Contractual terms: are the UTCCR 1999 capable of re-writing other legislation?

Whether mandatory statutory provisions can be classed as ‘unfair contract terms’.

The background

Jones and another v Roundlistic Ltd [2018] concerned the lease of a property let for use as a ‘single private dwelling house in the occupation of the lessee and his family’. The lessees let the property out for 12 months in breach of this provision and the lessor applied to the First-tier Tribunal for determination under the Commonhold and Leasehold Reform Act 2002 to the effect that the lessees had breached the terms of the lease.

The lessees argued that the prohibition contained in the lease was an ‘unfair term’ under the UTCCR and was therefore not binding. The FTT agreed, holding that the prohibition was unfair, but on appeal, the Upper Tribunal found that the UTCCR did not apply where the contractual terms were mandatory statutory provisions. The lessees appealed to the Court of Appeal.

The decision

The Court of Appeal dismissed the lessees’ appeal, finding that they had breached the terms of their lease. The prohibition was not classed as an ‘unfair term’.

The Court considered the language contained in the lease and Regulation 4, in particular in the context of the lessees’ earlier lease, which had been extended. The subject of the case was the current 2012 lease, which was therefore subject to the terms of the UTCCR. The 2012 lease was granted mandatorily pursuant to the Leasehold Reform, Housing and Urban Development Act 1993, both parties had received advice and the lessees had chosen not to amend the terms of the lease.

Advice and action for landlords

Helpful particularly in respect of properties where earlier leases have been extended, this case supports landlords facing litigation over mandatory statutory provisions and in cases where terms are argued to be ‘unfair’.

The Court of Appeal’s reasoning ensures that landlords may rely on such mandatory provisions and places the responsibility on tenants to ensure that they are satisfied the terms of their leases, particularly extended leases, continue to reflect their needs.