Mew v Tristmire concerned whether or not two “houseboats” were “dwelling houses let as separate dwellings” as required in section 1 of the Housing Act 1988 in order for them to be assured tenancies.

The “houseboats” appear to have been converted WWII landing craft that were, in the event, not used in the D-Day invasion. Both rested on wooden platforms so that they did not rise and fall with the tide. Both could be lifted off the platforms and removed, although one, “Emily” was fixed to an additional structure that had been added some 5 years previously and which would be damaged or destroyed if “Emily” was moved.

The court took the “houseboats” status as “dwelling houses” depended on their forming a part of the land, which in turn depended on their degree of annexation. Readers may be familiar with the considerable case law that has built up around the question of annexation and the fertile source of argument to which it can give rise, particular in the context of business tenancies.

The court considered, on the one hand, Elitestone v Morris, where a bungalow had been constructed in situ. The House of Lords held that, although it merely rested on some concrete pillars by its own weight — and so was not strictly speaking “fixed” to the land — it could only be removed by demolition and thus was properly speaking a part of the land.

On the other hand was Chelsea Yacht & Boat Co Ltd v Pope where a houseboat that was moored to the banks of the Thames (and a pontoon) could be untied (and the mains services disconnected) and floated away was found to be chattel that did not form a part of the realty.

The court considered that the condition of the houseboats at the time they were installed was relevant. At that time, on the findings of the first instance judge, the houseboats were capable of being floated away, even though now they had deteriorated to a point where removal would mean their destruction. As a result the case was more like Chelsea Yacht than Elitestone. The houseboats continued to be chattels and so could not be dwelling houses. The tenants of the houses could not, therefore be assured tenancies.

This is actually two appeals which deal with an important question about insolvency and bankruptcy and whether monies that form part of the bankruptcy can be counted as arrears of rent for the purposes of obtaining possession.

Facts
Both Ms Sharples and Mr Godrey were assured tenants of their respective landlords and both were in arrears of rent. Ms S had possesion proceedings commenced against her but these were adjourned generally on condition she made monthly payments. She failed to do so but then declared bankruptcy prior to the reinstated proceedings being heard. Mr G had a Debt Relief Order (DRO) approved by the Insolvency Service prior to the first hearing of his landlord’s claim for possession for arrears of rent.

In the case of Ms S it was argued at first instance that s285(3) of the Insolvency Act 1986 precluded the making of an order against her in respect of arrears that formed part of her bankruptcy. For Mr G it was argued that proceedings against him should be stayed due to the DRO. Both arguments failed and possession orders were made, Mr G’s being suspended on condition that he paid the future rent and a regular sum toward the arrears. The tenants duly appealed, their cases being consolidated in the Court of Appeal.

Sharples
The Insolvency Act protects the property and estate of a bankrupt from action being levied against it. The bankrupt is required to deliver all his (or her in this case) estate up to the trustee in bankruptcy and it then vests in the trustee. Assured tenancies are exempt form this provision in part and will not vest in the trustee unless the trustee specifically serves notice vesting the tenancy in himself.

Ms S’ appeal turned on two specific pieces of legislation. First on the wording of s285 Insolvency Act 1986 which reads (so far as is relevant):

(3) After the making of a bankruptcy order no person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy shall –
(a) have any remedy against the property or person of the bankrupt in respect of that debt, or
(b) before the discharge of the bankrupt, commence any action or other legal proceedings against the bankrupt except with the leave of the court and on such terms as the court may impose.
This is subject to sections 346 (enforcement procedures) and 347 (limited right to distress).
(4) …
(5)….
(6) References in this section to the property or goods of the bankrupt are to any of his property or goods, whether or not comprised in his estate.

and Ground 8, Schedule II, Housing Act 1988 which reads:

Both at the date of the service of the notice under section 8 of this Act relating to the proceedings for possession and at the date of the hearing
(a) if rent is payable weekly or fortnightly, at least eight weeks rent is unpaid;
(b) if rent is payable monthly, at least two months rent is unpaid;
(c) if rent is payable quarterly, at least one quarter’s rent is more than three months in arrears; and
(d) if rent is payable yearly, at least three months’ rent is more than three months in arrears;
and for the purpose of this ground “rent” means rent lawfully due from the tenant.

It was contended for Ms S that s285(3)(a) precluded the granting of a possession order as this would be a remedy granted to the landlord in respect of the debt covered by the bankruptcy and the Assured tenancy was clearly property protected by that sub-section. Further, Ground 8 was not made out as no rent was ‘lawfully due’ from the tenant, in fact no rent was due at all. Finally, there was a public policy argument in favour of protecting Assured tenants from being made homeless where they had declared bankruptcy in respect of their debts and this was surely the entire point of the IA.

The Court of Appeal disagreed and held that the making of a possession order was not in fact a remedy precluded by the IA. Three key principles were set out:

First, the grant of a tenancy, including an assured tenancy, creates a property interest in the tenant which is an incumbrance on the landlord’s title. An order for possession is a remedy which restores to the landlord full proprietary rights, including rights of occupation and letting, in respect the property. Secondly, the failure to pay rent is a breach of a contractual obligation. Neither forfeiture, nor a court order for possession, nor recovery of possession by the landlord, nor an order for bankruptcy, eliminates the personal indebtedness constituted by the rent arrears. Thirdly, it follows, as a matter of general principle, that an order for possession of property, whether let under an ordinary contractual tenancy or a secure tenancy or an assured tenancy, is not a remedy “in respect of” the debt represented by the rent arrears which gave the landlord an entitlement to the order for possession.

It followed from these principles that a possession order was not a remedy in respect of the debt because it was not designed to enforce payment of the debt which is what the IA was actually intended to prevent. It was a remedy in respect of the property by allowing the landlord to free himself of the incumbrance of the tenancy. The public policy argument of maintaining the right of Assured tenants to stay in their home was given careful consideration but it was felt by the Court that this was a matter for housing legislation and the careful balance struck in that legislation should not be upset by legislation designed to deal with personal insolvency.

Godfrey
Many of the same arguments were adopted for Mr G but his case was said to be stronger because the wording of s251G, IA 1986 (which deals with DROs) is not qualified as s285 is because it prohibits any remedy in respect of the debt rather than limiting it to the property and person of the bankrupt. Furthermore the order against Mr G did not rely on the mandatory Ground 8 but on a discretionary ground for possession, Ground 10.
However, the reasoning that the Court had followed in dealing with Ms S was relatively simply extended to deal with Mr G. However, it was wrong for the order to be suspended on condition that payments were made toward the arrears as this would offend against the insolvency legislation as regards past indebtedness for reasons which are outlined above.

Summary
I have adopted the Court’s excellent summary of its findings:

(1) an order for possession of property subject to a tenancy, including an assured tenancy, on the ground of arrears of rent, which are provable in the bankruptcy of the tenant, is not a “remedy … in respect of that debt” within IA s. 285(3)(a);
(2) that is so, whether the order is an outright order for possession or is a conditional suspended possession order;
(3) IA s.285(3)(b) is implicitly limited to legal proceedings against the bankrupt “in respect of that debt”; that is to say, it is qualified in the same way as IA s.285(3)(a);
(4) accordingly, proceedings for an order for possession of property subject to a tenancy, including an assured tenancy, on the ground of rent arrears, in which no claim is made for arrears provable in the tenant’s bankruptcy, are not subject to the automatic stay in IA s.285(3)(b);
(5) an order for possession of property subject to a tenancy, including an assured tenancy, on the ground of arrears of rent, which are the subject of the tenant’s DRO, is not a “remedy in respect of the debt” within IA s. 251G(2)(a), whether the order is an outright order for possession or is a conditional suspended possession order;
(6) proceedings for possession of property subject to an assured tenancy on the ground of rent arrears, which are provable in the tenant’s bankruptcy or are the subject of the tenant’s DRO, should not normally be stayed under IA s. 285(1) or (2) or IA s. 251G(3);
(7) on the hearing of such proceedings, no order can be made for payment of such arrears; nor should a suspended order for possession be made conditional on payment of such arrears, but it should be made conditional on payment of any other arrears (i.e. those not provable in the bankruptcy or subject to the DRO) and current rent.

So the appeal of Ms S was dismissed and Mr G’s suspended order stayed in force but was varied so that he did not have to make payments to the arrears of rent. Given the current economic conditions this decision is likely to have wide consequences and will cause disappointment to many tenants and relief to their landlords.

Schedule 2A of the Housing Act 1988 was inserted by the Housing Act 1996 and supports s19A which was inserted by the same Act. S19A basically acts to make the AST the default tenancy under the Act while Schedule 2A lists a series of exceptions to the default position. Most crucially, for this case is the exception in paragraph 7 which states that a tenancy which was previously an Assured tenancy cannot be regranted as an AST unless a notice in a prescribed form had been served.

The parties had been in a previous dispute over rent arrears. This had been settled by way of a Tomlin order with the arrears being waived by the landlord and the tenant accepting a regrant of an AST in place of his Assured tenancy. The landlord now sought to terminate that AST and recover possession. The tenant argued that the Tomlin order was ineffective as notification to allow the regrant of an AST in place of his original Assured tenancy and that consequently the regranted tenancy was an Assured as opposed to an AST. Lower courts had found in favour of the landlord and the tenant appealed to the Court of Appeal.

The landlord argued that the Court should take the same approach to the defect in notice as had been taken with regard to section 20 notices under the original Housing Act 1988 regime. Therefore if the notice was in a form substantially to the same effect as the required form then a small defect of form should not be taken overly seriously.

The Court of Appeal rejected the argument although it should be noted that they did so mainly on the facts. The correct form is a Form 8 and is prescribed by the The Assured Tenancies and Agricultural Occupancies (Forms) Regulations 1997. The Court held that the key information in the form is in paragraph 4 which reads:

I/We* understand that under my/our* existing tenancy, I/we* can only be required to give up possession in accordance with the grounds set out in Schedule 2 to the Housing Act 1988, whereas under the new shorthold tenancy, the landlord(s) will be able to recover possession of the premises without being required to prove a ground for possession, after the first six months of the assured shorthold tenancy, or, if there is a fixed term for longer than 6 months, at the end of that fixed term, subject to two months’ notice

There was nothing in the Tomlin Order that in any way equated to paragraph 4 and so the Tomlin order could not be said to be in a form substantially to the same effect as a correct Form 8 and so could not be seen as a valid notice.
In addition, the Tomlin order itself contained a valid contract for a new tenancy agreement, albeit one that was later completed by the execution of a full tenancy agreement. Therefore the Tomlin order could not be valid as a notice which was required to be served “before” the tenancy was entered into as required by para 7.

In short, if a landlord wants to carry out this kind of exercise he would need a valid Form 8 signed first and then it should be referenced in the Tomlin Order which creates the new tenancy.

Appeal by the tenant allowed, the tenant has an Assured tenancy.

Vertigan was the assured shorthold tenant of the claimant. Over the years, it seems that he had done a number of things of which his landlord disapproved, including: (a) sawing through the floorboards to access a cellar, which was not demised to him; (b) damaging padlocks placed by the landlord to exclude him from certain areas; (c) erecting a metal structure outside his flat that he refused to remove; and, (d) allowing his dogs to foul the communal areas.

The landlord issued possession proceedings and the judge granted an outright order. She found that Mr Vertigan had breached various covenants and generally felt that he could do whatever he liked to the flat. She considered whether to make the order an outright order or to suspend it on terms, but decided that the evidence did not allow her to have any confidence that Mr Vertigan would comply with the terms of a suspension.

Mr Vertigan persuaded Peter Smith J to grant him permission to appeal ([2010] EWCA Civ 963 – on casetrack) on the basis that he had seen the error of his ways and was now willing to offer an undertaking to comply with any terms of a suspended order.

The appeal was dismissed. The undertaking, if it was to be offered, should have been offered to the trial judge and not the Court of Appeal. It was not appropriate to consider the offer in those circumstances. The judge had not just been entitled to come to the conclusion that the case justified an outright order, but had plainly been right to so conclude.

The new law gives some relief to an assured (whether or not shorthold) tenant (as well as to protected and statutory tenants under the Rent Act 1977) where a mortgage lender who is not bound by the tenancy brings proceedings for possession of the tenant’s home. The tenant has two, alternative, forms of relief:

• before the possession order is made, the tenant may apply to the court for a postponement — of up to two months — of the date for possession
• after the making of an order, the tenant may ask the mortgagee for an undertaking in writing that they will postpone execution of the order for up to two months and if the mortgagee does not give an undertaking, the tenant may apply to court for an order postponing execution of the order for up to two months.

The second option may not be exercised by someone who was a tenant when the court previously made an order postponing the date of possession. As I read the regulations this would allow, in unusual cases, two separate periods of two months postponement if the landlord had re-let the property in the interim.

In deciding whether to make an order for postponement, the court must have regard to the circumstances of the tenant and whether there have been any breaches by the tenant of its tenancy agreement and whether the tenant might reasonably be expected to have avoided breaching that term or to have remedied the breach. An order for postponement can be made on terms that the tenant makes payments to the mortgagee for their continued occupation. Such payments are, of course, stated not to create a tenancy agreement.

CPR 55.10 already requires that a mortgagee must, within 5 days of being notified by the court of the date of hearing (and so normally more than 3 weeks before the hearing) send a notice addressed to the “tenant or occupier” alerting them to the proceedings and the date of the hearing. A new CPR 55.10(4A) gives the unauthorised tenant of residential premises a right to apply to the court for a postponement of the date of possession.

A further requirement has been added: mortgagees must now give a notice addressed to “the tenant or occupier” no less than 14 days before they execute a warrant. The notice is in prescribed form and alerts the tenant to the possibility of applying for a postponement of possession. Such a notice may be “given” by sending it by first class post addressed to the property, which suggests that the date of “giving” is the date of sending, so that the 14 days would run from the date on which the notice was posted.

CCR Order 26 rule 17 is amended accordingly so that a mortgagee must now certify that they have given such a notice.

While these reforms do not give much protection to an innocent tenant whose landlord has failed to keep up their mortgage payments, they will provide some additional time to find new accommodation.

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.

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).

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?

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.