common ground that the court had no power to make (a possession order) prior to the specified date'. Counsel for the landlord having made a specific submission to the contrary, it seems more likely that the common ground was that no court order could be effective before that date.

There being nothing in either the 1988 Act (as amended) or in the present CPR to prohibit the issue of proceedings before the expiry of the section 21 notice and there being no requirement that the notice itself should so provide (although many do), it is surprising that the amendment of section 21(5) has not led to a challenge to this old authority. It may be that the time is overdue for the senior court to be asked to reconsider the Lower Street rule. If successfully challenged, the savings to landlords in time, cost and exasperation are likely to be significant.