Governors of the Peabody Trust v Reeve

02 Jun 2008

Subject matter: Landlord and tenant

A social landlord had not been entitled to unilaterally vary the terms of its tenancy agreements by relying on a clause that purported to incorporate the mechanism under Section 103 Housing Act 1985 in contradiction of a preceding clause that provided for variation by agreement with the tenant.

As there was doubt as to the meaning of the clause as a whole, and, in the light of the contradictory nature of the sub-clauses, as to the meaning of the sub-clauses, the Court was obliged by Regulation 7(2) Unfair Terms in Consumer Contracts Regulations 1999  to adopt the interpretation most favourable to the tenant. (2) If that was wrong, it was necessary to consider the fairness of a unilateral variation clause. P had incorporated two entirely contradictory clauses into the tenancy agreement and had then attempted to rely on one of them to enforce a power of unilateral variation; such actions were contrary to any concept of fair and open dealing.  Furthermore, the tenancy agreements already made ample provision for future events; there was no reason to suggest that P would be left in an impossible position without a sweeping variation clause. (3) To satisfy the requirements of the Regulations, any such unilateral variation clause would need at a minimum to take full and proper account of the common sense guidelines set out by the Office of Fair Trading for tenancy agreements.

Alexander Bastin represented Peabody Trust.

For further details, please refer to the full judgment: Governors of the Peabody Trust v Reeve [2008] EWHC 1432 (Ch)


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