Judgments - Knowsley Housing Trust (Respondents) v White (FC) (Appellant)
Honeygan-Green (Respondent) v London Borough of Islington (Appellants)
Porter (FC) (Appellant) v Shepherds Bush Housing Association (Respondents)

(back to preceding text)

23.  There is also nothing to support such a suggestion in the previous Court of Appeal decision in Sherrin v Brand [1956] 1 QB 403 to which Lord Evershed referred at p 186 in Payne v Cooper and on which both he and Romer LJ had sat. The issue in Sherrin v Brand was one of succession by a family member to a statutory tenancy in circumstances where a conditional possession order had been made against the deceased tenant, with the conditions of which he had not complied. In that case, it was provided by various orders that a judgment for possession should not be enforced “for twenty-eight days and for so long thereafter as the [tenant] punctually pays …. the arrears of rent, mesne profits and costs by instalments of £10 forthwith and 13s 7d per week in addition to the current rent", and that “the judgment shall cease to be enforceable when the arrears of rent, mesne profits and costs referred to above are satisfied". The concluding provision was regarded as a proleptic discharge of precisely the same type as fell for consideration in Payne v Cooper. This was expressly explained by Romer LJ in Payne v Cooper at p 429:

“In my opinion, the meaning and effect of this judgment [the judgment for possession], when taken as a whole, and especially in view of the concluding paragraph, is that the defendant might remain on as tenant of the premises so long as he performed the conditions as to payment of the prescribed instalments in addition to the current rent; and that, on payment of the final instalment, the operation of the judgment would automatically cease. In other words, the judgment for possession was not intended to have an immediate effect, and would never indeed take effect at all provided that the conditions as to payment were fulfilled.” (emphasis in bold added)

So the concluding paragraph of the judgment for possession was not, and was not regarded as, an order for discharge if the conditions were not complied with. There was also no question of it being necessary to treat it as such - the only issue in Sherrin v Brand was whether a sufficient statutory tenancy still existed (despite the failure to comply with the conditions or to pay the arrears at any stage) to enable the family member to succeed to the statutory tenancy.

24.  It follows that I can see no basis for saying that a court has under section 85(4) power - whether ex post facto or proleptic - to discharge or rescind a conditional order for possession where the conditions imposed under section 85(3) have not been (either punctiliously or, if one reads the word into subsection (4), substantially) complied with and no variation of such conditions has been obtained. I do not find this analysis in any way surprising, when applied to situations in which the proleptic power recognised in Payne v Cooper has been exercised, and it is what the statute clearly prescribes. The method of dealing with this situation is for the tenant to seek and obtain under section 85(2) and (3) (either by consent or on contested application) a variation of the possession order to impose fresh conditions with which the tenant can comply or has already complied.

25.  I also see no ground for construing paragraph 6 of the order in Honeygan-Green (“Upon payment of the arrears in full, claim do stand dismissed”) as intended or capable of doing anything other than that which the court was empowered to do under section 85(4). In other words, read in context, this paragraph means no more than that the possession order would be discharged upon payment of the arrears in full in compliance (or, if one reads this into subsection (4), substantial compliance) with the schedule provided by the immediately preceding paragraph. But, if the order were (in my opinion wrongly) to be construed as purporting to provide more, it was to that extent at least beyond the statutory power.

26.  Lord Neuberger suggests that it might however be possible under the court’s inherent common law or procedural powers to make an order suspending or staying the execution of a possession order on one set of conditions, but providing for discharge or rescission of the order in other substantially different circumstances (such as payment of the net arrears, without interest, at any such future date as the tenant might please or be able to procure). In the circumstances which I have described in para 8 above, we heard no argument upon this possibility. The court has of course substantial inherent powers as well as powers under the rules of court to vary or discharge its own orders, particular in the light of changed circumstances. But it seems to me improbable that it should be taken to have exercised such powers proleptically by paragraph 6 of the order in Honeygan-Green in any manner going further than its proleptic statutory power under section 85(4). I understand the common law in relation to claims to possession to be that the extent to which a court can either deny or postpone a private owner’s entitlement to possession is extremely limited - a view which lay at the basis of the decision of the majority in this House in Harrow London Borough Council v Qazi [2003] UKHL 43; [2004] 1 AC 983 as I noted in Doherty v Birmingham City Council [2008] UKHL 57; [2008] 3 WLR 636, paras 129-130. CPR 3.1(2)(a), enabling a court to extend or shorten the time for compliance with any order is no different in substance from long-existing procedural powers under the former rules of court. If a court, when or after making a possession order, has a free hand under its inherent or procedural powers to suspend, stay or order its discharge proleptically (or even ex post facto), in circumstances not envisaged by the detailed statutory provisions of section 100 of the Rent Act 1977, section 85 of the Housing Act 1985 and section 9 of the Housing Act 1988 and of their predecessor provisions, one asks why such statutory provisions (developed and built on by the legislature over the last century) were necessary at all. The whole argument in Payne v Cooper would also have been misconceived, in so far as it proceeded on the basis that, unless the power was to be found in the relevant section (there, section 4(2) of the 1923 Act), it did not exist at all.

27.  Apart from the qualification discussed in this speech, which does not affect the outcome of these appeals, I am, as I stated at the outset, in full agreement with Lord Neuberger’s reasoning and conclusions in respect of all three appeals.

LORD NEUBERGER OF ABBOTSBURY

My Lords,

28.  These three appeals raise questions about the effect of suspended possession orders on the status and rights of secure tenants under the Housing Act 1985 and assured tenants under the Housing Act 1988. Your Lordships were told that the resolution of these questions will affect tens of thousands of tenants who are subject to such orders, and indeed their landlords.

29.  To understand the issues requires me first to give a brief (and highly simplified) summary of the legislation relating to residential security of tenure and the right to buy for secure tenants, and to set out a few centrally relevant statutory provisions.

The law governing residential security of tenure

30.  Security of tenure for most residential tenants in England and Wales was first introduced by the Increase of Rent and Mortgage Interest (War Restrictions) Act 1915. As its name suggests, this was emergency war-time legislation, which accorded protection from eviction to the great majority of residential tenants, irrespective of the identity of their landlords. The 1915 Act was supplemented or replaced by a number of subsequent Rent Acts between 1919 and 1965, perhaps most significantly by the Rent and Mortgage Interest (Restrictions) Acts 1920 and 1923 and the Rent Act 1965. The legislation was then consolidated (with amendments) in the Rent Act 1968 and, finally, the Rent Act 1977. Until the 1968 consolidation, the drafting of the Rent Acts was somewhat opaque (MacKinnon LJ’s description of “that chaos of verbal darkness", in Winchester Court Ltd v Miller [1944] KB 734, 744, was only one of many judicial derogatory descriptions), and they often required substantial constructive input from the courts.

31.  Well before the 1977 Act came into force, section 33 of the Housing Repairs and Rents Act 1954 had removed Rent Act protection from tenancies under which the landlord was a local authority, a housing association or a similar entity.

32.  Accordingly, by 1980, tenants of private sector landlords had protection pursuant to the Rent Act 1977, whereas tenants whose landlords were local authorities and housing associations had no statutory protection. However, chapter II of Part I of the Housing Act 1980 introduced a new form of protection for tenants of local authorities and housing associations (and other entities as now prescribed in section 80 of the 1985 Housing Act): their tenancies became secure tenancies. By chapter I of Part I of the 1980 Act, most secure tenants were given the right to buy their properties (the freehold in the case of a house, and a long lease in the case of a flat). These two chapters of the 1980 Act were repealed and re-enacted (with amendments) as, respectively, Parts IV and V of the Housing Act 1985.

33.  The Housing Act 1988 changed the landscape yet again. Rent Act protection was prospectively abolished, and private sector tenants were accorded a new form of protection in that their tenancies were designated as assured tenancies under the 1988 Act (albeit that a very limited, short-lived, and limited type of assured tenancy had been introduced by sections 56 to 58 of the 1980 Act). The 1988 Act also provided that any future tenancies granted by housing associations should be assured, rather than secure, tenancies.

34.  Accordingly, in very summary terms (and subject to exceptions), the current position is as follows. Private sector tenancies granted before the 1988 Act came into force remain governed by the 1977 Act, but private sector tenancies created thereafter are assured tenancies under the 1988 Act. Housing association tenancies are secure tenancies under the 1985 Act if granted between 1980 and 1988, but they are assured tenancies under the 1988 Act if granted thereafter. All local authority tenancies are secure tenancies under the 1985 Act.

35.  The protection afforded to protected, secure and assured tenants is effected through the medium of circumscribing the landlord’s right to possession. At least one of the grounds specified in the relevant legislation (section 98 of, and Schedule 15 to, the 1977 Act; section 84 of, and Schedule 2 to, the 1985 Act; and section 7 of, and Schedule 2 to, the 1988 Act) normally has to be established by a landlord before the court can make an order for possession.

36.  The most commonly invoked of those grounds, and the most relevant for present purposes, is non-payment of rent. Under ground 8 of Schedule 2 to the 1988 Act, this can, in some circumstances, entitle a landlord under an assured tenancy, as of right, to an order for possession. Although such a ground is often open to landlords under assured tenancies (including one of the instant cases, as my noble and learned friend Lord Walker of Gestingthorpe pointed out in argument), we were told that ground 8 is something of a last resort so far as housing associations are concerned.

37.  In practice, it is normally the case under the 1988 Act, and it is always the position under the 1977 and 1985 Acts, that, in rent arrears cases, the landlord will rely on case 1 of Schedule 15 to the 1977 Act, ground 1 of Schedule 2 to the 1985 Act or grounds 10 or 11 of Schedule 2 to the 1988 Act, as may be appropriate. These grounds require a landlord, in addition to establishing that the tenant is in arrear with the rent, to satisfy the court that it is reasonable to make such an order before the court will order possession — see section 98(1)(a) of the 1977 Act, section 84(2)(a) of the 1985 Act and section 7(4) of the 1988 Act.

38.  Under each of the three regimes, in any case where the landlord has to establish that it is reasonable to make a possession order, the court is given very wide and flexible powers. The relevant provisions are section 100 of the 1977 Act, section 85 of the 1985 Act, and section 9 of the 1988 Act. These three sections are very similar in their wording, but there are some differences. In the light of the issues in these appeals, it is necessary to set each of them out.

39.  Section 100 of the 1977 Act provides:

Extended discretion of court in claims for possession of certain dwelling-houses

(1)  …. [A] court may adjourn, for such period or periods as it thinks fit, proceedings for possession of a dwelling-house which is let on a protected tenancy or subject to a statutory tenancy.

(2)  On the making of an order for possession of such a dwelling-house, or at any time before the execution of such an order (whether made before or after the commencement of this Act), the court … may —

(a)  stay or suspend execution of the order, or

(b)  postpone the date of possession,

for such period or periods as the court thinks fit.

(3)  On any such adjournment as is referred to in subsection (1) above or any such stay, suspension or postponement as is referred to in subsection (2) above, the court shall, unless it considers that to do so would cause exceptional hardship to the tenant or would otherwise be unreasonable, impose conditions with regard to payment by the tenant of arrears of rent (if any) and rent or payments in respect of occupation after termination of the tenancy (mesne profits) and may impose such other conditions as it thinks fit.

(4)  If any such conditions as are referred to in subsection (3) above are complied with, the court may, if it thinks fit, discharge or rescind any such order as is referred to in subsection (2) above.

….”

40.  Section 85 of the 1985 Act is in these terms:

Extended discretion of court in certain proceedings for possession

(1)  Where proceedings are brought for possession of a dwelling-house let under a secure tenancy on any of the grounds …([being] cases in which the court must be satisfied that it is reasonable to make a possession order), the court may adjourn the proceedings for such period or periods as it thinks fit.

(2)  On the making of an order for possession of such a dwelling-house on any of those grounds, or at any time before the execution of the order, the court may —

(a)  stay or suspend the execution of the order, or

(b)  postpone the date of possession,

for such period or periods as the court thinks fit.

(3)  On such an adjournment, stay, suspension or postponement the court —

(a)  shall impose conditions with respect to the payment by the tenant of arrears of rent (if any) and rent or payments in respect of occupation after the termination of the tenancy (mesne profits), unless it considers that to do so would cause exceptional hardship to the tenant or would otherwise be unreasonable, and

(b)  may impose such other conditions as it thinks fit.

(4)  If the conditions are complied with, the court may, if it thinks fit, discharge or rescind the order for possession.

…"

41.  Section 9 of the 1988 Act says this:

Extended discretion of court in possession claims

(1)  … [T]he court may adjourn for such period or periods as it thinks fit proceedings for possession of a dwelling-house let on an assured tenancy.

(2)  On the making of an order for possession of a dwelling-house let on an assured tenancy or at any time before the execution of such an order, the court … may —

(a)  stay or suspend execution of the order, or

(b)  postpone the date of possession,

For such period or periods as the court thinks just.

(3)  On any such adjournment as is referred to in subsection (1) above or on any such stay, suspension or postponement as is referred to in subsection (2) above, the court, unless it considers that to do so would cause exceptional hardship to the tenant or would otherwise be unreasonable, shall impose conditions with regard to payment by the tenant of arrears of rent (if any) and rent or payments in respect of occupation after the termination of the tenancy (mesne profits) and may impose such other conditions as it thinks fit.

(4)  If any such conditions as are referred to in subsection (3) above are complied with, the court may, if it thinks fit, discharge or rescind any such order as is referred to in subsection (2) above.

…..".

42.  All three sections also contain subsections (in the case of section 100 of the 1977 Act, inserted by the 1980 Act) which confer the right on the present or former spouse (or indeed civil partner) of the tenant to apply for relief under the relevant section in the same way as the tenant, provided such a spouse is “in occupation” and the tenancy “is terminated as a result of those proceedings".

43.  Where a landlord seeks an order for possession solely in reliance on the tenant’s arrears of rent, the court will only very rarely consider it reasonable to make an outright order for possession - that is, an order which simply directs the tenant to vacate on or before a certain date. Much more commonly in such a case, the court will consider it reasonable to make a suspended order for possession - that is, an order which, while directing the tenant to vacate, suspends the implementation of that direction so long as the tenant pays off the arrears (and costs, if any have been ordered) at a specified rate.

44.  These regimes of statutory security against eviction required the legislation to address the status of a tenant whose tenancy has contractually determined. A tenancy which is protected under the 1977 Act is allowed to determine in accordance with its contractual terms, but, by virtue of section 2(1)(a), such a tenant then becomes a “statutory tenant” “if and so long as he occupies the dwelling-house [in question] as his residence". Protected tenancies and statutory tenancies are together often called “regulated tenancies".

45.  By contrast, section 82 of the 1985 Act effectively extends the contractual term of a secure tenancy. Subsections (1) and (1A) provide that a secure tenancy “cannot be brought to an end by the landlord” save by obtaining an order of the court, of which the most common and relevant is an “order for possession". Section 82(2) states that where such an order is made, “the tenancy ends on the date on which the tenant is to give up possession in pursuance of the order". (Section 86 provides that if a secure tenancy expires by effluxion of time, it is automatically followed by a periodic tenancy, which itself will be within the ambit of section 82).

46.  Under the 1988 Act, the legislature adopted a fairly similar approach for assured tenancies. Except if the assured tenancy was a shorthold, section 5(1) lays down that an assured tenancy “cannot be brought to an end by the landlord except by obtaining an order of the court in accordance with the following provisions", which provisions, most importantly, and most relevantly for present purposes, include section 7 which, as mentioned, enables the court to make an order for possession. However, the 1988 Act has no provision expressly stating when an assured tenancy subject to a possession order comes to an end - in other words, section 5 of the 1988 Act has no equivalent to section 82(2) of the 1985 Act. (Section 5(2) of the 1988 Act has a similar effect to section 86 of the 1985 Act.)

47.  The three Acts also contain provisions which enable specified members of a tenant’s family to succeed to the tenancy on the tenant’s death - see section 2(1)(b) of the 1977 Act for regulated tenancies, section 87 of the 1985 Act for secure tenancies, and section 17 of the 1988 Act for assured tenancies.

Secure tenants’ right to buy

48.  The “right to buy” under Part V of the 1985 Act is accorded by sections 118 and 119 to a “secure tenant” who has been such for at least five years. Section 121 provides:

Circumstances in which the right to buy cannot be exercised

(1)  The right to buy cannot be exercised if the tenant is obliged to give up possession of the dwelling-house in pursuance of an order of the court or will be so obliged at a date specified in the order.

(2)  The right to buy cannot be exercised if the person, or one of the persons, to whom the right to buy belongs —

(a)  has a bankruptcy petition pending against him,

(b)  …

(c)  is an undischarged bankrupt, or

(d)  has made a composition or arrangement with his creditors the terms of which remain to be fulfilled.”

(It is right to mention, for completeness, that section 121(1) has been amended by section 304(1) of the Housing and Regeneration Act 2008 but this has no application to the current case: see section 304(2).)

49.  Section 122 provides for the right to buy procedure to be initiated by a “secure tenant” serving notice on the landlord. Section 124 states that the landlord must then serve a notice admitting or denying the tenant’s right. By section 125, the landlord is required to provide the tenant with details of the purchase price. According to section 126, this price is to be the market value of the property at the date of service of the section 122 notice, less a discount which, under sections 129 to 131, is (subject to a maximum) dependent on the length of time the tenant has been a secure tenant. Sections 125D and E (inserted in 1993) require the tenant thereafter to serve notice indicating whether he or she intends to buy, and, if no such notice is served, the landlord can serve a default notice, which, if not complied with, results in the tenant’s section 122 notice being “deemed to be withdrawn".

50.  By section 128, the tenant, if unhappy with the landlord’s valuation, may refer the issue to the district valuer within three months of the landlord’s section 125 notice. The terms on which the property is to be transferred are governed by section 139. Once all outstanding matters have been agreed, section 138(1) imposes a duty on the landlord to transfer the property to the tenant. However, by virtue of section 138(2) there is no such duty so long as the rent is more than four weeks in arrear.

51.  If the tenant does not complete, sections 140 and 141 provide for the landlord to serve two successive notices requiring completion, and, if, after expiry of the second of those notices, the tenant has still failed to complete, his or her section 122 notice is “deemed to be withdrawn". Section 141(5) states that, if such a second notice is served and under section 138(2) “the landlord is not bound to complete, the tenant shall be deemed not to comply with the [second] notice".

52.  Section 153A (added in 1988) provides that, where a landlord is guilty of delay in relation to any step in the procedure, the tenant can serve a notice of delay, followed, if the delay persists, by a second, “operative", notice of delay. If such an operative notice is served, and the delay persists, section 153B provides that the aggregate of the rent then paid by the tenant shall be set off against the purchase price, and, where the delay is more than twelve months, a further 50% of that aggregate is to be set off against the purchase price.

53.  Sections 125A, B and C (inserted in 1986) provide that, where the property concerned is a flat, the landlord must include in its section 125 notice estimates of the likely level of service charge for a specified period. That period is five years from the date “beginning … not more than six months after the notice is given as the landlord may reasonably specify as being a date by which” the property is to be transferred. In such a case, para 16B of Schedule 6 to the 1985 Act provides that a tenant, who is in due course granted a long lease of the flat shall (subject to an allowance for inflation) not be liable for a greater sum in respect of service charges than that indicated in the section 125 notice.

54.  Where a secure tenant has a right to buy, and the reversion to the tenancy is then transferred to a person who is not within section 80 of the 1985 Act, so that the tenancy ceases to be a secure tenancy, the tenant’s right to buy under the 1985 Act is normally preserved against the new landlord, by virtue of and in accordance with sections 171A to H (inserted in 1986).

The facts underlying the three instant appeals

 
Continue  Previous