Places for People Homes Ltd v Sharples

JurisdictionEngland & Wales
JudgeLORD JUSTICE ETHERTON,LORD JUSTICE WILSON,LORD JUSTICE MUMMERY
Judgment Date15 July 2011
Neutral Citation[2011] EWCA Civ 813
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: B5/2009/2220
Date15 July 2011

[2011] EWCA Civ 813

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE SALFORD COUNTY COURT

His Honour Judge Tetlow

Royal Courts of Justice

Strand, London, WC2A 2LL

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE OXFORD COUNTY COURT

His Honour Judge Charles Harris QC

Before:

Lord Justice Mummery

Lord Justice Wilson

and

Lord Justice Etherton

Case No: B5/2009/2220

5SF06696

Case No: B5/2010/0725

9PA14004

Between:
Christina Sharples
Appellant
and
Places for People Homes Limited
Respondent
Stephen Godfrey
Appellant
and
A2 Dominion Homes Limited
Respondent

Mr Jan Luba QC and Mr Ben McCormack (instructed by Glaisyers) for the Appellant (Sharples)

Mr Edward Bartley Jones QC (instructed by Whiteheads) for the Respondent (Places for People Homes Ltd)

Ms Kerry Bretherton (instructed by Turpin and Miller) for the Appellant (Godfrey)

Mr Jonathan Manning and Ms Victoria Osler (instructed by Owen White) for the Respondent (A2 Dominion Homes Ltd)

Hearing dates : 17th and 18th May 2011

LORD JUSTICE ETHERTON

Introduction

1

These two appeals raise common issues about the effect of a person's insolvency on the right of a landlord to obtain an order for possession of a dwelling let on an assured tenancy on the ground of rent arrears.

2

In one appeal Christina Sharples, who was adjudged bankrupt on 14 May 2009, appeals the order of His Honour Judge Tetlow on 28 August 2009 in the Salford County Court dismissing Ms Sharples' appeal from an order for possession of her home, 27 Denbigh Place, Salford, M5 4BA ("Denbigh Place"), made by District Judge Hovington on 19 May 2009 on the ground of rent arrears.

3

In the other appeal Stephen Godfrey, in respect of whom a Debt Relief Order ("DRO") was made on 27 April 2009, appeals the order of His Honour Judge Harris QC on 22 February 2010 in the Oxford County Court dismissing Mr Godfrey's appeal from a conditional suspended order for possession of Mr Godfrey's home, 40 Holford Road, Witney, Oxford, OX28 5NG ("Holford Road"), made by District Judge Gatter on 12 August 2009 on the ground of rent arrears.

4

The central issue on the appeals is whether a bankruptcy order (as in the case of Ms Sharples) and a DRO (as in the case of Mr Godfrey) preclude the making of an order for possession of a dwelling let on an assured tenancy on the ground of rent arrears.

5

These appeals highlight the very real difficulties arising from the huge increase in recent times in personal debt, particularly of tenants of modest means who occupy their homes under tenancies granted by social landlords. When such tenants are unable to pay their rent, the consequences are not only severe for them and their immediate families, if they face homelessness on re-possession, but also for their social landlords whose financial integrity is thereby undermined, putting at risk their role as providers of accommodation for those with limited incomes, and also for their non-defaulting tenants who may have to pay higher rents to compensate for the landlord's lost revenue. The appeals raise important issues of general principle about the interface between legislation governing the provision of such accommodation and its withdrawal from the defaulting tenant and insolvency legislation.

The facts

Sharples

6

Places For People Homes Limited ("PPHL") let Denbigh Place to Ms Sharples under an assured tenancy on 15 December 1997. She fell behind with her rent. When her rent was just over 8 weeks in arrear PPHL served on her a notice seeking possession. After further arrears accrued PPHL began proceedings for possession on 14 September 2005 in the Salford County Court on Grounds 8 (at least 8 weeks' rent unpaid), 10 (rent in arrears) and 11 (persistent delay in paying rent) in Schedule 2 of the Housing Act 1988 ("HA 1988").

7

When the claim first came on for hearing, it was adjourned generally on terms of payment of the current rent and £28.85 per week in respect of the arrears. After the accrual of further arrears (which had mounted to £2,417.94 by 9 February 2009) the proceedings were reinstated and were listed for hearing on 19 May 2009. Shortly prior to that hearing, on 14 May 2009 Ms Sharples filed a bankruptcy petition in the Salford County Court and was adjudged bankrupt by order of District Judge Relph. The official receiver was appointed receiver and manager of her estate.

8

The claim for possession was heard by DJ Hovington on 19 May 2009. Ms Sharples, who was represented by an adviser, Mr Holland, argued that, as the rent arrears were provable in Ms Sharples' bankruptcy, the court was prevented from making an order against her by virtue of section 285(3) of the Insolvency Act 1986 (" IA"). The District Judge found that Ground 8 was established. He refused to make an order for payment of the rent arrears (which by that date stood at £2,332.86) since they were a debt provable in the bankruptcy, but held that IA s.285(3) did not preclude the making of an order for possession. He made an order for possession to take effect on 30 June 2009.

9

Ms Sharples' appeal came before Judge Tetlow on 28 August 2009. He dismissed the appeal for reasons which he gave in a judgment handed down on 15 September 2009. In short, he held that IA s.285(3)(a) does not preclude an order for possession of property subject to an assured tenancy on the ground of rent arrears.

Godfrey

10

A2 Dominion Homes Limited ("DHL") is the landlord of Mr Godfrey under an assured tenancy of Holford Road granted to him on 17 April 2000. Mr Godfrey suffered a heart attack in 2006 and has not worked since then. He fell into arrears with his rent. On 28 January 2009 DHL issued possession proceedings on Ground 10 in Schedule 2 of HA 1988 in respect of arrears of rent, then amounting to £2,091.73. On 27 April 2009 the Insolvency Service approved a DRO, which included the rent arrears. The possession proceedings were heard by DJ Gatter on 12 August 2009. Mr Godfrey, who was represented by his solicitor, contended that the proceedings should be stayed in view of the DRO. The District Judge rejected that defence. She made an order for possession on or before 9 September 2009. She ordered that Mr Godfrey pay DHL rent arrears of £2,335.84 and £276.75 in respect of DHL's costs. She directed that the order was not to be enforced so long as Mr Godfrey paid DHL £5.00 per week in respect of the amount of rent arrears and costs.

11

Judge Harris dismissed Mr Godfrey's appeal on 22 February 2010.

The legal framework

Termination of assured tenancies

12

The court cannot make an order for possession of a dwelling-house let on an assured tenancy except on one or more of the grounds set out in Schedule 2 of HA 1988: HA 1988 s.7(1).

13

Grounds 1 to 8, which are in Part 1 of Schedule 2, are mandatory grounds, that is to say, in respect of which the court must order possession: HA 1988 s.7(3). In such a case the court cannot postpone the date for giving up possession for longer than 14 days, save in a case of exceptional hardship, when up to 6 weeks may be allowed: Housing Act 1980 s.89(1).

14

The other grounds for possession of an assured tenancy, which are set out in Part II of Schedule 2 of HA 1988, are discretionary; that is to say, if the court is satisfied that any of them is established, the court may make an order for possession if it considers it reasonable to do so: HA 1988 s.7(4). Even where that is the case, the court has power under HA 1988 s.9 to adjourn the proceedings, postpone the giving up of possession on terms, or to stay or suspend execution of any warrant. HA 1988 s.9(3) provides that on any such adjournment, stay, suspension or postponement, the court, unless it considers that to do so would cause exceptional hardship to the tenant or would be unreasonable, shall impose conditions with regard to payment by the tenant of arrears of rent (if any) and current rent and may impose such other conditions as it thinks fit.

15

In Ms Sharples' case possession was initially sought, as I have said, on Grounds 8, 10 and 11, and the order for possession was made on Ground 8. In Mr Godfrey's case possession was sought and ordered on Ground 10. Ground 8 is a mandatory ground in Part 1 of Schedule 2 of HA 1988. Grounds 10 and 11 are discretionary grounds in Part II of Schedule 2. They are as follows:

Ground 8

Both at the date of the service of the notice under section 8 of this Act relating to the proceedings for possession and at the date of the hearing

(a) if rent is payable weekly or fortnightly, at least eight weeks rent is unpaid;

(b) if rent is payable monthly, at least two months rent is unpaid;

(c) if rent is payable quarterly, at least one quarter's rent is more than three months in arrears; and

(d) if rent is payable yearly, at least three months' rent is more than three months in arrears;

and for the purpose of this ground "rent" means rent lawfully due from the tenant.

Ground 10

Some rent lawfully due from the tenant—

(a) is unpaid on the date on which the proceedings for possession are begun; and

(b) except where subsection (1)(b) of section 8 of this Act applies, was in arrears at the date of the service of the notice under that section relating to those proceedings.

Ground 11

Whether or not any rent is in arrears on the date on which proceedings for possession are begun, the tenant has persistently delayed paying rent which has become lawfully due.

16

An assured tenancy is not brought to an end by the making of the possession order itself, even an outright order. The tenancy will end only when possession is actually delivered up: Knowsley Housing Trust v White [2009] 1 AC 636, and now made clear by amendment of HA 1988...

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