England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER
(HIS HONOUR JUDGE ROSE)

		Royal Courts of Justice Strand London WC2
		Thursday 18th November 1999

LORD JUSTICE PETER GIBSON: The defendant/appellant, Alan Ferguson, appearing by his litigation friend, the Official Solicitor, appeals from an order made on 24th May 1999, made by His Honour Judge Rose, sitting in the Wandsworth County Court, by which the judge gave possession of the ground floor and first floor rear flat at 3 Hillier Road, London SW11 6AX, to the claimant landlord Tadema, Holdings Limited ("Tadema") and ordered Mr Ferguson to pay rent arrears in the sum of £19,600 in respect of the period to 19th June 1999.

Mr Ferguson, who was born on 3rd October 1937, has lived in the flat since 1945. He succeeded to the tenancy of the flat on the death of his mother on 5th June 1997. She herself had succeeded her husband as tenant on his death in 1981. The terms of the original tenancy are contained in a memorandum of agreement of 7th September 1995. By that document, the then landlady granted Mr Ferguson's father a 3 year tenancy from 24th June 1965 at the rent of £225 per annum, payable on the 24th day of each month.

In December 1994 Tadema became the landlord. At the time of Mrs Ferguson's death the rent was £200 per month. On 30th January 1997, Tadema, by its agents, Knightsbridge Estate Management Limited ("Knightsbridge") wrote to Mr Ferguson acknowledging that he was entitled to an assured tenancy by succession. It said that a fair rent could be charged by agreement under an assured tenancy and that Tadema had indicated that a fair rent would be £800 per month. It asked for confirmation that that sum was acceptable to Mr Ferguson. No reply to this came from Mr Ferguson. On 12th June 1997, a notice purporting to be in compliance with section 13(2) of the Housing Act 1988 ("the 1988 Act"), that is to say a notice in the prescribed form proposing a new rent to take effect at the beginning of a new period of tenancy specified in the notice, was served on Mr Ferguson under cover of a letter of the same date. It gave notice to Mr Ferguson that, as from 20th July 1997, his landlord proposed to charge a new rent. It gave the existing rent as £2,400 per annum and the proposed new rent as £9,600 per annum. It gave Tadema as the name of the landlord, and the address of Tadema as "c/o Agent" and Knightsbridge's name, address and telephone number were given.

The notice was in the form prescribed for use up until 28th February 1997. From that date a new form, Form 4 of the Assured Tenancies and Agricultural Occupancies Forms Regulations 1997, was the prescribed form.

There was no response from Mr Ferguson to that notice. Tadema charged Mr Ferguson with the new rent from 20th July 1997, but he made no payment of rent whatever from the inception of his tenancy.

On 10th February 1998 Tadema purported to serve the notice required under section 8 of the 1988 Act to be served before possession proceedings are commenced and specifying, among the grounds for possession relied upon, the mandatory ground 8, that is say, rent being more than 2 months in arrear, and the discretionary ground 11, that is to say, persistent delay by the tenant in paying rent which has become lawfully due, those grounds being found in Schedule 2 to the 1988 Act.

On 20th April 1998, a summons was issued in the Wandsworth County Court seeking an order against Mr Ferguson for possession. Mr Ferguson did not appear and was not represented. The order for possession was made on 24th June 1998. A warrant of eviction followed on 23rd July, and Mr Ferguson was evicted on 2nd September.

In the course of the eviction he was arrested and charged with a breach of the peace. Only then were solicitors consulted. They, on his behalf, applied to set aside the possession order but that application was refused District Judge Tilbury on 7th December 1998.

Mr Ferguson's solicitors, on being instructed were concerned about Mr Ferguson's mental condition. An independent psychiatric report was commissioned from

Dr Niall Campbell. He reported on 25th September 1998 that Mr Ferguson suffered from a mental disorder as defined by section 1 of the Mental Health Act 1983. He referred to delusions from which Mr Ferguson was suffering and he said:

"Because of this mental disorder, I am of the view that Mr Ferguson should be assessed by his local community mental health team to form a more measured judgment of his ability to manage his own affairs. I think there is distinct possibility that if he is not paying his rent for delusional reasons, he may be deemed to be incapable of managing his own affairs and may therefore qualify to have his financial affairs managed by the Official Solicitor. In my view his incapacity would be on the grounds of his persecutory delusions."

On 2nd December 1998, the Official Solicitor consented to act on Mr Ferguson's behalf. No certificate of incapacity had been obtained by the time of the hearing before the District Judge. However, Mr Ferguson appealed from the District Judge's order, and a certificate of incapacity was obtained by the time that appeal came on for hearing on 8th February 1999. Judge Rose heard that appeal, and set aside the possession order and gave directions, including an order that Mr Ferguson pay 25 months' rent, at the undisputed rate of £200 per month, that sum to be paid either to Tadema or into court, and £5,000 was paid into court on 15th February.

By his defence, Mr Ferguson had challenged the validity of the section 8 notice. Consequently, on 2nd March a further section 8 notice was served on Mr Ferguson, as well as on the Official Solicitor and on Mr Ferguson's solicitors. A second summons for possession was issued on 23rd March. The Official Solicitor was appointed as Mr Ferguson's litigation friend. By his defence in the second action the validity of the section 13(2) notice, as well as of the second section 8 notice, was challenged.

At the trial, it was the second action on which the dispute between the parties was fought. No oral evidence was called, the trial being only on the documents. In a full, careful and lucid reserved judgment, to which I would pay tribute, the judge found that the section 13(2) notice was in proper form and not invalid, that Tadema had properly increased the rent by serving a valid notice on Mr Ferguson, that Tadema was entitled to an order for possession under ground 8, unless the section 8 notice was invalid, but that the section 8 notice was not invalid and was properly served on Mr Ferguson. The judge expressed the view that even if he was wrong in holding that ground 8 was applicable, he would have exercised his discretion to make an order for possession under ground 11.

The judge gave Mr Ferguson leave to appeal.

Mr Luba, appearing for Mr Ferguson, raises three questions by this appeal. The first is: did Tadema lawfully increase the rent? The second is: were the necessary statutory notices actually served? And the third is: was it reasonable to order possession?

1. Rent increase

Mr Luba takes four points on this:

(a) He submits that the notice purporting to be in compliance with section 13(2) was invalid because it was neither in the prescribed form nor substantially to the same effect as the prescribed form. He points out that the layout and structure of the form and the contents of the notes are different in the prescribed form from that actually used. He says that this difference is significant. He pointed to the fact that the new form now contains, at the end of the form, a section commencing "What to do if this notice is served on you". He did not suggest that the notes which followed contained information that was substantially different from the information contained in notes in the old form, but the information was not presented in the same way. Further, he draws attention to the fact that the new prescribed form requires the name and address of the landlord to be given, whereas the old form provided not only for the landlord's name and address, but when that form was signed by an agent for the landlord, the name and address of the agent. The new form, he submits, would not permit the landlord to give an address in the form of "c/o Agent", even though the agent's name and address were given.

I am not able to accept these submissions. To my mind, the old form used was of substantially the same effect as the form and Regulation 2 of the 1997 Regulations expressly allows a form which is substantially to the same effect to be used as validly as the prescribed form.

I do not doubt that the draftsman of a new form would, if possible, deliberately be careful not to introduce a radically different form because of the common experience that old forms continue to be used inadvertently after they have ceased to be the prescribed form. It would be unfortunate if the prescribing of a new form always had the effect of invalidating a notice on a previously prescribed form. The fact that information is provided in a different format does not seem to me to amount to a difference of significance. Indeed, in my view, that is precisely the sort of difference which Regulation 2 was aimed at making immaterial.

Nor do I regard the change in the new form relating to the landlord's name and address as significant. To my mind, what was done in the present case, that is to say, to give the landlord's name and to give the landlord's address as care of the agent, the agents being named and the agent's address being given, was entirely valid and in compliance with the requirements of the Regulation.

The purpose of requiring the landlord's address to be given is to enable the tenant to know how he can contact the landlord. I see no reason why a landlord cannot give his address as a post office box number, or as care of some other person such as an agent, provided that an address at which the landlord can be contacted is given.

I therefore can see no basis on which the judge's conclusion on this point, that is to say that the earlier form was not so different from the prescribe as to render it not substantially to the same effect, can be challenged.

b) Mr Luba's second point was that the notice was defective for giving an annualised figure for the rent rather than the true monthly figure, the tenancy being a periodic monthly tenancy. He submitted that it was clear from the prescribed form that the landlord had to state the rent as being payable either weekly, monthly or annually, and that this carried with it the implication that it was only the actual payment contractually due on each occasion that could be stated. He argued that the true rent was £200 per month, and that the judge was wrong to hold that the proposal to increase that rent to £9,600 per annum should be treated as reading £800 per month. I reject this submission, which seems to me to lack substance. The notice gave the existing rent as £2,400 per annum. That was to be increased fourfold to £9,600.

There is nothing in the notice to suggest that the basis for payment of the rent was being changed so that it was no longer to be a monthly payment. I repeat, the existing rent was given as £2,400 per annum. The tenant would know or ought to have known that it was payable monthly. So too the increased rent would be construed in the same way. The rent in the 1965 memorandum of agreement was expressed as an annual figure before setting out how it should be paid monthly. I entirely agree with the judge when he said that the expression of the rent on an annualised basis did not constitute an error, and that the objection to the notice on that basis had no substance.

(c) Mr Luba's third contention was that the notice was bad for stipulating the wrong date as the date on which the new period of tenancy started. The day specifies in the 1965 memorandum of agreement for the payment of rent was the 24th of each month. The notice stipulated that the new rent was payable on 20th July 1997. Mr Luba pointed to the fact that there is no provision in the 1988 Act corresponding to section 49(5) of the Rent Act 1977, allowing the court to correct errors or omissions in a notice of increase which are due to a bona fide mistake by the landlord. He said that, when Mr Ferguson succeeded to the tenancy, his tenancy was on the same terms as to the period of tenancy as that for which rent was last payable by the predecessor under his tenancy

(section 39(6)(d) of the 1988 Act), and he stresses that the word used in that provision is "payable", not "paid".

But, as the judge said, the question is whether the rent date had been varied to the 20th in each month by the time Mr Ferguson succeeded to his mother's tenancy. The judge pointed out that the documents show clearly that for a number of years, the landlord calculated the rent as due on 20th of each month, and notified Mrs Ferguson to that effect. At no time was this ever challenged by Mrs Ferguson. Indeed, there are documents which show that she accepted that fact. The judge relied, in particular, on a letter from Mr Ferguson's sister, on 9th October 1995, in which she said to the landlord:

"The rent has been paid by standing order on the 20th of each month since 1984. This date is confirmed on the notice of increase of rent dated November 1993. On checking on my mother's bank statements there are no missed payments."

We have seen other documents giving instructions to the bank or the bank acknowledging instructions to the same effect.

Mr Luba pointed out that the picture is not entirely consistent, and that there are some documents which suggest that this date was not always adhered to. However, in my judgment, this is a question of fact on which the judge had material on which he could properly infer, as he did, that the parties had agreed that the date on which rent should be paid would be varied to the 20th of each month. I do not see that we should disturb that finding.

(d) Mr Luba's fourth point was that the judge applied the wrong test of invalidity in relation to a statutory notice. This question does not arise in view of the conclusions which I have reached on the earlier points. It is sufficient, however, that I should say that, for my part, I can see no error by the judge who seems to me to have considered the appropriate authorities, and applied the test which they laid down entirely accurately.

My attention has been drawn to an inaccurate reference in a judgment of mine in York v Casey [1998] 2 EGLR 25 at 27, where I referred to"the test found to be appropriate in the Panayi case". That should be a reference to the Mannai case.

(2) Service of Notices

Mr Luba points out that Tadema, by relying on ground 8, was seeking to rely on a mandatory ground, leaving the court with no discretion. He said the combined effect of section 8(1) and (5) was that the court had no jurisdiction to entertain the proceedings, unless Tadema could show that a notice complying with section 8 had been "served" on the tenant. The landlord was also required, under section 13(2) to "serve" on the tenant the notice under that subsection.

Mr Luba submitted that it is not possible to serve a statutory notice by delivering it to a person who suffers from a mental disability, or who is incapable of dealing with that notice. He drew our attention to Part 6.6 of the Civil Procedure Rules, which specified the person or persons on whom a document must be served in court proceedings, if it is a document which would otherwise be served on a patient.

He frankly acknowledges that there is no authority in point. It seems to me that what the Court must do is to construe the meaning of the word "serve" in section 8(1) and section 13(2). I do not think it can be said that the meaning of that word is different in relation to service is on a patient from that which it would have in relation service is on a person of full capacity. "Serve" is an ordinary English word connoting the delivery of a document to a particular person. It does not seem to me to imply that the document has to be understood by the person to whom it is delivered. It does not have to be read by the person to whom it is delivered. Indeed it may not even be known to have been delivered to that person if it is delivered to the proper address for service.

In the particular circumstances of this case, Mr Ferguson did not present to a stranger as a person suffering from mental incapacity. There would have been nothing to put Tadema on notice, when dealing as landlord with Mr Ferguson as tenant, that he was incapable of managing his own affairs by reason of mental incapacity.

Even a contract made by a person who, at the time of the contract, lacked the capacity to make it, is binding on him in every respect, unless it can be shown that the other contracting party knew of the incapacity at that time, or knew of such facts and circumstances that he must be taken to have been aware of the incapacity. I do not see why a more rigorous rule should be taken to apply to service of a notice on a tenant. Our attention has been drawn to the fact that by section 192 of the Law and Property Act 1925, notices required or authorised by that Act to be served on a lessee, or mortgagor, may be served even though the lessee or mortgagor is under a disability. That subsection, of course, has no direct application here, but it is an indication that Parliament was not averse to the notion that someone under a disability could properly be served with a notice. If there is to be a special meaning giving to "service", when the service is effected on a patient, then that must, I think, be a matter for Parliament to prescribe.

In the present case, for the reasons which I have given, it seems to me plain that service was effected on Mr Ferguson, even though, because of his mental incapacity, it would appear, he did not trouble to open any envelope containing such notice or otherwise choose to deal with formal documents served upon him. Accordingly, I cannot accept Mr Luba's argument on this ground either.

(3) Reasonable to order possession

This issue therefore does not arise and, as we have not heard Mr Weekes for Tadema on this, I do not think it right to say anything about it.

For these reasons, despite the valiant attempts by Mr Luba to sustain this appeal, and in acceptance of the arguments which Mr Weekes had presented in his skeleton argument I, for my part, would dismiss this appeal.

LORD JUSTICE WARD: I agree.

ORDER: A section 18 order. Mr Ferguson's contribution assessed as nil. Legal aid taxation. A possession order 28 days from today.