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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> McIntyre & Anor, R (on the application of) v Gentoo Group Ltd [2010] EWHC 5 (Admin) (04 January 2010) URL: https://www.bailii.org/ew/cases/EWHC/Admin/2010/5.html Cite as: [2010] EWHC 5 (Admin) |
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QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Strand, London, WC2A 2LL |
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B e f o r e :
Sitting as a Deputy High Court Judge
____________________
THE QUEEN on the application of ANTHONY McINTYRE (1) ELAINE McINTYRE (2) |
Claimants |
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- and - |
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Defendant |
____________________
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
Official Shorthand Writers to the Court)
Mr Sam Grodzinski (instructed by Olswang) for the Defendant
Hearing date: November 30th 2009
Further written submissions on December 1st, December 3rd, December 14th and December 18th 2009
____________________
Crown Copyright ©
Mr John Howell QC:
INTRODUCTION
THE FACTUAL BACKGROUND
"You must not assign all or part of the property without prior written permission of [SHCL]."
But it also made specific provision for "mutual exchanges". It stated that:
"You have the right to exchange your home with another tenant, providing you meet certain conditions. Please refer to the Tenants' Handbook for further details of the right to exchange and the circumstances in which it applies."
"providing you both meet certain conditions including:
• You both have your local Housing Company's written consent.
• You make sure that neither of you is in breach of any of your tenancy conditions or obligations. You must also comply with any reasonable condition attached to your local Housing Company consent relating to the payment of outstanding rent, the remedying of any breach or performing any obligation of the tenancy agreement.
• The exchange does not result in any property either becoming overcrowded or under occupied."
The Tenants' Handbook also provided that a tenant could also "exchange with another tenant of any local Housing Company in Sunderland Housing Group, Local Authority or Registered Social Landlord throughout the country providing consent is granted". It further indicated that the local Housing Company's permission for an exchange might be withheld but
"Your local Housing Company will not unreasonably withhold permission. It will not withhold permission on any grounds except those in Schedule 2 to the Housing Act 1988."
"All arrears of rent due as at the Completion Date from existing and former tenants of the Property [which included all the freehold and leasehold property the subject of the housing stock transfer]....(the "Arrears")...together with all rights to recover the same shall be assigned by the Council to [SHCL]".
Subsequently, in a Deed of Assignment of Rent and Service Charge Arrears and Overpayments dated December 21st 2001, the City Council assigned to SHCL
"1.1 all the Council's right and remedies for recovery of and interest in the Arrears brief details of which are set out in the Annex hereto; and
1.2 (so far as the Council is able) the benefit of any....orders for possession and money judgments obtained by the Council against Former Tenants and/or other occupiers of the premises comprised in the Property."
WHETHER NSHC'S DECISION IS AMENABLE TO JUDICIAL REVIEW
THE RELATIONSHIP BETWEEN PRIVATE AND PUBLIC LAW
i) First there may be a difference in what matters fall to be assessed as reasonable or unreasonable. Thus public law may affect the process by which a decision is reached to exercise such a right (including the considerations taken into account and the purpose for which the right may be exercised) as well as requiring the result not to be objectively unreasonable. In private law by contrast the objective reasonableness of what is done may be the only relevant matter. In other cases the reasons why that result was in fact chosen may also be material. There is, therefore, no necessary identity in what matters falls to be assessed as reasonable or unreasonable in public and private law.
ii) Secondly the perspective from which the reasonableness or unreasonableness of what is done falls to be assessed may be markedly different. Normally the functions which are vested in a public authority, and the rights which it may acquire in discharging them, fall to be exercised in the public interest for the purpose for which the function was conferred having regard to the consequences of their exercise for others. The reasonableness of their exercise does not normally fall to be assessed purely by reference to the interests of the public authority itself since functions are not normally vested in such a body for its own benefit. By contrast the reasonableness of the exercise of some rights in private law may fall to be assessed simply by reference to the particular legitimate interests of the person having that right. In such a case a right might be exercised reasonably (or not unreasonably) as a matter of private law but unreasonably as a matter of public law.
iii) Thirdly the onus of proof and the standard of reasonableness to be deployed in resolving any dispute about the exercise of the right may vary. In public law, for example, the onus is on a claimant to show that a public authority's decision was one no reasonable person could have made in the circumstances. In private law the onus may instead be on the person exercising a right to show that what he has done is reasonable.
iv) Finally the persons who may be able to challenge the reasonableness of what is done may be different. In public law anyone with a sufficient interest may do so. In private law it is normally only another party to the contract who may do. In this case, for example, the person with whom the Claimants wished to exchange tenancies might have challenged NSHC's decision to grant the Claimants a conditional consent to that exchange if that decision was unlawful in public law even though as a matter of private law that person may not have been able to do so.
THE PRIVATE LAW APPLICABLE TO NSHC'S DECISION
(i) whether section 1 of the Landlord and Tenant Act 1988 applies to the Claimants' right to exchange
(ii) the consequences of the application of section 1 of the Landlord and Tenant Act 1988
"3..........The first, as expressed by Balcombe LJ in International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513, 520 is that
"a landlord is not entitled to refuse his consent to an assignment on grounds which have nothing whatever to do with the relationship of landlord and tenant in regard to the subject matter of the lease ..."
The same principle was earlier expressed by Sargant LJ in Houlder Bros & Co Ltd v Gibbs [1925] Ch 575, 587:
"in a case of this kind the reason must be something affecting the subject matter of the contract which forms the relationship between the landlord and the tenant, and ... it must not be something wholly extraneous and completely dissociated from the subject matter of the contract."
While difficult borderline questions are bound to arise, the principle to be applied is clear.
4. Secondly, in any case where the requirements of the first principle are met, the question whether the landlord's conduct was reasonable or unreasonable will be one of fact to be decided by the tribunal of fact. There are many reported cases... care must be taken not to elevate a decision made on the facts of a particular case into a principle of law. The correct approach was very clearly laid down by Lord Denning MR in Bickel v Duke of Westminster [1977] QB 517, 524.
5. Thirdly, the landlord's obligation is to show that his conduct was reasonable, not that it was right or justifiable. As Danckwerts LJ held in Pimms Ltd v Tallow Chandlers Company [1964] 2 QB 547, 564: "it is not necessary for the landlords to prove that the conclusions which led them to refuse consent were justified, if they were conclusions which might be reached by a reasonable man in the circumstances ..." Subject always to the first principle outlined above, I would respectfully endorse the observation of Viscount Dunedin in Viscount Tredegar v Harwood [1929] AC 72, 78 that one "should read reasonableness in the general sense". There are few expressions more routinely used by British lawyers than "reasonable", and the expression should be given a broad, common sense meaning in this context as in others."
"34......there is no doubt that the lessor is normally entitled to be guided by reference to his own interests alone. As Lord Rodger accepted in Ashworth Fraser:
"… the court is not concerned with whether or not the terms of the contract are reasonable as between the parties. The court is concerned only with the assignment and with whether or not it is reasonable for the landlord to withhold consent to that assignment…." (para [69]).
..........
35. However, there may be exceptions. In the International Drilling case, where the authorities were considered by Balcombe LJ. He found "two streams of authority" which he reconciled in the following passage:-
"A proper reconciliation of those two streams of authority can be achieved by saying that while a landlord need usually only consider his own relevant interest, there may be cases where there is such a disproportion between the benefit to the landlord and detriment to the tenant if the landlord withholds his consent to an assignment that it is unreasonable for the landlord to refuse consent." ([1986] 1Ch 513, 521C-D)
In that case the Court of Appeal upheld the finding of the judge that the refusal had been unreasonable. Balcombe LJ thought it right to take into account the fact that the decision resulted in the premises being left empty. He said:-
"Although (the judge) did not expressly mention the disproportionate harm to the tenants if the landlords were entitled to refuse consent to the assignment, compared with the minimum disadvantage which he clearly considered the landlords would suffer by a diminution in the paper value of the reversion – 'paper value' because he was satisfied there was no prospect of the landlords wishing to realise a reversion – he clearly recognised the curious results to which the landlord's arguments based solely upon a consideration of their own interests could lead." (p 521G-H).
36. The judge had referred to the unfairness of an approach which had the effect that, the more the substantial the lessee, the more easily the landlord would be able to justify a refusal of consent since unless the proposed assignee's covenant was as strong, a reasonable man might form the view that the market would regard the reversion as less attractive. Balcombe LJ commented:-
"In my judgment the gross unfairness to the tenants of the example postulated by the judge strengthens the arguments in favour, in an appropriate case of which the instant case is one, of it being unreasonable for the landlord not to consider the detriment to the tenant if consent is refused, where the detriment is extreme and disproportionate to the landlord."
That passage needs to be seen against the background of the judge's conclusions in that case, which included findings that there was "no possibility" that the proposed use would have a depreciatory effect on the letting value at the end of the lease; that there was no significant danger that the rent would not be paid throughout the term; that the rent obtainable on future rent reviews would not be prejudiced; and that the was "no prospect" of the property being placed on the market or mortgaged to the fullest extent possible. (p 518 F-G)"
As Carnwath LJ later observed (at [51]),
"the approach taken in that case was exceptional, and dependent on the strong findings made by the judge."
THE GROUNDS ON WHICH NSHC'S DECISION IS CHALLENGED
(i) whether NSHC ever had any right to the amounts to which the condition impugned related
(ii) whether the amounts were irrecoverable by NSHC and the significance of that if they were
"Where rent lawfully due from the tenant has not been paid or an obligation of the tenancy has been broken or not performed, the consent required by virtue of this section may be given subject to a condition requiring the tenant to pay the outstanding rent, remedy the breach or perform the obligation."
Mr Paget submitted that rent is not "lawfully due", and accordingly cannot be "outstanding", if a claim for it would be statute-barred. Mr Grodzinski's response was that a statute-barred debt is still one which is due.
(iii) the significance of the fact that the arrears of rent and the order of the County Court related to 78 Rockingham Road, not the property
(iv) the Claimants' other contentions
(v) conclusion
WHETHER RELIEF SHOULD BE REFUSED IN ANY EVENT
(i) proceedings by way of ordinary claim
"Since O'Reilly v. Mackman decisions of the House of Lords have made clear that the primary focus of the rule of procedural exclusivity is situations in which an individual's sole aim was to challenge a public law act or decision. It does not apply in a civil case when an individual seeks to establish private law rights which cannot be determined without an examination of the validity of a public law decision."
That is precisely what would be involved when an assured tenant of a registered social landlord seeks to establish his right to assign his tenancy and, if so, on what conditions by impugning a decision affecting it on public law grounds. If the decision is invalid, either the landlord will not have lawfully refused any permission within the relevant period in breach of his duty under section 1 of the 1988 Act or his consent will have been given subject to an invalid condition. Such a case does not involve a statutory relationship which happens to include a contractual element; it involves a contractual relationship which happens to possess a public law dimension: cf Clark v University of Lincolnshire and Humberside [2000] 1 WLR 1988 per Sedley LJ at [16]. Indeed, far from it being an abuse of process for a tenant to bring in one claim all his claims about his landlord's decision on his application to exchange or assign, it would normally be contrary to the overriding objective for him not to do so. The claims will almost inevitably involve consideration of number of common elements. To bring only one claim will save expense and enable as many aspects of the case to be dealt with on one occasion as possible.
(ii) a complaint to the ombudsman
CONCLUSION