Factual and Procedural Background
The case concerns the application of the Tenant Fees Act 2019 ("the TFA") to payments made by a tenant under various assured shorthold tenancies ("ASTs") of a flat in The City. The Plaintiff entered into an original fixed term AST in April 2018, which included provisions requiring payment of a security deposit, an administration fee, and a check-out fee. Payments for these fees were made before the TFA came into force on 1 June 2019.
Subsequent tenancies arose, including a 2019 tenancy possibly statutory periodic, a 2020 AST, and a current AST commencing in April 2021. The latter two tenancies no longer included provisions for administration or check-out fees. The Defendant served a section 21 notice in June 2023 seeking possession under the current tenancy. The Plaintiff contested the validity of the notice, arguing that payments made before the TFA barred its service. The District Judge rejected this defence and ordered possession. The appeal concerns whether payments required and made before the TFA preclude a section 21 notice under the current tenancy.
Legal Issues Presented
- Whether payments required by the landlord and paid before the Tenant Fees Act 2019 came into force can preclude the service of a section 21 notice under a subsequent tenancy.
- The interpretation of the term "require" within section 1 of the Tenant Fees Act 2019 and its application to payments made prior to the Act's commencement.
- Whether retention of previously paid check-out fees constitutes a prohibited payment under the TFA in relation to a new tenancy.
- The applicability of transitional provisions in section 30 of the TFA to payments and requirements imposed before the Act's commencement.
Arguments of the Parties
Appellant's Arguments
- The check-out fee was lawfully paid before the TFA and formed part of the consideration for the original tenancy.
- Because no check-out took place at the end of the original tenancy, the fee should have been repaid, either as a conditional payment or under the doctrine of unjust enrichment.
- The landlord's retention of the check-out fee monies under subsequent tenancies, including the current tenancy, amounts to a requirement for payment connected to those tenancies.
- Even though the current tenancy does not expressly require payment of a check-out fee, the parties' unstated objective and the landlord's conduct imply a requirement to retain and apply those funds.
- The term "in consideration of" in section 1(6) of the TFA should be interpreted broadly to encompass payments connected to the grant of a tenancy, not strictly limited to express contractual terms.
- Drawing inferences from the facts, the landlord effectively required unlawful payments in relation to the current tenancy despite the absence of explicit contractual provisions.
Respondent's Arguments
- The payments made in 2018 were lawful and made before the TFA came into force; therefore, they do not preclude the service of a section 21 notice under the current tenancy.
- The current tenancy does not contain any provision requiring payment of an administration or check-out fee; hence, no requirement exists under the TFA to make such payments.
- The term "require" implies an overt act or demand by the landlord; mere silence or passive retention of funds does not constitute a requirement.
- The transitional provisions in section 30 of the TFA exclude requirements imposed before the Act's commencement from the prohibitions in section 1.
- The District Judge correctly distinguished the precedent relied upon by the Appellant, noting that the current tenancy lacks the payment provisions central to that case.
- The Appellant did not request repayment of the check-out fee, and no factual findings support the inference that the landlord required unlawful payments.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Superstrike Ltd v Rodrigues [2013] EWCA Civ 669 |
Application of statutory periodic tenancy provisions and deposit requirements under the Housing Act 2004; whether deposits paid under an original tenancy extend to a subsequent tenancy. |
The court distinguished this case on the basis that the current tenancy did not contain equivalent payment provisions, unlike the statutory periodic tenancy in Superstrike, and therefore the payments made previously did not carry over. |
| Efobi v Royal Mail Group Ltd [2021] UKSC 33 |
Guidance on the drawing of inferences by tribunals and courts, emphasizing common sense and context over strict legal rules. |
The court applied this principle to reject the Appellant's argument that adverse inferences should be drawn absent factual findings supporting the claimed requirement to pay. |
| Pitts v Jones [2008] QB 706 |
Consideration in contract law can be given without awareness; relevant to interpreting "in consideration of" in statutory language. |
The court acknowledged this but held that a requirement cannot be established by mere silence, reinforcing the need for an overt act or demand. |
Court's Reasoning and Analysis
The court began by examining the relevant statutory provisions of the Tenant Fees Act 2019, focusing on section 1 which prohibits landlords from requiring prohibited payments in connection with tenancies. The court emphasized that a "requirement" entails a compulsory demand or overt act by the landlord, not mere silence or passive retention of funds.
It was noted that payments made before the TFA came into force are exempt from the prohibitions by virtue of section 30. The payments in question, including the check-out fee, were made lawfully before the Act commenced and formed part of the consideration for the original tenancy.
The court distinguished the precedent in Superstrike Ltd v Rodrigues, which involved a statutory periodic tenancy containing a deposit requirement, unlike the current tenancy here. The check-out fee was not a term of the current tenancy and thus could not be treated as a requirement in relation to it.
The Appellant's argument depended on drawing inferences that the landlord required payment under the current tenancy despite the absence of contractual terms or overt demands. The court found no obligation to draw such inferences, especially as the District Judge was not invited to do so below and there was no evidence that the tenant requested repayment.
The court interpreted the phrase "in consideration of" within the statutory context in line with ordinary contractual principles, requiring a payment made in exchange for the grant of the tenancy. The check-out fee was paid in exchange for the original tenancy, not the current one.
Overall, the court found the retention of the check-out fee monies was independent of the current tenancy and did not amount to a prohibited payment or requirement under the TFA.
Holding and Implications
The court DISMISSED THE APPEAL, affirming the decision to allow the service of the section 21 notice and the order for possession.
The direct effect is that payments lawfully made under a tenancy agreement prior to the commencement of the Tenant Fees Act 2019 do not preclude the landlord from serving a section 21 notice under a subsequent tenancy that does not include equivalent payment provisions. No new precedent was established beyond the application of the statutory provisions and existing case law distinguishing pre- and post-TFA requirements.