Nothing going on but the rent
Date: 12 June 2009
Authors: James Driscoll
Issue: Vol 159, Issue 7373
Categories: Features, Personal injury
In order to recover possession against a tenant with security of tenure, it is a fundamental principle that the ground for possession must be proved and also, crucially, that it is reasonable to make an order. This was established by the Rent Acts and continued by later housing legislation.
Under the Rent Act 1977 (RA 1977), a landlord can only recover possession against a tenant if the tenant is provided with suitable alternative accommodation, or if one of what are sometimes described as the discretionary grounds for possession set out in RA 1977, Sch 15, such as rent arrears, is proved.
In either case it must be reasonable to make an order for possession. There are also a number of mandatory grounds where possession must be ordered if the relevant ground is made out (Sch 15, Pt 2).
Similarly, under the Housing Act 1985 (HA 1985) a court can only order possession against a secure tenant where a specific ground for possession has been proved and it is reasonable to make an order for possession (HA 1985 Act, Sch 2). (There are, however, a limited number of cases where the court must order possession against a secure tenant where a specific ground is made out, such as where there is overcrowding, and suitable alternative accommodation is available.)
A similar procedure applies to tenants who have assured tenancies under the Housing Act 1988 (HA 1988). The grounds for possession against an assured tenant, which are set out in HA 1988, Sch 2, consist of certain mandatory cases which, if proved, the court has no discretion other than to order possession, and, a number of discretionary grounds where it must be established that the ground is proved, and that it is reasonable to make an order for possession.
Reasonableness
How should the court balance the desire of the landlord to recover possession with the tenant’s desire to remain in occupation? As this is essentially a matter for the discretion of the county court, when should the appeal court interfere with such a decision?
The issue may be particularly complex where the landlord seeks possession by offering alternative accommodation to the tenant as opposed to alleging a beach of the tenancy agreement.
If the landlord wants possession and is able to rehouse the tenant, what is the correct approach where the tenant for personal or family reasons does not wish to move? The latest decision, Whitehouse v Loi Lee [2009] EWCA Civ 375, [2009] All ER (D) 130 (May), concerns a possession claim against a protected tenant under RA 1977.
The possession proceedings
Mrs Whitehouse appealed against a possession order made against her and her late husband on 8 July 2008 in the Central London County Court.
Mr and Mrs Whitehouse had been tenants of premises in north London since 1963 having a tenancy protected under RA 1977.
The respondent to the appeal, Dr Lee, their landlord, had sought possession on the ground that suitable alternative accommodation was available and that it was reasonable to make an order for possession.
Dr Lee and other members of his family bought the freehold to the building containing Mrs Whitehouse’s flat and also other properties in the area in 1969. He and his family purchased the property Mrs Whitehouse lives in north London subject to their protected tenancy (no doubt at a price reflecting their security of tenure).
When Dr Lee and his family came to plan their retirement, they sought to realise their portfolio of property investments and they sought to recover possession of Flat 34c so that they could sell it along with the rest of the building (which consisted of garages) with vacant possession.
In order to do this they purchased a flat about a mile from their home and offered that as suitable accommodation to Mrs Whitehouse and her late husband. Mr and Mrs Whitehouse, however, declined to take up this offer.
Dr Lee took county court proceedings to recover possession.
The county court judge considered that the accommodation offered was reasonably suitable (see RA 1977, s 98(1) (a) and Pt 4 of Sch 15 which sets out the factors that affect the suitability of the accommodation offered) and he decided also that it was reasonable to make an order. Presumably the tenants would have remained protected in the new accomodation because of HA 1988, s 34.
There was no appeal against the finding that the accommodation offered was suitable. Instead Mrs Whitehouse pursued an appeal on the basis that the judge was wrong in finding that it is reasonable to make an order.
The county court judge considered that in dealing with reasonableness he had to balance the reasonableness, as regards (the tenants) staying in their accommodation, against reasonableness of (Dr Lee and his family) wishing to sell it.
The judge concluded that it was reasonable for Dr Lee and his family to seek to realise their investments and to recover possession in order to sell the property. He also decided that Dr Lee was not motivated by a desire to make a pecuniary gain.
At trial Mr and Mrs Whitehouse gave evidence that they had no wish to leave a property which had been their home for more than 40 years. They were both actively involved in the local community and several witnesses supported their evidence by saying how unfortunate it would be if they had to move.
The judge concluded that he had to balance the desire of Mr and Mrs Whitehouse to stay in a property that had been their home for decades against the needs of Dr Lee and his family to maximise their investments. The judge considered that the flat that Dr Lee had incurred the expense of providing the alternative accommodation was an important factor in his favour.
Despite his findings that moving the tenants would be upsetting and disruptive for them, he decided that it was reasonable to make an order for possession. However, the judge did not explain how he had resolved the balancing exercise in favour of the landlord.
The appeal
The Court of Appeal allowed Mrs Whitehouse’s appeal on the ground that the judge’s decision on reasonableness was wrong.
In reaching this decision the court started by noting that the issue of whether or not it is reasonable to make an order for possession is one that is the responsibility of the trial judge who must take account of all the facts, matters and circumstances and evaluate them in forming an overall factual judgment. “It is important that this Court should recognise the limits of the grounds upon which it can properly interfere with the trial judge’s evaluation” (para [23]).
In other words it is only in a case where the Court of Appeal is satisfied that a judge’s decision was the product of an error of principle or plainly wrong that a court will interfere with a finding of reasonableness.
Cresswell v Hodgson
In this case the court quoted the well known authority of Cresswell v Hodgson [1951] 2 KB 92 where the landlord sought possession from a tenant who had a controlled tenancy having offered the tenant at a higher rent another property as alternative accommodation as the landlord was under pressure from his bank and needed capital to pay off his overdraft.
At trial the judge found that the accommodation offer was suitable but held that it would not be reasonable to order possession as making such an order would be a loss to the tenant of a property he had made his home and nothing but a substantial gain to the landlord.
The Court of Appeal dismissed the landlord’s appeal. In the Whitehouse case the Court of Appeal concluded that the Cresswell decision shows that in this case the judge was entitled to take account of Dr Lee’s desire to maximise the realisation of the family’s investment.
However, the Court of Appeal found that the judge has misdirected himself and that he had decided that the balancing exercise between the desire of the landlord to recover vacant possession and that of the tenant to remain in the premises came down in favour of making a possession order but without explaining why he had done so: “The decision as to whether or not it was reasonable to make a possession order was not one that could be made merely by a purported balancing of the reasonableness of the tenant’s wish to stay in Flat 34c against the reasonableness of the siblings (a reference to Dr Lee and his family) that they should go. It required him to look at the question from all the angles, in particular by considering the effect on the parties not just if an order is made, but also if it was not” (para [30]).
The court was also critical of the county court’s attempt to balance the respective interests of the landlord and the tenant in this matter without explaining how he arrived at the decision that it was reasonable to make an order.
The court was also critical of the conclusion that Dr Lee was not seeking to make a pecuniary gain. The Court of Appeal found it impossible to understand that comment as, in this case, making a pecuniary gain was precisely what Dr Lee wanted to do: “Property values between 1969 and 2008 have, of course, changed somewhat but, by reference to 1969 values, Dr Lee had bought cheap (subject to the tenant’s occupation of Flat 34c) and now wanted to sell dear (with vacant possession)” (para 30).
The Court of Appeal said that the judge should have approached the matter by applying principles in cases such as Cresswell by looking at the effect on the parties not only if a possession order is made but also if one is not made.
From the point of view of the tenants, to refuse possession would allow them to continue to enjoy security of tenure and to continue to live in their home which they had occupied for 45 years and in which they brought up their family and have established themselves in the local community.
The question that the judge also failed to address was the effect on Dr Lee and his family if no order was made. They would still be able to realise their property investments though they would get less for the property occupied by Mrs Whitehouse.
The Court of Appeal therefore concluded that the judge’s finding that it was reasonable to make an order on the basis that he did was incorrect so the possession order should be set aside.
Rather than remit the matter to the county court on the reasonableness issue, the Court of Appeal decided (with the agreement of the parties) to consider itself all of the circumstances of the claim.
The court concluded that if one considers the effect on the parties both if an order is made, and if it is not made, that in this case this pointed unerringly to the conclusion that it was not reasonable to make an order for possession.
A powerful reminder
This case is a powerful reminder that where landlords seek to recover possession against a tenant, or a family who have been in occupation of premises for substantial periods of time, that, however compelling the landlord’s case may be for seeking possession, the interest of the tenants may very well prevail.
The case is also a useful reminder that even though a landlord can re-house a tenant in suitable accommodation that this is not of itself a decisive factor as one has to consider the circumstances and preferences of the tenant in a case where they have occupied the premises for many years.
Professor James Driscoll is a consultant solicitor at Trowers & Hamlins and the consultant editor to Butterworth’s Residential Landlord & Tenant Handbook the fifth edition of which will be published later this year
Share this page
