Landlord and tenant — Secure tenancy — Order for possession — Whether agreement not to execute order while conditions complied with by tenant creates new secure tenancy
In August 1984
the appellant council granted the respondent and her husband a secure tenancy
of a flat. They fell into arrears with the rent. In January 1992 the council
obtained a final order requiring the respondent and her husband to give
possession of the flat by February 12 1992. On February 5 1992 the council and
the respondent agreed that the arrears of rent were to be paid off at a
specified weekly amount and that if the payments ceased or became irregular the
council would seek to evict the respondent. The respondent failed to make the payments
and in June 1994 the council issued a warrant for possession which was
executed. The county court judge ordered that the respondent be reinstated in
the flat. The council appealed the decision of the Court of Appeal which had
dismissed their appeal from the judge.
parties did not intend to create a tenancy or licence but only to defer the
execution of the order for possession so long as the respondent complied with
the agreement. The agreement should take effect as the parties intended; the
former tenant could be characterised as a trespasser who the council had agreed
not to evict pending the revival of the old tenancy or the breach of the agreed
conditions. The agreement therefore did not create a secure tenancy or licence
under Part IV of the Housing Act 1985. There was no reason why the agreement
should not be given the same effect as an order of the court in similar terms
suspending execution of the original order for possession.
The following
cases are referred to in this report.
Greenwich
London Borough Council v Regan (1996) 28 HLR
469
Thompson
v Elmbridge Borough Council [1987] 1 WLR
1425; (1987) 86 LGR 245; 19 HLR 526, CA
This was an
appeal by Brent London Borough Council from a decision of the Court of Appeal
which had dismissed the council’s appeal from a decision of Judge Finestein QC
in Willesden County
be reinstated in premises following the execution of a writ of possession.
Ashley
Underwood (instructed by the solicitor to Brent London Borough Council)
appeared for the appellants; David Neuberger QC and William Geldart (instructed
by Daniel & Harris) represented the respondent.
Giving the first
speech, Lord Browne-Wilkinson said: This appeal raises a question as to the
rights of a tenant of a dwelling-house let by a local authority. Under Part IV
of the Housing Act 1985 such tenancy is a ‘secure tenancy’. A landlord cannot
terminate a secure tenancy otherwise than by obtaining from the court an order
for possession. Local authority landlords often obtain an order for possession
against a secure tenant but then agree with the tenant that, while certain
conditions are observed, the order will not be executed. The question is
whether such an agreement operates so as to create a new secure tenancy which
can only be terminated if the landlord obtains a further order from the court.
On August 6
1984 Brent London Borough Council (‘Brent’) granted a tenancy of the basement
and ground-floor flat at 28 Oxford Road, London NW6, jointly to the respondent,
Miss Burrows, and her husband Richard Allen. In January 1986, Mr Allen left the
premises leaving Miss Burrows with her children. She fell behind with her rent.
On January 29
1992 Brent obtained a final order for possession against Miss Burrows and Mr
Allen in Willesden County Court. The order directed that the plaintiff should
recover the sum of £2,427.63 being arrears of rent and costs. It further
ordered: ‘that the defendant do give the plaintiff possession of the said land
on 12 February 1992’. Thus, the order was not suspended: it was an immediate
order for possession on February 12.
On February 5
1992 Brent came to an arrangement with Miss Burrows which was recorded in
writing. It was made on a form which was designed for use by tenants prior to a
possession hearing. The memorandum of the arrangements stated:
I acknowledge
that there are arrears of £2,313.41 on my rent account as at 27.1.92 … I
understand that in those circumstances the London Borough of Brent will seek a
possession order and judgment for the full amount of the arrears from the
County Court … I agree to pay the rent charge of £2.67 due every week and, in
addition, to reduce the arrears by regular instalments of £3.00 per week.
There was then
a section of the document which was only applicable when the document was to be
signed before an order was made which was crossed out.
If payments
cease or are irregular the Council will seek to evict.
Miss Burrows
failed to make the payments in accordance with the agreement of February 5
1992. Brent issued a warrant for possession informing her that she would be
evicted on June 8 1994. Miss Burrows moved out on June 7. The order was
executed. She returned on June 8 1994 to find herself locked out and the
premises boarded up. She thereupon applied to Willesden County Court seeking to
have the bailiff’s warrant and the possession order set aside, but those
proceedings were dismissed.
On July 4 1995
Miss Burrows commenced this action seeking a declaration that she remained a
tenant and damages for unlawful eviction. She also sought a mandatory
injunction to be allowed back into the premises. At the heart of her case was
the contention that the effect of the arrangements made on February 5 1992 was
to create a new tenancy or licence by operation of law. By his judgment of
August 19 1994 Judge Finestein QC agreed with Miss Burrows’ submissions and
ordered her reinstatement. He made the declaration and injunction asked and
referred the matter to the district judge for an assessment of damages.
In the course
of his judgment, the judge found that:
(1) Miss
Burrows understood, and this was part of the express agreement, that eviction
would be a penalty if she was in default;
(2) it was not
contemplated by her that when she entered into the arrangement on February 5
she was entering into a tenancy;
(3) when she
left the premises on June 7 1994 it was not her state of mind that a new
tenancy had come into being as a result of the arrangement of February 5 1992.
Brent appealed
to the Court of Appeal (Butler Sloss, Otton and Auld LJJ) (1995) 27 HLR 748 who
dismissed the appeal. Brent appeal to your Lordships’ House.
Sections 79,
80 and 81 of the Act of 1985 define the conditions which have to be satisfied
in order to constitute a ‘secure tenancy’. Those conditions were satisfied in
the present case. It is important to note that under section 79(3) the
provisions of Part IV of the Act apply to a ‘licence to occupy a dwelling-house
… as they apply in relation to a tenancy’. Therefore nothing in this case turns
on the distinction between a licence and a tenancy; if, by making the agreement
not to enforce the possession order, the local authority are to be taken to
have granted a licence for the tenant to continue in occupation the position
will be just the same as if they had granted a tenancy.
Section 82
provides as follows:
(1) A secure
tenancy which is either —
(a) a weekly
or other periodic tenancy, or
(b) a tenancy
for a term certain but subject to termination by the landlord,
cannot be
brought to an end by the landlord except by obtaining an order of the court for
the possession of the dwelling-house or an order under subsection (3).
(2) Where the
landlord obtains an order for the possession of the dwelling-house, the tenancy
ends on the date on which the tenant is to give up possession in pursuance of
the order.
It is
important to note that the secure tenancy ends, not on the date on which
possession is in fact given up, but on the date on which the order requires the
defendant to give up possession.
Section 84
provides that the court shall not make an order for possession save on one of
the grounds mentioned in Schedule 2, which include non-payment of rent. In
addition, in the case of non-payment of rent the court must also be satisfied
that it is reasonable to make the order. An order for possession cannot be made
unless the ground on which an order is to be sought has been specified in a
prior notice to be served on the tenant: sections 83 and 84(3).
Section 85 is
central to the argument in this case. It provides:
(1) Where
proceedings are brought for possession of a dwelling-house let under a secure
tenancy [for the non-payment of rent] … the court may adjourn the proceedings
for such period or periods as it thinks fit.
(2) On the
making of an order for possession of such a dwelling-house on any of those
grounds, or at any time before the execution of the order, the court may —
(a) stay or
suspend the execution of the order, or
(b) postpone
the date of possession, for such period or periods as the court thinks fit.
(3) On such
an adjournment, stay, suspension or postponement the court —
(a) shall
impose conditions with respect to the payment by the tenant of arrears of rent
(if any) and rent or payments in respect of occupation after the termination of
the tenancy (mesne profits), unless it considers that to do so would
cause exceptional hardship to the tenant or would otherwise be unreasonable,
and
(b) may
impose such other conditions as it thinks fit.
(4) If the
conditions are complied with, the court may, if it thinks fit, discharge or
rescind the order for possession.
The argument
for Miss Burrows, which the Court of Appeal accepted, is as follows. The order
of January 29 1992 directed that possession should be given on February 12
1992. Therefore, by virtue of section 82(2), Miss Burrows’ original secure
tenancy terminated on that day. Yet, under the agreement of February 5 1992,
Miss Burrows remained in occupation of the house paying a ‘rent charge’ of
£2.67 per week for such occupation. That agreement could not be effective to
alter or vary the order itself, but could only take effect as an agreement to
permit Miss Burrows to stay on after her existing tenancy had terminated on
February 12 1992. This right of continued occupation can only be explained on
the ground that the agreement conferred on Miss Burrows a new right of
occupation, either by way of a new
was a new secured tenancy; if it was only a licence, by virtue of section 79(3)
Miss Burrows enjoyed the same protection as if it were a tenancy. In either
event, the new secure tenancy or new licence could only be terminated by Brent
applying to the court for a further court order terminating the new right:
section 82(1).
The argument
for Brent before the Court of Appeal was that the agreement of February 5 was
simply an agreement by Brent not to execute the possession order, provided that
Miss Burrows complied with the agreed conditions. As the judge’s findings
demonstrated, Miss Burrows never intended that the agreement should create a
tenancy and it was absurd to imagine that Brent, by granting Miss Burrows an
indulgence in relation to a possession order which they had only just obtained,
should have intended to create a new right of occupation necessitating a
further application to the court in order to obtain possession. In the period
during which Brent agreed to forbear from enforcing the order, Miss Burrows was
a mere ‘tolerated trespasser’.
The Court of
Appeal, while accepting that the crucial factor in determining Miss Burrows’
rights was the intention of the parties, rejected Brent’s contention on the
ground that it gave rise to manifest absurdities. At the rate for payment of
arrears stipulated by the agreement of February 5 1992, it would have taken
Miss Burrows 14 years to pay them off during which time, if the argument of
Brent were correct, she would be a mere trespasser. As a trespasser she would
enjoy none of the rights of a tenant. Thus she could not require Brent to
repair the house. She would have no rights under the Defective Premises Act,
1972. She would qualify as a homeless person under section 58 of the Act of
1985. Brent would have no right to evict her for any breach of the covenants in
her tenancy, but only for breach of the conditions contained in the agreement
of February 5 1992.
On the case as
presented to the Court of Appeal their conclusion was inevitable. But the
significance of section 85 was not drawn to their attention. As a result of the
recent decision of the Court of Appeal in Greenwich London Borough Council
v Regan (1996) 28 HLR 469 Brent advanced before your lordships a far
more compelling argument, viz:
(1) Although
under section 82(2) the original tenancy came to an end on February 12 1992
(being the date fixed by the order for giving possession) that was not necessarily
the final position;
(2) Under
section 85(2) the court has power to postpone the date of possession;
(3) This power
to postpone the date for possession is exercisable by the court ‘at any time
before the execution of the order’. This shows that the power can be exercised
even after the date for possession specified in the order has passed and the
tenancy has thereby been terminated by virtue of section 82(2);
(4) This
conclusion is re-enforced by section 85(3)(a) which postulates that the court
can make a suspended order conditional on making ‘payments in respect of
occupation after termination of the tenancy (mesne profits)’. This
demonstrates that there can come a time when, although the old tenancy has
terminated and the former tenant has remained in possession for which he is
liable to pay mesne profits as a trespasser, the court can until the
original order is executed make an order varying the date for the giving of
possession thereby reviving the previously defunct tenancy.
(5) Therefore,
so far as the tenant is concerned, the crucial event is the execution of the
order for possession. Down to that date the tenant can apply to the court for a
variation of the original order substituting a new date on which possession is
to be given thereby reviving the old secured tenancy. This revived tenancy will
not be terminated under section 82 until the new date for giving possession
occurs.
(6) That such
revival of the old tenancy is possible is demonstrated by section 85(4) which
plainly assumes that on discharge or recision of the original order for
possession, the old secure tenancy will revive.
I accept this
analysis of the effect of section 85 which is largely derived from the judgment
of Millett LJ in Greenwich London Borough Council v Regan. In
that case, an order for possession was made against a secure tenant, the order
(as construed by the Court of Appeal) providing for the giving of possession to
be postponed so long as arrears of rent were paid by instalments and the
current rent was paid. The tenant having failed to comply with the conditions
in the order, the landlord and the tenant agreed variations in the amount of
the payments which were to be made. The tenant having breached the terms of the
order and the agreed terms, the landlord applied for a warrant of execution.
The tenant sought a stay of execution. He submitted that the old tenancy had
come to an end when he failed to comply with the conditions imposed by the
order: see Thompson v Elmbridge Borough Council [1987] 1 WLR
1425. He then submitted, in reliance on the decision of the Court of Appeal in
the instant case, that by agreeing to allow the former tenant to remain in
possession the landlord had created a new tenancy or licence and therefore
could not obtain possession under the old order.
The Court of
Appeal in Regan, after analysing section 85 in much the same terms as I
have summarised above, posed the question whether the parties could, by
agreement, revive the expired tenancy without an order of the court. The Court
of Appeal held (in my view rightly) that the parties could not by agreement
vary the terms of the court order. But they held that by agreeing the new
conditions, the landlord waived the right to complain that failure to comply
with the conditions specified in the order constituted a breach of those latter
conditions. Consequently, there being no breach of the conditions imposed by
the order upon which the landlord could rely, the order remained in force, the
date for giving possession had not passed and therefore the old tenancy had not
been terminated. They distinguished the decision in the present case on the
ground that they were dealing with a suspended conditional order of the court
whereas in the instant case there is an immediate, unconditional order for
possession.
One factor
which weighed heavily with the Court of Appeal in Regan (to which I also
attach importance) is the practical effect of the decision under appeal, ie any
consensual variation of an order for possession produces a new secure tenancy
or licence. Local authorities and other public housing authorities try to
conduct their housing functions as humane and reasonable landlords. In so doing
they frequently need to grant indulgences to their tenants to reflect changes
in the tenants’ circumstances. When applying for possession orders for
non-payment of rent local authorities agree to the order being suspended upon
the payment of arrears, the rate of payment being adjusted to meet the means of
the tenant at the date of the order. If the tenant subsequently loses his job,
the landlords will often be willing to reduce the rate of payment of arrears.
Why should this not be done by agreement? Yet the effect of the local authority
agreeing to such a reduction will be that the tenant, while keeping up his
payments at the agreed reduced rate, will be in breach of the conditions
specified by the order at the higher rate. If so his old tenancy will be
terminated. On the view of the law adopted by the Court of Appeal in the
present case, a new secure tenancy requiring a new order will come into
existence. Similarly where, as with Miss Burrows, the court makes an immediate
order for possession but the landlords grant an indulgence by agreeing not to
execute the order immediately: if the Court of Appeal decision is correct, the
effect of granting the indulgence is to create a new tenancy or licence and the
local authority will have to obtain a new possession order. The practical
result therefore will be either that the local authority will be reluctant to
make reasonable and humane concessions by agreement or in every case will have
to make an application to the court to vary the existing order so as to ensure
that the old tenancy is not brought to an end. I find it impossible to believe
that parliament intended to produce such an unreasonable regime, penalising
sensible agreements out of court and requiring repeated applications to an
already overstretched court system.
What, then, is
the correct legal analysis? I start from the proposition that where a former
tenant is by agreement allowed to remain in possession of the demised property
after the termination of the tenancy, the question in each case is quo animo
the parties have so acted: depending upon the circumstances, their conduct may
give rise
February 5 1992 the parties plainly did not intend to create a new tenancy or
licence but only to defer the execution of the order so long as Miss Burrows
complied with the agreed conditions. It cannot be right to impute to the
parties an intention to create a legal relationship such as a secure tenancy or
licence unless the legal structures within which they made their agreement
force that conclusion.
A secure
tenancy protected by Part IV of the Act of 1985 is not like an ordinary
tenancy. It can only be terminated by an order of the court ordering possession
to be given on a particular date or in a particular event. But even
determination by order of the court is not final. Until the possession order is
executed, the court can by variation of its order change the date on which
possession is to be given and thereby revive a secure tenancy which has already
been terminated. During the period between the date specified by the order for
the giving of possession and the date on which the order is executed there is a
period of limbo: the old tenancy has gone but may yet be revived by a further
order of the court varying the date for possession. If the parties reach an
agreement as to the continued occupation of the premises by the tenant during
that limbo period, what intention is to be imputed to them?
In my
judgment, little guidance is to be obtained from the cases where a tenant holds
over after the termination of an ordinary tenancy where there is no possibility
that the expired tenancy can revive. The position in relation to secure
tenancies is sui generis. In my judgment, the agreement can and should
take effect in the way the parties intend, ie it is an agreement by the
landlords that, upon the tenant complying with the agreed conditions, the
landlords will forbear from executing the order, ie from taking the step which
would finally put an end to the tenant’s right to apply to the court for an
order reviving the tenancy. There is no need to impute to the parties an
intention to create a new tenancy or licence: the retention of possession and
the payment of rent relate to occupation under the old tenancy which is in
limbo, but which may be revived. In these circumstances I think it is fair to
characterise the former tenant as a trespasser whom the landlords have agreed
not to evict, a — ‘tolerated trespasser’ — pending either the revival of the
old tenancy or the breach of the agreed conditions.
Once the
effect of section 85 is appreciated, the absurdities which led the Court of
Appeal not to accept that Miss Burrows could be a tolerated trespasser
disappear. Technically the old secure tenancy is, during the limbo period, no
longer in existence and therefore neither the repairing covenants in the
tenancy nor the Defective Premises Act 1972 apply. But the tenant can at any
time apply to the court for an order varying the date on which possession is to
be given and thereby retrospectively revive the old secure tenancy, together
with its covenants. If the tenant has complied with the agreed conditions,
there can be little doubt that the court would make the required order.
Moreover, the tenant will not be a homeless person within section 58(2) of the
Act of 1985 because the tenant will be occupying the residence by virtue of
‘any rule of law giving him the right to remain in occupation’: see section
58(2)(c). If the tenant were in breach of any of the covenants in the old
secure tenancy, Brent could apply to vary the order so as retrospectively to
revive the old tenancy together with its covenants.
Finally, there
is a method (albeit a clumsy one) whereby the order for possession even if an
immediate unconditional order, can be discharged or rescinded if so desired
under section 85(4). The power in that subsection to discharge or rescind only
arises ‘if the conditions are complied with’, a requirement which cannot be
satisfied in the case of an unconditional order. But there is no reason why the
order cannot be discharged by consent or, if such consent is not forthcoming,
by the court varying the original order so as to impose the agreed conditions
and then discharging the varied order.
It was
submitted that the fact that the tenancy was granted to Miss Burrows jointly
with Mr Allen whereas the agreement of February 5 1992 was made with Miss
Burrows alone, indicated that the agreement must have given rise to a new
tenancy with Miss Burrows alone. Therefore there must be a new tenancy.
However, since, in my view, on its proper analysis the arrangement contained in
the agreement of February 5 1992 gave rise to no new tenancy with anyone, that
factor is irrelevant.
I therefore
reach the conclusion that, in the absence of special circumstances, an
agreement by a landlord not to enforce strictly an order for possession,
whether conditional or unconditional, does not create a new secure tenancy or
licence under Part IV of Act of 1985. Brent, by making the agreement of
February 5 1992, did not grant a new tenancy or licence to Miss Burrows as from
February 12 1992. It follows that the possession order of January 29 1992 was
properly enforced. I would therefore reverse the decisions of the Court of
Appeal and the trial judge and dismiss Miss Burrows’ action.
As Brent have
succeeded on a point not taken in the courts below, I propose that there should
be no order as to costs before your lordships’ House and the order for costs
made in the courts below should remain undisturbed.
Lord Keith
of Kinkel and Lord
Griffths agreed with Lord
Browne-Wilkinson and did not add anything.
In his speech,
Lord Jauncey of Tullichette
said: This appeal raises an important question of principle in relation to
the effect of forbearance by a landlord to enforce an order for possession
granted under section 82(2) of the Housing Act 1985 (‘the Act’). I have had the
advantage of reading in draft the speech of my noble and learned friend Lord
Browne-Wilkinson and I gratefully adopt his account of the factual background
giving rise to this appeal.
Section 82(1)
of the Act provides that a secure tenancy such as was enjoyed by the respondent
cannot be brought to an end by the landlord without an order of the court for
possession. Section 82(2) provides:
(2) Where the
landlord obtains an order for the possession of the dwelling-house, the tenancy
ends on the date on which the tenant is to give up possession in pursuance of
the order.
This provision
is mandatory with the result that occupation by the tenant after the date
specified in the order ceases to be attributable to the original secure
tenancy. In view of the terms of that subsection the Court of Appeal concluded
that the effect of the agreement of February 5 1992 was to grant to the
respondent a new lease or licence to occupy which enjoyed the same protection
as the terminated tenancy. Before this House Mr Ashley Underwood for the
appellants advanced an argument which had not been deployed before the Court of
Appeal and which relied upon detailed consideration of section 85 which
provides, inter alia, as follows:
85(1) Where
proceedings are brought for possession of a dwelling-house let under a secure
tenancy on any of the grounds set out in Part I or Part III of Schedule 2
[grounds 1 to 8 and 12 to 16: cases in which the court must be satisfied that
it is reasonable to make a possession order], the court may adjourn the
proceedings for such period or periods as it thinks fit.
(2) On the
making of an order for possession of such a dwelling-house on any of those
grounds, or at any time before the execution of the order, the court may —
(a) stay or
suspend the execution of the order, or
(b) postpone
the date of possession,
for such
period or periods as the court thinks fit.
(3) On such
an adjournment, stay, suspension or postponement the court —
(a) shall
impose conditions with respect to the payment by the tenant of arrears of rent
(if any) and rent or payments in respect of occupation after the termination of
the tenancy (mesne profits), unless it considers that to do so would
cause exceptional hardship to the tenant or would otherwise be unreasonable,
and
(b) may
impose such other conditions as it thinks fit.
(4) If the
conditions are complied with, the court may, if it thinks fit, discharge or
rescind the order for possession.
Subsections
1(1) and (2) cover three different situations which are in turn reflected in
subsection (3). If the proceedings for a possession order are adjourned in
circumstances covered by subsection (1) the secure tenancy will continue in
force but the court is required by
of future rent, subject always to questions of exceptional hardship and
unreasonableness. If the tenant fails to comply with these conditions the
landlord will be entitled to go back to the court and seek an order for
possession. If during the initial proceedings the court makes an order but
postpones the date of possession the tenancy will not be terminated under
section 82(2) until any condition imposed under subsection (3) has been
breached by the tenant: see Thompson v Elmbridge Borough Council
[1987] 1 WLR 1425. However, the court’s power to make an order postponing the
date of possession is not restricted to exercise on the first application for
an order for possession but may be exercised on the application of either party
at any time prior to execution of that order and even after the secure tenancy
has ended by reason of section 82(2). This is made clear by the words in secdon
85(2) ‘or at any time before the execution of the order’ see also Greenwich
London Borough Council v Regan (1996) 28 HLR 469, at p476, per
Millett LJ. In such an event the secure tenancy is reinstated or revived
subject to any conditions imposed under subsection (3).
However,
whereas an order postponing the date of possession necessarily affects the
operation of section 82(2), an order staying or suspending the execution of an
order for possession on a stated date has no effect on the operation of that
subsection but merely postpones execution so long as the conditions of
suspension are complied with. The reference to mesne profits in
subsection (3)(a) as contrasted with that to payment of rent is relevant to the
period of occupation after such a suspension as well as to any period of
occupation between the termination of a tenancy under section 82 and the
subsequent postponement of the date of possession under section 85(2)(a). The
words are, in my view, particularly significant since they show that the Act
contemplates the court requiring post-termination payments to be made by an
occupier which are of a nature wholly inconsistent with the existence of any
tenancy in his or her favour. Subsection (4) is similarly inconsistent with the
creation of a new tenancy because a discharge of an order for possession would
only be effective if the tenancy to which the order related had not been
superseded by a new tenancy. I therefore conclude that the court has power
under section 85 not only to permit an individual to continue to occupy
premises after a secure tenancy has determined without the creation of a new
tenancy in his or her favour but also to revive the determined secure tenancy
on compliance by the individual with any stipulated conditions. During the
period between the termination of the secure tenancy and either its revival or
the execution of the order for possession the occupation of the former secure
tenant derives not from any new lease but from the provisions of the Act which
cast him in the role of what my noble and learned friend aptly describes as ‘a
tolerated trespasser’. Can the same result be achieved by agreement between the
parties without the need to invoke the power of the court under section 85?
In Greenwich
London Borough Council v Regan (1996) 28 HLR 469 the Court of Appeal
considered an order for possession which Millett LJ, at p476, construed as one
‘requiring the delivery of possession to be postponed, in the first instance
for 28 days and thereafter until there was a breach of the conditions of the
order’. The tenant failed to comply with the terms of the order and the parties
thereafter entered into a fresh agreement whereby the tenant agreed to make
weekly payments of a lesser amount than those stipulated in the order. Some
time later the tenant again defaulted on his payments and the landlords sought
to execute the order for possession. The tenant argued that the agreement
between the parties varying the order had created a new tenancy and that
therefore a new order for possession was required. This argument was rejected.
Millett LJ after pointing out the impracticability of a landlord applying to
the court whenever he granted some indulgence to a tenant went on to say, at
p477:
If, after a
breach occurs and the tenancy is determined, and the Local Authority
subsequently reaches agreement with the tenant the effect of which is to waive
the breaches, then in my opinion in accordance with ordinary principle such
breaches must be treated as if they had not occurred. It would follow from this
that the tenancy must thereafter be treated as not having been determined. This
appears to me to be the effect of an order which leaves the determination of
the tenancy to the occurrence of a breach of the conditions of the order, and
which leaves the occurrence of a breach to be dependent upon whether the
landlord treats it as such or agrees to waive the breach.
If the
landlord does more and agrees not only to waive a breach of the conditions on
which the order has been suspended, but also to accept payment of the arrears
by smaller instalments and over a longer period than those provided for by the
order, he thereby consents to such payments being treated as sufficient
compliance with the order. This must either prevent the tenancy from being
brought to an end or, if it has already been determined, prevent it from being
so regarded.
He summarised
the position, at p478, in four paragraphs of which I repeat only two:
2. The Local
Authority may waive the breach, in which case the tenancy continues as if there
had been no breach. This is so whether the Local Authority agrees in advance
not to treat the particular failure to comply with the terms of the order as
bringing the tenancy to an end, or agrees to waive the breach after it has
occurred. In either case the tenancy is treated as if it has not determined.
3. The Local
Authority may agree a consensual variation in the terms of the order. It will
be a question of fact in every case whether the agreement which the parties had
entered into should be characterised as an agreement which creates a new tenancy,
or merely as one which provides for a variation in the terms on which the order
has been suspended, waiving any past breaches and treating the tenancy as if it
has not been terminated.
Mr David
Neuburger QC for the respondent, did not challenge, correctly in my view, the
decision in Greenwich London Borough Council v Regan but sought
to distinguish it upon the ground that whereas a landlord could waive a
condition imposed on a tenant in a court order the parties could not by
agreement alter the impact of section 82(2) on an unconditional order for
possession. It followed that any agreement between the parties as to the
respondent’s continued occupation must constitute a new tenancy. Mr Underwood
argued that such a result would be not only contrary to the intention of the
parties but to the whole scheme of the Act.
My lords, I
agree with Mr Neuburger that the impact of section 82(2) cannot be altered by
agreement between the parties. However, for the reasons which I have already
elaborated, that subsection cannot be looked at in isolation from the other
sections, in particular section 85, of Part IV of the Act. The whole scheme of
that Part is to afford protection to the secure tenant and that is achieved in
section 85 by conferring on the court flexible powers to continue an existing
secure tenancy, to revive a determined secure tenancy or to create a state of
statutory limbo which will afford to a defaulting tenant an opportunity to have
restored to him all the benefits of the secure tenancy when he has complied
with stipulated conditions. Parliament cannot have intended to penalise a
landlord who acted within the spirit of the Act by granting indulgences to
defaulting tenants without going through time-wasting and expensive court
proceedings. Furthermore, a tenant who has reached an agreement advantageous to
himself is not thereby prevented from making an application to the court under
section 85(2) or (4). In this case the judge found as a fact that neither party
contemplated that the agreement of February 5 1992 created a new tenancy and I
can therefore see no reason why it should not be given the same effect as an
order of the court in similar terms suspending execution of the order for
possession of January 29 1992. Such a result would accord entirely with the
spirit of the relevant statutory provisions, would be consistent with the
intention of the parties and would preserve all the respondent’s rights under
subsections (2), (3) and (4) of section 85. For these reasons and for those
given by my noble and learned friend Lord Browne-Wilkinson I would therefore
allow the appeal.
Lord Steyn also agreed that the appeal should be allowed and did not add
anything.
