Irwell Valley Housing Association Ltd v Docherty

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Lewison
Judgment Date14 May 2012
Neutral Citation[2012] EWCA Civ 704
Docket NumberCase No: B5/2011/2845

[2012] EWCA Civ 704

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM MANCHESTER COUNTY COURT

(HIS HONOUR JUDGE PLATTS)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Lewison

Case No: B5/2011/2845

Between:
Irwell Valley Housing Association Limited
Appellant
and
Docherty
Respondents

Mr Paul Whatley (instructed by Dobsons Solicitors) appeared on behalf of the Appellant.

The Respondent did not appear and was not represented.

(As Approved)

Lord Justice Lewison
1

Mrs Docherty is the tenant of 25 Ascot Avenue in Sale. She fell into arrears of rent and her landlord began proceedings for possession.

2

On 14 January 2008 District Judge Osborne made an order for possession but postponed the date for possession. He also ordered Mrs Docherty to pay £1,216-odd for rent arrears and £100 in costs, making a total judgment debt of £1,316. He also ordered that the landlord would not be entitled to apply to fix a date for possession so long as Mrs Docherty paid the current rent and £3 a week towards the judgment debt. Paragraph 7 of the order provided that the order would cease to be enforceable when "the total judgment debt is satisfied".

3

Mrs Docherty failed to comply with the terms of the order. On 28 April 2008 District Judge Letall made an order for possession forthwith. That order does not seem to have been executed. So far there is nothing unusual in this case. It is a straightforward case of possession having been ordered on the ground of rent arrears.

4

However, on 5 October 2009, some eighteen months after the initial order was made, Mrs Docherty applied for and obtained a Debt Relief Order ("DRO"). Mr Whatley appearing on her behalf says that this makes all the difference. The effect of a DRO is, in short, to impose a moratorium on debts covered by the DRO and at the end of the moratorium to discharge them. Mrs Docherty's rent arrears fluctuated during the period of the moratorium. At one stage they were as low as £1,150, but at the expiry of the moratorium on 5 October 2010 they had risen to £2,000. One can infer from those figures that at some point during the moratorium Mrs Docherty had paid the current rent and something towards the arrears and one can equally infer that at the end of the moratorium she was again in arrear, not only with the figure mentioned in the judgment debt but also with the current rent, otherwise the total would have remained the same as the judgment debt.

5

The landlord applied again to fix a date for possession. Mrs Docherty argued in the light of the DRO the judgment debt had been satisfied, with the result that the order had ceased to be enforceable. Both District Judge Horan and HHJ Platts rejected that argument. Mrs Docherty applies for permission to appeal. It would of course be a second appeal.

6

The effect of the moratorium is specified by section 251G of the Insolvency Act 1986. It says in subsection (2):

"During the moratorium, the creditor to whom a specified qualifying debt is owed—

(a) has no remedy in respect of the debt, and

(b) may not—

(i) commence a creditor's petition in respect of the debt, or

(ii) otherwise commence any action or other legal proceedings against the debtor for the debt,

except with the permission of the court and on such terms as the court may impose."

7

Plainly the debt continues to exist during the moratorium period, as Mr Whatley accepts. Indeed, the very fact that the court can give permission to apply for a remedy shows plainly that the debt has not gone away. It is only at the end of the moratorium period that the debt is discharged by virtue of section 251I of the Insolvency Act.

8

It is established law that the enforcement of an order for possession is not a remedy in respect of the debt. That was clearly decided by this court in Sharples v Places for People Homes Limited [2011] EWCA Civ 813. Etherton LJ at paragraph 63, having referred to earlier cases, said:

"Those cases seem to me entirely consistent with, and indeed to support, the following general principles applicable to any consideration of the meaning of IA s.285(3)(a). First, the grant of a tenancy, including an assured tenancy, creates a property interest in the tenant which is an incumbrance on the landlord's title. An order for possession is a remedy which restores to the landlord full proprietary rights, including rights of occupation and letting, in respect the property. Secondly, the failure to pay rent is a breach of a contractual obligation. Neither forfeiture, nor a court order for possession, nor recovery of possession by the landlord, nor an order for bankruptcy, eliminates the personal indebtedness constituted by the rent arrears. Thirdly, it follows, as a matter of general principle, that an order for possession of property, whether let under an ordinary contractual tenancy or a secure tenancy or an assured tenancy, is not a remedy "in respect of" the debt represented by the rent arrears which gave the landlord an entitlement to the order for possession."

9

He also held at paragraphs 79, 80 and 81 that the same principle...

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