In a previous blog, we looked at Private Residential Tenancies (PRT) and Wrongful Termination Orders (WTO), which are a “new” (in the legal sense) innovation introduced by sections 57 and 58 of the Private Housing (Tenancies)(Scotland) Act 2016 (the 2016 Act). The point of WTOs being that they “police” misuse of the grounds for possession in Schedule 3 of the 2016 Act. Or put another way, the “mischief” that they are aimed at is to prevent unscrupulous landlords contriving situations to mislead tenants into vacating a property in response to a Notice to Leave (NTL) or misleading the First-tier Tribunal (FtT) into granting an eviction order. In our last blog, we looked at WTOs generally and in relation to ground 1 (the landlord wants to sell) where a landlord’s circumstances change after a NTL is served. We looked at the important question being the landlord’s intentions when the NTL was served. Up until now, most cases about WTOs have been dealt with by the FtT and have therefore been of limited use in that they are not authoritative.
We now have a decision of the Upper Tribunal, which looks at WTOs in some detail and that also looked at the use of Ground 1 itself. The case can be found here.
What was the case about?
This was a case where a former tenant sought a WTO from their former landlords under section 58 of the 2016 Act claiming they had been misled into leaving her property after a NTL relying on ground 1 had been served on her. What is interesting about the background here is that, whilst it was not in dispute that the landlords had in fact put the property up for sale, it was disputed by the tenant that they had a genuine intention to actually sell the property and that the marketing for sale was merely a sham to hide their genuine intention which was to move into the property themselves pending renovations to their own house. Indeed, in their decision, the FtT found that the landlords never had “any intention of going through with the sale of the property” and that the “situation was contrived for the benefit of the Respondents” [landlords].
Notwithstanding that finding, the FtT took the view that because the landlords had taken steps to market and advertise the property for sale, this was sufficient to establish Ground 1 and therefore the tenant had not been misled into leaving the property. It was this finding that the tenant appealed to the Upper Tribunal about.
What did the Upper Tribunal (UT) decide?
The UT decided that the FtT was wrong in their interpretation of Ground 1 and allowed the appeal and remitted it back to a differently constituted FtT to consider again.
What did the UT say about WTOs?
The UT looked at the principal factors or issues that had to be decided by a tribunal when considering whether or not to grant a WTO. These are:
- The landlord must have made some form of representation to a tenant and that necessarily includes such a representation contained in a NTL served on the tenant.
- The representation must be objectively misleading and that a statement in a NTL that a landlord has a ground for eviction when they do not will be misleading.
- The tenant must have actually been misled. If the tenant did not believe or knew that the ground for eviction did not apply, then they cannot have been misled.
- The misrepresentation must have actually misled the tenant into ceasing to occupy the property in that it was at least a “significant or material cause” on them doing so. If a tenant left for other reasons, a WTO would not be appropriate.
What did the UT say about Ground 1 and what did the FtT get wrong?
What the UT said was that, whether or not Ground 1 will apply depends on a landlord’s intention to either:
- Sell the property for market value; or
- At least put it up for sale within 3 months of the tenant seeking to occupy.
Regardless of which it is, the intention to sell must be genuine. As the UT stated, “If a landlord puts a property on the market, but has no genuine intention of accepting any offers that may be made for it, he is neither intending to sell the property for market value, nor is he putting it up ‘for sale’ ”. The UT went on to say that the FtT was wrong when it concluded it was sufficient to establish Ground 1 where a landlord “pretends to put a property up for sale even if in fact he has no intention of selling it” and this was “precisely the sort of mischief at which” WTOs are aimed.
What else did the UT say in their decision?
The UT did confirm (as previously blogged) that a landlord can have a genuine intention to sell a property, but their circumstances change or a “genuine plan might not be fulfilled”, and they can change their mind. Landlords faced with such circumstances should follow the advice set out in our previous blog and retain as much information as they can to explain their change of heart or circumstances should a claim for a WTO come.
If you require any further information or advice, please contact us or watch our blogs for further updates.
