Local authority housing – Area to be redeveloped – Vacant possession of property required – Possession order obtained – Appellant entitled to home-loss payment – Housing authority claiming rent arrears – Whether authority entitled to set off rent arrears against home-loss payment – Judge finding council entitled to set off arrears – Appeal dismissed
In December 1996 the respondent housing authority received confirmation of funding of £9.5m under the “capital challenge pilot scheme” administered by central government. This was to be applied to redevelop the Marquess estate located within the Islington authority area, and involved the demolition of, or major works to, a large number of residential dwellings. Vacant possession was required of some of the dwellings. Between 18 September 1976 and 10 November 1997 the appellant occupied 10 Crowline Walk on the Marquess estate as her home as a secure tenant within the meaning of Part IV of the Housing Act 1985. On 9 May 1997 the respondents served the claimant with a notice of intention to seek possession of her home, and relied upon ground 10 of Schedule 2 to the 1985 Act. Subsequently, the respondents issued proceedings seeking possession. An order for possession was obtained, and the appellant moved to alternative accommodation. It was common ground that the circumstances of her displacement entitled her to a mandatory home-loss payment of £1,500 from the respondents pursuant to sections 29, 30 and 32 of the Land Compensation Act 1973.
On 11 November 1997 the respondents notified the appellant that £77.64 in rent arrears were owing, which were to be deducted from her home-loss payment by way of set-off. She was duly presented with a cheque for the balance of £1,422.36. Upon inquiry, the respondents confirmed that it was their policy to deduct up to £1,000 from statutory home-loss payments where displaced tenants had arrears of rent. The appellant issued proceedings seeking a declaration that the respondents were not entitled to deduct rent arrears from a home-loss payment by way of set-off. The judge held that although the Act did not provide for the set-off of rent arrears, general equitable set-off applied, and, accordingly, he refused the application. The appellant appealed.
Held: The appeal was dismissed.
1. Although parliament had expressly provided for rights of set-off in certain legislation, the fact that such a right had not been provided for in the 1973 Act did not mean that parliament had intended to militate against it. There was nothing in the 1973 Act or in the specific purposes of the payment to imply a legislative implication against set-off.
2. Equitable set-off arose where each party’s claims were so closely related that it would be unjust not to allow it. In this case the parties’ claims were sufficiently closely related, since their relationship was that of landlord and tenant and the claims related to the same premises. Although a tenant would have to wait until any arrears had been calculated (which might involve litigation) before receiving a home-loss payment, that was no reason for set-off not to apply. Therefore, there was no injustice to be found in allowing the set-off to be made.
Andrew Nicol QC and Stephen Reeder (instructed by Marcus Barnett) appeared for the appellant; Mark Lowe and Ranjit Bhose (instructed by the solicitor to Islington London Borough Council) appeared for the respondents.
Thomas Elliott, barrister
