Fair limit on damages for ex-TTs?

Chase v Islington LBC Clerkenwell & Shoreditch County Court 30/07/2010

This case is reported in the October 2010 ‘Recent Developments’ in Legal Action. It is an interesting case on the use of applications under Schedule 11, 21(3) Housing and Regeneration Act 2008 to have a period of tolerated trespasser-hood treated as a continuous tenancy with the replacement tenancy given on 20 May 2009 under the H&RA. This is for the purposes of a disrepair claim including a period prior to 20 May 2009.

Ms C had been a tolerated trespasser from about Feb 2001 following possession proceedings for rent arrears. In 2010, she brought a claim for disrepair and for specific performance, with an application under Schedule 11 for the tenancy to be treated as continuous.

At the application hearing, HHJ John Mitchell set out principles for considering such applications (although these are, of course, non binding, at least outside Clerkenwell). My commentary in square brackets:

  • The burden of showing that the discretion under Schedule 11 should be exercised rests on the tenant [No surprise there. It does indeed.]
  • The aim of the Court is produce a result which is fair to both parties [which one must presumably take to mean fair in terms of the history, not just present circumstance]
  • The discretion should be exercised having regard to all the circumstances of the case including any benefit or prejudice to the parties in granting or refusing the application
  • Regard should be had to the extent to which the parties believed or treated the original tenancy as having continued during the period of tolerated trespass, including the extent to which either party acted to their detriment.
  • It would be unjust to refuse relief to a tenant in technical breach of a suspended possession order by missing a payment by a day but who thereafter for a number of years complied with the terms of the tenancy and discharged the arrears [Well, yes. So where does the boundary of this unjustness lie? Missed a few payments but made them up? Paid irregularly but cleared arrears? Paid every payment when due, but arrears not yet cleared? Or just the wholly technical and inadvertent breach?]
  • It would be unjust to grant relief where the landlord allowed a vulnerable occupant to occupy the premises as a matter of grace for a limited period while s/he was attempting to find alternative accommodation but failing to make any payments on account of the occupation. [I’m struggling to see how this could fall under replacement tenancy/Schedule 11 terms anyway. Even if it did, the ‘grace period’ would surely have to be so short as to make a Schedule 11 application for the purposes of a disrepair claim a waste of time? Or am I wrong?]
  • The importance of granting or refusing relief to the parties should be considered
  • Regard should be had to the amount and merits of the claim [Fair enough, but is that the claim in total, or for the period of TT-dom only?]
  • If the costs of defending the claim would be out of proportion to the amount claimed, or if the merits were slight, it may be unfair to allow the claim to proceed. [Slight merits, I can see. But if the claim has merits, then surely the costs of defending the claim are down to whether the Defendant behaves reasonably or not? It would be an unusual disrepair claim that meant that defending a claim, over the last 6 years at most, for some reason gave rise to exceptionally high but wholly merited costs of defending it.]
  • There is a need to avoid protracted satellite litigation [Indeed. But what would that be – a s.85 application, on essentially the same discretion? But that is unlikely to be protracted, and has to be a viable alternative route to a Schedule 11 application.]
  • The Court can impose conditions on the grant of relief, for example, by limiting the amount of damages which can be recovered. [I’m not sure where this discretion comes from – I can’t see it in Schedule 11, where the discretion is simply to order that the tenancy should be treated as continuous, or not.]

In this case – where the use and occupation charges were identical to the rent, which [impliedly, surely] included an amount to fund repairs – it was fair to grant the application. However, the arrears remained high throughout, although reduced by £1000. It was therefore fair to limit the claim for damages to the amount of the arrears outstanding at 20 May 2009.

We need more details – Toby Vanhegan, for Ms C, if you are reading this, what were the levels of arrears and, crucially, did the limit on damages only apply to the claim for the period of TT-dom up to 20 May 2009? If it didn’t and covered the post May 2009 period, I would suggest that this was manifestly unfair and also beyond any discretion under HRA 2008, even though I’m not sure that there is such a discretion in any event. Contrast this decision with Litchmore v Lewisham, where no conditions were set.

My view is that the use and occupation charges being levied at the same level as rent, where the latter involves a repairing obligation is surely key. Not only are any arrears a continuing and enforceable debt, but payment of the mesne profits at that level means a windfall profit for landlords who did not carry out repairs they would otherwise have been obliged to do.

I would also point to certain passages of Austin v Southwark in the Supreme Court to the effect that the TT was a judicial disaster that should not have happened, and that mesne profits at the level of rent, without the corresponding repairing obligation, were strongly arguable as unfair (see Baroness Hale at 54).

Of course, if the limitation of the claim to the arrears at 20 May 2009 only applied to the claim up to 20 May, and there was a full claim for damages and specific performance for the period thereafter, then there is no effect on the viability of the disrepair claim, just a limit on the damages the tenant can recover. However, if this is an argument made by LLs elsewhere in future, it is clearly something any ex-TT claimant should be advised on.

Granted this is a County Court decision, but as it comes from a CJ, it will have continued effect in Clerkenwell and may be persuasive elsewhere. Views on this and in particular on the discretion to impose conditions such as limits on damages (and where such a discretion comes from) welcome…

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Disrepair, Housing law - All, secure-tenancy, Tolerated trespasser, Uncategorized and tagged , .

2 Comments

  1. this decision is very unhelpful for replacement tenants.

    All tolerated trespassers obtain a replacement tenancy in any event regardless of their payment history. The old test in Lambeth v Rogers has arguably now been superseded. A LA can resist a continuity application because compensation has already been paid or perhaps use and occupation charges were reduced but I don’t think because of payment history.
    The LA has the original money judgment and has other remedies to recover rent monies. The applicant’s legitimate claim should not be shut out on the basis of the rent arrears, nor should restrictive conditions be applied. This would, arguably, amount to a breach of Article 6.

    • MP – as I hope the post suggested, I agree.

      Assuming, as is usually the case, that the use and occupation charges were at the level of rent, and also assuming that the possession order included a money judgment, as is pretty much universally the case, then the balance of fairness should be clear. There will, of course, be a set off of arrears against damages in any event.

      I still don’t see where the power to impose limits on damages for the period of TT-dom comes from. I’ve seen the judgment and it appears to be based on a presumed applicability of the guidance given in s.85 applications in Lambeth LBC v Rogers [2000] 32 HLR 361. I think that is arguably wrong. While it is right that the Claimant could have proceeded by s.85 application, in which case such conditions could be set under the discretion s.85 affords the court, I don’t think that this is sufficient to say that the s.85 and Schedule 11 discretions are the same. Crucially, a s.85 application restores the tenancy as if it had never been lost, while the Schedule 11 application only treats the tenancy as continuous for the purposes of the disrepair claim alone.

      The arrears history in this case was messy, but there were reasons advanced for this, not just housing benefit errors but also mental health issues. Arrears at May 2009 were c.£3800, down from a peak of £8,600. But they were down by about £1,000 between the date she became a TT and May 2009.

      It is also true that, as I surmised, the limitation of damages to the level of arrears applied only to the period of claim to 20 May 2009, and to arrears extant at that date.

      I also note that the CJ said that the power to order the tenancy to be treated as continuous would still have been exercised even if there was no power to set a condition like a limit on damages.

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