Croydon London Borough Council v Kalonga

The Court of Appeal considered whether a landlord may terminate a secure flexible tenancy granted for a fixed term before the contractual expiry date when the tenancy agreement does not contain an express provision for re-entry or forfeiture. The court analysed the wording and purpose of section 82 of the Housing Act 1985 (and related provisions including sections 82(3), 82(4) and section 86), the effect of the Localism Act 2011 introducing flexible tenancies, and authorities on forfeiture. Applying the test from Clays Lane, the court held that a clause permitting the landlord to serve a notice seeking possession or to apply for a possession order is not, by itself, a forfeiture clause. Accordingly a fixed-term flexible tenancy can only be terminated prior to its contractual expiry by the landlord if the tenancy agreement contains a forfeiture clause and the landlord obtains a termination order under section 82(3) (with section 146 of the Law of Property Act 1925 applying where appropriate). On that basis the appeal was dismissed.

Background and parties. The respondent was a flexible tenant of Croydon Council under a five-year fixed-term tenancy from 25 May 2015 to 24 May 2020. The council served a notice seeking possession on 2 August 2017 relying on grounds 1 and 2 of Schedule 2 to the Housing Act 1985 and issued proceedings in the County Court on 29 August 2017. The tenant pleaded that the tenancy contained no forfeiture clause and that the landlord could not determine the tenancy during the fixed term. A preliminary issue as to the correct manner of terminating a secure flexible tenancy during the fixed term was transferred to the High Court.

Procedural history. Tipples J in the High Court ([2020] EWHC 1353 (QB)) held that the Tenancy Agreement did not contain a forfeiture clause and that, absent such a clause, the landlord had no right to determine the tenancy before expiry; the claim was dismissed. The landlord appealed to the Court of Appeal and the tenant served a respondent’s notice raising further points about the need to serve a section 146 notice and to obtain an order under section 82(3).

Nature of the application / relief sought. The landlord sought to recover possession during the fixed term. The core relief in issue was whether the landlord could bring the tenancy to an end before expiry and thereby obtain possession.

Issues framed. (i) How should the phrase "a tenancy for a term certain but subject to termination by the landlord" in section 82(1)(b) be interpreted: does it encompass any contractual means of termination or only re-entry/forfeiture? (ii) Does the Tenancy Agreement contain a forfeiture clause? (iii) If a forfeiture clause exists, must the landlord bring proceedings under section 82(3) and serve a section 146 notice where applicable?

Court’s reasoning and conclusions. The court held that the ordinary meaning of "subject to termination by the landlord" covers termination by any lawful contractual means, but the statutory scheme (notably sections 82(3),(4) and section 86) shows Parliament intended that termination of a fixed-term secure tenancy before expiry is controlled where a provision for re-entry or forfeiture exists. The key practical question is whether an order for possession under section 82(1A)(a) is available against a fixed-term tenancy; the court concluded it is not the general route for fixed-term tenancies lacking a forfeiture clause. The court applied the Clays Lane test for a forfeiture clause and concluded that the clauses relied upon (service of a notice seeking possession and applying for a possession order) did not amount to a forfeiture clause. The judge’s conclusion that the tenancy could not be terminated before expiry in the absence of an express forfeiture clause was therefore upheld. The respondent’s notice was allowed in part: the Court of Appeal held that termination must proceed by section 82(1A)(b)/82(3) where a forfeiture clause exists and that, where applicable, section 146 of the Law of Property Act 1925 applies.

Wider context. The court noted the statutory changes creating flexible tenancies and the availability of a separate remedy of demotion orders for anti-social behaviour, but concluded those changes did not alter the fundamental protection given to fixed-term secure tenancies lacking forfeiture provisions.

Appeal dismissed. The court held that a landlord cannot terminate a secure flexible tenancy for a fixed term prior to its contractual expiry unless the tenancy agreement contains an express provision for re-entry or forfeiture. If a forfeiture clause exists the proper route is to obtain a termination order under section 82(3) of the Housing Act 1985, with section 146 of the Law of Property Act 1925 applying where appropriate.

County Court at Central London: possession claim issued 29 August 2017; HHJ Bailey directed a trial of a preliminary issue and transferred that issue to the High Court. High Court (QB): Tipples J [2020] EWHC 1353 (QB) dismissed the landlord's claim. Court of Appeal: [2021] EWCA Civ 77 (this judgment).