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Underhand but not abusive

Andrew Henley v Shelly Bloom [2010] EWCA Civ 202

This was a second appeal to the Court of Appeal of a first instance decision that Mr Henley’s claim for disrepair against his former landlord, Ms Bloom was an abuse of process, the first appeal to a Circuit judge having been dismissed.

The brief facts: Mr H was the tenant of a basement flat since about 1986. Ms B was the landlord from about 2001, when she acquired the freehold of the property, later just retaining a lease of the basement flat.

In October 2002, Brighton Council served notices stating that it was minded to serve formal notice requiring repairs, including defective pipes, brickwork and plaster, windows and doors on Mrs B. In November 2002 formal notice was served. In February 2003 Mrs B obtained a builders survey which highlighted penetrative damp and defective plaster work. No works were done. In September 2006, Mrs B obtained another builder’s survey, showing similar problems.

Meanwhile, in August 2006, Mrs B had begun possession proceedings against Mr H on the grounds that the tenancy was an AST which had been duly terminated.

Mr H defended on the basis that he was a regulated tenant under the Rent Act 1977 and there were no grounds for possession under that Act. Alternatively, it was a shorthold tenancy, no notice had been served under s.52 Housing Act 1980, and it was not just and equitable to dispense with notice.

The claim was settled in January 2007 on terms that Mr H would vacate by 1 June 2007 and Mrs B would pay him £16,000 and £4,000 costs. In the recital to the consent order it stated that this was full and final settlement of any claim Mr H might have arising out of improvements he had carried out at the flat, and that Mr H was to leave the flat in a good and tenentable condition when he vacated.

Mr H left on 1 May 2007, but before he did, he obtained an expert report from an environmental health officer on the condition of the property, showing extensive disrepair.

Mrs B refurbished the flat in July 2007, receiving a report from the builders on damp penetration and other issues.

Soon afterwards, Mr H raised his disrepair claim with Mrs B. There was some skirmishing on liability, causation and the extent to which Mr H had contributed to the defects. The claim was issued in November 2008.

Mrs B defended on the basis that the claim was an abuse of process and that a fair trial was impossible. Mrs B applied for a strike out on that basis. She also counterclaimed for untenant-like behaviour and breach of the agreement to deliver up in tenantable condition.

The first instance DJ granted the strike out. He held:

that there was no good reason for Mr Henley not having raised the disrepair claim during the course of the possession claim and that he “was not putting his cards on the table” during the negotiations which settled that claim. He said that the disrepair claim “ought to have been brought in the earlier proceedings”, and was “eminently capable of being settled in those proceedings”. Accordingly, he concluded, the claim was an abuse of process. He also concluded that it would be impossible to have a fair trial as Mrs Bloom was “now in a position in which she cannot instruct an expert to inspect the alleged defects in the flat.

Mr H appealed to the Circuit Judge. The CJ dismissed the appeal, for rather narrower reasons.

He relied on the fact that “the state of the property was raised in the possession proceedings and in the negotiations that led to the consent order”, and also on the fact that “the tenant agreed that he would deliver up the property in good condition”. Accordingly, as the condition of the flat was raised both in the argument contained in the pleadings and in the agreed terms contained in the consent order, he concluded that it was an abuse of process to raise a subsequent claim for damages for disrepair of the flat. As to the fair trial issue, Judge Simpkiss said that Mrs Bloom “would be fighting the case with one hand behind her back” and that the unfairness “had been caused entirely” by Mr Henley.

On a second appeal, the case came to the Court of Appeal.

After reviewing the precedent cases (Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1, Stuart v Goldberg Linde (a firm) [2008] 1 WLR 823 ) and noting that it would be “wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive” (Lord Bingham in Johnson), and the Art 6 entitlement to access to justice for an arguable case, the Court of Appeal found that Mr H’s disrepair claim was not an abuse of process.

Mr H could indeed have raised the claim in the possession proceedings (held against his own argument), but the issue was whether he should have. On that:

i) the possession proceedings did not involve the question of whether the flat was out of repair. The provisions in the consent order related solely to Mr H’s improvements to the flat and/or his obligation on the condition of the flat at the end of the tenancy. it did not touch on Mrs B’s obligations.

ii) If the possession claim had gone to trial, whether Mrs B had won or lost, there would be no question that a subsequent disrepair claim by Mr H would not have been an abuse of process. It was therefore only the ‘integrity of the consent order’ that was at issue. But that order was clear on its terms and it was, of course, open to Mrs B to introduce terms on disrepair at that time. Given the factual history it could not be said that she was unaware of the possibility of such a claim and it was as much up to her to raise it in the possession proceedings as Mr H.

The bringing of the claim was not an abuse of process. If at trial the court was unhappy about the manner in which the claim had been brought, it was open to deal with that in costs.

On the fair trial issue, it was clearly possible for there to be a fair trial. While Mrs B could no longer obtain an expert report on the condition of the property at the relevant time, she had an abundance of material relating to the condition of the property between 2001 when she purchased it to July 2007 when the builders conducting the refurbishment reported to her.

It is not unusual for one party in litigation to be better informed or better advised than the other, for one party to have first hand evidence of important events which is not available to the other, or for one party to have stronger expert evidence than the other. Such inequalities normally cannot possibly justify a conclusion that the trial cannot be fair, even where the advantaged party can be said to be in some way to be responsible for the inequality. Of course, if the inequality is very substantial and very prejudicial, and especially if it is attributable to the actual wrongdoing of the advantaged party, the court might conclude that a fair trial cannot be achieved. But this is not such a case.

In addition, Mrs B could cross examine Mr H’s expert.

Mrs B failed by a significant margin to establish a fair trial was not possible.

Appeal allowed on both points. Mr H may have been underhand in keeping the disrepair claim up his sleeve, but it was not abuse to do so.

Comment
Thank heavens for that. The idea that all possible litigable issues arising out of a tenancy should be stuffed into a possession proceeding or risk being struck out as an abuse of process is bonkers. While a disrepair counterclaim may well be both relevant and necessarily raised in a possession claim based on rent arrears, in a claim such as this, based on notice and terms of termination of the tenancy alone, it is hard to see how a disrepair claim could be considered relevant, let alone necessarily have to have been included. And it may well be that the time scale of the possession proceedings would prejudice the disrepair claim, where time for expert evidence and relevant disclosure is important.

Showing abuse of process must surely be a high hurdle to surmount. The first instance and first appeal decisions in this case appear to have been extremely generous to the landlord, to put it mildly, largely on the basis that Mr H hadn’t behaved particularly sportingly.

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

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