EASTMOOR LLP v KEITH BULMAN

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2014SCDUM31

 

SHERIFFDOM OF SOUTH STRATHCLYDE DUMFRIES AND GALLOWAY AT DUMFRIES

COURT Ref. No.: SD 52/14

                                               JUDGMENT

                                                                    of

                                   SHERIFF GEORGE JAMIESON

         in the summary cause for recovery of possession of the heritable property at [address]

                                                                                          in causa

 

EASTMOOR LLP                                                      PURSUER

                                    against

KEITH BULMAN                                               DEFENDER

 

_______________________________________

 

 

 

 

 

           

                                                                                                                                          

Introduction

 

• [1]This is an action by the pursuers, landlord, against the defender, tenant, for recovery of possession of the heritable property known as [address] let by the pursuers to the defender on a short assured tenancy under the lease between the parties dated 1and 5 June 2013 for the period from 1 June 2013 until 31 May 2014.

   

• [2]Despite the averment in article 2 of the statement of claim that the AT 6 was served “intimating the tenancy would terminate on or before 17 February 2014”, this would not in fact appear to be the case. There is no averment that a Notice of Quit was validly served on the defender, terminating the lease at its ish on 31 May 2014.

   

• [3]The contractual tenancy therefore appears to have renewed by tacit relocation for a further year until 31 May 2015. This creates a certain problem for the pursuers for they aver the defender is more than three months in arrears of rent.

   

• [4]The CAB acting on behalf of the defender has submitted the pursuers are unable during the contractual tenancy to recover possession for rent arrears because they have not complied with section 18(6) of the Housing (Scotland) Act 1988, specifying the grounds for possession in the lease.

   

   

  (a) FINDINGS

   

• [5]The following facts appear to be unchallenged at this stage:

   

  1. The pursuers served on the defender Form AT 6 on 31 January 2014.
  2. Form AT 6 specified grounds 8, 11 and 12 as grounds for possession on the basis the defender was in arrears of rent.
  3. The tenancy is a contractual short assured tenancy in terms of the Housing (Scotland) Act 1988(“the 1988 Act”) which has not yet reached its ish.
  4. By virtue of section 18(6) of the 1988 Act, the pursuers are entitled to recover possession of the property only on those grounds in schedule 5 to the 1988 Act specified in the lease.

      

      

      

     (b) DECISION

      

• [6]The CAB challenged the competency of these proceedings at the preliminary hearing of the summary cause. I reserved my decision on this point, after hearing from the parties’ representatives, owing to the importance of the question of law involved. I am of the opinion the action is incompetent for the reasons advanced by the CAB on behalf of the defender. I accordingly dismiss it under SCR 2002, rule 8.3(1).

  (c) NOTE OF REASONS FOR MY FINDINGS AND MY DECISION

   

• [7]Section 18 (6) (b) of the 1988 Act provides that the sheriff shall not make an order for possession of a house which is for the time being let on an assured tenancy, not being a statutory assured tenancy, unless—(b) the terms of the tenancy make provision for it to be brought to an end on the ground in question.

   

• [8]The grounds referred to here are those mentioned in section 18(6) (a) of the 1988 Act and these grounds are set out in schedule 5 to the Act. Section 18(6) applies only to the contractual tenancy; it does not apply where that tenancy has been terminated by valid service of a valid Notice to Quit and a statutory assured tenancy comes into being.

   

• [9]The pursuers rely in their AT 6 this case on:

   

  • Ground 8, which refers to three months’ rent being due both at the date of service of the AT6 and the hearing of the summary cause;
  • Ground 11, which refers to the tenants having: “persistently delayed paying rent which has become lawfully due”; and
  • Ground 12, which refers to “some rent lawfully due from the tenant” being unpaid on the date on which the proceedings for possession are begun; and in arrears at the date of the service of the AT6.
• [10]Clause 1 (g) of the tenancy agreement states:

   

  “If any of the events referred to in Grounds 8, 11, 12, 13, 14, 15 or 16 of Schedule 5 of the Housing (Scotland) Act 1988 occur, the Landlord shall be entitled not only to recover from the Tennant all loss or damage caused by the Tenant which they may thereby sustain and all rents due and which may become due in addition may forthwith put an end to this lease and may commence proceedings for possession.”

   

• [11]This clause is poorly drafted:

   

  • It mentions but does not specify what these grounds are; and
  • It wrongly assigns to the landlord the right to “forthwith” put the lease to an end if these grounds occur, because even if they do, the lease may only be brought to an end within the contractual period on an order for possession granted by the sheriff under section 18 of the 1988 Act.

     

• [12]In Royal Bank of Scotland v Boyle 1999 Housing Law Reports 63, Sheriff Principal Wheatley was faced with circumstances similar to those in the present case. Firstly, the landlords had not served a valid Notice to Quit that terminated the contractual tenancy at its ish. To recover possession they had therefore to show the lease satisfied the terms of section 18(6) of the 1988 Act.
• [13]In that case, the lease did not mention the grounds even by reference to their number. Clause 15 of the lease referred to the landlord terminating the lease if the tenant was in arrears of rent for fourteen days and did not comply with a notice by the landlord to pay the arrears. The AT 6 referred to grounds 8 and 11. There was an obvious difficulty in relating the terms of clause 15 to either of these grounds.

   

• [14]The sheriff principal held that section 18(6) (b) had not been complied with in that case: the landlord could only recover possession prior to determination of the tenancy at its ish if one of the schedule 5 grounds applied; the connection between Clause 15 and grounds 8 and 11 was not “reasonably precise and complete”: paragraph 12-13.

   

• [15]In what in my opinion must be regarded as obiter remarks, the sheriff principal opined that section 18(6) (b) necessitated that “the essential ingredients of those conditions must be referred to in the tenancy agreement”.

   

• [16]An “exact citation” of the grounds would suffice.

   

• [17]While it might be “appropriate” to provide a “summary of the clauses to be relied on”, the “essential ingredients” would have to be included: paragraph 12-12.

   

• [18]Also at paragraph 12-12, the sheriff principal stated:

   

  “I am not satisfied that necessarily in all cases incorporation by reference would be sufficient or indeed appropriate. It is also doubtful whether such a device is good drafting practice”.

   

   

• [19]The CAB founded on these passages in seeking dismissal of the cause. Rubric (1) to the Housing Law Reports interprets them as meaning:

   

  “The essential ingredients of the grounds for recovery of possession in schedule 5 to the 1988 Act must be referred to in the tenancy agreement, and while this could be done by an exact citation of the grounds, and maybe by providing a summary containing the essential ingredients of the grounds, incorporation by reference would not necessarily be appropriate”.

   

• [20]Mr Stevenson, solicitor for the pursuers, sought to distinguish this case on the basis sections 30A and 30 B of the 1988 Act, (inserted by section 33 of the Private Rented Housing (Scotland) Act 2011 (asp 14)), now provided with regard to leases, such as the present lease, entered into after 1 May 2013 for inter alia a “Tenancy Information Pack” to be given to the tenant[1].
• [21]This document he submitted gave adequate information to the tenant as to the content of the Schedule 5 grounds: see section 1.5. It should be noted however these are but summaries of the grounds. They are not exact summaries either. They do not necessarily contain the “essential ingredients”. For example, the description of ground 8 refers only to three months’ rent arrears. It does not refer to those arrears being purgible at the date of the hearing.

   

• [22]The problem with the tenancy agreement in the present case is that it mentions inter alia grounds 8, 11 and 12, but wrongly refers to those as grounds on which the landlord might “forthwith put an end to this lease”. While it refers to them as grounds on which the landlord “may commence proceedings for repossession” this is in the context of this supposed entitlement. There is no attempt to summarise the “essential ingredients” of any of these grounds in the tenancy agreement.

   

• [23]In these circumstances, is section 18(6) (b) complied with if all the landlord has done is to refer to the grounds by number, but has not given any summary of the “essential ingredients” of those grounds in the “terms of the tenancy”?

   

• [24]In the Royal Bank of Scotland case, the sheriff principal did not think it “reasonable to require tenants to require access to the relevant legislation to understand their contract”; paragraph 12-11.

   

• [25]The force of that argument is somewhat lessened by the requirement to give tenants in leases after 1 May 2013 a “Tenant Information Pack”, though, as noted above, the information therein is not entirely accurate. Undoubtedly it is good drafting practice for the agreement to set out the grounds relied on by repeating the statutory wording ad longum, but should departure from such practice prejudice the landlord where some attempt is made to notify the tenants by referring to the grounds by number only?

   

• [26]It is not an easy question to resolve. The sheriff principal’s decision in the Royal Bank case is of persuasive force, but not binding on me; his relevant comments are obiter in any event as the tenant in that case had not, in fact, been notified of any statutory grounds upon which the landlord might recover possession before the determination of the tenancy at its ish.

   

• [27]On a strict reading of section 18(6) (a) it seems necessary only that “the terms of the tenancy make provision for it to be brought to an end on the ground in question”. On that view, while good drafting practice, it is not necessary to state what the grounds are at all or even summarise them so long as the summary contains the “essential ingredients” of each ground. On that view, the sheriff principal’s comments in the Royal Bank case are merely a gloss on the statutory provision.

   

• [28]Section 18(6) (b) appears to have been copied from section 7(6) of the Housing Act 1988, which requires :

   

  “The terms of the tenancy make provision for it to be brought to an end on the ground in question (whether that provision takes the form of a provision for re-entry, for forfeiture, for determination by notice or otherwise).

   

• [29]In Scotland, a lease may only be “brought to an end” prior to its ish, if there is a statutory or conventional irritancy[2]. As in the Royal Bank case, it seems to me that section 18(6) is in effect a provision anent conventional irritancies; the purpose of the section is to restrict the conventional irritancies to the grounds set out in section 18(6)(a). For that reason, the tenancy agreement must provide for it to be “brought to an end” on the ground in question, being a ground in schedule 5 to the 1988 Act specified in section 18(6) (a).

   

• [30]Since therefore a tenancy agreement may only be “brought to an end” prior to its ish on certain permitted conventional grounds, I am of the view, as with the sheriff principal in the Royal Bank case, that the parties must contract in such a way that the contract itself sets out the grounds for bringing to an end the lease prior to determination of its ish. It is not sufficient for the tenancy agreement merely to refer to the number of the ground in schedule 5. Best practice is to refer to its number and terms ad longum; if the ground is summarised, the summary must contain the “essential ingredients” of the ground in question.
• [31]In any event, I am of the further view that Clause 1(g) of the Tenancy Agreement does not comply with section 18(6) of the 1988 Act; it misleadingly refers to the landlord’s “entitlement” to “forthwith” put an end to the lease. Not only is reference to the numbers meaningless to the tenant without having recourse to schedule 5 of the 1988 Act, it suggests the landlord (not the court) can put an end to the lease.

   

• [32]Finally, while Clause 1(h) of the tenancy agreement refers to the tenant having received the “Tenant Information Pack”, this is insufficient to comply with section 18(6)(a) of the 1988 Act; Clause 1(g), even if it had referred the tenant to section 1.5 of this Pack for the meaning and content of the listed grounds and specifically incorporated that information as a term of the tenancy agreement, would, as noted above, not have given the tenant the “essential ingredients” of all those grounds as the Pack inaccurately summarises some of the grounds at least. The onus remains on the landlord to contract with the tenant in such a way the ground of possession accurately and unambiguously forms part of the “terms of the tenancy”.

 

 

 

Sheriff George Jamieson

                                                                                                Dumfries Sheriff Court

                                                                                                5 June 2014