Lease – Assignment – Landlord’s consent not to be unreasonably withheld – Claimants assured tenants of defendant registered social landlord – Claimants seeking to exchange home with another tenant – Exchange requiring defendant’s consent – Defendant making consent conditional on payment of rent arrears on different property – Claimants seeking judicial review – Whether decision amenable to judicial review – Whether private law aspect bearing on public law aspect – Whether exchange constituting assignment of tenancy – Whether payment of arrears constituting reasonable condition – Whether relief sought appropriate – Application dismissed
The claimants, a married couple, were the assured tenants of a property owned by the defendant registered social landlord (RSL). In 1996, the property had been owned by the local authority. During their ownership, the claimants briefly separated, with the husband moving to other local authority premises (Rockingham Road). While living there, he fell into arrears with his rent and the council obtained a county court judgment against him, which they were unable to enforce. In 2001, both the claimants’ property and those in Rockingham Road were transferred to the defendant’s parent company (NSHC), which then became the claimants’ landlord. The claimants wanted to exchange their home with another tenant, but the landlord’s required permission was granted only on condition that the husband first paid the arrears in respect of Rockingham Road.
Although the claimants had a remedy under the Landlord and Tenant Act 1988, they applied for judicial review of the defendant’s decision together with an order requiring it to consent to the exchange. The defendant contended, inter alia, that the decision was not amenable to judicial review because it was not governed by public law but was merely the exercise of an existing private law/contractual right.
The issues for the court included whether: (i) the decision was amenable to judicial review; (ii) the private law aspect had any bearing on that relating to public law; (iii) as a matter of private law, section 1 of the 1988 Act applied to the claimants’ right to exchange; (iv) it was reasonable to impose a condition for the payment of arrears in respect of a different property; and (v) it was appropriate to grant the relief sought.
Held: The application was dismissed.
(1) The question of whether an exchange of social housing should be permitted involved a decision that was to be taken in the discharge of the public function of managing and allocating social housing. The fact that RSLs might have greater freedom than local authorities in responding to applications for mutual exchange did not mean that, in dealing with those applications, they were not required to take decisions in the discharge of their public function. Judicial review on conventional public law grounds in respect of such applications applied not merely to decisions concerning the termination of a tenancy of social housing but also to those concerned with the mutual exchange of such tenancies: R (on the application of Weaver) v London & Quadrant Housing Trust [2009] EWCA Civ 587; [2009] 4 All ER 865; [2009] 25 EG 137 (CS) applied.
(2) The fact that a right might have been exercised in accordance with the terms of a contract did not necessarily mean that the decision to exercise that right might not be invalid as a matter of public law. The extent to which differences might arise with regard to the exercise of a contractual right between the requirements of public and private law and the consequences of their application would depend, in part, on an analysis of what that right, and any disputes over its exercise, involved as a matter private law. What was required under public law would not necessarily be required under contract law: Hampshire County Council v Supportways Community Services Ltd [2006] EWCA Civ 1035; [2006] BLGR 836 considered.
(3) An express general provision in the claimants’ assured tenancy limited their right to assign without the prior permission of their landlord, which was not to be unreasonably withheld by virtue of section 19(1) of the Landlord and Tenant Act 1927. The right to exchange was exercisable by the assignment of their tenancy. NSHC’s decision was one to which section 1 of the 1998 Act applied. When the tenant served a written application for consent, the landlord was obliged to serve a written notice on the tenant within a reasonable time specifying the reasons for withholding consent. The landlord also owed a duty to give consent, except where it was reasonable not to do so, and that duty was not satisfied if consent was granted subject to any condition that was unreasonable: section 1(3)(a) and 1(4) of the 1988 Act: Ashworth Frazer Ltd v Gloucester City Council [2001] UKHL 59; [2002] 1 EGLR 15; [2002] 05 EG 133 considered.
(4) The purpose of a covenant against assignment without the landlord’s consent was to protect the landlord from having its premises used or occupied in an undesirable way or by an undesirable assignee. It would not normally be reasonable for a landlord to seek to impose a condition that was designed to increase or enhance the rights that it enjoyed under the lease: International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] 1 EGLR 39; (1985) 277 EG 62 and Staudley Investments Ltd v Mount Eden Land Ltd (1997) 74 P&CR 306; [1996] EGCS 153 considered.
In the instant case, the condition attached to the permission had nothing to do with the personality of the proposed assignee, the manner in which the property might be used or ensuring that the terms of the assured tenancy were performed. It was not the purpose of a qualified covenant against assignment to provide the landlord with a lever enabling it to recover debts that did not arise under, or at least in connection with, the tenancy to be assigned but which the tenant who wished to assign might owe his landlord in some other capacity. The condition imposed by NSHC was therefore not one that it could impose on any consent to an assignment by the claimants that was not to be unreasonably refused as a matter of private law. NSHC had proceeded on the assumption that it could do so and in that respect had erred in law by taking into account something that was irrelevant to its decision to impose that condition.
(5) An ordinary claim involving only questions and matters arising under section 1 of the 1988 Act was a suitable alternative remedy for a tenant who was refused permission for an assignment or granted permission subject to a condition. It was a better remedy for such a claimant since the onus was on the landlord to show that its refusal of permission, or any imposition of a condition, was reasonable. On a claim for judicial review, on the other hand, the onus was on the claimant to show that the landlord’s decision was unreasonable. In some cases, the tenant might have grounds on which to impugn the landlord’s decision on conventional public law grounds, raising additional considerations. There would normally be no good reason why, in such a case, a tenant who had been refused permission to assign, or who had been given permission subject to conditions, might not impugn the legality in public law of that decision in an ordinary claim, which might also deal with the legality of the decision in private law. In the instant case, having regard to the fact that an alternative remedy was available by way of an ordinary claim, the application for judicial review would be refused: O’Reilly v Mackman [1983] 2 AC 237 considered.
Per curiam: In future, claims concerning decisions to refuse permission to assign or exchange or to grant such permission only on conditions, to which section 1 of the 1988 Act applied, should be brought by ordinary claim, even if they also included claims that the RSL’s decision was unlawful as a matter of public law.
Michael Paget (instructed by Harding Swinburne Jackson & Co) appeared for the claimants; Sam Grodzinski (instructed by Olswang) appeared for the defendant.
Eileen O’Grady, barrister
