Often, I will read a judgment with which I disagree; but it is rare that I read one that I think is just plainly wrong. The judgment of Hildyard J in Southward Housing Co-Operative Ltd v Walker and Hay [2015] EWHC 1615 (Ch) falls in to the latter category, made all the more odd that it took nearly five months to hand down the decision. Perhaps, in that period, Hildyard J should have read one of Mark Wonnacott’s rather good, but decidedly specialist, landlord and tenant historical monographs. It is based on a wrong reading of the Supreme Court judgment in Berrisford v Mexfield Housing Co-Operative Ltd [2011] UKSC 52 (our note here). And that wrong reading gets Hildyard J in to all sorts of bother. His judgment on the other bits – in particular section 6 and Article 14, Sch 1 Human Rights Act 1998 – is also almost certainly wrong imho. But it will take you a long time to read (it’s 45 pages long) before you get that kind of visceral reaction to it. I gather that there is an appeal in the offing, but I don’t really think that should have been necessary. It seems to me to be a relatively straightforward case, but there we go.
In short, Southward granted the Defendants a weekly periodic tenancy in April 2011. The tenancy could only be determined in accordance with the service of a notice to quit on limited grounds, such a non-payment of rent. The Defendants defaulted, Southward served a notice, and the whole thing became a problem at that stage.
Now, my understanding of Berrisford is that the tenancy was clearly void on its face as uncertain in accordance with the standard doctrine; Berrisford adds that, in such cases, prior to 1925, such an agreement would constitute a tenancy for life but that, as a result of section 149(6), Law of Property Act 1925, the tenancy automatically becomes a 90 year term subject to earlier determination on death or in accordance with the contract. I fully appreciate that this goes against the property lawyers’ grain, which is that (objective) intention rules. But there we go – that is the “Carrollian” effect of the rule to which both Lord Neuberger and Baroness Hale referred. Although my students had difficulties with Berrisford, it seems pretty clear to me.
So, Hildyard J begins correctly by saying that this case is analagous to Berrisford; he also says, again correctly, that the tenancy term is uncertain (there is some odd stuff that others better than me will, no doubt, explain about whether the notice affects the claim for possession or the determination of the tenancy: [55]-[63]). But then he goes off the rails. He holds that the agreement created a contractual licence. By what process of legal alchemy does he turn a tenancy, which objectively both parties intended to create, to a licence?
He argues that the result in Berrisford was dependent on the parties’ intentions in that case. Now, it is true that the UKSC contented themselves by saying that the outcome did appear to be in tune with the parties’ intentions – I’m not so convinced – but the point was that was entirely unnecessary to the judgment. The tenancy for life analysis, whatever one thinks of it (and it is fair to say that its reception in academic life has been critical), and Section 149(6) operate automatically. Hildyard J, however, found a solution, in accordance with the maxim ut res magis valeat quam pereat (better to save a thing than let it perish – a maxim of absolutely no use in this matter because the tenancy is, in law, saved),
… with diffidence and anxiety, I have eventually concluded that there is a solution which does give effect to the intention of the parties. The solution revolves around the difference between, on the one hand, accepting (as plainly one must) that the ‘rule’ can be applied in circumstances where the parties had no inkling or intention that it would, and, on the other hand, accepting that its application is mandatory even where the parties’ intentions were to the contrary and their agreement contains fundamental terms that simply cannot be carried over into a 90 year lease.
The solution was that the contractual licence analysis was open to the court. There is no reasoning for this abrupt conclusion, other than a desire to avoid the consequences of the automatic operation of the rule and that this appears to be the Scottish solution. Of course, even prior to Berrisford, such a solution would have been regarded as untenable – Prudential, for example, where the term was void for uncertainty, simply became an annual periodic tenancy (nb the result in Prudential would remain the same today because of its corporate status).
HIldyard J goes on, on the (correct) assumption that he is wrong, to ask how the 90 year agreement could be determined. The Defendants here had an interesting argument. They said that, in the absence of a forfeiture clause, the notice provision was inadequate to determine the 90 year agreement. I am unconvinced by this as a proposition, but Hildyard J found their argument “so unpalatable, and so alien to the parties’ intentions, that some solution must be found” ([111]); and, as if by magic, a solution was found – to treat the notice clause as an innominate process for termination”, a forfeiture clause. The Defendants then deployed the full range of arguments around the forfeiture of a long lease, , which may follow (from one point of view) from Berrisford, particularly taking in to account sections 76 and 77, Commonhold and Leasehold Reform Act 2002. Again, although I’m not convinced by this analysis, what is interesting is that the Claimant followed the Defendants and argued it on their turf, so to speak. Section 76 specifically includes section 149(6) leases as “long leases” but section 77 excludes some leases on certain conditions, which seemed to include the Southward lease. So, of course, Southward managed alchemically to get round all of that inconvenient law on forfeiture, waiver, and rent claimed etc; and there was no sense that relief from forfeiture should be granted.
We then get to what Hildyard J describes as the public law issues, which are those deriving their force from the Human Rights Act 1998. For some time, I along with others better than me have puzzled over the human rights issues deriving from co-operative cases. There is no security of tenure, as they are excluded from the various security provisions, given the satisfaction of certain criteria. Instinctively, that seems wrong – the Welsh government have, of course (given that they are light years ahead of the English), corrected the position in the Housing (Wales) Act. In Southward, the Defendants argued the incompatibility point and Hildyard J magisterially rejected those arguments. There is an “interesting” discussion of the “other status” element of Article 14, it having been argued that being a tenant of a fully mutual housing co-op is an “other status” as part of a broader discrimination argument. At [187], Hildyard J said
In my judgment, that which is said in this case to occasion the Defendants’ differential treatment is difficult to describe as a “personal characteristic”. The characteristic is not innate but acquired; it has nothing to do with what the person is, as distinct from what that person has chosen to do; the choice made is most unlikely either to reflect or to have affected the person’s character; and the circumstances of fully mutual housing association tenants differ greatly. In short, any circle is far from the centre.
I imagine that point will be conceded on appeal. On surer footing, Hildyard J found that any distinctions were justified; in any event, the Defendants had signed up to contractual protections which were the equivalent, if not greater rights. Here, and in parenthesis, I was struck by the witness statement from the civil servant at the DCLG who argued ([202]) that
The fundamental difference between housing co-operatives and other housing associations is the absence of a landlord and tenant relationship in the case of co-operatives. Other housing associations tend to operate their tenancies according to a strong landlord and tenant relationship, with tenants generally having little direct input into the decisions made in relation to the management of where they live. In contrast, housing co-operatives are locally owned by the members themselves, and decisions are taken locally and exclusively by members/tenants. Those who work and live in the sector would argue that every part of a co-operative’s operations differ substantially from those of other housing associations because in a co-operative the interests of the tenants and landlord are indivisible; they are the same people.
My strong suspicion is that such a position would be entirely alien to the operation of most housing associations and their tenant participation officers as well as their tenants and tenant board members.
In any event, a fully mutual housing co-operative was not a public authority for these purposes. Here again, I am afraid the analysis (at [223]) is, at best weak. Hildyard J said that Southward does not rely on public subsidy (although it received capital grant, erm a bit like L&Q); it only has an informal nominations agreement with the local authority as it can refuse a nominee (erm a bit like any other housing association, including L&Q); it does not charge market rents (erm a bit like L&Q’s general needs) but does not provide subsidised housing as it exists for the benefit of its members; although there is public benefit, this is incidental because it exists for the benefit of its members (erm a bit like L&Q); fully mutuals are not subject to statutory regulation in the same way as other housing associations (by which I think he meant the security of tenure regimes, the stuff about which the complaint was made); Southward is regulated by the FCA and HCA as a co-op and, therefore, the regulation is light touch (but there is regulation and its rationale is because they are providing social housing).
Finally, and in any event, there was nothing exceptional anyway (a position from which he probably should have started his analysis).
All I can say is blimey, what a load of old cobblers (meaning no disrespect to cobblers).