England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE TRURO COUNTY COURT
His Honour Judge Neligan
Claim No. 6BJ01881

		Royal Courts of Justice Strand, London, WC2A 2LL
		22 October 2008

Lord Justice Moore-Bick :

1. This is an appeal against an order made by His Honour Judge Neligan in the Truro County Court on the trial of certain preliminary issues in proceedings between Truro Diocesan Board of Finance Limited ("the Board") and Mr. Desmond Foley. The dispute concerns Mr. Foley's occupation of a house owned by the Board called The School House at South Petherwin near Launceston ("the property").
2. The origin of these proceedings lies in an agreement made in March 1987 under which Mr. Foley was granted a tenancy of the property by the Board's predecessor in title, the trustees of the church school. The Board considered that Mr. Foley held the property under a protected shorthold tenancy and in May 2000 brought proceedings in the Bodmin County Court claiming possession under Case 19 of schedule 15 to the Ret Act 1977. Mr. Foley maintained that he was a weekly tenant who enjoyed the full protection of the Rent Act and contested the Board's claim on that basis.
3. On 20^th September 2001 the parties compromised their dispute on terms contained in a schedule to a consent order, the material parts of which provided as follows:

"1A The Claimant's claim for possession is stayed.

1B There be a declaration that the First Defendant was a tenant of the premises under a protected shorthold tenancy within the meaning of section 52 of the Housing Act 1980 and as at the date hereof there has been no grant of a further tenancy."

4. The material parts of the schedule to the order provided as follows:

"1) The First Defendant's existing tenancy of the premises at the Church School House . . . ("the property") shall be determined by the First Defendant delivering up possession of the property to the Claimant on or before 26 September 2001 on which date the Claimant shall arrange for the First Defendant's dinner bed and breakfast at the White Hart Hotel, Launceston.

2) The First Defendant shall deliver up possession of the property by vacating the property for a minimum period of 24 hours and by delivering all keys to the property to the Claimant at the commencement of that period by delivery of the keys to Messrs Kivells at 2 Broad Street Launceston at or before 11.30 am on 26^th September 2001 and collection of the keys on or after 12 noon 27 September 2001.

3) On 27^th September 2001 the Claimant shall grant to the First Defendant an assured shorthold tenancy of the property within the meaning of section 19A of the Housing Act 1988.

4) The terms of the said shorthold tenancy shall include the following:

(i) a fixed term of 5 years commencing on the date of the grant of the tenancy

(ii) An initial rent of £320 per month payable in advance on 4^th day of each month

(iii) . . . .

(iv) Clauses 3 to 5 contained in the Agreement date[d] 20^th March 1987 attached hereto.

The above tenancy being for a period in excess of 3 years is required to be by deed and now the parties to the agreement hereby sign this as a deed as witnessed below."

5. Each party then signed and delivered the document as a deed in the presence of witnesses. Clauses 3-5 of the original tenancy agreement dated 20^th March 1987 contained the tenant's and landlord's covenants and the landlord's right to re-enter and take possession in the event of a breach by the tenant of his covenants.
6. As the judge below found, Mr. Foley duly handed the keys to the Board's agent on 26^th September 2001 and collected them again a little over 24 hours later on 27^th September. His furniture and belongings remained in the property throughout that period. Mr. Foley then continued in occupation but no formal grant of a tenancy was subsequently made.
7. In April 2006 the Board gave notice to Mr. Foley under section 21 of the Housing Act 1988 to surrender possession of the property, that notice expiring on the last day of the five year term, namely 26^th September 2006. Mr. Foley declined to do so on the grounds that he was still entitled to the full protection of the Rent Act 1977. Accordingly, in November 2006 the Board brought the present proceedings seeking an order for possession.
8. On 3^rd April 2007 District Judge Griggs directed that there be a hearing to determine as preliminary issues (a) whether the declaration contained in paragraph 1B of the consent order made on 20^th September 2001 was binding on Mr. Foley and (b) whether, if Mr. Foley was a protected or statutory tenant immediately following that order, he continued to have that status immediately before the tenancy referred to in paragraphs 3 and 4 of that order was granted within the meaning of section 34(1)(b) of the Housing Act 1988.
9. The matter came before His Honour Judge Neligan on the trial of those preliminary issues. He held that because it is not possible for parties to contract out of the Rent Act 1977 Mr. Foley was not bound by the declaration in paragraph 1B of the consent order, which was based entirely on the parties' agreement. There is no appeal against that part of his decision and it is therefore unnecessary to make any further reference to it. As to the effect of section 34(1)(b) of the Housing Act 1988, the judge came to the conclusion that he was bound by the decisions in Dibbs v Campbell (1988) 20 H.L.R. 374 and Bolnore Properties Ltd v Cobb (1996) 29 H.L.R. 202 to hold that Mr. Foley could not bring himself within the scope of the section. He therefore answered each of the two preliminary issues in the negative.
10. Mr. Watkinson on behalf of Mr. Foley advanced two submissions in support of this appeal. The first was based on section 3 of the Human Rights Act 1998 and article 8 of the Convention. In essence, he submitted that the court should construe section 34(1)(b) of the Housing Act 1988 in a way that would not expose Mr. Foley to the risk of eviction from his home without having an opportunity to persuade a court that it would amount to a disproportionate interference with his rights under article 8. His second submission was that by virtue of section 45(1) of the Housing Act 1988 the word "tenancy" in subsection 34(1)(b) includes an agreement for a tenancy and that accordingly if (as must be assumed for present purposes) Mr. Foley was a fully protected tenant immediately before the parties entered into the agreement dated 20^th September 2001, he necessarily fell within that subsection.
11. It is convenient to consider the second of these arguments first.

Section 34(1)(b) of the Housing Act 1988

12. Section 34(1)(b) of the Housing Act 1988 provides as follows:

"(1) A tenancy which is entered into on or after the commencement of this Act cannot be a protected tenancy, unless—

(a) . . .

(b) it is granted to a person (alone or jointly with others) who, immediately before the tenancy was granted, was a protected or statutory tenant and is so granted by the person who at that time was the landlord (or one of the joint landlords) under the protected or statutory tenancy;"

13. The material part of section 45(1) provides:

"(1) In this Part of this Act, except where the context otherwise requires,—

"tenancy" includes . . . an agreement for a tenancy . . . ;"

14. It was common ground, rightly in my view, that an agreement for a tenancy in section 45(1) means a legally enforceable agreement. To comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 such an agreement must be in writing unless it is for a lease taking effect in possession for a period not exceeding three years. In this case, however, being mindful, perhaps, of the provisions of section 52 of the Law of Property Act 1925, the parties took particular care to ensure that the agreement was embodied in a deed. The agreement was clearly enforceable, therefore. Moreover, although it provided for the Board to grant an assured shorthold tenancy to Mr. Foley on 27^th September 2001, no such grant was in fact made. Mr. Foley went back into possession and both parties treated their relationship as being governed by the agreement.
15. The purpose of section 34(1)(b) appears to be to prevent those who are currently entitled to the full protection of the Rent Act 1977 from losing that protection as a result of being persuaded to enter into a new tenancy in respect of the same property, a course of action that would normally involve the surrender of the existing tenancy and a consequent loss of full protection. However, the decisions in Dibbs v Campbell and Bolnore Properties v Cobb, and indeed earlier cases, make it clear that there is nothing to prevent a contractual or statutory tenant from surrendering his tenancy, and with it his protection, if he chooses to do so, as he may if he perceives it offers him some advantage. One way of achieving that object, as the authorities demonstrate, is for the tenant to surrender possession for a short period of time before the new tenancy is granted, though as appears from Dibbs v Campbell, it is unnecessary for there to be an interruption of physical occupation for such an arrangement to be effective. That appears to have been what Mr. Foley and the Board had in mind in this case. In exchange for questionable protection under the Rent Acts Mr. Foley agreed to accept the certainty of an assured shorthold tenancy for five years. The arrangements for him to spend 24 hours out of occupation appear to have been intended to mirror those in Bolnore Properties v Cobb.
16. Mr. Watkinson's submission was simplicity itself: "tenancy" in section 34 includes an agreement for a tenancy and at the time the parties entered into the agreement under which Mr. Foley occupied the property from 27^th September he was still a protected tenant. There was no intervening period of time between the expiry of his former tenancy and the creation of his right to occupy the property under the agreement. The response of Mr. Arden Q.C. to that argument was equally simple: by virtue of section 45(1) "tenancy" includes an agreement for a tenancy unless the context otherwise requires, and in this case it does.
17. Although I have not found it an easy question to resolve, I think Mr. Arden's submission is correct. If one were construing subsection (1)(a) in isolation it would be difficult to see how the word "tenancy" could be capable of including an agreement for a tenancy given that a clear distinction is drawn between a tenancy and a contract for a tenancy. The position might be different if one were construing subsection (1)(b) in isolation (although even then the references to the grant of a tenancy suggest that the provision is concerned only with a grant and not with an agreement), but even so, the opening words of the subsection govern each of the following paragraphs. It follows that the whole of the subsection is dealing with the same subject matter and, as the terms of paragraph (a) show, that is not an agreement for a tenancy but an actual tenancy. Moreover, it seems to me that subsection (1)(b) scarcely makes sense in relation to an agreement for a tenancy. In my view, therefore, the word "tenancy" in section 34(1) does not include an agreement for a tenancy.
18. However, that is not quite the end of the matter because it emerged in the course of argument that Mr. Foley had another string to his bow and although it did not form one of his grounds of appeal, the issues were fully developed on both sides and it effectively became part of the appeal. The argument was based on the fact that the agreement in this case, being embodied in a deed and containing, as it did, all the terms of the tenancy in one document, was capable of taking effect as a tenancy in accordance with the decision in Walsh v Lonsdale (1882) 21 Ch D 9.
19. The agreement itself was made on 20^th September 2001. It expressly provided that Mr. Foley would deliver up possession of the property on 26^th September and that the Board should grant him a new assured shorthold tenancy on 27^th September for a period of five years from the date of the grant. The parties seem to have contemplated, therefore, that the agreement itself would be followed by a formal grant and if that had occurred Mr. Foley would have held the property under the grant and not under the agreement. In the event, however, no grant was executed and therefore as from the time he went into possession on 27^th September he held the property under the terms of the agreement. Mr. Watkinson submitted that in those circumstances the new tenancy had been granted to Mr. Foley on 20^th September at a time when he was a protected tenant and thus satisfied the requirements of section 34(1)(b).
20. The critical question, therefore, is the meaning of the word "granted" in the expression "immediately before the tenancy was granted". If it refers to the date on which the instrument under which the tenant holds the property was executed, it is clear that Mr. Foley was a protected tenant immediately before the tenancy was granted on 20^th September, even if the agreement was not itself intended to operate as a grant. However, I do not think that the answer is quite as simple as that.
21. I have had the advantage of reading in draft the judgment of Sir John Chadwick and am grateful to him for setting out in greater detail the factual background to the agreement of 20^th September and the legislative context in which it was made. I have considered the two authorities to which he specifically refers, Poole v Bentley (1810) 12 East 168 and Warman v Faithfull (1834) 5 B. & Ad. 1042, and agree that they support the proposition that whether an agreement takes effect as a lease or merely as an agreement for a lease depends on the intention of the parties as collected from the words of the instrument itself. In each of those cases, as in case of Doe D. Pearson v Ries (1832) 8 Bing. 178, one of the cases to which reference is made in note 3 to paragraph 73 of Halsbury's Laws of England, 4^th ed. Re-issue, volume 27(1) to which he also refers, the instrument in question was described as a memorandum of agreement and expressly contemplated that a formal lease would be executed in due course. However, in each case the agreement also contained language which by the date of the decision had come to be accepted as words of present demise: "L agrees to let and T agrees to take". In Pinero v Judson (1829) 6 Bing. 206, another of the cases to which the note in Halsbury refers, the agreement did not contain those or similar words, but it did provide that until the execution of a lease the tenant should pay rent and hold the premises subject to the covenants set out in the document. Moreover, in some of these cases, of which Poole v Bentley is probably the best example, there were cogent reasons for construing the document as a lease giving the tenant an interest in the land. In that particular case the tenant agreed to spend a significant sum of money building houses pending the execution of the formal lease.
22. These decisions certainly do support the proposition that the mere fact that the instrument provides for the execution of a formal lease at a later date does not prevent its taking immediate effect as a lease and I accept that the agreement in the present case contains all the terms necessary to enable it to take effect as an immediate grant of a lease. However, I am unable to accept that that was what the parties intended. On the contrary, I think that the language of the document read as a whole points to the conclusion that the parties intended the agreement to take effect as what it purports to be, an agreement for a tenancy to be granted in the future rather than a present grant.
23. It is quite true that the dispute which had led to the proceedings that were compromised by the agreement turned in part on the need for the affixing of a seal for the valid execution of a document as a deed, but it is in any event apparent from the words of the agreement themselves that by the time it came to be executed the parties had it in mind that a tenancy for a period of more than three years could only be granted by deed. However, I think it is clear that they also had in mind the terms of section 34(1)(b) and the need for there to be an interval between the first tenancy and the grant of the second. I do not think that one can confidently presume that the parties had a last-minute change of mind, as Sir John Chadwick suggests (indeed the evidence filed by the parties points strongly the other way), or that it is legitimate to enquire into the process by which the agreement reached its final form, although it is clear from the document itself that it underwent modification prior to execution. I think one just has to take the document as it stands.
24. One striking feature of the agreement is that, unlike the cases mentioned earlier, it contains no words that could reasonably amount to a present demise. The document could easily have been further amended so as to make it quite clear that it was intended to take effect as an immediate grant of a tenancy to be effective from noon on 27^th September (even if that had reflected a last-minute change of mind on the part of both parties), but that was not done. Clauses 1) to 4) are all expressed in future terms and clause 3) in particular provides that "On 27^th September 2001 the claimant shall grant to the First Defendant an assured shorthold tenancy", while clause 4) makes it clear that the term of the tenancy shall be a fixed term of 5 years "commencing on the date of the grant", that being the grant referred to in clause 3). Those clauses evidence an intention to make a grant on a future date of a tenancy to commence on that date. They are not on the face of them consistent with an intention to make an immediate grant of a tenancy to commence on a later date. I am inclined to think that the paragraph added in a different hand above the signatures, which refers to "the above tenancy", and the terms of the signature clauses ("I do sign this deed for the above tenancy") probably do no more than reflect a mistaken understanding that, because the tenancy was to be for a period of more than three years and because the agreement was intended to give Mr. Foley the right to obtain such a tenancy, the agreement itself had to be made by deed. However, that is no more than surmise on my part and cannot affect the construction of the document. Taking the document as a whole I am unable to accept that those clauses are of sufficient weight to displace the clear words of the operative clauses which would not have been left in the form in which one finds them if the parties had intended the document to take effect as an immediate grant of a lease.
25. The Board's case was supported by evidence in the form of statements from its solicitor, Mr. Lingard, and its property agent, Mr. Hicks. Mr. Lingard was present at the time the agreement was made and would certainly have been aware of any last-minute change in the parties' intentions. He exhibits attendance notes recording conversations with Mr. Foley's solicitors in which he states that he was told that Mr. Foley considered it unnecessary to sign a further document given that there was already a deed setting out the terms of the new tenancy. Mr. Hicks confirms that a formal tenancy agreement had been drafted, but that Mr. Lingard had told him that he did not need to obtain Mr. Foley's signature to it before giving him back the keys. Mr. Foley made a statement in which he said that he declined to sign the formal tenancy agreement because it contained errors. Like Sir John Chadwick I doubt whether evidence of the parties' conduct following the execution of the agreement is admissible in relation to its construction, but that evidence does undermine any suggestion that the Board did not insist on the execution of the formal tenancy agreement because it knew that the agreement had been intended to take effect as an immediate grant of a tenancy. Accordingly, although the agreement of 20^th September was embodied in a deed, I am unable to accept that it was intended to, or on its true construction did, take effect as a present grant or that Mr. Foley was to take possession under it. It was not, therefore, a grant of a tenancy in the ordinary sense.
26. Mr. Foley surrendered his existing tenancy on 26^th September by the symbolic act of handing the keys to the Board's agents pursuant to the agreement. Under the agreement he became entitled to the grant of a new tenancy taking effect from noon on 27^th September. The parties seem to have contemplated that the grant would be executed that day, or soon after, and that in any event it would take effect from noon on 27^th September when the keys would be returned to Mr. Foley and he would go back into possession. The fact that in the event no tenancy agreement was executed and that he occupied the property under the terms of the agreement of 20^th September did not in my view convert that agreement into a grant within the meaning of section 34(1)(b), but it did provided the legal basis on which a new relationship of landlord and tenant began at noon on 27^th September.
27. There was some debate in the course of argument about the minimum interval between the two tenancies that will suffice to prevent the tenant from taking advantage of section 34(1)(b). In Bolnore Properties v Cobb it was assumed, apparently without argument, that a short interval (not being so brief as to be disregarded as de minimis) might not prevent the tenant from being a protected tenant "immediately before" the new tenancy was granted. The only issue in that case appears to have been whether an interval of 24 hours was sufficient to prevent the tenant from being protected; the court held that it was. In the light of that decision Mr. Watkinson was constrained to accept (subject to his submission on the effect of the Human Rights Act 1998) that the same must apply in this case.
28. However, I find it difficult to draw any rational distinction between intervals of different lengths without introducing an unacceptable degree of uncertainty into the statutory provisions. In my view, therefore, the expression "immediately before the tenancy was granted" in section 34(1)(b) should be given its ordinary meaning as being restricted to those cases in which the new tenancy takes effect immediately on the expiry of the old. That gives effect to the language of the section and provides continued protection to a tenant whose occupation of the property is uninterrupted. If that is correct, the expression "immediately before the tenancy was granted" must be understood to refer to the time at which the tenancy became effective and the tenant became entitled to possession under it. For that purpose it does not matter when the instrument granting the tenancy was executed; what matters is when it was effective to entitle the tenant to possession. A new tenancy in favour of a protected tenant created by an instrument executed during the currency of the existing tenancy, but expressed to take effect immediately on its expiry, causes no difficulty: the tenant was a protected tenant both when the document was executed and immediately before he became entitled to possession under the new tenancy, so the case falls within section 34(1)(b) in any event. However, the same cannot be said of a new tenancy created by an instrument executed after the previous tenancy had expired but expressed to be effective from the date of its expiry. The new tenancy would be protected if the date of inception were accepted as the date of the grant, whatever interval might have elapsed between the two, but not if the date of the instrument itself were taken to be the date of the grant. In my view the former interpretation accords with the purpose of the subsection, whereas the latter does not. Moreover, I think the opening words of the subsection lend some support to this conclusion. They refer to "entering into" a tenancy, an expression which, in the light of paragraph (a) appears to mean something distinct from making a contract for a tenancy.
29. For these reasons I have come to the conclusion on the rather unusual facts of this case that a new tenancy was granted to Mr. Foley within the meaning of section 34(1)(b) of the Act at noon on 27^th September 2001 and not before. Since he had surrendered his former tenancy the previous day he was not a protected tenant immediately before the new tenancy was granted to him and accordingly the new tenancy was not a protected tenancy.

Section 3 of the Human Rights Act 1998

30. Section 3(1) of the Human Rights Act 1998 requires the court, so far as it is possible to do so, to read and give effect to primary and subordinate legislation in a way that is compatible with Convention rights. Mr. Watkinson submitted that eviction from one's home involves an interference with the right contained in article 8(1) of the Convention and that accordingly the court should read and give effect to the expression "immediately before the tenancy was granted" in section 34(1)(b) as covering the present case in which the new tenancy took effect a little over 24 hours after the expiry of a previous protected tenancy.
31. Although I accept that the eviction of Mr. Foley from The School House would on the face of it involve an interference with his right to respect for his home under article 8(1) of the Convention if carried out by a public authority, I think there are at least two major obstacles in the way of Mr. Watkinson's submission. He emphasised that the statute requires the court both to read and give effect to primary legislation in a manner compatible with the Convention, but he was quite unable either to articulate the way in which section 34(1)(b) is to be read in order to give effect to his argument or to identify the principle that would govern the way in which it should be applied. In effect, his argument consisted of little more than the proposition that it should be applied so as to include the present case. I think that would require one to read the words "immediately before" as if they were "a reasonable time before", but in my view that is not possible because it would fundamentally alter the nature of the subsection. Moreover, the right to respect for one's home is qualified by the recognition in article 8(2) of the need to provide for other competing interests, including the economic well-being of the country and the protection of the rights and freedoms of others. The balance between the rights of landlords and the protection of tenants touches on both of these and is essentially one for determination by Parliament.
32. The speeches of their Lordships in Kay v Lambeth London Borough Council [2006] UKHL 10; [2006] 2 AC 465 make clear that save in exceptional cases compliance with the statutory provisions governing the rights of landlords to obtain possession of property let under tenancies subject to statutory protection of one kind or another will provide sufficient justification for the consequent interference with the occupier's right to respect for his home. That case concerned public landlords, but the principle must in my view apply equally to private landlords who have entered into tenancies subject to the provisions of the Rent Act 1977 and similar legislation, if indeed Convention rights have any part to play where they are concerned.
33. Mr. Watkinson sought to derive support from the decision of the European Court of Human Rights in McCann v The United Kingdom (Application 19009/04), but in my view it does not assist his case. The court was there concerned with the effect on the applicant's rights under article 8 of his eviction from the former matrimonial home in circumstances where his wife, who had since moved out, determined the tenancy, thereby terminating his right of occupation. The court held that there was an interference with the applicant's to respect for his home, but that it was in accordance with the law and pursued the legitimate aim of protecting the rights and freedoms of others, in particular the right of the local authority to recover its property and the proper application of the statutory scheme for housing provision. However, when it came to consider whether the interference was proportionate to the aim pursued, the court held that article 8(2) raises a question of procedure as well as substance. Following its decision in Connors v The United Kingdom (Application 66746/01) it held that a person at risk of eviction should in principle be able to have the proportionality of the order for possession determined by an independent tribunal, notwithstanding that his right of occupation has come to an end.
34. The decision in McCann v The United Kingdom has itself recently been considered by the House of Lords in Doherty v Birmingham City Council [2008] UKHL 57. Lord Hope and Lord Scott were critical of that decision and a clear majority of their Lordships were of the opinion that, notwithstanding what was said in McCann, the House should not depart from its decision in Kay v Lambeth London Borough Council. In paragraph 22 of his speech Lord Hope described as the "basic law" established by their Lordships' decision in Harrow London Borough Council v Qazi [2003] UKHL 43, [2004] 1 AC 983 and reaffirmed in Kay v Lambeth London Borough Council that such interference with the right to respect for the home as may flow from the application of the law which enables a public authority to exercise its unqualified right to possession does not violate the essence of the Convention right and that it is not open to the court to hold that the exercise of that right should be denied because of the occupier's personal circumstances.
35. In the light of these decisions I do not think it can be said that section 34(1)(b) of the Housing Act 1988 itself, if interpreted in accordance with the natural meaning of words used, gives rise to an infringement of the tenant's rights under article 8. It is quite true that its effect in this case is that Mr. Foley's new tenancy did not benefit from protection under the Rent Act, but that was a matter of his own choosing and there is nothing in the Convention which prevents a person of his own choice from entering into a tenancy for a defined term subject to an obligation to give up possession on its expiry. Whether the provisions of section 98 and Case 19 in Part II of Schedule 15 to the Rent Act 1977 or the procedure by which possession may be obtained pursuant to them are open to challenge is not a matter with which we are concerned.
36. For these reasons I am satisfied that section 3 of the Human Rights Act 1998 does not require the court to give section 34(1)(b) of the Housing Act a meaning other than that which it naturally bears and accordingly I would dismiss the appeal.

Sir John Chadwick:

37. The assumption which gives rise to the issue for determination on this appeal is that, on 20 September 2001, the appellant, Mr Foley, was a protected or statutory tenant of The School House. It has been common ground that that tenancy determined on 26 September 2001 by surrender; that Mr Foley was out of possession for a period of some twenty four hours; and that, on 27 September 2001, he retook possession of The School House under a tenancy the terms of which are to be found in the schedule to the consent order made on 20 September 2001. The issue for determination is whether (on the assumption which is to be made) that second tenancy is itself a protected tenancy.
38. That issue turns on the effect which is to be given, in the circumstances of this case, to the words in section 34(1)(b) of the Housing Act 1988:

"34(1) A tenancy which is entered into on or after the commencement of this Act cannot be a protected tenancy, unless – . . .

(b) it is granted to a person . . . who, immediately before the tenancy was granted, was a protected or statutory tenant . . ."

Those words must be read with the direction, in section 45(1) of the Act, that:

"45(1) In this Part of this Act, except where the context otherwise requires, -

'tenancy' includes . . . an agreement for a tenancy . . ."

39. It follows, as it seems to me, that the first question to be addressed is whether the schedule to the consent order of 20 September 2001 took effect as the grant of a tenancy. If so, the tenancy under which Mr Foley has occupied The School House since 27 September 2001 falls within section 34(1)(b) of the 1988 Act: it was a tenancy granted to a person who (on the assumption which is to be made) was a protected or statutory tenant immediately before the grant on 20 September 2001. It is immaterial that (on any view) the previous tenancy continued until 26 September 2001.
40. If, on the other hand, the schedule to the consent order of 20 September 2001 did not take effect as the grant of a tenancy – but as an agreement for a tenancy – a second question arises: does the context in which section 34(1)(b) of the 1988 Act falls to be construed require that "tenancy" does not include "agreement for a tenancy"? If "tenancy" does not include "agreement for a tenancy", the tenancy under which Mr Foley has occupied The School House since 27 September 2001 was not the subject of a grant on 20 September 2001. There being no other grant, that tenancy arose when, on 27 September 2001, Mr Foley retook possession of the property upon the terms which had been agreed seven days earlier. A tenancy which arose on 27 September 2001 (albeit on terms agreed on 20 September 2001) is not within section 34(1)(b) of the 1988 Act.

The first question: did the schedule to the consent order of 20 September 2001 take effect as the grant of a tenancy?

41. It is not, I think, in doubt that the schedule to the consent order of 20 September 2001 was capable of taking effect as the grant of a tenancy notwithstanding that it contained terms which provided for a formal grant to be made thereafter: see Poole v Bentley (1810) 12 East 168, Warman v Faithfull (1834) 5 Barnewall &.Adolphus 1042 and the cases noted in Halsbury's Laws of England (Fourth Edition, 2006 Re-issue, volume 27(1), page 102: note 3 to paragraph 73). The schedule contains all the terms necessary for a tenancy for a period of five years. The commencement of the term (27 September 2001) is fixed: paragraph 4(i) read with paragraph 3. The rent is fixed: paragraph 4(ii) read with paragraph 4(iii). The schedule is in a form which satisfies the requirements of section 52(1) of the Law of Property Act 1925. Further, it incorporates (by reference to an earlier tenancy agreement of 20 March 1987) the other terms which the grant of a short fixed term tenancy could be expected to contain: that is to say, tenant's covenants, a provision for re-entry by the landlord in the event of breach of those covenants and a covenant by the landlord for quiet enjoyment.
42. Given that the schedule is capable of taking effect as the grant of a tenancy the question whether it did so turns on the intention of the parties. Their intention is to be determined by construing the words which they have used with proper regard to the circumstances in which the consent order of 20 September 2001 was made. The circumstances in which the consent order was made are described, briefly, by the judge at paragraphs 9 and 10 of his judgment. But it is necessary, I think, to examine the position more closely.
43. The proceedings in which the order of 20 September 2001 was made were, themselves, proceedings for the possession of The School House. It is necessary to have in mind that Part II of the Housing Act 1980 had modified the provisions of the Rent Act 1977 in relation to protected shorthold tenancies. Section 52(1) of the 1980 Act provided (so far as material) that a protected shorthold tenancy was "a protected tenancy granted after the commencement of this section which is granted for a term certain of not less than one year nor more than five years . . .". The landlord, the Diocesan Board of Finance, sought possession in those earlier proceedings under Case 19 in Part II of Schedule 15 to the Rent Act 1977 (introduced by section 55(1) of the 1980 Act), on the basis that Mr Foley held the property under a protected shorthold tenancy granted by an agreement dated 20 March 1987. Mr Foley resisted that claim on the ground that, although the agreement of 20 March 1987 purported (on its face) to grant a protected shorthold tenancy for a term certain of five years, it had not done so. It was said – in reliance on section 52(1) of the Law of Property Act 1925 – that a tenancy for a fixed term exceeding three years must be made by deed; that (as the law stood in 1987 – before amendment by section 1(1) of the Law of Property (Miscellaneous Provisions) Act 1989) the execution of a deed by an individual was required to be under seal; and that those requirements as to the form of the agreement of 20 March 1987 were not satisfied. So (it was said) on a true analysis Mr Foley held the property under a under a periodic tenancy from year to year (which had arisen by operation of law); and that was a tenancy to which Case 19 of the Rent Act 1977 had no application.
44. The claim for possession made in those earlier proceedings was compromised on the terms contained in the schedule to the consent order of 20 September 2001. The order (with its schedule) was written out in manuscript and signed at the court. It is plain that it was originally contemplated that there would be a formal grant of an assured shorthold tenancy on 27 September 2001: paragraph 3 of the schedule. But, before the consent order was signed, there was added (in a different hand) an endorsement in these terms:

"The above tenancy being for a period in excess of 3 years is required to be by deed and now the parties to the agreement hereby sign this as a deed as witnessed below"

45. As the law stood in September 2001 a lease or tenancy for a term in excess of three years was void unless made by deed: section 52(1) of the Law of Property Act 1925, read with section 54(2) of that Act. A contract to grant a lease or tenancy for a term in excess of three years was void unless made in writing signed by or on behalf of the parties: section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989, read with section 2(5) of that Act and section 54(2) of the 1925 Act. There was no need for the schedule to the consent order to be executed as a deed if it were to take effect as an agreement for the future grant of a tenancy. But – as the parties must have appreciated, having regard to the issue which had been raised in the proceedings which were the subject of the compromise – there was a need for execution as a deed if the schedule were to take effect as a grant of a tenancy.
46. In my view, the circumstances in which the consent order was made - and (in particular) the addition of the endorsement to which I have referred – lead to the conclusion that the parties' intentions changed in the course of the drafting process which resulted in the schedule as executed. It seems to me that an initial intention that the schedule should have effect only as an agreement for the formal grant of an assured shorthold tenancy on 27 September 2001 – when, or immediately before, Mr Foley was let back into possession of The School House – was superseded by an intention that, if necessary, the schedule should itself have effect as the grant of a tenancy. It may be that those advising the Diocesan Board of Finance had become concerned (at the door of the court) that Mr Foley might decline (as in the event he did) to execute a formal grant when the time came to do so. Be that as it may, I find it impossible to explain the addition of the endorsement on any basis other than that the parties intended that, if necessary, the schedule should have effect as a grant of a tenancy. In particular, I am not persuaded that the endorsement was added in the mistaken belief that an agreement for a lease needed to be made by deed. Given the context in which the consent order was made, the parties must (as it seems to me) to have had well in mind that the formal requirements for the grant of a lease differed from those in respect of an agreement for a future tenancy.
47. Although I do not think that this is a case in which it is necessary (even if permissible) to rely on subsequent events (on 27 September 2001) as an indication of the parties' intentions when they executed the schedule to the consent order (on 20 September 2001), I should add that the view expressed in the previous paragraph is consistent with the fact that, when Mr Foley did decline to execute a formal tenancy agreement on 27 September 2001, the Board's solicitors did not press him to do so: they expressed themselves content with the document (the schedule to the consent order) which they already had.
48. For those reasons I would answer the first question in the affirmative: the schedule to the consent order of 20 September 2001 did take effect as the grant of a tenancy. It follows that if, on 20 September 2001, Mr Foley was a protected or statutory tenant, he continued to enjoy that status: the new tenancy granted on 20 September 2001 fell within section 34(1)(b) of the Housing Act 1954.

The second question: does the context in which section 34(1)(b) of the 1988 Act falls to be construed require that "tenancy" does not include "agreement for a tenancy"?

49. If (as I would hold) the first question is to be answered in the affirmative, the second question does not arise. Nevertheless, in the circumstances (i) that the other members of the Court have reached a different conclusion on that first question and (ii) that I was, at first, attracted to the view that the direction in section 45(1) of the 1988 Act – that "tenancy" includes "an agreement for a tenancy" – was not displaced, in its application to section 34(1)(b) of that Act, by context, it is appropriate that I should explain, shortly, why I am satisfied that that view cannot be correct.
50. As I have said, Part II of the 1980 Act had modified the provisions of the Rent Act 1977 in relation to protected shorthold tenancies by introducing a new Case (Case 19) to the Cases in Part II of Schedule 15 to the 1977 Act (mandatory orders for possession). Section 52(1) of the 1980 Act defined "a protected tenancy" in terms to which I have already referred. Section 52(2) was in these terms:

"52(2) A tenancy of a dwelling house is not a protected shorthold tenancy if it is granted to a person who, immediately before it was granted, was a protected or statutory tenant of that dwelling house."

The statutory purpose was identified by Lord Justice Purchas in Dibbs v Campbell (1988) 20 H.L.R. 374, 377:

" . . . section 52(2) prevents the landlord from avoiding statutory protection already acquired by tenants under the 1977 Acts by inducing statutory tenants to enter into a protected shorthold tenancy."

51. There was no interpretation provision in the 1980 Act specific to Part II of that Act: contrast section 27(2) (interpretation of Chapter I, Part I), section 50(1) (interpretation of Chapter II, Part I), section 85(1) (interpretation of Part III), section 105 (interpretation of Part VI) and section 133(1) (interpretation of Part VIII). Section 150 of the 1980 Act – the general interpretation provision applicable to the whole of the Act – contained no direction that "tenancy" was to include "agreement for a tenancy". Section 85(1) provided that expressions used in the Rent Act 1977 should have the same meaning in the interpretation of Part III of the 1980 Act; but that section had no application to expressions used in Part II of the 1980 Act. And, even if it did, there was no direction in the 1977 Act that "tenancy" was to include "agreement for a tenancy": see section 152(1) of the 1977 Act (which provided only that "tenancy" includes "sub-tenancy").
52. In those circumstances there was, as it seems to me, no reason to construe section 52(2) of the 1980 Act so as to extend the protection which it offered to those who were protected or statutory tenants immediately before (or at the time of) an agreement for a new shorthold tenancy. I note that there seems to have been no suggestion in Dibbs v Cambell – where, on the facts, an agreement for a new tenancy was reached some time before the tenants surrendered their protected tenancy – that the relevant date, for the purposes of section 52(2), was the date of the agreement rather than the date when the new tenancy was granted. Nor was that point taken in Bolnore Properties Ltd v Cobb (1996) 29 H.L.R 202: where, again, it would seem to have been open to the tenant on the facts.
53. It is, I think, reasonably clear that the legislative purpose underlying section 52(2) of the 1980 Act was carried through into the 1988 Act: and finds expression in section 34(1)(b) of that Act. But, for the reasons which I have explained, there is no basis for the view that it was the intention of the legislature, when enacting section 52(2) of the 1980 Act, to extend protection to those who entered into a new tenancy at a time when they were not protected or statutory tenants pursuant to an agreement made at a time when they were. To attribute that intention to the legislature in 1988 would be to hold that section 34(1)(b) of the 1988 Act reflected a more extensive legislative purpose than that to which section 52(2) of the 1980 Act had given effect. I can see no reason to do so.
54. The interpretive direction in section 45(1) of the 1988 Act – that "tenancy" includes "an agreement for a tenancy" – is qualified by the introductory words "except where the context otherwise requires". It is important, therefore, to have in mind the context in which section 34(1)(b) of that Act appears:

"34(1) A tenancy which is entered into on or after the commencement of this Act cannot be a protected tenancy, unless –

(a) it is entered into in pursuance of a contract made before the commencement of this Act; or

(b) it is granted to a person . . . who, immediately before the tenancy was granted, was a protected or statutory tenant . . .; or

(c) it is granted to a person . . . in the following circumstances . . .; or

(d) it is a tenancy in relation to which subsections (1) and (3) of section 38 below have effect in accordance with subsection (4) of that section."

Sections 38(1) and (3) apply to tenancies entered into "before, or pursuant to a contract made before, the commencement of [the 1988] Act".

55. It is clear, therefore, that the legislature had well in mind the distinction between the grant of a tenancy and the entry into a tenancy; and had well in mind the distinction between a tenancy and a contract in pursuance of (or pursuant to) which a tenancy was entered into. As I have sought to explain, a tenancy may arise by virtue of a grant – which, in the case of a tenancy for a period in excess of three years, must be made by deed – or it may arise by the entry into possession and the payment of rent. In particular, a tenancy may be entered into pursuant to a prior contract in circumstances in which there is no grant: the tenancy arises by agreement or by operation of law. The distinction between "tenancy" and "an agreement for a tenancy" is a real distinction; it is a distinction which the legislature clearly had in mind – and intended to draw - when enacting section 34(1) of the 1988 Act; and there is no reason why section 34(1)(b) should be construed in a way which ignores that distinction. The context does require that, in section 34(1) of the 1988 Act, "tenancy" is not construed so as to include "an agreement for a tenancy".

The Human Rights Act 1998

56. If (as I would hold) the schedule to the consent order of 20 September 2001 took effect as the grant of a tenancy, there is no room for an argument that the effect which the judge gave to section 34(1)(b) of the 1988 Act in this case was incompatible with Mr Foley's convention rights. But, for completeness, I should add that I agree with the conclusion reached by Lord Justice Moore-Bick on this ground of appeal.

Conclusion

57. The particular feature of the present case is that the schedule to the consent order of 20 September 2001 was executed by the parties as a deed in circumstances which (as I would hold) lead to the conclusion that that schedule took effect as the grant of a tenancy. It is for that reason alone that I would have allowed this appeal.

Lord Justice May:

58. The Housing Act 1980, and subsequently the Housing Act 1988, modified for tenancies of dwelling houses granted after the commencement of the relevant legislation the protection afforded to tenants. In broad terms, under the Rent Act 1977 a protected or statutory tenant who paid his rent and otherwise complied with the terms of the tenancy agreement could not be readily and lawfully dispossessed at the unilateral election of the landlord. Again in broad terms, upon the introduction by the 1980 Act of protected shorthold tenancies, a landlord became able, upon service of the requisite notice, to obtain a mandatory order for possession of a dwelling house let under such a tenancy when its term came to an end – see section 55 of the 1980 Act which introduced by amendment Case 19 to the Cases in Part II of Schedule 15 of the 1977 Act. This scheme was carried forward by the 1988 Act for assured shorthold tenancies under that Act. In short, the legislative policy was to relax what were regarded as undue statutory constraints on landlords of residential property, which had resulted in a dearth of dwelling houses available for letting by private landlords.
59. The legislation, however, preserved 1977 Act protection for existing 1977 Act protected or statutory tenants. It also preserved such protection, by section 52(2) of the 1980 Act, for a "tenancy of a dwelling house … granted to a person who, immediately before it was granted, was a [1977 Act] protected or statutory tenant of that dwelling house". As Purchas LJ said in Dibbs v Campbell (1988) 20 HLR 374 at page 377, section 52(2) prevented a landlord from avoiding statutory protection already acquired by tenants under the 1977 Act by inducing statutory tenants to enter into a protected shorthold tenancy. This provision carried through into section 34(1)(b) of the 1988 Act, whose application to the facts of the present case is the subject of this appeal.
60. Moore-Bick LJ has set out the facts and circumstances of this appeal, which are supplemented in certain respects in the judgment of Sir John Chadwick. I gratefully adopt, without repeating, these accounts. Mr Foley appeals against part of the judgment and order of His Honour Judge Neligan of 29^th August 2007 in the Truro County Court for which the judge himself gave permission to appeal. The judge decided two preliminary issues, only the second of which is the subject of this appeal. The judge's decision was that, on the assumption (yet to be determined) that Mr Foley was a statutory or protected tenant of The School House on 20^th September 2001, he did not have that status immediately before the tenancy referred to in paragraphs 3 and 4 of the schedule to the order of 20^th September 2001 was granted within the meaning of section 34(1)(b) of the 1988 Act.
61. The substance of the judge's decision on the facts was that Mr Foley surrendered his (assumed) protected or statutory tenancy on 26^th September 2001 – that is not contentious; that he then voluntarily went out of possession for 24 hours; that the new tenancy was "granted" on 27^th September 2001; and that the granting of the new tenancy on 27^th September 2001, 24 hours after the surrender of the protected or statutory tenancy, meant that Mr Foley was not a protected or statutory tenant "immediately before" the new tenancy was granted. The judge held himself to be bound so to decide by the decisions of this court in Dibbs v Campbell and Bolnore Properties v Cobb (1996) 29 HLR 202. He expressed no view as to how those cases would have been decided if the Human Rights Act 1998 had been in operation at the time. Sitting in a County Court, he was not able to consider making a declaration of incompatibility in relation to section 34(1) (b) of the 1988 Act.
62. The written grounds of appeal are (a) that the judge failed to apply section 3 of the Human Rights Act 1998 so as to read and give effect to section 34(1)(b) of the 1988 Act in a way which was compatible with Mr Foley's convention rights; and (b) that the judge failed to acknowledge that, by section 45(1) of the 1988 Act, except where the context otherwise requires, "tenancy" includes an agreement for a tenancy; that this interpretation is applicable to the expression "a tenancy" in section 34(1); that the agreement embodied in the Schedule to the order of 20^th September 2001 is an agreement for a tenancy and no separate tenancy was subsequently entered into; that thus the [agreement for a] tenancy was granted on 20^th September 2001; and that therefore immediately before that Mr Foley was (assumed to be) a protected or statutory tenant.
63. I agree with Moore-Bick LJ for the reasons he gives in paragraphs 30 to 35 of his judgment that the first ground of appeal, which relies on the Human Rights Act, should fail. I do not wish to add anything on this part of the appeal.
64. I agree with Moore-Bick LJ for the reasons he gives in paragraph 17 of his judgment, and with Sir John Chadwick for the expanded reasons in paragraphs 48 to 54 of his judgment, that the second ground of appeal should fail in so far as it relies on the Interpretation section, section 45(1) of the 1988 Act. The context does require that, in section 34(1) of the 1988 Act, "tenancy" is not construed so as to include an agreement for a tenancy.
65. There remains, however, the question on which Moore-Bick LJ and Sir John Chadwick disagree, that is whether Mr Foley's new tenancy for a fixed term of 5 years commencing on 27^th September 2001 was "granted" on that date, or on 20^th September 2001, being the date of the agreement embodied in the Schedule to the consent order of that date. This question turns on whether as a matter of construction the agreement embodied in the Schedule was indeed an agreement for a tenancy or itself the grant of a tenancy. I note in passing that the language of section 34(1) appears to distinguish between entering into a tenancy and granting a tenancy; but the question arising under section 34(1)(b) concerns when Mr Foley's new tenancy was "granted".
66. As Sir John Chadwick shows and Moore-Bick LJ accepts, an instrument which is called an agreement and stipulates for the subsequent grant of a formal tenancy may, depending on its terms, be construed as itself a lease or tenancy, provided that, as here, the essential terms are fixed. An instrument will usually be construed as a lease or tenancy if it contains words of present demise, which, as Moore-Bick LJ has shown, this agreement does not. All the numbered operative clauses of the agreement are expressed in the future tense; and clause 3 expressly states that the respondents "shall grant" Mr Foley an assured shorthold tenancy "on 27^th September 2001". In the face of these clear words, the proposition that this agreement should be construed as itself effecting the grant of a tenancy on 20^th September 2001 is difficult. In the event that the respondents did not in fact grant Mr Foley on 27^th September 2001, by a second formal document, the tenancy which clause 3 of the agreement appears to stipulate, it is uncontentious that in law the agreement of 20^th September 2001 then took effect as a tenancy. But it did so, I think, when and because the anticipated grant of a tenancy was not made, not because it was to be construed as the grant of a tenancy on and from the date it was made.
67. Subject to the single short point on which Sir John Chadwick would hold that the agreement of 20^th September 2001 took effect on that date as the grant of a tenancy, I do not consider that the facts of the present case are materially distinguishable from those in Bolnore Properties v Cobb. Again subject to the single short point, it seems to me obvious that the parties' general intention deriving from the terms of their written agreement was to make an agreement which replicated and had the same consequences in law as those in Bolnore Properties.
68. In Bolnore Properties, there was a written agreement in the letter of 21^st December 1987, whose terms are reproduced on page 205 of Millett LJ's judgment. Millett LJ took it that Wing Commander Cobb signed in confirmation that the arrangements in the letter were acceptable to him – see page 206. The arrangements included that Wing Commander Cobb should before 11^th January 1988 physically vacate the property for a minimum of 24 hours surrendering the keys. The new shorthold tenancy was to run from 12^th January 1988 for a period of one year. The dates were in fact put back by 3 days, so that Wing Commander Cobb and his wife vacated the property for the night of 14^th January 1988 and signed the shorthold tenancy agreement in the late afternoon of 15^th January. The landlord executed the tenancy agreement on 19^th January and the term started on that date, no rent being charged for the intervening four days. Millett LJ, with whom Thorpe and Waite LJJ agreed, held that the statutory tenancy came to an end by surrender by the giving up of possession on 14^th January 1988; that there was no rule of law which precluded a period of only 24 hours from being sufficient to prevent one event being "immediately before" another, that is, that 24 hours was capable of being sufficient for the purpose of section 52(2) of the 1980 Act; and that the fact that the arrangements for the surrender of the existing tenancy and the grant of a new tenancy were agreed in advance and implemented in accordance with the prior agreement did not mean that section 52(2) of the 1980 Act precluded the making of a protected shorthold tenancy in place of the former 1977 Act statutory tenancy.
69. The differences between the facts of Bolnore Properties and those of the present case are that in Bolnore Properties the prior written agreement was not made by deed, and that in Bolnore Properties the subsequent tenancy agreement was entered into. The prior agreement in Bolnore Properties did not need to be by deed; nor indeed did the agreement of 20^th September 2001 in the present case, if it was an agreement for a tenancy, not itself the grant of a tenancy. As to the fact in the present case that the stipulated assured shorthold tenancy was not in fact granted on 27^th September 2001, I have already indicated my view that this did not mean that the agreement of 20^th September 2001 took effect as a grant made on 20^th September 2001, if, when it was made, it was an agreement for a tenancy and not itself the grant of a tenancy. On this hypothesis, it took effect as the grant of a tenancy on 27^th September 2001 when and because the stipulated separate grant of a tenancy was not made on that date.
70. Sir John Chadwick considers that the circumstances in which the consent order of 20^th September 2001 was made, which he describes in paragraphs 42 to 44 of his judgment, and the addition of the endorsement to the agreement lead to the conclusion that the parties' intentions changed in the course of the drafting process. He discerns from the numbered clauses an initial intention that the agreement should have effect only as an agreement for a formal grant of an assured shorthold tenancy on 27^th September 2001, superseded by an intention that the agreement should itself have effect as the grant of a tenancy. He finds it impossible to explain the addition of the endorsement on any other basis. He explains why in his view the parties were aware of the statutory requirement for a lease or tenancy for a term in excess of three years to be made by deed; whereas a contract to grant a lease or tenancy had only to be in writing signed by or on behalf of the parties.
71. I am not on reflection persuaded that the endorsement should be read as having this effect for the following reasons. The words of the endorsement are:

"The above tenancy being for a period in excess of 3 years is required to be by deed and now the parties to the agreement hereby sign this as a deed as witnessed below."

This was appended to the four operative clauses of the agreement, which, upon Sir John Chadwick's conclusion that the parties changed their intention, were nevertheless unchanged. They still explicitly stipulate for the future grant of an assured shorthold tenancy on 27^th September 2001 – an inept way to express an intention that the agreement should have effect as the grant of a tenancy on 20^th September 2001. Nor, in my judgment, do the words of the endorsement compel that conclusion. The two line sentence itself distinguishes between "the above tenancy" and the "agreement hereby". "The above tenancy" is an assured shorthold tenancy for a fixed term of 5 years to be granted and commencing on 27^th September 2001; and that was indeed, when it was granted, required to be by deed for the reasons which Sir John Chadwick explains. I would construe the first line (in the printed version) as being no more than a statement to that effect. I would then construe the second line as the parties saying that, because the tenancy, to be granted in 7 days time, was required to be by deed, they would sign "the agreement hereby" as a deed also. Strictly this was unnecessary and, if the parties thought that the agreement also had to be by deed, a mistake. But, if so, it was an understandable mistake for parties negotiating and drafting in the corridors of the Truro County Court. On this construction, there is nothing in the endorsement which alters the nature of the agreement, which was an agreement for a tenancy.

72. In the result, I agree with Moore-Bick LJ for the reasons he gives that this appeal should be dismissed.