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PRS – case law update

McDonald v McDonald [2014] EWCA Civ 1049

The facts were that the tenant had a condition which made her particularly distressed by changes to her environment. Her parents had secured a mortgage over the property which the tenant occupied as her home, which she occupied under the terms of an AST granted by her parents as landlord to her as tenant. The parents had not sought the lender’s consent to the letting and it was in breach of the mortgage terms. The parents failed to make the mortgage repayments and the lender appointed receivers, who, under the terms of the mortgage were the agents of the parents. The receivers issued a notice to quit on the tenant in their own names under s21 of the Housing Act 1988 and commenced possession proceedings in the parents’ names. The County Court granted a possession order. The tenant appealed on 2 grounds:

  1. The possession order was disproportionate interference with her rights under Article 8 of the European Convention of Human Rights; and
  2. The receivers had no power to serve the s21 notice.

On the first ground it was decided that generally a landlord’s right to enforce the return of its’ property outweighed a tenant’s desire to remain in the property and in this case the fact that the landlord owed money to the lender strengthened the landlord’s position as the lender could not recoup its money unless possession was obtained. No clear line of decisions that implied Article 8’s ‘proportionality test’ applied to a private landlord.

On the second ground it was decided that the receivers had the requisite power to serve the s21 notice as the clear purpose of the mortgage conditions was to enable the receivers to proceed to realise the charged property and the receivers specified powers included the power to sell the property and take possession of it.

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