Housing — Secure tenancy — Right to buy — Possession and right to buy proceedings before court — Whether court entitled to hear possession action before right to buy proceedings
The appellants
were secure tenants of a property owned by the respondent council. On September
16 1996 the council served a notice seeking possession from the appellants
under section 83 of the Housing Act 1985. On January 22 1997 the council issued
possession proceedings alleging that the appellants had been guilty of nuisance
or annoyance to their neighbours and were in breach of the tenancy agreement.
On April 23 1997 the appellants served notice on the council under Part V of
the 1985 Act, stating their wish to exercise their right to buy the property.
The council refused to process the application and an application was made by
the second appellant seeking a declaration that the appellants were entitled to
acquire the freehold. Under section 121 of the Act the right to buy cannot be
exercised if the tenant is obliged to give up possession of the dwelling-house
in pursuance of a court order. The action for possession and the application
for the declaration both came before the recorder for hearing on the same date.
The recorder decided he had a discretion as to which action he heard first and
exercised that discretion by ordering that the possession action should be
heard before the application for the declaration.
decide the order in which cases should be heard: see Bristol City Council
v Lovell [1998] 1 WLR 446. He had exercised his discretion properly. He
had considered that if the council failed to obtain an immediate order for
possession in the possession proceedings, the application in relation to the
right to buy was not prejudiced, whereas if an order for possession was made,
that was precisely the situation that prevented the right to buy under section
121. The sequence of events and the seriousness of the allegations strongly
favour the view that the order chosen for determining the respective claims was
appropriate.
The following
cases are referred to in this report.
Bristol
City Council v Lovell [1998] 1 WLR 446;
[1998] 1 All ER 775, HL
Bristol
City Council v Lovell (1996) 29 HLR 528
Dance v Welwyn Hatfield District Council [1990] 1 WLR 1097; [1990]
3 All ER 572; (1990) 22 HLR 339, CA
This was an
appeal by the tenants against the decision of Mr Recorder Cole in Croydon
County Court, in proceedings between the tenants and the respondents, Tandridge
District Council.
Gerard van
Tonder (instructed by Parkinson & Co, of Yateley) appeared for the
appellant tenants; Ranjit Bhose (instructed by the solicitor to Tandridge
District Council) represented the respondents.
Giving the
first judgment at the invitation of Simon Brown LJ, SCHIEMANN LJ said: This is an appeal in relation to a
judgment delivered in Croydon County Court by Mr Recorder Cole. He was dealing
essentially with a procedural matter, namely which of two actions, both of
which were listed to be heard before him, should be heard first. It was,
however, a procedural matter of potentially very substantial importance, and
the appeal is pursuant to the leave of the full court.
The background
to the matter is this. The appellants, Mr and Mrs Bickers, are secure tenants
of some property owned by the respondents, Tandridge District Council. They
wish to exercise the right to buy that property pursuant to Part V of the
Housing Act 1985. Section 121 of that Act provides in its first subsection:
(1) The right
to buy cannot be exercised if the tenant is obliged to give up possession of
the dwelling-house in pursuance of an order of the court or will be so obliged
at a date specified in the order.
The two
matters that were before the learned recorder were a possession action and also
an originating summons by Mr and Mrs Bickers claiming that they have a right to
buy the house that was the subject of the possession action. It is fairly
obvious that if the possession summons came in first and if an order was made
that possession should be granted, then their right to buy under the Act would
disappear and so it would have grave consequences for them. Mr Recorder Cole
decided that the possession action should come first. It is common ground that
he had a discretion as to how to order the hearing of these cases, but it is
submitted that this court can interfere with his exercise of that discretion.
It is
important to set out the crucial dates. On September 16 1996 the council served
a notice seeking possession from the Bickers. That notice was served under
section 83 of the Act, which makes the service of such a notice a precondition
to the issuing of proceedings for possession. On January 22 1997 the council
issued possession proceedings against the Bickers and filed particulars of
claim alleging that they should be granted possession on the basis, to put it
very shortly, that the Bickers had been guilty of intolerable conduct, that is
to say, conduct that was a nuisance or annoyance to their neighbours, and had
also been in breach of various terms of their tenancy.
The Bickers
were rather slow about serving defences to that action, but one of them, Mr
Bickers, served a defence on April 21. Two days later there was a hearing and
the possession action was ordered to be set down on the first open day after
June 17. I interpose that in due course this turned out to be August 4, because
the allegations against the Bickers were so manifold that it was thought it
would take five days to prove them and allow adequate time for the Bickers to
refute them. On April 23 the Bickers also served notice on the council under
Part V of the Housing Act, saying that they were interested in buying the
house. The Act lays down a procedure that in principle should be followed
when such a notice is served. The position is broadly this: by section 122 a
secure tenant may claim the right to buy by written notice to that effect
served on the landlord by section 124. Where a notice claiming a right to buy
has been served by the tenant, the landlord, so section 124 lays down, shall
within four weeks serve on the tenant a notice admitting the right or denying
the right with reason. Then, by section 125, where a secure tenant has claimed
to exercise the right to buy and that right has been established, then the
landlord shall within eight weeks serve a notice stating, inter alia,
the price at which the tenant is entitled to acquire the freehold and the terms
of the conveyance. Finally, I draw attention to the fact that, by section 138,
where a secure tenant has claimed to exercise the right to buy and that right
has been established and all matters relating to the grant have been agreed or
determined, then the landlord shall grant an estate in fee simple, and
the duty thereby imposed on the landlord is made enforceable by injunction.
There is now a
procedure set out in section 153A and B of the Act that provides the tenant
with a sanction in relation to any dilatoriness by the landlord to take the
appropriate steps that parliament says he should take. In a nutshell, the
sanction is that the tenant can attribute the rent to the ultimate purchase
price. However, nothing arises under that.
What in fact
the tenants did will shortly appear. The council, when they received the notice
on April 23 by the tenants that the tenants wished to buy, simply decided not
to process that claim. They made that position perfectly clear, and equally
made their reasons perfectly clear. In substance they were these:
The Council’s
concern was (and remains) that if it was obliged to admit the right to buy and
process the application there would be every incentive upon Mr and Mrs Bickers
to seek to delay the trial of the possession proceedings. Put simply, if Mr and
Mrs Bickers were to accept the Council’s terms for purchase before the
conclusion of the proceedings for possession they would be able to issue
proceedings for injunctive relief to compel completion: s138(3). The Council is
aware of authority that there is no discretion to refuse such an application
for an injunction, once all the terms of the purchase have been agreed.
So, faced with
that, the second defendant, on June 5, filed an originating application
applying to the court for an order that they were entitled to acquire the
freehold. On June 27 directions were given in relation to those originating
proceedings by the tenant and they were ordered to be heard on the first open
date after August 15. On July 4 the defendants issued an application that the
possession proceedings be heard after the Part V proceedings, and they applied,
on July 8, to adjourn the possession action. If everything had gone entirely
according to the statutory timetable, then by July 16 the landlords should have
specified a price for the house. They did not, because, as I say, the council
effectively refused to progress the application in relation to the right to
buy.
On July 22
District Judge Brown refused to adjourn the possession action and ordered the
two matters to be heard at the same time, in any order that seemed good to the
judge, and ordered that a defence to the possession action should be served by
the first defendant. On July 28 the second defendant appealed against the
refusal to adjourn the possession action. A day later the first defendant
served his defence and both actions and the appeal came in front of the
recorder on August 4. His decision, as I have indicated, was that he had a
discretion as to which case should proceed first, and he came to the conclusion
that the possession proceedings should go first. It is that decision that is
the subject of the challenge before us now.
There is now
no dispute between the parties that Mr Recorder Cole was right to hold that he
had a discretion as to which order the cases should be heard. Before him there
had been very much argument about it. That argument involved citing to him a
number of cases in the Court of Appeal, some of which were thought to indicate
that he did not have a discretion in certain circumstances. What the learned
recorder did was to distinguish those cases on their facts and say that in the
circumstances of the present case he did have a discretion.
I need not go
into the question of whether or not that process of distinguishing was
justified, and we have not been addressed upon it. That is because meanwhile,
after the learned recorder’s decision, the House of Lords decided a case called
Bristol City Council v Lovell [1998] 1 WLR 446. What that case
establishes is that the county court, in circumstances like this, does have a
discretion to regulate its own proceedings and decide in what order cases
should be heard in front of it.
There is some
help to be gained in that case, and in another case to which I shall shortly
refer, as to the matters that may be relevant to a court deciding the sort of
problem that faced Mr Recorder Cole, the problem arising out of a tension
between the council’s desire to get possession and the tenant’s desire not to
be defeated by the possession action in his attempt to buy the property.
At p455B Lord
Hoffmann, who delivered a judgment with which two of the fellow members of the
committee agreed, said, after having referred to a number of previous cases and
in particular to a case called Dance v Welwyn Hatfield District
Council [1990] 1 WLR 1097:
The essential
facts were very similar to those of the present case, except that the tenants
had actually started proceedings for an injunction first. The landlord was
counterclaiming for possession. Such questions of timing may be relevant to the
exercise of the discretion, if there is one, but I do not think that they
affect the question of whether a discretion exists. [That was the question that
was before the House of Lords.] The same is true of another distinction which
clearly affected the view which the court took of the merits: the ground for
possession… was that the landlord wanted the premises to demolish and
reconstruct and was willing to provide alternative accommodation.
Lord Hoffmann,
at the very conclusion of his judgment at p456, said in relation to the
exercise of that discretion that guidance could be found in the judgment of
Lord Woolf MR in Bristol City Council v Lovell (1996) 29 HLR 528.
[Although that report shows Sir Thomas Bingham sitting as Master of the Rolls,
that is incorrect. By that stage, Lord Woolf had already taken over.] Lord
Woolf says at p538:
Bearing in
mind that there is the express provision that the tenant loses his right to buy
if an order for possession is made or if he ceases to be a secure tenant, I find
it difficult to see why the tenant’s rights under Part V should always take
precedence over the local authority’s rights under Part IV. Whether they do so
or not should depend upon the circumstances of the case. If a judge before whom
the matter comes, was able to conclude having heard an outline of the
circumstance, that having regard to the nature of the local authority’s case,
it would not be proper to make an order for possession, then there is no
purpose in hearing the claim for possession and the matter could be dealt with
on the claim for an injunction. However if the judge took the view that the
case is one which notwithstanding that the tenant may have an established right
to buy, he considers that it could still be proper to make an order for possession,
then he should be able to adjourn the claim for an injunction until he has
determined the claim for possession. If the judge was in doubt as to which side
of the line the case falls, it would be necessary to hear both claims and only
then make the determination as to which is the more appropriate order to make.
What the judge should not do is blur the distinction between establishing a
right to buy for the purposes of the Act and the exercise of that right by the
making of the grant. In many cases such as Dance [that is a reference to
the case of Dance v Welwyn Hatfield District Council [1990] 1 WLR
1097] the sequence of events would give an indication of the appropriate order
of determination. In other cases such as this, the seriousness of the allegation
which has been made by the local authority could be significant in indicating a
need to determine the facts.
So the
guidance that one has is that the sequence of events and the seriousness of the
allegation are relevant factors when considering what to do by way of
exercising the discretion as to which case should be heard first.
Mr Recorder
Cole referred, for reasons I have indicated, to a lot of previous authority and
came to this conclusion towards the end of his judgment:
The
conclusion I have come to is that in all four cases the tenant has gone far
down the line to enforcing a claim to a right to buy. None of these
considerations applies in this case. And I do not feel the applicants can say
they could insist on an injunction. I, however, might be considered to be wrong
in that and if there is a discretion as to which case I would try first, I
would rely on the chronology.
He then makes
reference to the dates that I have already set out. Then he goes on to say:
So it would
appear and I think it is right to take into account that, despite all the
formal orders, they were not complied with. I also feel it was not mere
coincidence that the applicants’ application was issued on the same day as the
pre-trial review. It is said that if the possession proceedings come first
there is likely to be prejudice to the applicants. Well, the matter does not
necessarily conclude in that way — if the plaintiffs’ claim against the
defendants fails either because evidence is not compelling or because it does
not seem right to the court for an order for immediate possession to be made,
then the onward application would merely have been postponed by five days and I
see no detriment to the applicants to abide the result of possession
proceedings …
I reject the
application on behalf of the applicants that I have no discretion but to order
an injunction compelling the plaintiffs to proceed with the purchase. I reject
the application that the originating application be heard first and I intend to
proceed with the possession proceedings before me.
That exercise
of discretion is attacked by Mr Gerard van Tonder, on behalf of Mr and Mrs
Bickers, in this way. He says that the judge did not seem to have appreciated
that the reason that the tenants had not got further down the line than they
had was because the council had failed to progress the application. Second, he
says that the judge did not give sufficient weight to the fact that if the
possession order was made against them, then the defendants were liable to lose
for ever their right to buy the property.
So far as the
latter point is concerned, it is clear that it was before the judge. He adverts
in effect to it, and indeed the whole of the discussion in front of the judge
was clearly on that basis. The judge met it by saying that if the defendants
had been behaving like proper tenants, then all this is of no prejudice to
them, and if they had not that is precisely the situation with which section
121 of the Act was intended to deal. So he was not impressed by that as a factor.
So far as the first point is concerned, which was that the judge did not
mention that the reason for the delay was the council’s own delay in
progressing the application to buy, it is true that the judge did not, in that
passage of his judgment, specifically refer to it, but it was common ground
before him; it was not something of which he was, or could possibly have been,
in ignorance, because he recites it at the beginning of his judgment.
So the
relevant factors were before the judge. If I had had to make this decision as a
matter of my own discretion I would undoubtedly have exercised it in exactly
the same way as the judge. But we are not in that position. We were here to see
if there was anything legally wrong with the way that the judge exercised it.
In my judgment, there was not, and this appeal should be dismissed.
Agreeing, SIMON BROWN
LJ said: Lord Woolf MR’s judgment in Bristol County Council v Lovell
(1996) 29 HLR 528 began as follows:
This is a
further case raising a relationship between a secure tenant’s right to buy the
dwellinghouse of which he is a tenant under Part V of the Housing Act 1985
(‘the Act’) and the local authority’s right to obtain possession of that
property under Part IV of the same Act. The central issue on which the appeal
turns is the extent of the court’s discretion to select the order in which it
should determine a claim by the local authority for possession and a claim by a
tenant for an injunction to enforce a right to buy where both claims are being
made at the same time. The order in which such conflicting claims are decided
can be critically important. This is because, if the court makes an order for
possession prior to determining the claim for an injunction the making of the
order for possession could bring to an end the tenant’s right to buy, while if
the claim for an injunction is heard first this can pre-empt the claim for
possession. In this case the tenant’s claim was heard first and an injunction
was granted. The appeal is by the local authority against the grant of that
injunction.
The extent of
the discretion is of particular significance on the facts of this case due to
the allegation being made by the local authority. This is that the tenant is
using the dwellinghouse (on a large estate) which he is trying to buy, as a
centre for a drug-dealing operation. This is interfering with the lives of
other tenants on the estate, some of whom, according to the local authority,
are frightened to come forward to give evidence.
The central
issue identified there was resolved by the House of Lords in the local
authority’s favour in Bristol City Council v Lovell [1998] 1 WLR
446. In remitting the decision in that case for rehearing in the county court,
the House of Lords not itself having been invited to exercise the relevant
discretion, Lord Hoffmann recommended to the county court judge the guidance
contained in the passage from Lord Woolf’s judgment already cited in full by my
lord. I repeat only the final sentence [at p539]:
In many cases
such as Dance the sequence of events would give an indication of the
appropriate order of determination. In other cases such as this, the
seriousness of the allegation which has been made by the local authority could
be significant in indicating a need to determine the facts.
In the present
case both those crucial considerations, ie both the sequence of events and the
seriousness of the local authority’s allegation (here not drug dealing, but
what the authority regard as a severe campaign of harassment against a number
of neighbours), strongly favour the view that the appropriate order for
determining the respective claims was that decided upon by Mr Recorder Cole on
August 4 1997. This was to hear, first, the local authority’s claim for
possession so that that would not be pre-empted by the tenants’ Part V claim.
If, of course, the possession claim were to fail, then the tenants’ right to
buy would be given effect.
For the
reasons given by my lord, I see no reason to fault the recorder’s approach to
the exercise of what we now know to have been his discretion. Even, however,
were it otherwise, I would unhesitatingly exercise the discretion in the
selfsame way myself.
Mr van
Tonder’s principal submission is that the recorder here failed to pay proper
heed to the local authority’s refusal to process the tenants’ section 122
notice as the statute directs. This seems to me tantamount to saying that the
local authority should have been punished for that refusal by reversing the
order of determination of the competing claims and thereby shutting out their
possession action. That argument I unhesitatingly reject. No doubt it is
preferable to obtain the court’s ruling on the appropriate order for the
determination of the rival proceedings before the local authority are otherwise
forced to disregard the statutory requirements placed upon them under Part V.
To act, however, as the local authority did here should not of itself be held
necessarily fatal to their case.
For these
reasons, as well as those given by my lord, I too would dismiss this appeal.
Appeal
dismissed.