Whitehouse v Lee [2009] EWCA Civ 375 is a rare beast – a successful appeal against a decision on reasonableness in the context of possession proceedings. However, it merits close attention not only for its rarity, but because it also reminds us of how to properly consider whether it is “reasonable” to make an order for possession.
Mr & Mrs Whitehouse became the tenants of a flat in 1963. In 1969, Dr Lee purchased the freehold reversion, a neighbouring house and three garages underneath the flat, all of which were held beneficially with her siblings. In due course it was decided that the siblings wanted to sell the flat that Mr & Mrs Whitehouse lived in and, specifically, wanted to sell with vacant possession.
The only basis upon which possession could be recovered was that suitable alternative accommodation would be available to the tenants (see.s.98 Rent Act 1977 and Part 4, Schedule 15). To this end, the siblings purchased flat 11 Cleve House, Cleve Road, West Hampstead. Mr & Mrs Whitehouse declined to move and, so, possession proceedings were issued.
At trial, the Judge found that flat 11 was indeed suitable alternative accommodation. It was only about a mile from flat 34c, was affordable (particularly given concessions by Dr Lee as regards the level of the rent, payment by Dr Lee of the service charges and such like) and the physical differences were not such as to persuade him that flat 11 was unsuitable.
The real question was whether it was reasonable to make an order for possession. The Judge noted that Mr & Mrs Whitehead had lived at the property for a considerable period of time. It was a flat that they loved. It was where they had raised their children and, plainly, they would face real difficulties if they were required to move. They were active in their local community and their friends were in the immediate area. However, he also felt it “perfectly reasonable” for the siblings to seek to realise their assets, even though there was no pressing financial need for them to do so. The evidence showed that the flat was worth some £620,000 if sold with vacant possession but only £450,000 if sold subject to Mr & Mrs Whitehead remaining as tenants.
Balancing all the circumstances, the Judge found that it was reasonable to make an order, albeit that he did not think it should be enforced for at least three months. Mr & Mrs Whitehead appealed against that decision. Sadly, prior to the hearing of the appeal, Mr Whitehead died. The Court of Appeal enquired as to whether this fact might be regarded as admissible fresh evidence relevant to the correctness of the judge’s order, but this was not pursued.
The Court recognised that an appeal as to a decision on reasonableness by a trial judge is a difficult appeal to sustain, requiring as it does the appellate court to be satisfied that the trial judge made an error of principle or was otherwise plainly wrong (see, for example, Bracknell Forest Borough Council v Green and Another [2009] EWCA Civ 238).
However, the Judge was required to ask himself the right question. The Judge was not to consider whether it was reasonable for the landlord to seek possession, but whether it was reasonable that the Judge should make such an order (see Shreeve v. Hallam [1950] WN 140). Such a decision could only be reached if the Judge considered the effect on both the landlord and tenant of making and not making the order (see Cresswell v Hodgson [1951] 2 K.B. 92)
The Judge had erred by posing the question merely in terms of balancing competing interests. That approach could not allow him to consider the effect of not making an order. The “limited balancing exercise” meant that he had merely looked at why the tenants did not want to move and why the landlords wanted vacant possession. In particular, he had not considered what the effect on the siblings would be if no order was made.
The Judge had been wrong to find it reasonable to make an order. The siblings merely sought to maximise the value of their asset and if no order was made, would merely have to decide between selling with sitting tenants or retaining the property. The impact of an order on the tenants was, as the Judge had recognised, much more serious, as it would effectively move them from their community of the last 45 years. It was unreasonable to make a possession order in those circumstances and the appeal was allowed.
I think this is quite an important case. It reminds county court judges (and we lawyers) that “reasonableness” is not a woolly or “at large” concept, but contains quite a structured thought process that the Judge must go through. From my own experience, I know that many Judges do not expressly refer to the Shreeve and Creswell cases or pose the questions to themselves in terms that relate to those cases when considering reasonableness. Most Judges do something akin to the balancing of interests so disapproved of in this case. This is a timely reminder to us all that such an approach simply will not do.