Getting section 146 notices right: Anders v Haralambous

Despite the 146 notice having been around, in one form or another, for more than 130 years, it is still causing as much angst as ever. The High Court appeal in Anders v Haralambous [2013] EWHC 2676 (QB), in which John de Waal QC acted for the Respondent, highlights the added complication of the interaction between s146 and the determination of breach pursuant to s168 of the Commonhold and Leasehold Reform Act 2002.

The facts

Miss Anders was Mr and Mrs Haralambous’ tenant of a residential flat in Wandsworth Bridge Road. The lease contained, not unusual, user and alienation covenants.

“(k) Not to use the premises or permit the same to be used for any purpose whatsoever other than as a self-contained private dwelling for residential purposes only.”

“(m) Not to assign, underlet or part with or share possession or occupation of part only of the premises.”

Miss Anders had connections with a language school and used the flat to accommodate students. Having filed five witness statements and got through three counsel, the precise nature of her connection with the language school and the students’ status as occupants of the flat were not clear.

Proceedings were issued in the County Court for a determination of breach, pursuant to s168, relying on multiple occupation and subletting. A summary hearing took place, which Miss Anders did not attend.  DJ Hart declared on the face of the order that:

"…the Defendant is in breach of the covenants contained at paragraphs (k) and (m) of … the lease…"

That declaration was based on the findings that:

"Miss Anders used [the flat] on a commercial basis for lodging students from the language school with which she is associated. That is not used as a private dwelling. I therefore find that there has been a breach of the covenant at (k)."

And

"Miss Anders had had lodgers in residence in various of the bedrooms in the property. This amounts to parting with or sharing possession of part of the premises. I therefore find there has been a breach of paragraph (m)."

There was no express finding of sub-letting.

Following the determination, a 146 notice was served, setting out the user and alienation covenants and citing the following breaches.

"The above mentioned covenants have been broken and you have sublet the premises to students and received payments therefrom, thus operating the premises as a business as opposed to residential purposes only, as determined by the court on 15 August 2012."

Possession proceedings were issued, relying on the 146 notice, and Miss Anders made an application for relief.

The matter then came before HHJ Dight, who had to determine, inter alia, whether the 146 notice was valid. Having found that it was, his decision was overturned on appeal by Jay J and the claim dismissed.

The reasoning

Jay's J reasoning is relatively simple. The purpose of a 146 notice is to inform the tenant of a breach, or breaches, to give them the opportunity to remedy the same or apply for relief, if they are incapable of remedy: Akici v LR Butlin Ltd [2006] 1 W.L.R.201. To achieve that end, the notice must be clear enough to inform the tenant what it is that they are said to have done, so that they may address the situation.

In the instant case, the 146 notice was squarely founded on subletting, which had not been determined by the DJ. As noted by Jay J, this is not a purely academic point, as sharing or parting with possession is capable of remedy, whereas sub-letting is not.

Jay J acknowledged that the 146 notice also referred to operating the premises as a business, but concluded that that allegation, as worded, was inextricably linked to the allegation of sub-letting. Severing the two could not, therefore, save the notice.

Jay J acknowledged that the meaning of a notice had to be ascertained objectively, in light of the background facts known to the recipient. Whilst it was argued that Miss Anders knew full well what she had done, the problem was that she had not been at the determination hearing, therefore all she knew was what was on the face of the order: That it had been determined that she was in breach of the user and alienation covenants. However, the alienation covenant contains a number of different prohibitions on dealing with part of the premises: Assigning, underletting, parting with possession, and sharing possession or occupation.

When the 146 notice was served, therefore, Miss Anders would not have known that the breach which had been determined (“parting with or sharing possession of part of the premises”) was not the breach relied upon in the notice: subletting.  This was demonstrated by her applying for relief from forfeiture founded on the irremediable breach of subletting. In fact, by the time of the hearing, she had remedied the breach which had been determined, by removing the students from the flat.

What is to be learnt?

The purpose of the 146 notice is to inform the tenant of the breach alleged so that the tenant may be left in no reasonable doubt as to what must be done to either remedy the breach or to mitigate any damage caused so as to facilitate the granting of relief. Although there is no requirement to tell the tenant how to remedy the breach (Fox v Jolly [1916] 1 A.C. 1), she must know what she is being asked to remedy. Keeping that at the forefront of the mind when drafting 146 notices will go a long way to ensuring they are good.

There is no requirement to cite the covenant which is alleged to have been breached: Van Haarlam v Kasner (1992) 64 P. & C.R. 214.  As with the instant case, citing the covenant may lead to ambiguity and an invalid notice. 

That said, in residential cases, when asking the court or the Property Chamber to determine the breach, it will have to determine which covenant has been breached.  In light of Jay’s J decision, it would be prudent to have recorded on the face of the order not only the covenant which has been breached, but also how it has been breached, so there is no doubt as to what has been determined and what should be included in the 146 notice.

As acknowledged by Jay J, the outcome of this appeal was not an attractive one.  On her own evidence, Miss Anders was in breach and had, no doubt, put Mr & Mrs Haralambous to considerable expense. However, that the 146 notice inextricably referred to subletting, which had not been determined, could lead to no other conclusion than the notice was invalid, as, when considered objectively, it failed to inform the tenant what she was required to remedy.