Housing Act 1985 — Secure tenant — Arrears of rent — Complaint by tenant that premises had become uninhabitable through landlords’ failure of maintenance — Possession order sought by landlords — Tenant’s right to a set-off by way of counterclaim and to obtain a stay of landlords’ possession claim — Whether after various intermediate stages recorder acted correctly in granting possession to landlords — Recorder’s reasons considered — Held that there were no valid grounds for criticising the manner in which the recorder had exercised his broad discretion — The approach which he had adopted, and which the court approved, was analogous to that stated by Lord Greene MR in the well-known passage in Cumming v Danson
was the secure tenant of a flat in north London in a housing estate owned by
the respondents, Haringey London Borough Council — His accommodation was a
two-bedroomed flat on the top floor — There was a flat roof and there had been
problems of penetrating water and of condensation — The appellant had fallen
into arrears with his rent and the respondents sought an order for possession —
The appellant’s defence was that he had withheld payment of rent because the
flat was uninhabitable due to respondents’ failure to maintain it properly —
There followed a rather complicated procedural history, including a possession
order made in the tenant’s absence and subsequently set aside, an order for
payment of the current rent with a lump sum to reduce the arrears, two
part-heard sessions, and a reserved judgment dismissing the tenant’s counterclaim,
thus leaving him with nothing to set off against the original arrears —
Finally, the possession claim came before Mr Recorder Marr-Johnson, who made a
possession order against which the tenant appealed
recorder’s reasons for making the order were briefly (1) the tenant’s record of
tardy payments of the current rent over a period, (2) his failure to make any
provision or put forward any proposals for paying off the arrears, (3) the
state of the local authority’s pressing waiting list, (4) the fact that the
tenant as a single man in two-bedroomed accommodation was over-housed — The
recorder’s judgment was criticised on behalf of the tenant on three main
grounds — The first was that the recorder should not have considered any
matters other than the financial positions of the landlords and tenant — The
second was that it was unfair that the tenant should not have been given time
to deal with the arrears when his counterclaim fell to the ground — The third
was that the recorder ought on his own motion to have suspended the possession
order — The Court of Appeal rejected these criticisms and dismissed the appeal
— They could see no ground for saying that the recorder took into account
anything which lay outside the proper scope of the inquiry — The recorder’s
marshalling of the relevant factors and indeed his exercise of this broad
discretion could not properly be attacked on any of the bases which justified
interference with judicial discretion — Mustill LJ went further and said that
the recorder’s decision was plainly right
noted as of general interest that the Court of Appeal set out the principles
governing the position where a tenant in good faith asserts against the
landlord a breach of the latter’s obligations and on that ground withholds
payment of rent, maintains a right to set off his claim by way of counterclaim
and seeks a stay until the trial of the landlord’s claim for possession — The
position where the tenant’s counterclaim fails, where the tenant makes or fails
to make arrangements or proposals to clear his indebtedness, and where he has
already a very poor record for persistent late payment, is discussed in the
judgment
dismissed
The following cases are referred to in
this report.
British Anzani (Felixstowe) Ltd v International Marine
Management (UK) Ltd [1980] QB 137; [1979] 3 WLR 451; [1979] 2 All ER 1063;
(1978) 39 P&CR 189; [1979] EGD 414; 250 EG 1183, [1979] 1 EGLR 64
Cumming v Danson [1942] 2 All ER 653
Dellenty v Pellow [1951] 2 KB 858; [1951]
2 All ER 716; [1951] 2 TLR 733, CA
Lal v Nakum unreported, February 17
1981
Lee-Steere v Jennings (1988) 20 HLR 1
This was an appeal by the tenant, Vincent
Stewart, from the decision of Mr Recorder Marr-Johnson, at Clerkenwell County
Court, whereby he granted the landlords, Haringey London Borough Council, a
possession order under the Housing Act 1985, section 84 and Schedule 2, Part I,
Ground 1, against the tenant in respect of Flat 61, Wat Tyler House, Boyton
Road, Hornsey, London N8.
Edward Ellis (instructed by Nicos &
Co) appeared on behalf of the appellant; Roderick Noble (instructed by the
solicitor to Haringey London Borough Council) represented the respondents.
Giving the first judgment at the
invitation of Mustill LJ, WAITE J said: This is an appeal from an order of
Mr Recorder Marr-Johnson in the Clerkenwell County Court on January 25 1991
awarding possession of premises subject to a secure tenancy, following
dismissal of the tenant’s counterclaim to set off, against admitted arrears of
rent, damages for alleged breach of the landlords’ liability to maintain the
premises in a habitable condition.
The legal background to such a situation
is well settled by the authorities which have most helpfully been cited to us
by Mr Ellis, who has very fully and ably addressed the court on behalf of the
appellant tenant, Mr Stewart. I pay that tribute with special emphasis because,
as a result of an unfortunate misunderstanding, Mr Stewart and his instructing
solicitor did not receive immediate notice of the hearing of this appeal, and
they will need, now that they are present, to be assured that everything that
could have been said has been said on Mr Stewart’s behalf.
The principles of law can be summarised
in this way. A tenant who in good faith asserts against his landlord a claim
for damages for
withholds payment of rent, can in general maintain a right to set off his claim
by way of counterclaim and obtain until trial a stay of the landlord’s claim to
possession for non-payment of rent: see British Anzani (Felixstowe) Ltd
v International Marine Management (UK) Ltd [1980] 1 QB 137*.
*Editor’s note: Also reported at (1978)
250 EG 1183, [1979] 1 EGLR 64.
If such a stay is granted and the
counterclaim is heard but fails, then in the case of a tenancy like the one
here under consideration, which is protected by the Housing Act 1985, the
lessor will be entitled by virtue of the outstanding arrears of rent to an
order under section 84 and Ground 1 of Schedule 2 to the Act for possession,
provided — and provided only — that he can satisfy the court that it would be
reasonable to make a possession order. In ordinary circumstances it will not be
reasonable to make a possession order if the tenant has made arrangements in
the event of failure of his counterclaim to clear the arrears by an
anticipatory payment into court (to give one example), or by setting aside
funds which can be devoted for that purpose (to give another example), or, at
the very least, to put forward proposals for an early discharge of the arrears.
If he is able to take those steps towards
satisfying the proper demands of the lessor for payment of rent it will, in
general, be unreasonable for an order to be made against him. In exceptional
cases, however, as for example where the tenant has already a very poor record
for persistent late payment of rent, the ordinary benevolent course will not be
followed, and the making of an order would be regarded as reasonable upon the
ground that the tenant has disqualified himself from the court’s sympathy by
the persistency of his past defaults: see Dellenty v Pellow
[1951] 2 KB 858, Lal v Nakum in the Court of Appeal, unreported,
February 17 1981, and Lee-Steere v Jennings also in the Court of
Appeal (1988) 20 HLR 1.
In appropriate cases the court has power
under section 85 of the Housing Act 1985 to stay or suspend the execution of a
possession order or postpone the date of possession. An obvious case for the
exercise of such a power would be where a tenant has not been able to put
himself in funds to clear the arrears immediately by the time that his
counterclaim fails but can demonstrate that he has some reasonable and
realistic prospect of doing so provided the judge allows him the necessary
time.
Those, in very brief summary are the
relevant principles. The circumstances to which the judge in the instant case
was required to apply them were the following. Wat Tyler House, Boyton Road in
north London, is a local authority housing estate property owned by the
respondents, Haringey London Borough Council. It is a purpose-built block of
flats erected during the 1960s. It has a flat roof. No 61, the property with
which these proceedings are concerned, consists of accommodation on two floors
immediately under that flat roof. It is common ground that at times in its
history the flat has experienced problems of penetrating water and internal
condensation. There has, however, been (this was the issue raised by the
counterclaim) substantial dispute as to how far those troubles were due to the
default of the lessor council or how far they were matters that the tenant was
properly to be required in law to cope with for himself.
The tenancy was granted originally to Mr
Stewart, the appellant, and his wife on March 9 1987. There were matrimonial
troubles in the course of which the tenancy was changed into the wife’s sole
name later that year, but the parties separated in May 1988 and the appellant,
after his wife’s departure, remained in occupation of the property as a single
man.
On October 7 1988 notice seeking
possession for non-payment of rent was served on him by the lessors. That was
an essential statutory step under the Housing Act as a preliminary to the
bringing of proceedings for possession. The arrears at the date of the notice
amounted to £1,836. They remained uncleared for an appreciable period, so on
March 7 1989 the local authority as lessors issued a summons for possession in
the county court.
By his defence to that summons the tenant
asserted that he was withholding the rent because the premises had been
rendered uninhabitable through failure on the part of the lessors to maintain
it. Accordingly, the possession summons was listed to come on as a contested
hearing on June 6 1989. There was a most unfortunate misunderstanding that day
when Mr Stewart went to the wrong court, and when he finally arrived at the
Clerkenwell County Court he discovered that the case had already been heard in
his absence and judgment given against him. He sought to set aside that
judgment under the ordinary procedures available for such cases, and to cut a
long procedural story short (because it is common ground that nothing turns on
the technicalities of procedure in such circumstances) the matter came
effectively before His Honour Judge Aron Owen on July 11 1989.
The position was that the arrears of rent
then outstanding (which I will call for convenience ‘the original arrears’)
amounted to £1,200 in round figures, and the judge was informed as to the
general background of the case, namely the fact that the lessors were seeking
possession because the original arrears had not been paid and the defendant
wished to maintain a counterclaim that their failure to keep his flat in a
habitable state of repair entitled him to claim damages from them which
substantially exceeded the amount of any rent that was due.
Such were the circumstances in which
Judge Aron Owen made the following order. He set aside the possession order
which had been made (in the circumstances I have already described) in the
absence of the defendant, but on terms. These were the following (and I quote
from his order):
. . . that the First Defendant [that is
the appellant] do, as from Monday July 17 1989, pay regularly the current rent
of £6.32 per week AND on or before Tuesday July 25 1989 the sum of £200 to the
Plaintiffs off accrued arrears. IF the said terms are not complied with, order
for possession to stand.
The order then went on to provide that in
that event, that is to say if the terms were complied with, there should be
directions in the action which provided in the ordinary way for defence and
counterclaim to be served, together with, in due course, reply and defence,
discovery, inspection and so on. I will refer in a moment to the extent to
which the appellant did comply with the terms of that order.
Matters meanwhile proceeded as the judge
had directed. The defence and counterclaim were served on July 25 1989. In his
defence the appellant tenant asserted a denial of the fact that anything was
due under the lease and he made a very detailed case of complaint against the
lessors for the dilapidations which he had suffered in his flat. Issue was
joined on that pleading by a reply and defence to counterclaim on the part of
the lessors. There were particulars of discovery and inspection, and the case
came on for trial in the ordinary way on September 13 1990.
We were told that this was a busy day in
the county court, the case could not be reached until late, and there was
really only an opportunity to arrange a view, which took place very rapidly.
There was, however, an opportunity for Mr Ellis to tell the court on behalf of
the tenant that the defendant was no longer seeking to assert that the original
arrears were not due. This is the point at which I should say something about
what I will call ‘the current rent’ — that is to say the rent that was falling
due between the date of Judge Aron Owen’s order the previous July and the date
of that hearing on September 13.
The total amount of rent due was paid,
but the means by which, and the timing by which, it was paid were, from the
lessors’ point of view, very unsatisfactory. The bulk of the rent was provided
in any case by the social security, so that there was only a comparatively
modest amount for the tenant to pay. The £6.32 a week rent, which he had been
paying at the time of the order of Judge Aron Owen in July 1989, became reduced
in about April 1990 to £2.38 a week because of changes in social security
legislation. Nevertheless, there were many weeks, sometimes as long as two
months, when no payment was made by the tenant at all.
The case had to go part heard on
September 13 and continued on September 14, when it was not completed. In the
nature of things, the evidence that the judge was required to hear was evidence
devoted to the issues raised by the counterclaim. There had to be a substantial
period of adjournment before the case could be concluded and it went part heard
until December 5 1990. Unfortunately, in the meantime the defendant was
arrested on a criminal charge, so he had to attend the hearing in custody. At
the conclusion of the hearing that day, December 5 1990, the judge reserved
judgment. He sent a written reserved judgment to the parties through the post
early in January 1991. By his judgment he dealt very fully with the matters
that had been the subject-matter of the counterclaim, and in the upshot he
dismissed the counterclaim in its entirety. That left the defendant with nothing
to set off against the amount of the original arrears, which remained
outstanding.
Such were the circumstances in which on
January 25 1991 the action became restored before the judge to deal with the
possession claim for non-payment of rent. Two features of that hearing need to
be mentioned. The first was that the judge received evidence from the
local authority on matters of housing policy, including (specifically) the
needs for housing generally in the borough, the long waiting list confronting
Haringey London Borough Council as a housing authority, and the fact that the
defendant as a single man now living on his own was, by their housing
standards, over-accommodated. The other feature of the hearing that day was
that Mr Stewart, the appellant tenant, was not in a position to make any offer
at all as to clearing the original arrears. There were obviously difficulties
in his way in doing that as a man who was at that time in custody, but it is a
simple fact that no proposals of any kind were offered on his behalf to give
Haringey the satisfaction of knowing that one day, however far away, the
original arrears would be paid off.
At the end of that hearing the judge
delivered an extempore judgment of which there is an agreed note by counsel. He
made a possession order. His reasons for doing so, in summary, were the
following: first, the defendant’s record of tardiness in the payment of the
current rent falling due between the date of Judge Aron Owen’s order in July
1989 and the date of the hearings before the judge in September 1990 and
January 1991; second, the defendant’s failure to make any provision for payment
off of the original arrears; third, the state of the local authority’s pressing
waiting list; fourth, the defendant’s status (though this was not a matter to
which the judge attached great weight) as one who was over-housed in
two-bedroomed accommodation as a single man.
Mr Ellis, the tenant’s counsel, has
attacked that judgment before this court today on three principal grounds. The
first is that the judge was, he says, precluded from considering any matters
apart from a bare examination of the respective financial positions of the
landlord and tenant. For the proposition that this very narrow view had to be
taken of the case, Mr Ellis relied upon argument on these lines. The various
cases in the second Schedule to the Housing Act, he said, provide an exhaustive
statutory code under which matters such as housing needs and housing
availability are to be dealt with according to specific statutory contexts, and
there is to be no overlap; so that, for example, when a judge is considering
the issue of non-payment of rent he must blind himself entirely to issues of
the availability of accommodation in one set of circumstances or
non-availability in another.
For myself, I do not believe that there
is any basis for taking that restrictive view of the legislation. The section
itself is cast in the widest terms, stating simply that the court must consider
that it is reasonable to make a possession order in section 84(2)(a),
and the approach must be closely analogous to that adopted by this court in Cumming
v Danson [1942] 2 All ER 653 where Lord Greene, then Master of the
Rolls, stated that when considering reasonableness it was the duty of the judge
to take into account all relevant circumstances as they existed at the date of
the hearing — in what Lord Greene went on to describe as ‘a broad, common-sense
way as a man of the world, . . . giving . . . weight as he thinks [fit] to the
various factors in the situation’. One really could hardly have a wider
definition than that of the scope of consideration of reasonableness and
therefore this first ground cannot, in my judgment, be supported.
The second ground, encompassing also the
third ground of appeal, for they really come to the same point, is this. Mr
Ellis submits that Judge Aron Owen’s order must be construed as exculpating the
defendant from the original arrears altogether until the moment when his
counterclaim is disposed of. By implication, he says, the order must have
contemplated that thereafter the defendant would have time to deal with the
arrears and would not be left like a shorn lamb suddenly exposed to the wind
when his counterclaim fell to the ground. I feel bound to say that, in my view,
there is no warrant to be found for reading into the order of the earlier judge
so radical a departure from the principle which I endeavoured to summarise a
few moments ago — that is to say the general principle that a tenant who fails
in a counterclaim for dilapidations must equip himself to make immediate or
early provision for the discharge of outstanding arrears or accept the
consequences.
Third, and last, Mr Ellis argues that the
judge ought of his own motion to have suspended a possession order. He points
to the fact that suspended possession orders are part of the bread and butter
business of the county court and are commonly granted in courts in Rent Act
cases up and down the land.
For myself, I do not understand how a
duty of his own initiative to impose a suspension can reasonably be laid on the
judge in a case where no proposals regarding the discharge of the original
arrear within a short period, or even a long period, or at all, were offered to
him.
Those being the grounds of the appeal and
they having failed, I would, for my part, dismiss the appeal.
Agreeing, MUSTILL LJ said: One of
the arguments addressed to us in the course of Mr Ellis’ very comprehensive
submissions was to the effect that the recorder erred by taking into account
certain factors (Waite J has already described them) which were not germane to
the exercise of the discretion under section 84. The essence of this argument
was that the only factors to which regard could properly be had were those
linked in some way to the particular ground or grounds drawn from the Second
Schedule to the Act upon which the claim for possession was based and that,
since the ground invoked here was the non-payment of rent, only matters
relating to rent and its non-payment should have been placed in the scales. I
am afraid that I do not agree at all and would protest against any attempt to
impose constraints on the exercise of a general discretion which are nowhere to
be found in the statute. As Lord Greene MR said in Cumming v Danson
[1942] 2 All ER 653 at p 655 in relation to the kindred provisions of an
ancestor of this legislation:
In considering reasonableness under sect
3(1), it is, in my opinion, perfectly clear that the duty of the judge is to
take into account all relevant circumstances as they exist at the date of the
hearing. That he must do in what I venture to call a broad, common-sense way as
a man of the world, and come to his conclusion, giving such weight as he thinks
right to the various factors in the situation. Some factors may have little or no
weight, others may be decisive, but it is quite wrong for him to exclude from
his consideration matters which he ought to take into account.
I can see no ground here for saying that
the learned judge took into account anything which lay outside the proper scope
of the inquiry. It seems to me that the judge’s marshalling of the relevant
factors and indeed his exercise of this broad discretion cannot properly be
attacked on any of the bases on which this court interferes with the exercise
of a judicial discretion. I would indeed go further and say that, hard as it
may well seem to Mr Stewart, his decision was plainly right.
I add those few words in deference to the
arguments addressed.
I would also add that there is an
arithmetical mistake in computing the amounts now due from the appellant and to
that limited extent the order under appeal should be varied so as to reduce the
sum in question to £1,106.04. As to the remainder, I have nothing to add to
what has fallen from Waite J.
The appeal was dismissed with costs, not
to be enforced without leave of the court; legal aid taxation of appellant’s
costs.
