Chancery Division

Published June 9, 2008

Governors of the Peabody Trust v Reeve

Before Mr Gabriel Moss, QC

Judgment June 2, 2008

A social landlord could not vary its tenancy agreement unilaterally; excluding changes in rent, any variation would need the agreement in writing of both parties.

Mr Gabriel Moss, QC, sitting as a Deputy Chancery Division Judge, so held when rejecting the claim of the Governors of the Peabody Trust against Mr Michael Reeve, a representative defendant of approximately 10,000 tenants, whose costs had been paid by the trust for taking part in the case.

Mr Alexander Bastin for the Peabody Trust; Miss Zia Bhaloo for the defendant.

HIS LORDSHIP said that two questions arose: first, whether a clause in the claimant’s standard form of tenancy agreement entitled it to effect unilateral variations in the terms of the agreement using the procedure set out in section 103 of the Housing Act 1985; and second, whether such a clause would be binding under regulation 8 of the Unfair Terms in Consumer Contracts Regulations (SI 1999 No 2083).

Unlike local authorities, registered social landlords such as the Peabody Trust ceased to enjoy the ability to vary tenancy agreements in accordance with section 103 of the 1985 Act after the enactment of the Housing Act 1988.

His Lordship was not convinced that it was actually impossible to manage 10,000 tenants without a unilateral method of varying the terms of tenancies. He therefore concluded that the standard form tenancy agreement did not provide for a variation in terms but that, excluding changes in rent, it could be altered only by agreement in writing of both parties.

While it was not strictly necessary to decide because there was no right of unilateral variation, his Lordship stated that even if the standard agreement did allow such a right by notice under section 103, such a term would not be binding on a tenant under regulation 8 of the 1999 Regulations because, under the grounds within regulation 5(1), it would be a term that had not been individually negotiated and, contrary to good faith, would cause a significant imbalance in the rights and obligations of the parties to the detriment of the tenant.

To satisfy the requirements of the 1999 Regulations, any unilateral variation would at the least need to take full account of the guidelines set out by the Office of Fair Trading for tenancy agreements.

Solicitors: Miss Cara Gelston, Southwark; Collyer Bristow

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