"Arising from" a tenancy: the First-tier Tribunal's continuing jurisdictional headache

"Arising from" a tenancy: the First-tier Tribunal's continuing jurisdictional headache
2021-04-13

Recently, while preparing material for a series of lectures for prospective law students, I have had cause to go over again the approaches to statutory interpretation that are taught to first year LLBs up and down the country. A key principle of all approaches is that, in the absence of a statutory definition, words in legislation are to be given their ordinary meaning where possible.

Difficulties, we tell new lawyers, arise where it is either unclear which of several possible meanings to apply, or where it is unclear how the established meaning applies to the facts. This takes me to SW v Chesnutt Skeoch Ltd, a recent Court of Session appeal from the Upper Tribunal for Scotland concerning a disputed assured tenancy agreement.

The case began when Chesnutt Skeoch, the landlord of a property in Port Glasgow, made an application to the First-tier Tribunal for Scotland’s Housing and Property Chamber for rent arrears in excess of £4000 from its former tenant. The tenant, a woman with learning difficulties that her social worker stated made her “open to manipulation with regard to managing her finances”, opposed the application and in doing so sought to reduce the lease on the grounds of facility and circumvention.

While the tenant ultimately did not insist upon a lack of capacity defence, it was nonetheless submitted to the Tribunal that the FtT had the jurisdiction to entertain an action for reduction as part of the current proceedings. The FtT, however, took the line that it did not, and even if it did it could not reduce the tenancy without a formal Rule 70 application under the HPC’s rules of procedure.

It is worth noting here that part of the FtT’s overriding objective requires it to “seek informality and flexibility” in proceedings. The refusal to allow a defence based on reduction and the imposition of a requirement on a tenant to lodge a formal action of reduction very much seems to go against this. Nonetheless, the decision was made and an appeal to the Upper Tribunal was permitted.

On appeal, the UT rejected a submission that the tenancy agreement could be set aside without an action of reduction ope exceptionis (i.e. by way of exception, such as under Rule 19.3 of the Summary Cause Rules 2002) in the same way that a sheriff could have before the transfer of jurisdiction to the FtT by the Housing (Scotland) Act 2014. It made an obiter comment that it was “arguable” that the FtT had jurisdiction, but it was not a matter that needed to be determined here.

The UT refused the tenant permission to appeal to the Court of Session but permission was granted by the court. The Inner House promptly remitted the case back to a differently constituted FtT for redetermination, deciding that the FtT did have the power to reduce the agreement ope exceptionis as otherwise a tenant would have more difficulty defending themselves before the FtT than they would have before a sheriff.

The Inner House rejected the contention that the tenant’s submissions to the FtT constituted a valid application for reduction of the tenancy, rendering the jurisdiction issue no longer live. Because of this, and because the landlord (which had been represented throughout previous proceedings by its company director rather than legal representation) had not entered replies to the Inner House appeal, the court deigned not to address the issue “until a case arises where its resolution is necessary” and arguments were heard for both sides.

For housing advisors and legal practitioners, this is a near-miss of a shot at a high-level authoritative answer to the question of what types of action “arise from” a tenancy type over which the FtT has jurisdiction. The phrase appears in both the Private Housing (Tenancies) (Scotland) Act 2016 and the Housing (Scotland) Act 2014, which combined give the FtT near-complete jurisdiction over private rented sector tenancies in Scotland, and on the face of it, it should not be that complicated an issue.

Despite this, every so often the FtT rejects an application on jurisdictional grounds, leading to opinions further up the chain which again seem to have failed to totally remove any ambiguity from the question. Most notable is Sheriff Ross’ take in Anderson v First-tier Tribunal for Scotland (2019), a private residential tenancy case in which he said (emphasis mine):

The natural and ordinary effect of the words ‘arising from’ is unrestricted and imprecise, and invites a wide, inclusive approach.  It is quite the opposite of a defined award.  It tends to show that the legislature intended the FtT to deal with all PRT-related events, to the exclusion of the sheriff court, and not just the core lease.

Returning to the first-year classroom, this seems like a textbook example of the ‘purposive’ approach to statutory interpretation, looking at the general intent of Parliament. ‘All tenancy-related events’ should surely encompass an action for reduction of a tenancy, by applying a simple test of ‘would this action exist but for the creation of the tenancy?’.

In determining the ope exceptionis question in SW, the Inner House uses the ‘mischief’ approach that sees the law as fixing problems with the current state of affairs, with Lord Doherty saying there was:

A widely-held view that the existing system for resolving private rented housing disputes in the sheriff court was unsatisfactory. It was slow, overly adversarial, weighted against tenants, non-specialist, and prone to inconsistency of decision-making between sheriff courts.  These were all matters which it was considered would be improved by transferring the disputes to a specialist tribunal.

It is very difficult to see how that ‘mischief’ might have been resolved if the FtT’s position that tenants who seek to have their leases set aside need to apply to a system apparently stacked against them holds true, at least if this extensive list of grievances is anything to go by. While the Inner House’s comment was not made in respect of the jurisdictional issue, it feels relevant to it. It may not have answered the question definitively, but the seeds of an answer are there.

Without a definitive answer to the extent of the FtT’s tenancy jurisdiction, these comments will come up again and again in hearings and case management discussions across Scotland. If the Tribunal cannot answer the same question in the same way both times, could it really be said that the 2014 and 2016 Acts have ‘cured’ the mischief of inconsistent decision-making?

We teach new lawyers that applying the mischief approach requires the promotion of the remedy the statute provides and the suppression of anything that would lead to the continuance of the mischief. In not giving even an obiter on the issue, lack of counterargument notwithstanding, the Inner House has for now left the FtT’s jurisdictional question to its own mischievous devices.

PS: This case related to an assured tenancy, which as followers of myself and Douglas Bain’s irregular ‘tenancy problems column’ on this blog will know is no longer the current statutory form for newly created tenancies in Scotland. Under section 44 of the Private Housing (Tenancies) (Scotland) Act 2016, private residential tenancies cannot be terminated by either party except in accordance with Part 5 of the 2016 Act.

Nothing in the 2016 Act seems to preclude the termination of a tenancy by the Tribunal, even if it is suggested by one of the parties. Similarly, if the contract establishing the tenancy is rendered void by facility and circumvention, as was initially attempted in SW, the effect will be that no tenancy ever existed to be brought to an end in the first place. If the contract never had effect to begin with, there should be no issue with section 44 at all.

Published by School of Law, University of Aberdeen

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