Salix Homes v Mantato (2019) EWCA Civ 445
A court of appeal decision on a first instance application, where the main issue was whether, given an historic possession order, the landlord could bring fresh possession proceedings.
Mr Mantato was Salix Homes assured tenant from 2015. Before that, he had been the secure tenant of Salford City Council. The tenancy was transferred under a stock transfer.
In 2008, Salford CC obtained a postponed possession order for rent arrears. In 2009 that was turned to an outright order, but Mr M was successful in staying subsequent warrants, on terms.
Mr M never cleared the arrears, although they fluctuated, so the possession order was never discharged.
After the stock transfer, in 2017, Salix brought possession proceedings for arrears of rent under grounds 11 and 12 Housing Act 1988. Mr M did not appear at the possession hearing and a suspended possession order was made. The terms of the SPO were breached and Salix applied for a warrant. Mr M was evicted on 12 September 2017.
On the same day, but after the eviction, Mr M paid all arrears and costs. In January 2018, Mr M applied to set aside the warrant and to discharge or rescind the 2017 possession order, and, by a further application, Mr M argued that the 2017 possession order was an abuse of process because barred by res judicata – already subject to a judicial decision.
At the first hearing of the application:
The Deputy District Judge held that there was no oppression in the execution of the September 2017 warrant but the current proceedings could not lawfully be brought because they were barred by the doctrine of res judicata. His reasoning on res judicata was that the first set of possession proceedings leading to the original possession order were based on arrears or rent, the original possession order remained extant and enforceable, arrears under the original possession order had not necessarily been cleared by the time of the current proceedings, the current proceedings were based on the same facts, namely arrears of rent under the same tenancy, and sought possession of the same Property.
The Deputy District Judge observed that, contrary to CPR PD 55A para. 2.3(4) (which requires the particulars of claim in a possession action for non-payment of rent to set out “any previous steps taken to recover the arrears of rent with full details of any court proceedings”), the Particulars of Claim in the present proceedings were silent as to the previous proceedings. He also observed that, as six years had elapsed since the original possession order, Salix Homes would have required the permission of the court to issue a warrant of possession.
Turning to the question of delay in making the application to set aside dated 19 March 2018, some nine months after the June 2017 possession order, the Deputy District Judge said that CPR 39.3 was not applicable (because the hearing on the return date was not a “trial”) and he should apply the court’s management powers under CPR 3.1.2(m).
He said that, had DJ Khan been aware of the original possession order, it was “highly likely that he would have sought more information and the resulting [June 2017] order could well have been different”.
He said that the defence of cause of action estoppel was an absolute bar to the proceedings, and that “a breach of the substantive law must trump a procedural argument”, and that it followed that the claim should be struck out and the warrant be set aside.
Salix, unsurprisingly, appealed. Somehow, the matter went straight to the Court of Appeal.
The Court of Appeal held:
1. The second possession claim included a money claim for the then arrears of rent. The first possession claim did not, although the level of arrears was noted in the order.
Salix Homes could not have relied upon the original possession order in order to obtain, for example, an attachment of earnings order or a third party debt order for recovery of rent arrears accruing after the date of the original possession order as those arrears were not part of the judgment debt specified in that order. The current proceedings were necessary for that purpose.
2. The possession claim could not simply be detached from the money claim for arrears of rent.
It was a necessary and sufficient factual ingredient of the right to an order for possession in the present proceedings that there were arrears of rent which had accrued and were unpaid since the date of the original possession order. The fact that it may not have been necessary to bring the present proceedings in order obtain possession of the Property is not to the point. That may give rise to an argument about abuse of process but the absence of necessity to bring fresh proceedings for possession, in view of an earlier order, is neither a paraphrase nor a substitute for the test for cause of action estoppel.
3. The cause of action in the previous proceedings was different, the possession order was made on establishing ground 1 of Schedule 2 Housing Act 1985. The subsequent proceedings were based on grounds 11 and 12, Schedule 2 Housing Act 1988:
In order to establish a right to possession it was necessary to show that the tenancy is an assured tenancy and that either one of the mandatory grounds or one of the discretionary grounds in schedule 2 to HA 1988 was satisfied, and, in the case of a discretionary ground, that (pursuant to HA 1988 s.7(4)) it was reasonable to make the order. (…) Accordingly, looking at the matter broadly, the cause of action for possession in the earlier proceedings was for possession for arrears of rent in respect of a secure tenancy pursuant to Part IV of HA 1985. The cause of action for possession in the present proceedings is both for arrears of rent and, separately and additionally, persistent delay in the payment of that rent, in respect of an assured tenancy, pursuant to schedule 2 to HA 1988.
The cause of action was not the same, or even substantially the same.
Salix should have mentioned the previous proceedings in the possession claim. That might even amount to abuse of process, but the application and appeal was on cause of action estoppel, which was a narrower ground.
Mr Stark made the related point that if, in circumstances such as the present, a landlord had the benefit of two different orders for possession, with different conditions for paying current rent and arrears, there could be unfairness to the tenant as the tenant would not know which conditions to comply with and the landlord could choose whichever set of conditions and order were most favourable. We can see that those matters might, depending on the facts, give rise to argument about abuse of process but that concept is, as Lord Sumption emphasised in the Virgin Atlantic Airways case, much broader than the principle of cause of action estoppel. The Deputy District Judge did not set aside the June 2017 possession order on the basis of anything other than cause of action estoppel and the merger of the cause of action in the original possession order. Nor is there any respondent’s notice seeking to uphold the order of the Deputy District Judge on the alternative or additional ground of abuse of process short of cause of action estoppel.
On the side issue of whether Mr M’s March 2018 application was belated and whether CPR 39 applied, the DDJ had found on the res judicata issue and had not considered the CPR 39(3) requirements for a belated application to set aside.
Contrary to the view of the Deputy District Judge, cause of action estoppel does not bar the present proceedings and so is completely irrelevant to the exercise of any power of the court to allow an application to set aside the original possession order. The second matter relied upon, namely the inability to obtain a default judgment for possession and the brevity of a hearing for an order for possession when the tenant has not filed a defence and is not present at the hearing, is not unusual but standard in the case of actions for possession of an assured tenancy for non-payment of rent. The third matter relied upon, namely the failure of Salix Homes to disclose the previous history to DJ Khan, may be relevant to the prospects of success on any re-hearing of the claim for possession in the present proceedings, in the sense of Mr Mantato obtaining an order which will be more likely to enable him to continue in possession than the June 2017 order. It is not, however, an unusual and compelling circumstance in any way comparable to that in the Forcelux case, in which the tenant stood to lose a highly valuable long lease on the ground of a very small amount of unpaid rent and service charges. (…)
It follows that, in deciding whether to allow Mr Mantato’s application to set aside the June 2017 possession order, the Deputy District Judge ought to have paid close attention, by way of analogy, to the three conditions in CPR 39.3(5). He did not do so. The only relevant observation he made in that regard concerned the condition in CPR 39.3(5)(a) that the applicant acted promptly when he found out that the court entered judgment or made an order against him. He observed that the application to set aside the June 2017 possession order was made on 19 March 2018, some nine months later, and he found as a fact that, at the very latest, by the end of August 2017 Mr Mantato should have been aware of the precarious situation in which he found himself.
Mr M’s witness statement before the Judge below had contained no explanation of why he did not attend the 2017 possession hearing.
The 2017 possession order was restored.