Negligence — Agents letting dwelling-house on basis of Rent Act 1977, Schedule 15, Case 11 — Whether agents negligent in not warning owner of Case 11 conditions for recovering possession
The plaintiffs
owned a flat which they occupied until May 1982 when they purchased a house
nearby. The defendant letting agents, who had been instructed to find occupiers
for the flat and to make arrangements enabling the plaintiffs to recover
possession at the end of any term granted so that it could be sold, allowed SB
into possession on December 20 1982 giving her a notice under Case 11 of
Schedule 15 the Rent Act 1977 that the owners would require possession on the
expiration of the one-year tenancy agreement. At the expiration of the term SB
did not give up possession and in possession proceedings for arrears of rent,
the plaintiffs’ solicitors did not rely on Case 11 because they were not
satisfied that the plaintiffs intended to resume occupation of the flat. The
plaintiffs claimed damages against the defendants alleging that they were
negligent in failing to appreciate that the plaintiffs could not satisfy Case
11 as they intended to sell the flat.
plaintiff made plain to the defendants that a most important consideration in
relation to the letting of the flat was to be able to recover possession at the
end of the term granted. The defendants’ failure, prior to the letting to SB,
to warn the plaintiffs that they could not recover possession under a Case 11
letting unless the plaintiffs required the flat as their residence was
negligent.
No cases are
referred to in this report.
This was the
hearing of a preliminary issue as to liability in a claim by the plaintiffs, Mr
and Mrs Hellings, for negligence against the defendants, Parker Breslin
Estates.
David Schmitz
(instructed by Porter & Co, of Cheam) appeared for the plaintiffs; Simon
Gill (instructed by Edward Lewis) represented the defendants.
Giving
judgment, SIR MERVYN DAVIES said: In this action the plaintiffs claim
damages against the defendants in respect of alleged negligence by them when
acting as their letting agents. The plaintiffs are the owners of 13 The Avenue,
Worcester Park, and at all material times the defendants carried on business as
letting agents in the London Borough of Sutton.
13 The Avenue,
consists of three flats and a garden flat. When the plaintiffs bought no 13,
they went to live in flat 1; the other three flats were, as I understand, let
at the time.
The plaintiffs
then decided to move from flat 1 and live at 100 Kingsmead Road. That property
was bought on mortgage and it was hoped that flat 1 could be let on a long
lease and thus bring a substantial capital sum to be used towards the cost of
100 Kingsmead. The purchase of 100 Kingsmead was completed on May 15 1982, but
negotiations for a long lease of flat 1 broke down.
In these
circumstances the plaintiffs approached the defendants as letting agents with a
view to a letting of flat 1 for a short term. The first approach seems to have
been in February 1982 when Mr Hellings met Mr Richard Parker of the defendant
firm. However that may be, on June 12 1982 certain licences were granted to
three or four students who went into occupation of flat 1 as licensees. They
moved out in November or December 1982 and almost immediately, on December 20
1982, Miss Schmitt-Barraud went into occupation of flat 1.
On December 28
the defendants sent a rent statement to the plaintiffs. That was because the
defendants, as letting agents, were to collect the rent and account for it —
subject to certain deductions — to the plaintiffs.
On January 20
1983 the defendants sent to the plaintiffs a copy of a tenancy agreement signed
by Miss Schmitt-Barraud, the tenant, and as well a notice pursuant to the Rent
Act 1977, Schedule 15, Part II, Case 11. This is a notice given by a landlord,
being an owner-occupier, to a tenant under a regulated tenancy as to recovery
of possession under Case 11. The notice was signed by Mr Hellings and addressed
to the new tenant. It was also signed by the new tenant. The notice is that
given to a tenant at the start of the tenancy and it explains that possession
may be recovered by an owner/occupier who becomes a landlord in Case 11
circumstances: for example, if the dwelling-house is required as a residence
for the owner or any member of his family, who resided with the owner when he
last occupied the dwelling-house as a residence.
The tenancy
agreement I have mentioned was dated December 19 1982; it was signed by Mr
Hellings. It is a document partly on a printed form, with some typed additional
provisions introduced by the defendant firm. The agreement was between the
plaintiffs and the new tenant, Miss Schmitt-Barraud. The property is described
as, ‘A suite of five rooms with ground floor, 13 The Avenue’. The term of the
agreement was one year from December 20 1982. The rent is £75 a week, ‘payable
in advance by monthly instalments on 20th day of each month at £325 per month’.
I need not
refer to the lengthy provisions of the agreement, save to note that clause (5)
is typed into the printed form and it reads:
The landlord
hereby notifies the tenant under the Rent Act 1977 that the landlord is the
owner-occupier of the property within Case 11 of Part II of Schedule 15 of the
said Act and that possession of the property may be recovered under that Case.
So it was that
the defendants arranged for the plaintiffs what may be termed a ‘Case 11’
tenancy.
Matters
proceeded without incident until May 1983. The plaintiffs then became
dissatisfied with the tenant’s conduct and her care of flat 1.
On October 4
1983 the tenant applied to the rent officer to have the rent fixed. A copy of
the rent register shows that a rent of £302 a month was registered on November
22 1983.
The one-year
term of the letting agreement ran out in December 1983. Before that time it was
made plain to the tenant that there would be no renewal of the term. The tenant
remained in possession. Solicitors — Donald Nelson — were instructed to take
proceedings for possession. Proceedings ensued, but the claim for possession
was not based on Case 11; that was because, as I understand it, the solicitors
acting for Mr Hellings were not satisfied that he wished to resume possession
of flat 1. Possession was claimed for non-payment of rent and on account of
certain breaches of covenant.
The hearing of
the possession claim eventually took place on August 3 1984. On or about that
date the tenant paid up most of the rent arrears. A suspended possession order
was made, suspended while the remaining arrears of rent were paid off.
Thus, the
plaintiffs’ wish expressed to the defendants that they, the plaintiffs, be
entitled to retake possession of flat 1 at the end of the term was not
fulfilled; in fact, Miss Schmitt-Barraud remained in possession for some years.
Until
September 1984 the defendants can be regarded as having been acting for the
plaintiffs, but on September 6 1984 the plaintiffs ceased to employ the
defendants.
The writ in
the action was issued on June 2 1986. The re-reamended statement of claim says:
The
defendants were retained by the plaintiffs in February 1982 to advise them as
to the terms upon which they could grant the right to occupy Flat 1 for a fixed
period while retaining the right to recover possession at the end of such
period. It is alleged that the defendants knew that the plaintiffs did not wish
to grant a right to occupy Flat 1 unless they could be certain that they would
be entitled to recover vacant possession.
The defendants
knew, it is said, that the plaintiffs were purchasing a house — 100 Kingsmead —
on a substantial mortgage and that they intended to sell the garden of flat 1
for development. So it was said that if the flat were to be let in such a
manner as to preclude the plaintiffs from recovering possession the value of
the plaintiffs’ freehold interest in 13 The Avenue would be substantially
diminished.
The statement
of claim goes on to allege negligence by the defendant firm. It is said that
the defendants:
(a) failed to
take account of the fact that by reason of the plaintiffs’ intention to sell
the premises the plaintiffs could not rely upon Case 11 for possession; and
(b) prepared
a lease which was likely to be ineffective for the purpose of ensuring that the
plaintiffs would be entitled to recover possession at the end of the one year
term;
(c) advise
the plaintiffs that under the terms of the draft agreement they, the
plaintiffs, were certain to be able to recover possession of Flat 1 after one
year when in fact it is unlikely that they would be so entitled;
(d) let the
tenant into the premises and accepted rent thereby constituting the tenant as a
protected tenant.
There is also
an allegation that the defendants failed to obtain adequate references.
Allegations of loss and damage follow, which I need not now mention.
The principal
issue between the parties lies in what was said — prior to the letting to the
tenant — by Mr Hellings to representatives of the defendant firm as to his (Mr
Hellings’) requirements and what the defendants did in response thereto.
Mr Hellings
says he made plain to the defendants that he wanted a letting for a period of
six months or one year, but on terms that he would be sure of getting possession
at the end of the period of letting. The defence in para 3(i) denies that the
plaintiffs did not wish to grant a right to occupy flat 1 unless they could be
certain that they would be entitled to recover vacant possession.
Para 3(ii)
says:
The defendants
will contend that the plaintiffs were at all material times aware, having been
so informed by the defendants, that there would be no certainty as to the
recovery of possession
Then para
3(iii) alleges:
If the
plaintiff did not wish to grant a right to occupy Flat 1 unless he could be
certain of recovery possession the defendants had no knowledge of that fact
The principal
question arising is, as I say again, what did Mr Hellings say to
representatives of the defendants about the letting of flat 1 and what was the
defendants’ response to the Hellings’ requirements?
Mr Hellings
says, as I have mentioned, that he told the defendants that he wished to effect
a letting of flat 1 for a term of, say, 12 months, but that he wished to be
certain of getting back possession of flat 1 at the end of that 12 months. If
that is so the defendants failed to bring about such a letting as Mr Hellings
desired, because it is common ground that the letting arranged by the defendant
was not such a letting as entitled Mr Hellings to obtain possession of flat 1
at the end of the letting period. I suppose the defendants might have said that
such a letting as Mr Hellings desired was impossible or, at any rate, very
difficult. They did not express that view. Furthermore, it was accepted that
the defendants owed the plaintiffs a duty of reasonable skill and care in the
course of arranging any letting.
So I proceed
to consider the evidence as to what Mr Hellings said in the way of his
requirements and what the defendants did in response to such requirements.
The
documentary evidence is of no great help in assessing what Mr Hellings asked to
be done. One must rely principally on the oral evidence.
There was
before me a bulky file of letters and other documents, numbering 299 pages. Shades
of inference can be drawn from many of the letters, etc, but essentially one
has to consider the oral evidence. This was given by Mr Hellings and, for the
defendants, by Mr Richard Parker and Mrs Patricia Ann Parker.
The oral
evidence has to be considered in the light of the fact that the witnesses were
giving evidence of oral conversations many years after they took place and in
this situation the three witnesses before me all accepted that on some points
there was a difficulty of recollection; however that may be, some points of
oral evidence came through with sufficient certainty.
The Parkers
are husband and wife, partners in the defendant firm. Mr Hellings approached
the defendant firm and there was a first meeting between Mr Hellings and Mr
Parker at flat 1 in February 1982. Mr Parker was told that the Hellings wished
to let flat 1 (they were then resident there) because they were hoping to move
to a house nearby, 100 Kingsmead.
Mr Hellings’
evidence was that he said he wanted to have flat 1 back after a particular
time. He explained why, saying that he wanted to remain owner of flat 1,
particularly since there was on the cards a prospect of development there and
as well he wanted to let so as to have some help meanwhile with mortgage
payments on the house he was to move to. Further, that he wished to sell flat 1
at some time because he would thereby be able with the proceeds of the sale to
pay off a mortgage arranged over some property put at his disposal by his
mother-in-law in the course of buying 100 Kingsmead.
His evidence
was that he told Mr Parker that he would expect the flat back in his possession
at the end of any term granted.
Mr Parker’s
evidence at this stage in events was that when he saw Mr Hellings in 1982 he,
Parker, had had about three years’ experience as a letting agent, but his wife
had much more experience because she had been engaged in letting for about 13
years. He said he regarded four different types of letting agreement as being
of use: shorthold, Case 11, a licence and a company let. Mr Parker accepted
that Mr Hellings told him that he wanted the flat back at the end of any period
of letting. Mr Parker said that Mr Hellings did not mention Case 11, but did
refer to himself as an owner-occupier, desirous of keeping flat 1 with a view
to possible development.
Mr Parker said
he advised a shorthold tenancy, explaining that a registration of rent with a
rent officer might or would be involved; but, said Mr Parker, Mr Hellings said
that they did not want to involve the rent officer in any dealings with their
properties so it was decided not to go by way of shorthold. Mr Parker said he
dismissed Case 11 as a solution for Mr Hellings, his reason was that since Mr
Hellings lived close at hand to flat 1, at 100 Kingsmead, it would be difficult
to get possession even as an owner-occupier.
There was
then, said Mr Parker, discussion about granting a licence. That was the
solution accepted by both Hellings and Parker. The licence solution was not put
into effect immediately because Mr Hellings was still living at flat 1. In May
he moved to 100 Kingsmead. In June a licence agreement, or agreements, was made
with three students.
That completes
phase one of the defendants’ services to the plaintiffs. There is no complaint
about the defendants in regard to phase one; but one may conclude: (a) that Mr
Parker regarded Case 11 as inappropriate for Mr Hellings although, as will
appear, Case 11 was later used; and (b) Mr Parker did not ask Mr Hellings
whether he intended to resume occupation of flat 1 once he had left it.
The student
occupation of flat 1 came to an end in November with a voluntary departure by
the students before the term of the occupation was completed. Mr Hellings’
evidence was that when they left he telephoned the defendant firm and said that
he would like some more sharers in flat 1 and very soon he heard from an
employee of the defendants, a Mrs Jackson. Unfortunately it has not been
possible to hear evidence from Mrs Jackson and her absence was not explained
with any particularity.
However that
may be, Mrs Jackson, ‘On the telephone’, said Mr Hellings, informed him that a
lady with two children was available as a tenant; they had, it was said, ‘no
licensed people or sharers’, but did have this lady. It was explained that
because there would not be a sharer there could be no licence granted. It would
have to be a tenancy. Mr Hellings asked if he would have the flat back, Mrs
Jackson said yes, ‘Yes, you are safeguarded’, or words to that effect.
I now read my
note of the evidence of Mr Hellings that followed:
I asked why I
was not having a licence which, before, they said was best for protection. They
said, ‘You can have the flat back in the same way, you are protected’. I asked
on several occasions. I certainly asked two or three times in my first
conversation with Mrs Pat Jackson. Mrs Jackson said, on the day that people
moved in they would have to sign a notice to quit and that it was an important
part of the tenancy agreement in as much as, if not signed, it could not be
relied upon. I do not recall what she said about the contents of the notice.
She did not say anything about the status of owner-occupier. I expressed a
desire to have the property back at the end of the term. I didn’t say anything
about going back to the flat myself. There were two or three telephone calls
with Mrs Jackson and there was one face-to-face talk.
Mr Hellings
went on to say that the face-to-face talk was in January 1983 after the tenant,
Miss Schmitt-Barraud, had gone into occupation, but he mentioned his fear about
a tenancy during his first conversation with Mrs Jackson. Mr Hellings said he
saw Miss Schmitt-Barraud outside the flat on December 18 1982, that is two days
before Miss Schmitt-Barraud went into occupation on December 20. Mr Hellings
asked Miss Schmitt-Barraud whether she would honour her agreement to give up
occupation after the year, she said she would. Mr Hellings was pleased with
that answer and telephoned the defendants to tell them to go ahead.
As I have
mentioned, a copy of the tenancy agreement dated December 19 1982 was sent to
Mr Hellings on January 20 1983, together with a Case 11 notice.
As we have
seen, the plaintiffs were not satisfied with their new tenant in May 1983, but
nothing could be done to end her occupation until December 19 1983.
Mr Hellings
spoke to Mrs Parker about that and was told not to be anxious, there was a good
chance of getting the flat back.
Mrs Parker
instructed solicitors on Mr Hellings’ behalf. He was told by Mrs Parker there
was a 98% chance of success but, later, Mrs Parker said there was a ‘slim’
chance of success.
Mr Hellings
referred to a letter dated February 6 1984 sent to him by Mrs Parker, which
includes these words:
I think from
the initial paragraph of Donald Nelson’s letter he is pointing out that we have
a very slim chance of getting possession of the property unless you wish to
reside in the property once again yourself.
Mr Hellings
said that Mrs Parker had never before mentioned the importance of his intending
to return to flat 1. He added, ‘No member of the firm had said that ever’.
In a letter
dated February 8 1984 to his solicitor Mr Hellings says, ‘If the only way I can
get possession of my flat is to go and live there then I shall do so’. As to
that, Mr Hellings said, in evidence, that had he said that he wanted to go back
then he would have gone back, but he was not prepared to tell an untruth.
In the event,
of course, no claim was launched on Case 11 grounds.
The evidence
of Mrs Parker concerning the events leading up to the grant of a tenancy to
Miss Schmitt-Barraud was that she saw Mr and Mrs Hellings when the plaintiffs
came to her office to sign a licence granted to the students and that was in
June 1982. Mr Hellings accepts that he may have called at the defendants’
office at that time, but he did not remember doing so. Mrs Parker went on to
say that Mr Hellings came to her office when the students left. Her evidence
was about the events pleaded in paras 5 and 6 of the defence, that is, that Mrs
Parker said that Mr Hellings was distressed and financially worried. He had
said that the move to 100 Kingsmead had not been successful and that his wife
was not happy in a bungalow; all had gone wrong since they had moved there. Mrs
Parker said that she had asked him whether he wanted sharers again, he said
‘no’, that he had done a lot of work on the flat and preferred to see a family
there. Mr Hellings, she said, wanted the property let and there was a
discussion about Case 11. Mrs Parker said she saw a difficulty there because Mr
Hellings lived so nearby. Then Mrs Parker said, according to my notes:
I had no
doubt that he regarded flat 1 as his home; every possibility that he would have
to go back for financial purposes. I thought he would be safe under Case 11.
Hellings was looking long-term. I believed he would let under Case 11 for 12
months and re-let if he did not want possession, but when development was
possible he would be moving back whether or not he could sell his new property,
100 Kingsmead.
As to the
evidence I have just mentioned, Mr Hellings said that the conversation recalled
by Mrs Parker never took place. He did not know what Case 11 meant.
Mrs Parker
said that she gave Mr Hellings no assurance that flat 1 could be taken back at
the end of the tenancy. That may be so, but it seems that Mrs Jackson may well
have given such an assurance at the relevant time, that is, when Miss
Schmitt-Barraud was offered as a tenant in or about December 18 1982. Mr
Hellings was emphatic that such an assurance was given.
I am satisfied
on the evidence that Mr Hellings made very plain to both defendants and to
their employees that a most important consideration as to the letting of flat 1
was that he was to be able to recover possession at the end of the term granted
and Mrs Parker virtually admitted so in cross-examination; compare that with
the defence at para 3(i).
One bears in
mind that the defendants allowed or advised the plaintiffs to grant a Case 11
letting. Such a letting would not allow of the plaintiffs’ retaking possession
at the end of the term unless the plaintiffs required flat 1 as a residence for
themselves: see para 2(a) of Part V of Schedule 15 to the Rent Act 1977
as set out in the Case 11 notice bearing the date December 19 1982.
The question
is, did anyone in the defendants’ firm prior to the letting to Miss
Schmitt-Barraud inquire of Mr Hellings whether flat 1 would be required as the
Hellings’ residence on December 19 1983? As to this question there is no
assertion in the affirmative in the defence. Mr Hellings did not say that any
inquiry of this nature was made of him. As already mentioned, all Mr Hellings
did — and did on several occasions — was to say that he wanted to be sure of
getting flat 1 back at the end of the tenancy and in this regard he said that
Mrs Jackson, at the relevant time, assured him he was safeguarded. His
evidence-in-chief was that he said nothing to Mrs Jackson about going back into
flat 1 himself.
I have seen Mr
Hellings, both in-chief and in cross-examination. Mr Hellings said he signed
the Case 11 notice, dated December 19 1982, on or about January 20 1983. He
said he did not now remember
he meant to return to flat 1.
In this
situation my conclusion is that the defendants, knowing that Mr Hellings wished
to retake possession of flat 1 in a year’s time, allowed or advised him to
grant a Case 11 tenancy without informing him in any plain terms that he would
be able to retake possession only if he required it for his own residence; Mr
Hellings’ evidence is to that effect. I accept his evidence in preference to
that of the defendants. Mr Hellings was, in my view, an honest and careful
witness, who was quite unshaken in cross-examination. There was certainly no
discussion about his requiring flat 1 to live in when Mrs Jackson spoketo him
just before Miss Schmitt-Barraud was let into possession on December 20 1982.
This failure
by the defendants to explain to Mr Hellings the circumstances in which
possession could be reclaimed if a Case 11 tenancy were granted amounts to a
breach of the defendants’ admitted duty to advise the plaintiffs with
reasonable skill and care. It follows that the plaintiffs are entitled to such
damages as flow from that breach.
There will be
judgment for the plaintiffs on the matter of liability.
Judgment for
the plaintiffs on liability.
