Landlord’s consent to exchange of tenancies obtained by fraud – Whether subsequent assignment vitiated thus entitling landlord to possession against incoming tenant – Tenant’s appeal allowed
At all material times until November 10 1995, a house belonging to the plaintiff housing association in Russet Road, Canterbury, was let to Elvina Scamp (ES) on an assured tenancy, the terms of which gave her an express right, with the written consent of the plaintiff, to exchange her tenancy with that of another tenant of a registered housing association or local authority. A like right, conferred by section 92 of the Housing Act 1985, was enjoyed by the first defendant (B) in respect of her tenancy of a council house elsewhere in Canterbury. In September 1995 ES and B applied to the plaintiff and to the city council for their consent to an exchange of their tenancies and declared,inter alia that the information given was true to the best of their knowledge. Having obtained those consents, ES executed an assignment dated November 10 transferring the benefit of her tenancy to B and declaring that she did so in exercise of her right to exchange. B took possession of the Russet Road house, but no steps were taken by ES to take an assignment of the council house tenancy. In subsequent proceedings taken by the plaintiffs for possession of Russet Road the county court judge, having found,inter alia, that B had paid £400 to ES for her co-operation, declared that the attempt at a mutual exchange was a fraud from the outset. On that basis it was held that the plaintiff was entitled to have the assignment rescinded, and an order for possession was made accordingly. B appealed.
Held The appeal was allowed.
1. It was common ground that a failure to obtain the landlord’s consent, where required, did not invalidate an otherwise wrongful assignment: see Old Grovebury Manor Farm v W Seymour Plant Sales & Hire Ltd (No 2) [1979] 3 All ER 504 as applied to periodic tenancies in Peabody Donation Fund (Governors of) v Higgins [1983] 1 WLR 1091. Since the remedy of rescission was only available as between the assignor and the assignee (see Chitty on Contracts 27th ed vol 1 para 6.068) it made no difference that the consent of a third party (the plaintiff) had been fraudulently obtained.
2. The judge had erred in applying the maxim “fraud unravels everything” too literally. Although proof of fraud would enable the plaintiff to set its consent aside, it would still be faced with an assignment made without consent which remained valid as a separate transaction between the parties for the reasons stated above.
William Geldart (instructed by Harman & Harman, of Canterbury) appeared for the appellants; Mark Dencer (instructed by Gardner & Croft, of Canterbury) appeared for the respondents.
