Leadenhall Residential 2 Ltd v Stirling
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE LLOYD,LORD JUSTICE LATHAM,LORD JUSTICE JUDGE |
| Judgment Date | 29 June 2001 |
| Neutral Citation | [2001] EWCA Civ 1011 |
| Docket Number | Case No: B2/2000/3432 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 June 2001 |
[2001] EWCA Civ 1011
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CROYDON COUNTY COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Judge
Lord Justice Latham and
Mr Justice Lloyd
Case No: B2/2000/3432
Jan Luba Q.C. and Alison Rowley instructed by Stanfords for the Appellant
Paul Morgan Q.C. and Nicholas Allen instructed by Henriques Griffiths for the Respondent
This appeal raises a point of importance to landlords and tenants under the Housing Act 1988 in relation to circumstances which must occur very frequently. The Defendant, Mr Stirling, was a tenant under an assured tenancy. He got into arrears and his landlord brought proceedings for possession. An order for possession was obtained on the basis of those arrears, the ground relied on being one of those under which the court has no discretion to refuse an order or to suspend or postpone its effect. Mr Stirling was required to give up possession on 19 July 1996. Shortly before that date he offered to pay off the arrears at £100 per month, and the landlord agreed to that proposal. It is now said, for Mr Stirling, that this agreement constituted the creation of a new assured tenancy, and that possession can only be obtained by going through the procedure appropriate to such a tenancy. The deputy district judge held otherwise, as did the circuit judge on appeal. The general importance of the point justifies this second appeal.
The facts
Mr Stirling took a tenancy of 2 Linford Court, 14 Appleton Square, Mitcham, Surrey on 7 February 1994, for a year, at £4,940 per year, equivalent to £411.66 per month. His landlord was a different company from the present Respondent, Leadenhall Residential 2 Limited ("Leadenhall"), but nothing turns on the identity of the particular freeholder, and I will refer to Leadenhall as if it had been the reversioner throughout. The tenancy was an assured tenancy under Chapter I of the Housing Act 1988. He remained in possession after the year had expired, and thus acquired a statutory assured periodic tenancy: Housing Act 1988, section 5. He was already in arrears of rent. Notice was served under section 8 of the 1988 Act that the landlord would seek possession, referring to both mandatory and discretionary grounds. In May 1996 possession proceedings were commenced, relying on both mandatory and discretionary grounds. On 21 June 1996 an immediate order for possession was made, requiring Mr Stirling to give up possession on 19 July 1996, and to pay arrears of £2,832.63. By a later amendment under the slip rule, it also provides that the Claimant be "at liberty to accept mesne profits at the rate of £411.66 per month until possession is given". The order is in the prescribed form and does not record on which ground it was made, nor does it make that clear, for example, by recording that the court was satisfied that it was reasonable to make the order. The order was in fact made on the mandatory ground.
Mr Stirling wrote a letter to the landlord dated 4 July 1996 which is not in evidence. On 8 July Leadenhall's agent replied as follows:
"I refer to your letter dated 4 July 1996 sent to Ross McLaren regarding your repayment plan of outstanding rent amounting to £2,643.45 as at end of June 1996. I would confirm that your offer to pay £100 per month is accepted by your landlord and by ourselves. I look forward to hearing from you and receiving your first payment of £100."
Leadenhall did not apply to enforce the possession order on 19 July 1996. It did so apply in August when Mr Stirling had not paid the first £100, but the warrant which had been issued was then withdrawn, and payment of the arrears began. It continued rather sporadically. The £411.66 was being paid regularly by way of housing benefit. In June 1997 when four monthly payments of £100 had been missed, the landlord's agent wrote referring to £400 as being "rent in arrears", threatening enforcement proceedings, but again Mr Stirling managed to save the day with a payment. In March 1998 the landlord notified an increase of rent from £411.66 to £433 per month. Later, in January 1999 there was a further increase. It is accepted that the increase in March 1998 created a new tenancy, but if a new tenancy was not created until that date, then it was an assured shorthold tenancy and does not afford the same degree of protection for the tenant as does an assured tenancy. A new tenancy in July 1996 would have been an assured tenancy. In March 1999, on the grounds of further arrears, Leadenhall issued a warrant for possession. Mr Stirling applied to have the warrant set aside, and succeeded on the basis that the order for possession made in 1996 had been superseded by a new tenancy. The judge did not have to decide when the new tenancy came into being. In July 1999 Leadenhall gave a new notice that it would seek possession, and brought these proceedings in October 1999. On 18 April 2000 Deputy district Judge Turner delivered a written judgment and made an order for possession to be given on 2 May 2000. Mr Stirling appealed, and on 26 October 2000 His Honour Judge Coningsby Q.C. heard the appeal, gave judgment dismissing the appeal, and ordered that possession be given by 15 November 2000. The effect of the possession order had been stayed until then and is still stayed pending this further appeal.
There was no dispute of fact before Deputy District Judge Turner, and so far as I can gather no oral evidence at all, the matter proceeding on the documents, and above all on the letter of 8 July 1996. He held that the dealings in July 1996 were not intended to create legal relations at all, and that the letter amounted to no more than an agreement for the payment of the arrears for which a money judgment already existed: see paragraph 3.9 of his reserved judgment. On appeal, His Honour Judge Coningsby Q.C. viewed what took place in July 1996 as amounting to an agreement that, if the tenant paid the £100 per month and the £411.66 each month as well, the landlord would not apply for a warrant of possession to enforce the order. The letter says nothing about either the £411.66 or the enforcement of the order. He analysed the position somewhat differently from the Deputy District Judge, and said that it was not a tenancy, but was an arrangement for Mr Stirling to stay on as a non-tenant against whom Leadenhall would not enforce the possession order if he paid off the arrears and kept up payment of the current rent in accordance with his offer. He held that this was a relationship which could exist legally without constituting a tenancy, that it was not a licence, but was like a licence, and was a conditional right of occupation.
Mr Luba Q.C. submits that the parties agreed in July 1996 that Mr Stirling should continue to have exclusive possession of the premises after 19 July 1996 in return for monthly payments, and that this has the effect of giving Mr Stirling a new tenancy, regardless of the parties' actual understanding or intentions. If that is correct, landlords who have the benefit of a possession order on a mandatory ground act at their peril if they show any indulgence to the tenant after the date on which he is bound to give up possession. That is a conclusion to which the court would be reluctant to come, but he submits that we have no choice.
The Housing Act 1988
Assured tenancies are governed by the Housing Act 1988, Chapter I. Under section 5 an assured tenancy cannot be brought to an end by the landlord except by obtaining an order of the court. By section 7, the court may only make an order for possession, if the dwelling is let on an assured tenancy, on one of the grounds set out in Schedule 2 to the Act; if a ground set out in Part I of the Schedule is made out the court has no discretion not to make an order, whereas on the grounds set out in Part II the court may make an order if it considers it reasonable to do so. Under section 7(7) a statutory periodic tenancy such as Mr Stirling had in June 1996 comes to an end on the day on which the possession order takes effect. Section 8 requires the landlord to give notice before proceedings are started. Section 9 gives the court power to adjourn possession proceedings for such period as it thinks fit and, if it makes a possession order, also gives it power, either on making the order or afterwards at any time before execution, to stay or suspend that order or to postpone the date for possession. However, section 9(6) provides that none of these discretionary relieving powers apply if the court is satisfied that the landlord is entitled to possession on any of the mandatory grounds for possession in Part I of Schedule 2, or if the tenancy is an assured shorthold tenancy under section 21. The mandatory grounds in Schedule 2 Part I include ground 8, relating to given minimum arrears of rent. The discretionary grounds in Part II include grounds 10 and 11 which relate to arrears of rent.
Tenancies of dwellings belonging to local authorities, and some other social landlords, are not assured tenancies but secure tenancies, under the Housing Act 1985 Part IV. A licence to occupy a dwelling-house given by such a landlord is also a secure tenancy: section 79(3). Such a tenancy cannot be brought to an end by the landlord without an order for possession: section 82(1). If an order is made, the tenancy comes to an end on the date on which the tenant is to give up possession under the order. The grounds on which the court may make an order are set out in Schedule 2 to the 1985...
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