Tag Archive for 'assured-tenancy'

Improvements and rent redux

Published
by
NL
on 27/04/2010
in FLW case note, Housing law - All, Leasehold and shared ownership and assured-tenancy
. 0 Comments

Hughes v Borodex Ltd. [2010] EWCA Civ 425

This was the Court of Appeal hearing of the appeal from the High Court decision on first appeal that we reported in March 2009. I won’t rehearse the facts, which are in the earlier post, but the issue was whether former long leaseholders who had ended up with an assured tenancy as a result of notice served under the Local Government and Housing Act 1989 should have improvements that they carried out during the period of the lease taken into account in determination of the rent level for the assured tenancy, set by the Rent Assessment Committee after the interim tenancy. The High Court had held that, on the phrasing of Schedule 10 of the 1989 Act, the improvements could not be taken into account, despite the apparent unfairness to the (former) leaseholder, as the improvements would have been taken into account had they been the assured tenant at the time they were made. The effect was to raise the rent level on the back of improvements that the tenant, not the landlord, had carried out – something of a windfall for the landlord.

On second appeal, both parties acknowledged that the issue was solely that of the interpretation of Schedule 10 paragraphs 9 and 11.

Mrs Hughes, via leading counsel Martin Rodger QC, argued that the effect of Schedule 10 as found by the Judge below was without precedent, as the disregard for improvements would only be for the first 12 months a new tenancy, after which the landlord could serve notice under s.13 Housing Act 1988 to increase the rent and the disregard would not apply. Further, this does not sit with the intention of the 1989 Act to enable tenancies subject to Part I of the 1954 Act to be replaced by assured tenancies. Also the approach both in the Rent Act 1977 and the 1954 Act was to disregard the tenant’s improvements done under the same or an earlier contractual tenancy. Mrs Hughes submitted that if it is possible to construe Schedule 10 to permit a fair and logical treatment of improvements, this construction should be preferred.

The argument from there was, in short, that paragraph 9 of Schedule 10 of the 1989 Act established a framework or principles for the life of the whole of the new assured tenancy, not just for the interim tenancy. After all, 9(e) refers to rent, not just initial rent. On this view, s.13 and 14 Housing Act 1988 should not apply where they clashed with paras 10 to 12 of Schedule 10 of the 1989 Act.

The Court of Appeal was having none of this:

The essential question is one of interpretation in accordance with well-established principle. I agree with Mr Rainey that it is not open to this court to adopt Mr Rodger’s interpretation on the basis that it is a permissible interpretation and that it should be preferred because it meets the objections which I have set out above to the omission of the protection of the disregard once the landlord is able to operate sections 13 and 14 of the HA 1988. As I see it, the effect of paragraphs 9 and 11 in their form and context in relation to rent is clear. They provide a means of fixing the initial rent. Their function is thus limited to that of enabling the rent to be fixed at the outset. Once the initial terms, including rent, are fixed, these paragraphs are spent, and it is open to the landlord to serve a notice and start the procedure for fixing a new rent, when he is entitled so to do, under the provisions of section 13 of the HA 1988.

Furthermore, it is in my judgment impossible to read sections 13 and 14 as providing for the assessment of rent on the principles laid down by paragraph 9(2)(e) of schedule 10 of the LGHA 1989. If that were the intention of Parliament, there would have been some indication of that inserted into in sections 13 and 14 of the HA 1988 at the time of the LGHA 1989. Sections 13 and 14 provide a complete code for the notices to which they apply and there is no warrant to read in a further principle deduced from schedule 10.

It is, moreover, unusual, though not unknown, for a statute to set out principles rather than operative provisions. One would expect it to be made clear that, or the extent to which, a particular provision laid down a principle and not an operative provision, and how that principle was to relate to other operative provisions. Here, if paragraph 9(2)(e) lays down an overriding principle, it contradicts the express provisions of section 14(3) of the HA 1988. I have already explained that it applies only to improvements which the tenant has carried out under the new assured tenancy or some previous assured tenancy. It also only applies to improvements carried out in the previous 21 years whereas a long residential tenancy may have been for a greater term of years than this and improvements may have been made at any time during that tenancy. The absence of guidance on such points in either the LGHA 1989 or the HA 1988 is, in my judgment, a strong indication that the interpretation urged on us by Mr Rodger is not correct.

Further, para 9 introduces a range of provisions in para 10 -12, It was either unclear how or impossible for some of those provisions to have the lasting effect ‘throughout the tenancy’ argued for by Mrs Hughes, but no distinction was made between them in the statute as might be expected if Mrs Hughes’ case on the effect of para 9 was what was Parliament intended.

Appeal dismissed.

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Don’t forget to file and serve…

Published
by
J
on 03/03/2010
in FLW case note and assured-tenancy
. 9 Comments

Cadogan v Chehab [2009] EWHC 3297 (Admin), (only available on Casetrack) is noted in the current edition of Legal Action, but, so far as I can tell, hasn’t been picked up anywhere else. It’s only worthy of a short note though, which is set out below.

Chehab was the assured tenant of a flat owned by the appellant. The tenancy had arisen upon the expiry of a long leasehold interest. The rent had been agreed at £17,000 p.a. but, in 2008, the landlord served notice under s.13, Housing Act 1988, seeking to increase the rent to £29,120 p.a. and, in due course, the matter was referred to the Rent Assessment Committee.

Both parties put in evidence from a surveyor and were represented by their surveyors in the hearing. Following the hearing, the surveyor for the tenant submitted an additional report. The report was sent to the RAC but not to the landlord (the tenant apparently thought the RAC would forward a copy which, to be fair, it appears to have done with other, earlier, documents). Based partly on that supplemental report, the RAC set the rent at £22,500 p.a. The landlord appealed.

The appeal was allowed. It was wrong of the RAC to have made a decision based on the supplemental report without allowing the landlord to respond. Although the RAC appeared to have a practice of forwarding documents to the other party, it was advisable for the parties themselves to ensure that their documents were provided to the other side.

In addition, the RAC had erred in not taking into account the additional security of tenure conferred on an assured tenant and should have reflected this security in the rental level. The Judge declined to rule on what would happen if, taking that security into account, the RAC set the rent at more than £25,000 (such that security of tenure would be lost, as the tenancy could no longer be an assured tenancy).

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Rent arrears, transfers and Weaver in operation

Published
by
NL
on 07/01/2010
in FLW case note, Housing law - All and assured-tenancy
. 13 Comments

McIntyre & Anor, R (on the application of) v Gentoo Group Ltd [2010] EWHC 5 (Admin)

This was the judicial review of North Sunderland Housing Company’s refusal to permit an exchange of homes by the Claimants, joint assured tenants, with another NSHC assured tenant. NSHC are a subsidiary company of Gentoo and no points were taken on whether Gentoo were the proper Defendant. NSHC had refused to permit the exchange unless Mr McIntyre paid off an historic debt for rent arrears accrued when he lived at another property as a tenant of Sunderland City Council. Originally Mr & Mrs were joint tenants of Sunderland City Council in the property, prior to a stock transfer to what became NSHC in 2001. It is quite a complex and significant case, involving the disputed conjunction of private and public law and the first significant test of the application of the Court of Appeal Judgment in L&Q v Weaver [2009] EWCA Civ 587 on the status of RSLs as exercising a public function in their housing function. Apologies for length, but there is a lot in this judgment, with wider implications for all sorts of challenges, not just exchanges or challenges to RSLs.

The brief facts:
Mr & Mrs M were the joint secure tenants of Sunderland CC from 1984. In 1996, while Mr M was separated from Mrs M, he lived at another Sunderland CC property and accrued rent arrears. In 1998, the Council obtained a judgment against him for £597.80 plus £133.75 in respect of costs. The Council attempt to enforce that judgment by warrant on no less than 5 occasions, but no response or bailiff entry was achieved in respect of that property.

In 2001 the original property was sold to NSHC’s precursor, in a package of 36,000. Mr and Mrs M were granted an assured tenancy from March 2001.

The tenancy agreement provided that:

You have the right to exchange your home with another tenant, providing you meet certain conditions. Please refer to the Tenants’ Handbook for further details of the right to exchange and the circumstances in which it applies.

The Tenant’s Handbook stated that there was a right to exchange properties with another tenant of the same RSL provided that:

You both have your local Housing Company’s written consent.
• You make sure that neither of you is in breach of any of your tenancy conditions or obligations. You must also comply with any reasonable condition attached to your local Housing Company consent relating to the payment of outstanding rent, the remedying of any breach or performing any obligation of the tenancy agreement.
• The exchange does not result in any property either becoming overcrowded or under occupied.

And:
Your local Housing Company will not unreasonably withhold permission. It will not withhold permission on any grounds except those in Schedule 2 to the Housing Act 1988

The agreement for the transfer of housing stock between Sunderland CC and NSHC’s precursor stated that:

All arrears of rent due as at the Completion Date from existing and former tenants of the Property [which included all the freehold and leasehold property the subject of the housing stock transfer]….(the “Arrears”)…together with all rights to recover the same shall be assigned by the Council to [SHCL].

The rights to existing possession orders and money judgments were assigned.

In April 2007, Mr & Mrs M applied for consent to an exchange with another NSHC assured tenant. NSHC responded that consent was refused “as there were rent arrears and court costs outstanding”. The M’s solicitors responded and “an offer was made that, if consent was granted, Mr McIntyre would pay the amount outstanding by instalments. They also wrote to NSHC asking it to reconsider its decision contending that it was unreasonable to withhold consent to an exchange based on an irrecoverable debt; that it meant punishing Mrs McIntyre for a matter not of her own making; and that a strict policy of refusing an exchange on the basis of historical rent arrears was prima facie unreasonable.”

NSHC replied that consent “was conditional on Mr McIntyre clearing the Former Tenant Rent Arrears owed to the Sunderland Housing Group before any move; that it was entirely reasonable to require him to pay monies which were outstanding before permitting him to exchange; and that, given the Group’s historic dealings with him with respect to the arrears, the offer to pay by instalments after the exchange was not acceptable.” The JR claim was issued.

Issues
The MacIntyres argued that:
i) the decision not to consent until payment of Mr McIntyre’s historic and unenforceable rent arrears in respect of another tenancy was amenable to JR
ii) it was one no reasonable person could have taken in the circumstances
iii) Gentoo had simply applied a blanket policy with no consideration of individual circumstances

Gentoo argued that:
i) the decision was not amenable to JR
ii) if it was, the claim should be dismissed as there were alternative remedies available
iii) the decision was not unreasonable
iv) the complaint that a policy had simply been applied with no consideration of the Claimant’s circumstances was not raised the Claimant’s original grounds.

Amenability to JR

Gentoo argued that R (Weaver) v London & Quadrant Housing Trust [2009] EWCA Civ 587 could be distinguished:

(i) that a decision to refuse consent to the mutual exchange of a tenancy does not result in the individuals who may be concerned becoming homeless which a decision to terminate a tenancy may do; (ii) that assignment of a secure tenancy by way of exchange falls outside the cases governed by Part VI of the Housing Act 1996 dealing with the allocation of housing accommodation; and (iii) that registered social landlords are not obliged by any enactment to deal with applications for mutual exchange on any particular basis, unlike local housing authorities who must deal with applications for such exchanges in accordance with section 92 of the Housing Act 1985.

Held, that while each of these points was correct in itself:

they do not serve, either individually or collectively, to distinguish this case from Weaver. Whether an exchange of social housing should be permitted involves a decision to be taken in the discharge of what the majority in the Court of Appeal regarded as the public function of managing and allocating social housing. This is not merely because (as the Tenants’ Handbook in this case recognises) such an exchange may result in a property becoming overcrowded or under-occupied. It may also involve questions about how best to meet not only the need for social housing of those tenants wishing to exchange and their families but also the need of others for it. Like a decision to terminate a tenancy, in some cases it may also engage an individual’s right to respect for his or her private and family life.

Thus the fact that registered social landlords may have greater freedom than local housing authorities have in responding to applications for mutual exchange does not mean that such applications do not require them to take decisions in the discharge of what the Court of Appeal regarded as their public function of managing and allocating social housing. Nor did the majority of the Court of Appeal intend to limit that function to the doing of those things that are governed in the case of a local housing authority by Part VI of the Housing Act 1996 which regulates the allocation of housing by such an authority. Indeed a decision to terminate a tenancy by a local housing authority is not governed by those provisions: see section 159(2) of the 1996 Act. The fact that such a decision may result in an individual becoming homeless was not the basis for regarding that decision in Weaver as not constituting an act of a private nature. The decision was so regarded because it was one taken in the discharge of what the Court of Appeal regarded as a registered social landlord’s public function of managing and allocating social housing. That explains why it also was considered susceptible to a claim for judicial review. Such a claim is one to review the lawfulness inter alia of “a decision, action or failure to act in relation to the exercise of a public function”: see CPR Part 54 rule 54.1(2)(a)(ii).

For this reason, the attempt to distinguish Weaver failed.

Gentoo also argued that the condition in the Tenant’s Handbook on mutual exchange was a purely contractual condition. NSHC’s decision whether to hold to that condition or not was a private decision.

Held: Even if this were so, the decision about whether or not to implement the condition was a discretion which fell under the function of managing and allocating housing stock, so under Weaver.

The relation of public and private law

Gentoo’s argument appeared to rest on the ground that “public law makes no difference when considering the lawfulness of an exercise of a contractual right, particularly one that must be exercised reasonably. However, that a right is exercised under contract does not necessarily that may not be invalid under public law. The private law decision may be unfettered, but that does not exclude public law controls – for example terminating a local authority tenancy at the time before they had statutory security of tenure, Cannock Chase DC v Kelly [1978] 1 WLR 1.

While a contractual right that has to be exercised reasonable under the contract – as here -may more plausibly appear to be outside the ambit of JR. However, even if the private and public law requirements and consequences were identical, this would not mean that only private law would be applicable:

i) First there may be a difference in what matters fall to be assessed as reasonable or unreasonable. Thus public law may affect the process by which a decision is reached to exercise such a right (including the considerations taken into account and the purpose for which the right may be exercised) as well as requiring the result not to be objectively unreasonable. In private law by contrast the objective reasonableness of what is done may be the only relevant matter. In other cases the reasons why that result was in fact chosen may also be material. There is, therefore, no necessary identity in what matters falls to be assessed as reasonable or unreasonable in public and private law.

ii) Secondly the perspective from which the reasonableness or unreasonableness of what is done falls to be assessed may be markedly different. Normally the functions which are vested in a public authority, and the rights which it may acquire in discharging them, fall to be exercised in the public interest for the purpose for which the function was conferred having regard to the consequences of their exercise for others. The reasonableness of their exercise does not normally fall to be assessed purely by reference to the interests of the public authority itself since functions are not normally vested in such a body for its own benefit. By contrast the reasonableness of the exercise of some rights in private law may fall to be assessed simply by reference to the particular legitimate interests of the person having that right. In such a case a right might be exercised reasonably (or not unreasonably) as a matter of private law but unreasonably as a matter of public law.

iii) Thirdly the onus of proof and the standard of reasonableness to be deployed in resolving any dispute about the exercise of the right may vary. In public law, for example, the onus is on a claimant to show that a public authority’s decision was one no reasonable person could have made in the circumstances. In private law the onus may instead be on the person exercising a right to show that what he has done is reasonable.

iv) Finally the persons who may be able to challenge the reasonableness of what is done may be different. In public law anyone with a sufficient interest may do so. In private law it is normally only another party to the contract who may do. In this case, for example, the person with whom the Claimants wished to exchange tenancies might have challenged NSHC’s decision to grant the Claimants a conditional consent to that exchange if that decision was unlawful in public law even though as a matter of private law that person may not have been able to do so.

These elements need to be considered and addressed in a dispute over whether a public or private law right or remedy is involved. Where a public authority is exercising a contractual right, the public authority may take factors into account matters which would be irrelevant in private law when deciding whether to exercise that right as a matter of public law. Conversely, ” a contractual right may be exercisable as a matter of private law in a manner which it would not be capable of being exercised in public law as the considerations which a public body may take into account in exercising its public functions may be narrower than those which a person not exercising such functions may do”.

Nonetheless, when a public authority decides whether or not (and, if so, how) to exercise any contractual right it may have, it must consider whether it can do so lawfully as a matter of private law. No reasonable public authority would do otherwise. Of course failure to do so may be immaterial if there is a contractual right to do what the authority may decide to do. However, if a public authority simply assumes, or decides to act on the basis, that it has a contractual right to do what it decides to do or, when doing so, takes into account something that it may not do as a matter of private law, then it has equally misdirected itself in law or taken into account what in the circumstances is a legally irrelevant consideration when discharging the public function in question and it has thereby erred in public law. In such a case the other contracting party will no doubt have an alternative remedy available in private law and it may well find that permission to apply for, and any relief sought on, a claim for judicial review will be refused. But it is possible that there may be some occasions in which others adversely affected may have sufficient standing to apply for judicial review if a decision taken in relation to the discharge of a public function is thus erroneous in law (as indicated above) or the question of its lawfulness may arise in other proceedings. The fact that such a decision is taken in relation to the discharge of a public function makes it likely that there will be others who may be adversely affected by it, including those who may be required to help finance the authority’s activities. [para 36]

So, did the JR claim in this case bring anything more than the Claimants may have in a private law complaint? And should relief be refused if there was an alternative private law remedy open to them?

Against Gentoo, the Court found that clause on exchange of tenancies in the tenant’s handbook was one that was subject to which section 1 of the Landlord and Tenant Act 1988 applied. This meant that when the tenant serves a written application for consent, the landlord must serve a written notice on the tenant within a reasonable time specifying the reasons for withholding that consent (if it is withheld) and the conditions imposed (if it is granted subject to conditions). The landlord also owes a duty to give consent, except in a case where it is reasonable not to give it, and that duty is not satisfied if consent is granted subject to any condition that is not a reasonable condition. The tenant has claim if the landlord is in breach of these conditions.

Following Ashworth Frazer Ltd v Gloucester City Council [2001] UKHL 59, any condition imposed by the landlord must be something affecting the subject matter of the contract which forms the relationship between the landlord and the tenant. However, the landlord’s obligation is to show that his conduct was reasonable, not that it was right or justifiable, and it is only in exceptional cases that a landlord may be required to take into account anything beyond his own interests – something of the order of gross unfairness, or a clear disproportion between benefit and detriment.

This then would be the private law basis for the claimant’s claim. It would appear that there may well be factors that would weigh in a public law decision that would not in a private law one, such that the two could not be said to be identical. This issue of the application of s.1 Landlord and Tenant Act 1988 is key to this case and we’ll come back to it below.

On the public law challenge

The MacIntyres contended that the amount involved was one that NSHC never had any right to, as it was not incurred in respect of the current property. On the evidence is was hard to be clear whether the property for which the arrears were incurred was included in the assignment by Sunderland CC to NSHC. However, the benefit of any orders for money judgments obtained by the City Council against former tenants of premises comprised in Clause 9.1 of the stock transfer were assigned, and that certainly included the money judgment against Mr M.

On the MacIntyres’ argument that the sums were irrecoverable by virtue of the time elapsed, this was mistaken. Although as a simple debt, the Limitation Act 1980 would apply, there is no limitation on a judgment debt, simply on bringing a second action on that debt. An application writ of execution may require the Court’s permission, CPR Schedule 1, RSC Order 46 r2(1)(a), CPR Schedule 2 CCR Order 25 r5(1)(a), but none of that bars recovery of a judgment debt by other means, e.g. winding up petition, after 6 years. Accordingly, the Judgment debt in this case could not be considered as necessarily irrecoverable. Further, a statued barred debt does not, in any event, cease to be a liability – just unenforceable.

The MacIntyres contended that the sum could not be considered to be related to the payment of outstanding rent, as per the Tenant’s Handbook. However, the Tenant’s Handbook referred to ‘outstanding rent’, without a ‘lawfully due’ condition. Plus the Handbook did not limit the possible conditions the landlord may set to ‘outstanding rent, so in the end the question was simply whether the condition set was one no reasonable landlord of social housing could have imposed in the circumstances.

In view of the history of the debt, “it cannot be said that no reasonable landlord of social housing could have made payment of any amount due from Mr McIntyre a condition of its consent to a mutual exchange of his joint tenancy merely on the ground of the lapse of time since the order was made by Sunderland County Court.”

So, these elements of the claim failed. However, and key to the case, the debt was not incurred in relation to the property on which the exchange of tenancies was proposed. In a private law, contractual, situation, recovery of a debt owed in relation to another property would not be considered a reasonable condition for consent to assignment. It has “nothing whatever to do with the relationship of landlord and tenant in regard to the subject matter of the lease”. Gentoo’s arguments that it was a matter ‘not extraneous to the lessee’ was dismissed – that something (e.g. hair colour) might be related to the proposer assignor did not make it relevant.

Gentoo then argued that the condition was expressly set out in the Tenancy Agreement. This was not so. The natural meaning of the term in the tenancy agreement, ‘outstanding rent’, was that it referred to rent for the tenancy involved. This was particularly so when a joint tenancy was involved, as the condition would have to alert someone entering a joint tenancy that they may be frustrated in an exchange by the other joint tenant’s unrelated debt. In any event, the parties agreeing a term wouldn’t make it reasonable in Amzworth Fraser terms, unless a ‘qualifying lease’ under Landlord and Tenant Act 1927, which was not relevant here.

Gentoo’s construing of s.92(5) Housing Act 1985 to allow local authorities to recover rent due on another tenancy before consenting to an exchange was also in error. S.92(5) refers to ‘rent lawfully due’, which is here held to mean rent due on the tenancy at issue in the exchange. The attempted extension by comparison with HA 1985 failed.

In this case, also, the exchange was between NSHC’s tenants. Gentoo argued it was entitled to set the condition in view of Mr McIntyre being the prospective tenant of the exchanged property. But this would be a condition on the other person in the exchange, not the MacIntyres, and that was not what was done. In any event, the MacIntyres were not in arrears with their rent on the current property.

As a result:

The condition imposed by NSHC was thus not one in my judgment that it could impose on any consent to an assignment by the Claimants which was not to be unreasonably refused as a matter of private law. NSHC plainly proceeded on the assumption that it could do so and in that respect erred in law and took into account something, namely the amounts outstanding in respect of 78 Rockingham Road, that was irrelevant to its decision to impose that condition. It thereby erred as a matter of public law. [para 90]

If the condition had been a viable one at private law, none of the Claimants’ arguments would have succeeded:

Had the condition been one capable of being imposed as a matter of private law, however, there is no reason in my judgment why it would have been unreasonable to do so as a matter of public law subject to the other arguments which Mr Paget advanced. Recovering what is owed to a registered social landlord to assist in the provision of social housing is patently not an unreasonable objective in itself for such a landlord. Indeed it might well be thought not to be acting reasonably, other things being equal, if it does not do what it reasonably can do to obtain what it is owed by others, including those who occupy its social housing.[para 91]

In mopping up the remaining arguments: it was not unreasonable that Mrs MacIntyre was being penalised as a joint tenant. In any such exchange situation someone would end up being penalised for the fault of another in that the exchange did not go ahead; The size of the amount was not relevant – and would have the odd effect of saying that NSHC should have been stricter and sought the court costs as well as the arrears debt; it was not unreasonable for NSHC not to accept an offer of payment in instalments, as there was no evidence the amount could not be paid off at once and there was no particular detriment in not being able to exchange now.

The argument on a blanket policy had not been raised in the claim. No evidence was brought, just an assertion, and permission would have been refused to amend. The Defendant had not had the opportunity to deal with the contention. In any event the appearance was that NSHC had at least been prepared to consider instalments, which went against a ‘blanket policy’.

Overall:

In considering any claim that a decision is one no reasonable registered social landlord could have taken in discharging its function of managing and allocating its social housing stock, it is necessary to look at the position overall rather than point by point (although each point needs to be considered). Moreover it is also necessary not to overlook the fact that such a decision is one taken in the discharge of that function by a body not conducting its activities for profit and one which has experience in discharging that task that this court does not have. Its discretionary decisions in the discharge of that function which do not engage any Convention right are ones to which considerable respect should be given.

It was not for the fact that the sums involved arose from a different tenancy, there was nothing that would make this an unreasonable decision by the landlord.

On relief:
Gentoo contended that the Claimants had a private law claim under Landlord and Tenant Act 1988 and/or could have applied to the Independent Housing Ombudsman, so relief should be refused. While the availability of an alternative remedy would be a reason to refuse permission, permission had been granted and the issue of alternative remedies had not been raised by Gentoo at that stage.

On the overlap of public and private law claims:
The existence of a private law claim did not invalidate a public law claim on the same facts, Boddington v the British Transport Police [1999] 2 AC 143. In fact the two should be brought in one claim to further the overriding objective. However, had the question of alternative remedy been raised when permission to make this claim was sought, permission would no doubt have been refused. Once permission had been granted, refusal of a remedy was a matter of discretion.

A remedy was refused in this case, certainly the order sought quashing the decision NSHC took in May 2007. The other dwelling involved in the exchange had been let to someone else in 2008, so the order sought that that NSHC consent to the exchange was impossible. Any further exchange application would have to be considered on its own merits. Any right to damages under s.4 Landlord and Tenant Act 1988 would have to be determined by a claim under that act, assuming there was any loss.

In the circumstances, and having regard to the fact that an alternative remedy in respect of the condition imposed was and is available to the Claimants by way of an ordinary claim, the relief sought in respect of NSHC’s decision on this claim for judicial review is refused. The Claimants’ claim for judicial review is accordingly dismissed.

In future claims concerning any decision to refuse permission to assign or exchange, or to grant such permission only on conditions, to which section 1 of the Landlord and Tenant Act 1988 applies should normally be brought by ordinary claim, even if they also include claims that the decision of the registered social landlord involved was unlawful as a matter of public law. [para 115-116]

The claim for judicial review was accordingly dismissed.

Comment
This is a complex decision on what was, if we are honest, not really a viable case by the time it reached hearing (what is the remedy, always think, what is the remedy!). It covers some complex problems, particularly in the relation of public and private law claims, and indeed the lawfulness of ‘contractual’ decisions. As far as I can see the following are the major points, may there may well be some I have missed…

1. Weaver will be taken broadly in terms of ‘housing function’.
2. Conditions on exchange will be taken broadly, save were they have no private law basis – RSLs and indeed LAs take note.
3. The simple existence of an alternative private law claim will not invalidate bringing a public law claim, but…
4. where there is a coterminous private law remedy, permission should be refused (or, under the discretion, at substantive hearing)
5. Conditions on exchange of tenancy, where they relate to the performance of the tenancy, will not usually be considered to be unreasonable, assuming they have private law validity (i.e. relate to the tenancy proposed to be exchanged).
6. Assertions of a blanket policy -and fettering of discretion – must be made an an early stage and evidenced if they are to be sustained.
7. What is the detriment, even in an unlawful and unreasonable decision?

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L & Q Change Practice on Ground 8

Published
by
Dave
on 13/08/2009
in Housing law - All, Possession and assured-tenancy
. 0 Comments

News has come our way (circuitously) of a change in practice by London and Quadrant on the use of Ground 8, the mandatory ground for possession on the basis of rent arrears in respect of assured tenancies, from 01 August. Apparently, they will now only use it in “exceptional circumstances” (eg abandonment). Maybe others will follow … and it will be interesting to see how this chimes with the TSA research on the use of Ground 8 which should be completed by now.

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RSLs support L&Q in Weaver appeal

Published
by
NL
on 29/06/2009
in Housing law - All and assured-tenancy
. 0 Comments

According to Inside Housing, not only is L&Q to seek permission to appeal the Court of Appeal decision to the Lords/Supreme Court (and no surprise there) but the G15 group of the largest RSLs in London are potentially backing them, including funding. To quote Inside Housing:

Steve Howlett, chief executive of Peabody Trust and chair of the G15, said: ‘The G15 will consider how we can support L&Q if it chooses to appeal.’

When asked if this meant contributing to a possible ‘appeal fund’, Mr Howlett replied: ‘Yes – that is something that has previously been discussed.’

Given the ludicrous position that the LSC adopted on funding the Court of Appeal case for Ms Weaver, one would hope that this bloc of RSLs would make it abundantly clear that this is a ‘broader public relevance’ case par excellence and funding will follow.

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Pick a date, any date

Published
by
NL
on 18/06/2009
in FLW case note, Housing law - All, Possession and assured-tenancy
. 1 Comment

It might be a small thing next to the likes of Weaver v L&Q, but Hussain v Bradford Community Housing Limited & Kauser [2009] EWCA Civ 763 is worth attention on a technical point.

Hussain had a weekly periodic tenancy has joint tenant with Kauser. The weekly period ended on a Friday of each week. The tenancy specified 28 days notice. Following the breakdown of the relationship, BCH and Kauser issued Notice to Quit with effect from ‘the last Sunday of the month or the last day of the periodic tenancy after four weeks’. The landlord also wrote to Kauser saying that if an offer of alternative accommodation was not made in time, the tenancy would be held over for her.

Hussain submitted that:
1. The NTQ contained two alternative dates, was therefore ambiguous, and should be construed contra proferendum such that the Notice to Quit was given for the Sunday (and presumably was therefore invalid).
2. Alternatively he and Kauser had agreed to vary the notice, as evidenced by the landlord’s letter and the rent being paid up to the last Sunday of the month.

The Court held
1. While the NTQ gave two possible dates, only one complied with the clause in the tenancy. There was no basis in the tenancy to exclude the ‘catch-clause’ or saving clause which was present precisely to ensure that the tenancy was ended at the end of a period of the tenancy. Thus the NTQ took effect on a Friday.
2. The variation was hard to accept. It had not been raised at the trial below and lacked factual support – there was no evidence on rent payments, except for the usual payments in advance. Payment of rent did not affect a valid Notice to Quit. The landlord’s letter to Kauser was no more than an indication of what is was prepared to do and did not vary the NTQ. Kauser did not need Hussain’s consent for service of NTQ.
Appeal dismissed.

On the saving clause, this is not a surprise. Dates expressed as an alternative, if one does accurately coincide with the end of a period of the tenancy have stood before and would be hard to see as ambiguous.

I’m less sure about the variation point. Although the note does not give the full text of the landlord’s letter, if it proposed that Kauser’s tenancy would continue if alternative accommodation was not available, then it is hard to see how Kauser’s tenancy could be continued without waiver of the NTQ on the joint tenancy. It appears that in the event, alternative accommodation was found for Kauser, so this may arguably have been a offer of a new tenancy that was not taken up – without the details it is hard to tell – but I would be concerned if what could have been a statement that the tenancy, for Kauser at least, would continue was dismissed out of hand as not capable of waiving the NTQ on Hussain’s tenancy. A joint tenancy ends for both or neither, surely.

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Rent review (Megarry at last…)

Published
by
Francis Davey
on 17/06/2009
in FLW case note, Housing law - All and assured-tenancy
. 0 Comments

Avid students of assured tenancies will know that the late Sir Robert Megarry wondered (in his work the Rent Acts) what would happen to a term providing for a mechanism for setting the rent that was written into a fixed term assured tenancy after that tenancy had become a statutory periodic tenancy. The High Court has given us an answer in the case of London District Properties Management Limited v Goolamy [2009] EWHC 1367 (Admin).

For those who have more pressing interests than rent review, the legal background is this. Section 13 of the Housing Act 1988 creates a system by which a landlord may increase the rent of certain tenancies. Section 13 only applies to periodic tenancies and then only if the tenancy is (to paraphrase slightly):

  • a statutory periodic tenancy other than Crown or local authority tenancies as defined by paragraphs 11 and 12 of Schedule 1 to the 1988 Act
  • any other periodic tenancy which is an assured tenancy and for which there is no provision for the time being binding on the tenant which provides for a change in the rent

Thus if you let a property as an assured tenancy which is periodic from the outset and the tenancy agreement contains a valid clause which provides a mechanism for rent increases then section 13 will not apply. The mechanism you have agreed will take effect instead.

To digress slightly, this point does not seem to have been grasped by some housing associations. I have seen a great many housing association tenancy agreements which have a provision for rent review but then state that the tenant can appeal any rent to the Rent Assessment Committee. Not so. Such an agreement would oust section 13 and the RAC does not have jurisdiction to adjudicate on the rent outside s.13 (Contour Homes Ltd v Rowen [2007] EWCA Civ 842).

The puzzle is this: if a fixed term assured tenancy agreement contains a rent review clause does that clause survive in the statutory periodic tenancy? If it does survive then, it would appear, a landlord would be able to chose either to rely on the rent review clause, or serve a notice under s.13 and use that mechanism instead.

This is exactly the situation that a London Rent Assessment Committee found in Goolamy. The fixed term tenancy had included the following clause:

“6. It is hereby mutually agreed that with effect from each anniversary of the commencement of the term hereby created (whether during the said term or during the currency of any subsequent statutory periodic tenancy) the yearly rent payable hereunder (and accordingly the periodic payments of rent) shall increase by five per cent.”

After the fixed term had ended the landlord served a section 13 notice to increase the rent. The tenants referred the matter to the RAC which held that it did not have jurisdiction on the basis that:

Section 13 of the Housing Act 1988 (as amended) refers at (b) to any periodic tenancy other than one in relation to which there is a provision, for the time being binding on the tenant, under which the rent for a particular period of the tenancy will or may be greater than the rent for an earlier period.

and since the lease did contain such a provision, section 13 did not apply.

A truly puzzling decision. Section 13 does not refer to “any periodic tenancy….” but to “any other periodic tenancy…” other than a statutory one. But the tenancy in question was a statutory periodict tenancy and so (by section 13(a)) section 13 applied whether or not there was a binding provision. What on earth were the RAC doing looking at s.13(b)?

Unsurprisingly the landlords and their management company applied for a statutory review by the High Court which was granted.

The appellants argument was summarised as follows:

Mr. Buttimore, who appeared for the appellants, submits that the Panel fell into error when it suggested that this review was governed by section 13(1)(b) of the 1988 Act. It was governed by section 13(1)(a) with the result that any rent review clause in the original assured tenancy was not incorporated into the subsequent statutory periodic tenancy. That would be so whether the review clause was favourable to the tenant (as it may be here) or to the landlord. Either way, the statutory mechanism supersedes the contractual one in these circumstances. Mr Buttimore has been unable to locate any authority on the point.

The difficulty with this submission starts with the phrase  “…. with the result that” and goes on from there. That the Panel (strictly speaking it was an RAC drawn from the Panel) fell into error is evident. But the jurisdiction of the RAC is confined to that given to it by section 14 of the Housing Act 1988 which permits it, after a referral by a tenant under section 13, to determine an open market rent. An RAC does not have jurisdiction to determine what the rent payable under the tenancy might be.

What that means is that had the RAC decided that they did have jurisdiction given to them by section 13(1)(a) they would have acted beyond their powers if they had decided whether or not the rent review clause in the fixed term tenancy carried on into the statutory periodic tenancy. The High Court, on a statutory review, could not be in a better position.

This difficulty appears to have been unnoticed by the court, which agreed with the appellants. The court found a solution to the problem in section 5(3) of the act which preserves most of the terms and conditions of the original assured tenancy into the statutory periodic tenancy but “subject to the following provisions of this Part of this Act”. The provisions included section 13 and so (reasoned the court), the section 13 mechanism would prevent the rent review clause being preserved.

I’m not entirely convinced. A preserved rent review clause would work alongside and not in conflict with section 13. Section 13 does not imply a term into the a periodic tenancy, but rather provides a statutory mechanism for setting the rent. Section 5(3) does not appear (to me) to be conclusive. It is also hard to see why a landlord can grant a 1 month periodic tenancy containing a rent review clause which operates successfully, but if the same landlord granted the same tenancy as a 1 month fixed term tenancy on otherwise identical terms, section 13 would take effect.

Despite my doubts, and the fact that the decision of the court is at best obiter, I suspect that this decision will remain the law on the subject until assured tenancies as we know them are abolished.

One final remark: if a statutory periodic tenancy (other than a Crown or local government tenancy) ceases to be an assured tenancy (eg by rent review) it still remains subject to section 13, although in most cases a landlord could simply give notice if a tenant did not accept an increase in rent.

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Tenancy deposit alert

Published
by
NL
on 06/06/2009
in Assured Shorthold tenancy and Housing law - All
. 0 Comments

Mydeposits.co.uk, which is one of the approved TDS schemes, has issued a press release warning about mytenancydeposits.co.uk, whose site purports to be that of an approved TDS custodial scheme. It isn’t. Any landlord whose deposit is with mytenancydeposits.co.uk has not complied with the requirements of the scheme and may face the 3x penalty.

mytenancydeposits.co.uk is run by a company called MTD Secure Limited. They claim to be “administering a tenancy deposit protection scheme by Tenancy Deposit Solutions Limited under contract from Communities & Local Government”. This is not true.

Now, if they are going to lie about that, it would probably not be a good idea to hand them any money at all and certainly not a tenancy deposit. mydeposits.co.uk say that they have informed the relevant authorities.

Landlords, agents and tenants beware! There are only three approved schemes:

  • Tenancy Deposit Solutions Limited trading as mydeposits.co.uk
  • The Dispute Service, also known as the Tenancy Deposit Scheme (www.thedisputeservice.co.uk)
  • The Deposit Protection Service (www.depositprotection.com)

    • If it isn’t one of those, it isn’t legitimate for the purposes of the Housing Act 2004.

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    Outright orders and drug offences

    Published
    by
    J
    on 05/05/2009
    in FLW case note, Housing law - All, Possession and assured-tenancy
    . 0 Comments

    Knowsley Housing Trust v Prescott & Prescott [2009] EWHC 924 (QB)

    Mr & Mrs Prescott were the assured tenants of Knowsley Housing Trust and had been since 2002. On 11 April 2006, Mr Prescott pleaded guilty to charges relating to the supply of cocaine and amphetamines. He was sentenced to 8 years imprisonment.

    The Housing Trust sought possession of the property in light of the conviction. After a contested trial, the trial judge made a postponed possession order, postponed on terms that the property not be used for drug dealing. He felt that Mr Prescott had already been adequately punished. There was also nothing to suggest that Mrs Prescott had benefited from his wrongdoing. He also made no order for costs as regards Mrs Prescott. The Housing Trust appealed against both of those decisions.

    Mr Justice Blair, whilst aware of the reluctance which an appellate court should demonstrate when asked to review decisions based on reasonableness and discretion (see, for example, Bracknell Forest BC v Green [2009] EWCA Civ 238 and our note, here), was also struck by the severity of the crime which Mr Prescott had committed. The amphetamines were worth some £7.1 million and had been dealt on an “industrial and national” level. Mr Prescott was one of the two prime moves in this enterprise. He was a man with ten previous convictions (albeit not for drugs offences).

    The recent jurisprudence of the higher courts clearly indicated that it would be an unusual case where it was appropriate to make any order other than an outright possession order in cases involving drugs.

    Blair J allowed the appeal. The Judge had erred in postponing the order. It was significant that Mrs Prescott had not given oral evidence. The court could properly infer that she was unwilling to be cross-examined as to the extent of her knowledge of her husband’s behaviour.

    The drug ‘factory’ was located just over 90 seconds away from the property and was obviously in the “locality” of the property. The fact that there had been no complaints from neighbours was immaterial.

    The Judge had erred in taking note of the punishment that Mr Prescott had been given in the criminal proceedings. That could not now be a point taken in mitigation so as to justify postponing the order.

    Finally, as neither Mr nor Mrs Prescott had given evidence, it was hard to see how the Judge could properly have formed the view that there was a real prospect of the terms of the postponement being complied with.

    Accordingly, the Judge should have made an outright order. In those circumstances, the costs order must also be set aside.

    I don’t think there is anything new in this judgment. Drug dealing has, for some years, been regarded very seriously by the county court and I think it is fair to say that the vast majority of such cases where the dealing is proven, then an outright order will follow. I’d expect this case to be relied upon in skeleton arguments on behalf of landlord’s though, as it brings together various judgments in one place.

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    Improvements, rent and former long leaseholders – a nasty loophole

    Published
    by
    Francis Davey
    on 25/03/2009
    in FLW case note, Housing law - All, Leasehold and shared ownership and assured-tenancy
    . 0 Comments

    The recent case of Hughes v Borodex Ltd [2009] EWHC 565 (Admin) illustrates a pitfall that may face the very small number of former long leaseholders who have become assured tenancies as a result of the Local Government and Housing Act 1989 (“the 1989 Act”).

    Mrs Hughes had been the tenant under a lease that was originally granted for a term of 39.25 years (less 3 days) on 25 March 1964. The tenancy was kept alive by the 1989 Act (which requires the landlord to serve a notice to bring most long residential leases to an end after the term has expired).

    In due course the respondent landlord did serve a notice proposing that a new assured tenancy start on 28 February 2004. The rent was not agreed and a reference to the Rent Assessment Committee (“RAC”) was made under provisions of Schedule 10 of the 1989 Act. A rent was set at £1,668 per month.

    The process by which an RAC assesses a new rent under Schedule 10 is very similar to that followed under s.14 of the Housing Act 1988 (“the 1988 Act”) with which some readers will be familiar. S.14(2) requires the RAC to disregard “relevant improvements” which are (subject to some conditions) improvements made by the tenant either under the tenancy in question or under some previous assured tenancy up to a maximum of 21 years before. The landlord should not get more rent because the tenant did the house up.

    Schedule 10 imports most of s.14 but changes the definition of “relevant improvement” to mean any improvement carried out during the long residential tenancy. Just as one might expect.

    The flaw in this neat scheme is that, under the new assured tenancy, the landlord may, in the course of time serve a s.13 notice to increase the rent. Any challenge to that rent will result in a determination under s.14 under which the RAC will not be able to take into account the improvements made by the tenant during the long lease.

    This happened to the Claimant and a new rent of £2,340 per month was assessed by an RAC on 7 May 2008 now disregarding the Claimant’s improvements during the long tenancy. The new rent is of course sufficient to push the annual rent over £25,000 per year taking the Claimant’s tenancy outside the security of tenure in the 1988 Act.

    Her statutory appeal against the RAC’s decision failed because the High Court found, as I have indicated, that there is no statutory provision to permit the RAC to consider her improvements. Various inventive arguments were offered in support of her appeal but as far as I can see it was doomed to fail.

    This is a classic example of the kinds of personal tragedy and injustice that result when governments try to draft legislation in the messy and complex way that has been their usual practice in housing law for at least as long as I have been alive. The Claimant will suffer the consequences.

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