Follow the money…

Henson v Blackwood & Blackwood. Mayors & City of London Court 29 June 2012 & Central London County Court 25 July 2012

[We are grateful to Dean Underwood of Hardwicke Chambers for his notes on this case, from which quotes are taken and to GT Stewart Solicitors]

The difficulties in many cases against private landlords, not least unlawful eviction cases, do not end with trial and judgment. Realising damages and costs awards can be a fraught,complex and time consuming matter. This case is a prime example. It is a lengthy tale, but sadly not untypical in its twists and turns. It is also a useful case on quantum for unlawful eviction.

Ms Henson was the assured shorthold tenant of Mr & Mrs Blackwood from April 2009. She lived in the flat with her daughter and also became pregnant during 2009. A section 21 notice was served by the Blackwood’s agent in March 2010, to expire on 5 June 2010. On 4 June 2010, Mr B attended the flat without notice, told Ms H, 7 months pregnant, that she was to leave the next day with no ‘silly games’. ON the following day a man, thought to be Mr B’s brother rang the flat buzzer for 5 minutes. Ms H later left the flat and returned to find gas, water and electricity disconnected and fuses removed. A TV and video recorder were missing. Ms H left her daughter with a friend that night. She went to collect her daughter the next day and returned to find the locks changed. She stayed with a friend and found solicitors the next day.

A letter before action was sent that day to the agent, demanding re-admittance and threatening an injunction. The agent contacted Mr & Mrs B, without response. Ms B issued a claim for damages and an injunction. The injunction was granted and served the same day.

Mr and Mrs B initially failed to comply, saying they had re-let the flat. However, they hadn’t, and, following further communications, the next day they provided keys. A friend of Ms H went to the flat on 9 June to find her belongings left in bags in the hallway, her food cleared from the flat. As a result, Ms H stayed away from the flat with her mother for a few days. She then received a threatening phone call from Mr B on 14 June, saying he would be ‘sending more people’. Ms H returned to the flat on 15 June, but continued to receive threatening calls from Mr B. About a week later, a man thought to be Mr B’s brother and woman let themselves into the flat and threatened Ms H, who was in her underclothes, verbally and physically.

Ms H gave birth to her daughter in August. In November 2010, she discovered someone had glued the lock to the flat. She got in, but later moved out.

Mr and Mrs B initially defended Ms H’s claim, but the defence was struck out for failure to comply with directions. The claim went on to assessment of damages hearing in June 2012 – of which more below.

Several months before the assessment hearing, Ms H’s solicitors discovered that the flat was Mr B’s only significant asset and that he intended to sell it and dispose of the proceeds to avoid paying damages and costs.

In late March 2012, Ms H applied to the County Court for a freezing injunction under Regulation 3 of the County Court Remedies Regulations 1991 to prevent Mr B from selling the flat and disposing of the proceeds. However, on 28 March 2012, the Circuit Judge granted a mandatory injunction instead, requiring Mr B to pay Ms H’s solicitors £20,000 on account of damages and costs, either upon completion of the sale or by 16th April 2012, whichever was the earlier. He also ordered Mr Blackwood,

“forthwith and irrevocably, to instruct the solicitors and agents acting for both him and the purchaser of the flat to pay his share of the proceeds of sale or £20,000, whichever was less, directly to Miss Henson’s solicitors and not to him or his representatives.”

ON 12 April, Mr B applied to have the injunction set aside, on the basis that he didn’t have £20,000 and that the forecast of damages and costs was a fabrication. The application was set down for hearing on 20 July. Mr B did not pay £20,000 by 16 April.

The flat was sold on 14 May. The conveyancing solicitor paid £27,000 from the sale to Mr B directly into his account, and Mr B began dissipating the funds. On learning of this the next day, Ms H’s solicitors applied for a freezing injunction on assets up to £30,000 and for Mr B’s committal for contempt of court for breach of the March injunction. A freezing injunction was granted that day and Mr B was ordered to file evidence of his financial means. The committal application was listed with Mr B’s set aside application for hearing after the assessment of damages hearing on 29 June 2012.

The assessment of damages hearing resulted in the following:

£9870 by way of damages and interest.

The claim for general damages broke down into 3 distinct periods:-

  • £2000 for pre-eviction harassment, relying on awards (up-dated for inflation) made in Daramy v Streeks (Lambeth County Court 15.11.06) and Khan v Iqbal (Bury County Court 13.03.09);
  • £1000 for the eviction itself and the 3 nights for which Miss Henson could enter the flat; and
  • A further £2000 for the harassment that Miss Henson suffered thereafter.
  • £2000 by way of aggravated damages
  • £2000 by way of exemplary damages, relying on awards (up-dated for inflation) made in Khan v Iqbal (Bury County Court 13.03.09) and Salah v Munro (Willesden County Court 29.04.09).
  • Special damages at £500 and interest of £370

And, of course, costs to Ms H

However, the applications by Ms H and Mr B were adjourned to enable Mr B to get legal representation. Mr B was ordered to provide evidence of the proceeds of the sale of the flat and their disposal, failing which his set aside application would be dismissed. Mr B obtained an extension of time to do so, but failed to produce any evidence.

“He later filed a letter explaining that he had used the proceeds of sale to discharge debts owed to his brother, mother-in-law and father-in-law. He enclosed statements purporting to prove some of the debts and statements of his current account, but not of the savings accounts to which they referred. His bank statements disclosed various breaches of the freezing injunction. Miss Henson was unable to apply to commit Mr Blackwood for breach of it, however, due to funding limitations.”

At the eventual hearing of the applications on 25 July, the Circuit Judge dismissed Mr B’s set aside application, if it hadn’t already been so, as totally without merit. He found numerous breaches of the 28 March injunction, both in that Mr B had failed to pay £20,000 but also that he had wilfully failed to direct the solicitors dealing with the sale to pay £20,000 to Ms H’s solicitors on the sale, rather than to him personally. It was an aggravating feature of the contempt that Mr B had favoured his own interests and those of close family over those of Ms H and the Legal Services Commission in direct breach of a court order.

Mr B was sentenced to 9 weeks imprisonment. However, this was suspended on condition that he pay £2000 by 1 August, provide full details of all bank and building society statements (for 1 January to 31 July) by 8 August and pay £50 per month to Ms H’s solicitors until his liability in damages and costs was extinguished. The freezing injunction was discharged on Mr B’s evidence that he had no means other than £2000 that he could borrow. Costs of all three applications to Ms H.

Comment

Ms H won on all counts, but with damages and costs at well over £30,000, £2,000 and £50 per month means she is not going to see any damages for a very, very long time indeed – unless the disclosure of Mr B’s statements turns up something else. Mr B has arguably got away with the disposal of the proceeds of sale and there are apparently no chargeable assets left.

The best route to securing damages and costs would have been a charging order, but I’m doubtful that this could have been obtained prior to the assessment of quantum at the earliest – and that was too late in this case. Ms H’s solicitors initial approach of seeking a freezing order was probably the most sensible approach, not least as in my view it would arguably have been binding on Mr B’s conveyancing solicitors if brought to their attention and (although I’m not sure about this) might be registerable as a caution on title, whereas the personal mandatory injunction that the court actually made had no effect on the conveyancing solicitors if, as happened, Mr B failed to personally direct them as to the ordered disposal of sale proceeds.

Where Mr B’s conduct in the case up to that point was clearly sufficient for the court to make an injunction order, it is disappointing that the court would not make the freezing order sought, instead relying on Mr B’s personal compliance with a mandatory order. I can only presume that the court was reluctant to make an order that might cause the sale per se to fall through.

If anyone has any thoughts on alternative mechanisms or orders that might have helped in this situation, we would be very interested to hear them.

On the quantum on the case, my only comment would be my usual hobby horse of exemplary damages. Exemplary damages are properly based on a deliberate attempt to avoid legal responsibility/duty; and the measure of damages is the properly the profit achieved (or intended to be achieved – it doesn’t have to be realised) in doing so. It is hard to see how the figure of £2,000 was arrived at, apart from being on a scale with made in previous cases. If Mr B was seeking vacant possession in order to sell in his actions, then the basis for exemplary damages might be the difference in value between a tenanted and vacant property at sale, rather than, say, just the costs Mr B saved in not taking a lawful route in possession proceedings.

[Update 7 August.  Dean Underwood has kindly sent some clarifications on the case.

On the original application for a freezing order:

"HHJ Maloney QC had reservations at that stage of the proceedings about making a freezing injunction.  While he could have framed the order so as to attach to Mr Blackwood’s share of the proceeds of sale, thereby avoiding interference with the sale itself and potentially adverse consequences for Miss Henson, he took the view that, at that stage of proceedings, damages not having been quantified by the court, he did not have jurisdiction under Regulation 3 of the 1991 Regulations, to make a freezing injunction."

There was no funding to appeal that decision.

On exemplary damages - there wss no indication at the date of assessment of quantum that Mr B intended to seel the property, so the measure of exemplary damages was the 'saving' of the costs of possession proceedings, aggravated by the initial refusal to comply with the re-entry injunction.

On the future - the order is that Mr B pay a minimum of £50 per month and should evidence be forthcoming of other means, or failure to dissipate the proceeds of scale, Ms H can apply to vary the order accordingly. Mr B's 9 month suspended sentence remains so long as the damages and costs are not paid and there is interest at the judgment rate in the meantime. Additionally, the co-defendant, Mrs B may potentially face an attachement of earnings order. So the future position is not necessarily as bleak as I had made it sound.

Our thanks again to Dean. ]

Posted in Assured Shorthold tenancy, FLW case note, Housing law - All, Unlawful eviction and harassment and tagged , , , . RSS feed for this post and comments.

About

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +

14 Comments

  1. Posted 03/08/2012 at 9:06 am | link to comment

    I, believe, Ms H’s Solicitors should have used tactics in not allowing the defendant to dissipate the assests, including the vcharging orders on all assets or should have also in addition employed the Investigator who specializes in funds tracing.

    This was perhaps a very weak litigation by the claimants Solicitors, I believe.

    • Posted 03/08/2012 at 9:45 am | link to comment

      Stephen

      I think you need to have another look at the post. The issue was that the sale was taking place before the assessment of damages hearing. At that point there was no damages or costs order – although it was clear that it was very likely that there would be. Without an order for damages and/or costs, how can one get a charging order? I’m afraid your view is wrong.

  2. Posted 03/08/2012 at 2:47 pm | link to comment

    Hi,

    I wonder whether Ms H’s solicitors should have contacted the Agents selling the flat, with a view to ensuring his conveyancing solicitors knew about the Order of 28 March 2012. Although the Order was not against them, they may have been able to prevent the proceeds going to Mr B if they though they would breach the solicitors code of conduct.

    • Posted 03/08/2012 at 2:53 pm | link to comment

      I don’t know whether they did, but the terms of the injunction were that Mr B was to instruct the conveyancers to pay to Ms H himself. It would be tricky for the conveyancers not to act on his instructions, even if they were aware of the order – you can’t really act on the instructions that you know someone should have given you but didn’t…

  3. Posted 04/08/2012 at 12:26 am | link to comment

    I’m having some difficulty seeing how regulation 3 of the County Court Remedies Regulations 1991 could apply. The closest to being useful provision is 3(3)(b) – in that the flat (the property to be frozen) might have been the subject matter of proceedings. But that seems like a stretch to me.

    My response is: why on earth apply to the *county court* for a freezing order? It is almost certainly much easier and quicker to go straight to the Chancery Division and obtain one there. Its a routine matter. The judges will know the inns and outs of their jurisdiction. I don’t know why the Circuit Judge didn’t make the order in this case, but its not inconceivable that a judge in that position might not be sure of their jurisdictional underpinnings.

    Outside PCC and family proceedings, county court freezing orders are really not the norm. I wonder what was argued.

  4. S
    Posted 06/08/2012 at 9:40 am | link to comment

    Another option might have been to apply for an interim payment. If liability had been determined then it would surely have met the criteria.

    In the likely event it was not paid, then a charging order could have been obtained.

    • Posted 06/08/2012 at 10:57 am | link to comment

      True, but practically too slow, I suspect. And a two step process…

  5. Posted 07/08/2012 at 7:49 am | link to comment

    Hummmm – tricky one.

    If it had been my case, I would have been tempted to register a unilateral notice on the property, prior to the assessment of damages hearings. You don’t need to have a judgment for the Land Registry to register a unilateral notice, but equally, it can be easily removed by the owner of the property by filling in a form. (Although query whether Mr and Mrs B would have been able to do this without lawyers, or whether they would even know that the notice was there without lawyers).

    While it would have had a very limited effect, it would have brought the claim and the freezing injunction to the notice of the conveyancing solicitors and that could have stopped the money being dissipated.
    O
    Of
    /.

    • Posted 07/08/2012 at 8:36 am | link to comment

      Abby

      I was thinking about a notice. But i’m afraid I don’t think it would work. The injunction was a personal one, not a freezing order, at least before the sale. It may well be that Mr B’s conveyancing solicitors knew of the injunction anyway, but it wasn’t binding on them and the issue was Mr B’s failure to instruct them to pay to Ms H. The notice would have had no effect on the buyer, so wouldn’t have interfered with the sale.

  6. Posted 07/08/2012 at 10:15 am | link to comment

    I see your point about the mandatory injunction only being binding on Mr B, as opposed to the conveyancing solicitors.

    However, I wonder whether this is a situation where a court would find that Mr B’s conveyancers owed a duty of care to Ms H. Given the high threshold for these claims, I expect not. BUT if they had notice of the court order, a notice was placed on the property AND then, they still continued to pay out the funds to Mr B – would that constitute negligence and a breach of their duty to third parties?

    • Posted 07/08/2012 at 10:32 am | link to comment

      But only by failing to follow their client’s direct instructions – so I can’t see negligence against the conveyancers, alas.

  7. Justin1966
    Posted 30/10/2012 at 12:26 pm | link to comment

    please can you leave evidence in case laws of what a tenant might refer to in defence for the landlord’s refusal to do repairs. There is no quantification here of the extent and degree to which a tenant of a AST can risk demanding repairs from a landlord, and this risk of going to court for eviction. What must a landlord do; and what can a tenant fairly demand for him to do. Please also indicate cases that did not reach court; cases of damages and remedies; arguments for a tenant as “Right to Repairs”. Practical steps a tenant can take to ‘improve’ a property; liabilities of tenant to implement his obligations.

    • J
      Posted 30/10/2012 at 12:38 pm | link to comment

      Hmm… this sound like a request for professional legal advice, which we don’t give via the blog as none of us are insured to do so. I’m afraid all we can do is direct you to a CAB or, if relevant, a legal aid solicitor.

    • Posted 30/10/2012 at 1:00 pm | link to comment

      There are a number of reported cases on disrepair and the extent of the landlord’s repairing obligations on the blog, all to found found under the disrepair category in the list on the right. See here: http://nearlylegal.co.uk/blog/category/housing-law-all/disrepair/

      As for the rest, you are asking for legal advice, which we don’t give via the blog, and advice which could in any event only be given on the basis of the specific facts of your case – for example on the risk of retaliatory eviction. I can only suggest that you seek advice from a solicitor specialising in these matters.

      Might I also suggest that issuing demands to people whose help and time you are seeking is not a very productive approach.

One Trackback

  1. By Landlord Law Blog roundup from 30 July on 04/08/2012 at 8:15 am

    [...] dreadful case, reported on Nearly Legal, about how a landlord managed to ‘get away with [...]

Post a Comment

Your email is never published nor shared. Required fields are marked *

*
*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

css.php