Mexfield Housing Co-Operative Ltd v Berrisford
| Jurisdiction | England & Wales |
| Judge | Lord Justice Wilson,Lord Justice Aikens,Lord Justice Mummery |
| Judgment Date | 15 July 2010 |
| Neutral Citation | [2010] EWCA Civ 811 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 July 2010 |
| Docket Number | Case No: B5/2009/2332 |
[2010] EWCA Civ 811
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT, CHANCERY DIVISION
Mr Justice Peter Smith
Before: Lord Justice Mummery
Lord Justice Wilson
and
Lord Justice Aikens
Case No: B5/2009/2332
LOWER COURT NO: CC/2008/APP 0828
Mr Mark Wonnacott (instructed by the Mary Ward Legal Centre, London WC1) appeared for the Appellant.
Ms Kerry Bretherton and Ms Laura Tweedy (instructed by Rickerbys LLP, Cheltenham) appeared for the Respondent.
Hearing date: 25 March 2010
Lord Justice Wilson:
A: THE QUESTION
1. Where a clause of an agreement for a tenancy (or purported tenancy) from month to month purports to preclude the landlord from bringing the tenancy to an end unless the tenant falls into arrears of rent or commits another breach of the agreement, can the landlord ignore the preclusive clause and bring the tenancy to an end, irrespective of any arrears or other breach on the part of the tenant, by service of a month's notice to quit?
Such is the primary – and in my view the only – question to be answered in this appeal, which is brought by Ms Berrisford and to which the respondent is Mexfield Housing Co-operative Ltd (“Mexfield”). The answer to it is not as straightforward as one would assume.
B: INTRODUCTION
In 1993 Ms Berrisford and Mexfield entered into what they described as an “Occupancy Agreement” but which had various features indicative of an intention to create a tenancy. Mexfield purported to “let” and Ms Berrisford purported to “take” a property in Barnet at a “rent” of £89 per week, adjustable each year in the light of inflation. In the agreement there was a clause of the type described in the question set out in [1] above: I will set the clause out in [9] below. Ms Berrisford has enjoyed exclusive possession of the property ever since 1993.
By notice sent to her on 11 February 2008, Mexfield purported to give to Ms Berrisford notice to quit the property on 17 March 2008; such notice is conceded to have been valid in the event that she had only a monthly periodic tenancy. Then, in April 2008, Mexfield issued proceedings for possession of the property. Ms Berrisford raised various defences but Mexfield issued an application for summary judgment. In November 2008 a judge in the Central London County Court refused Mexfield's application. But, apparently wishing to use the proceedings against Ms Berrisford as a test case, Mexfield appealed; and on 5 October 2009 Peter Smith J, sitting in the Chancery Division of the High Court, handed down a judgment ( [2009] EWHC 2392 (Ch)) in which he answered the question set out in Section A above in the affirmative. So he allowed Mexfield's appeal and made a possession order in relation to the property in its favour. In the course of argument before him, however, Mexfield had agreed, at his invitation, to enter into a fresh Occupancy Agreement with Ms Berrisford. It was duly entered into on 21 October 2009 and, apart from the amount of rent, which under the old agreement had, by reason of inflation, increased over the years to £171 pw and which under the fresh agreement stands at £185 pw, it is in all material respects in terms identical to those of the old agreement. Thus Mexfield no longer aspires to obtain possession of the property.
It follows that, as between these parties (or, at least, for so long as no dispute arises between them in relation to the effect of the fresh agreement), this appeal is academic. So why have we entertained it? There are many occupancy agreements in this form. Mexfield has regularly been using such agreements. Other landlords with similar legal status (as to which see Section C below) have also done so: an example is contained in the facts of the recent decision of this court in Joseph v. Nettleton Road Housing Co-operative Ltd [2010] EWCA Civ 228. Mexfield tells us, off the cuff, that since about 1992 it has entered into perhaps 500 such agreements and that a substantial number of them still subsist. It also tells us that the legal effect of this form of agreement is troubling district judges throughout England and Wales when confronted with actions for possession brought by Mexfield. At present there is, of course, authority as to the validity – or, rather, lack of validity – of the preclusive clause: it is that of Peter Smith J in the ruling under appeal. We have taken the view that it would be helpful for this court to decide whether his ruling was correct.
Were we to have decided that the ruling of Peter Smith J was incorrect, the decision would not have reflected adversely on him. Ms Berrisford was unrepresented before him and, understandably, proved incapable of putting forward any real opposition to Mexfield's appeal, still less the highly learned – yet cleverly economical – argument put by Mr Wonnacott, who, in the light of the restoration to her of Community Legal Funding, appears before us on her behalf. Furthermore the defences with which other counsel who first represented her sought before the circuit judge to resist summary judgment bear virtually no relation to Mr Wonnacott's argument. Even Mexfield's argument to the circuit judge appears to me to have lacked its present focus. Indeed I must add that, by a respondent's notice, Mexfield sought before us to deploy alternative reasons for its – theoretical – entitlement even on a summary basis to the possession order, including a contention—which is in dispute – that, were Mexfield constrained by the preclusive clause to serve a notice to quit in the event only of arrears of rent or of other breach on the part of Ms Berrisford, then she had indeed fallen into such arrears at the relevant date (whenever that was, being a point which is also in dispute). But at the hearing we informed Ms Bretherton (who has represented Mexfield in all three courts) of our view that in the unusual circumstances it would, with respect to her, be a waste of time for us to decide more than the point of legal principle.
C: THE STATUS OF MEXFIELD
The “Rules” of Mexfield declare it to be a non-profit-making association, the primary object of which is the provision on the co-operative principle of housing accommodation for occupation exclusively by members of the association under the terms of agreements granted to them by the association. The rules define an agreement as “any form of tenancy agreement, lease underlease or an agreement for a lease under the terms and conditions of which the member occupies one of the Association's houses”. They provide that no one can be a tenant of the association without also being a member; and that no one can be a member without also being a tenant. Their effect is that Mexfield is not just a housing association within the meaning of s.1(1) of the Housing Associations Act 1985 but a “fully mutual” housing association within the meaning of s.1(2) thereof and thus also of s.45(1) of the Housing Act 1988.
Mexfield's status as a fully mutual housing association has important consequences. Mexfield cannot create an assured tenancy: see s.1(2) of, and paragraph 12(1)(h) of Schedule 1 to, the Housing Act 1988. Nor can it create a secure tenancy: for its status is such as to prevent the “landlord condition” set for secured tenancies by s.80 of the Housing Act 1980 from being satisfied. So its members/tenants have no statutory protection against eviction, apart from s.3 of the Protection from Eviction Act 1977, which requires that they be not evicted without court order. Moreover the court's power to postpone execution of a possession order is limited by s.89(1) of the Housing Act 1980 to a maximum period of only six weeks.
D: THE TERMS OF THE AGREEMENT
The terms of the Occupancy Agreement between Mexfield and Ms Berrisford were of course, provided by Mexfield to Ms Berrisford for her consideration in advance. She accepted them and the agreement was dated 13 December 1993. The agreement recited that, in anticipation of her occupation of the property, she had become a member of Mexfield. It provided as follows:
“1. The Association shall let and the Member shall take the [property] from the 13 th day of December 1993 and thereafter from month to month until determined as provided in this Agreement.” [Emphasis supplied]
Clause two, together with the fourth schedule, specified the rent, stipulated that Ms Berrisford should pay it weekly in advance and provided for its annual increase in accordance with the R.P.I. plus 2%. By other clauses she agreed, among other things, to pay the rent and not to assign, sublet or part with possession or occupation of the whole or any part of the property; and Mexfield agreed, among other things, to give her possession of the property at the commencement of the agreement and not to interfere (save in specified circumstances referable to the condition of the property) with her right peacefully to occupy it.
The only terms of the Occupancy Agreement which provided for its determination were the two clauses which follow:
“5. This Agreement shall be determinable by the Member giving the Association one month's notice in writing.
6. This Agreement may be brought to an end by the Association by the exercise of the right of re-entry specified in this Clause but ONLY in the following circumstances:—
a) If the rent reserved hereby or any part thereof shall at any time be in arrear and unpaid for 21 days after the same shall have become due …
b) If the member shall at any time fail or neglect to perform or observe any of...
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