Bristol City Council v Lovell
| Jurisdiction | England & Wales |
| Judge | LORD GOFF OF CHIEVELEY,LORD LLOYD OF BERWICK,LORD HOFFMANN,LORD HOPE OF CRAIGHEAD,LORD CLYDE |
| Judgment Date | 26 February 1998 |
| Judgment citation (vLex) | [1998] UKHL J0226-2 |
| Date | 26 February 1998 |
| Court | House of Lords |
[1998] UKHL J0226-2
Lord Goff of Chieveley
Lord Lloyd of Berwick
Lord Hoffmann
Lord Hope of Craighead
Lord Clyde
HOUSE OF LORDS
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hoffmann. For the reasons he gives I would allow the appeal.
My Lords,
It is helpful to have in mind the order of events leading up to this appeal. The tenant, Mr. Lovell, was first in the field. He claimed to exercise his right to buy his home under Part V of the Housing Act 1985 by notice served on the Council in about April 1994. The Council might have responded by serving a counter-notice under section 124 denying the tenant's right to buy, and stating the grounds. But they did not do so. They admitted the right to buy, and then, on 30 June, served a further notice stating the price and other terms of sale. On 14 October the tenant accepted the Council's terms. On 4 November the tenant's solicitors approved the form of transfer, and called for completion under section 138. There can, I think, be no doubt that at that stage the Council were under a duty to convey the freehold, and the tenant was in a position to enforce that duty by claiming an injunction under section 138(3). The statutory conditions were satisfied.
But in the meantime the Council had served a notice under Part IV of the Act informing the tenant that they intended to make a claim for possession. The notice was not served until 4 July, that is to say, some few days after they had told the tenant of the terms of sale. The proposed grounds included Ground 2 of Schedule 2. But the grounds did not at that stage include an allegation that the tenant was dealing in drugs. On 21 September 1994 the Council commenced proceedings. But again there was no mention of drug-dealing. It was only after the tenant's solicitors had approved the form of transfer, and called for completion, that the Council amended their particulars of claim to allege that the tenant was a drug-dealer. On 4 January 1995 the tenant amended his defence to add a counterclaim for an order that the Council convey the premises under Part V of the Act, whereupon the Council answered with allegations of misrepresentation, fraud and illegality. In particular, they alleged that the money with which the tenant was proposing to buy the premises came from the proceeds of his drug-dealing.
On 10 January 1995 the tenant applied for an injunction pursuant to his counterclaim. On 27 January the District Judge declined to grant relief on the ground that an injunction is an equitable remedy, and he could not be satisfied at that stage that the tenant had come with clean hands. He stressed that he was not adjourning the injunction proceedings so as to enable the possession action to be tried first. But that was the effect of his order.
So the question which arises is whether the judge was entitled to adjourn the application for an injunction once the conditions set out in section 138 had been satisfied. If the Council had already obtained an order for possession, then the case would have fallen within section 121(1). The right to buy could not have been exercised. But there was no order for possession in existence on 10 January, when the tenant applied for an injunction, or on 27 January when the district Judge refused an injunction; and there is nothing in section 121 or elsewhere in the Act about an application for an order for possession.
Similarly if the tenant had a bankruptcy petition pending against him, he could not have exercised his right to buy: see section 121(2). But that was not the case here.
The only other qualification on the landlord's duty to convey the freehold once the statutory conditions are satisfied is contained in section 138(2). It provides that the landlord is not bound to comply with section 138(1) if, and so long as, the tenant is four weeks or more behind with his rent. But that is the only exception. The implication is that in all other circumstances the duty is absolute and peremptory.
How then can it be said that the judge was entitled to refuse the injunction when the case came before him on 27 January? It is said that he was entitled to adjourn the application, on the ground that all courts have an inherent power to adjourn proceedings in the interests of proper case management. There is nothing in the Act, so it is said, to exclude the judge's ordinary discretion under Ord. 13, r. 3(1) of the County Court Rules 1981 to adjourn the tenant's application for an injunction so as to allow the Council's application for a possession order to be heard first. It was considerations of this kind which weighed with Lord Woolf M.R. but which in the end he put on one side having regard to previous decisions of the Court of Appeal.
I am bound to say that I have serious doubts about this line of argument, attractive though it can be made to seem at first sight. I have two concerns: one general and the other particular.
As to the general concern, I accept of course that all courts are in control of their own proceedings, and can regulate the order in which cases are brought on for hearing. They can fix dates, and they can vacate dates. But they must not do so in such a way as to deprive one or other party of his substantive rights. The distinction is fundamental. Thus a court will not hesitate to grant an adjournment in an appropriate case if one or other party is not ready for trial, or if, for example, a witness is not available, even if, without the evidence of that witness, the party in question would be bound to fail. But in all such cases the substantive rights of the parties are unaffected. The adjournment touches only their enforcement.
In the present case the purpose of the adjournment was quite different. It was to enable the Council to mount a defence which was not otherwise available when the tenant's application came on for hearing, thereby depriving him of his substantive right to buy. On 27 January there was no defence to the tenant's claim for an injunction under section 138(3). The effect, if not the purpose, of the adjournment was to provide the Council with the opportunity of putting forward a defence by obtaining an order for possession. It seems to me that this goes far beyond the ordinary limits of case management. The general rule must be that courts are obliged to decide cases as they come before them in accordance with the rights of the parties as they then stand. The Divisional Court has recently held that magistrates were wrong to grant an adjournment in a case under the Environment Protection Act 1990 on precisely this ground: see Reg. v. Dudley Magistrates Court, Ex parte Hollis (unreported) following and applying Reg. v. Walsall Justices, Ex parte W [1990] 1 Q.B 253. Moses J, said: "The wide discretion as to whether to grant an adjournment conferred by section 10 and section 54 of the Magistrates Court Act 1980 cannot, usually, be impugned. But it is a power which must not be exercised in a manner which undermines the statute under which the proceedings are brought or in a way which deprives a litigant of rights conferred by that statute. An adjournment cannot be granted if the only purpose is to avoid the consequences which the law provides will follow, should the hearing continue."
My particular concern relates to the specific provisions of Part V of the Act. It is said that Parliament must have intended judges to be able to exercise their discretion under Ord. 13, r. 3(1) of the County Court Rules even though the statutory conditions for the grant of an injunction under section 138(3) have been fulfilled. Again I have doubts. There is nothing in the language of the Act to support such a view. Indeed, as has been pointed out in previous cases, the language is drawn very tightly in favour of the tenant. Once the right to buy has arisen, the circumstances excluding the exercise of the right are strictly confined. In Taylor v. Newham London Borough Council [1993] 1 W.L.R. 444 it was argued that more general considerations might still be relevant. The argument was rejected. Sir Thomas Bingham M.R. said, at pp. 451-452:
"What, however, seems to me to be crucial in the present situation is that section 118 creates what is described as a right to buy, and section 138, setting out the landlords' duty to convey to the tenant, expresses it in unequivocal and unqualified mandatory terms. It seems to me quite plain as a matter of construction that Parliament did not intend in this instance that general considerations of hardship should afford any ground for refusing the grant of an injunction under section 138(3)."
A little later he said:
"It seems to be that we should be doing great violence to the obvious intention of Parliament if we did not recognise that it was Parliament's intention to block to the maximum the opportunities open to reluctant landlords to obstruct the acquisition of title by their tenants."
So far from supporting the argument that the judge has a discretion to adjourn proceedings for an injunction under section 138(3) the language and purpose of Part V of the Act point the other way.
I should refer next to Dance v. Welwyn Hatfield District Council [1990] 1 W.L.R. 1097. The essential facts were very similar to those of the present case. As in the present case, it was the tenants who were first in the field by claiming the right to buy; and as in the present case it was the Council who then gave notice of their intention to apply for a possession order. The only difference on the facts is that it was the tenants who were the first to commence proceedings, and the Council who then counterclaimed for a...
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