B e f o r e :
Lord Justice Buxton
Lord Justice Longmore
Sir Martin Nourse
|| JULIE WHITE
||- and -
||KNOWSLEY HOUSING TRUST
||THE SECRETARY OF STATE FOR COMMUNITIES AND LOCAL GOVERNMENT
(Transcript of the Handed Down Judgment of
WordWave International Ltd
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7421 4040 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Jan Luba QC and Mr Adam Fullwood (instructed by Stephensons) for the Appellant
Mr Edward Bartley Jones QC and Mr Michael Singleton (instructed by Anthony Collins LLP) for the Respondent
Mr Christopher Baker (instructed by The Solicitor to Her Majesty's Treasury) for the Intervener
Hearing dates : 14, 15 March 2007
HTML VERSION OF JUDGMENT
Crown Copyright ©
Lord Justice Buxton :
Background and history of the proceedings
- This appeal raises issues, we were told not previously determined but now regarded as urgent, that fundamentally affect the operation of assured tenancies under the terms of the Housing Act 1988 [the 1988 Act]. We were told from the bar that 250,000 tenancies might be potentially affected, including but not limited to many properties let out by registered social landlords such as the respondent [Knowsley], which is a non-profit-making housing association. Before entering upon the undoubtedly difficult general questions that have to be addressed in the course of the appeal, I must first explain how the appeal itself arose.
- Mrs White became a local authority tenant of 34 Chesterfield Drive Liverpool [the premises] on 19 April 1993. As a local authority tenant she held a secure tenancy under the terms of the Housing Act 1985 [the 1985 Act]. On 15 July 2002 Knowsley acquired the whole of the local authority's housing stock and Mrs White accordingly became a tenant of Knowsley. Because by that date registered social landlords had been removed from the list of persons eligible to grant secure tenancies, Mrs White held from Knowsley an assured tenancy under the terms of the 1988 Act.
- Unfortunately Mrs White fairly rapidly fell into arrears of rent, though it should be said on her behalf that that was at least to a considerable extent contributed to by difficulties in the payment of housing benefit. Arrears of rent is one of the grounds on which the landlord of an assured tenancy may seek possession of the premises by proceedings under section 7 of the 1988 Act. Such a claim for possession was issued out of the Liverpool County Court, and came before District Judge Sykes on 8 June 2004. She made an order in the terms set out in §21 below, which included an order that Mrs White give Knowsley possession of the premises on or before 6 July 2004, but with enforcement suspended on terms. The effect in law of that order is a matter of acute controversy. Put shortly, the issue is whether the overall effect of the order was that Mrs White remained in the premises as still an assured tenant; or whether that tenancy terminated on the latest date stated in the order for the delivery of possession. However, at this stage of the exposition it suffices to say that the effect of the order on the ground was that Mrs White remained in the premises on condition that she paid a required weekly sum off the arrears together with the current rent.
- Mrs White then decided that she would like to exercise her right to buy the premises under Part V of the 1985 Act, a right originally limited to secure tenants, but which had been preserved in the case of tenants of registered social landlords when those tenancies were changed from secure to assured status. Mrs White had found or had been found by an organisation that was prepared not only to lend her the purchase price but also to pay off her arrears of rent. Mrs White made her application in January 2005. Knowsley went through the process of administering the application but then, somewhat late in the day, took the position that because of Mrs White's failure to comply with the terms of the order of DJ Sykes she was no longer a tenant of the premises but only a trespasser in them; and thus was ineligible for the right to buy. The court ordered what it thought would be the resolution of that dispute by requiring Mrs White to apply for a declaration that she was still an assured tenant.
- That application came before HHJ Mackay on 14 September 2006. He dismissed the application but, seeing that the underlying issues were of importance, granted leave to appeal to this court. Mrs White then acquired the great advantage of representation by Mr Luba QC, who considered that in order to ensure that all possible issues were before this court he should apply, over two years out of time, to appeal against DJ Sykes' original order. I granted permission for that appeal to be brought before the court. I will simply record that I took that step as part of the management of an existing appeal in the dispute between Mrs White and Knowsley that was already before the court. The decision to grant permission was without prejudice to what would have been the proper route of appeal had the only matter in issue been the order of DJ Sykes.
- Before coming to the substance of the two appeals it will unfortunately be necessary to explain a number of the features of the underlying law that the arguments before us assumed.
The statutory background
- The various schemes for rented housing are of formidable complexity, but the following are the relevant elements for present purposes.
- Before the Housing Act 1980 [the 1980 Act] there were two main schemes of rented accommodation. The first ("council housing") was in the public sector, the landlords being public bodies. Tenants of such properties had no private law protection against eviction, or in respect of levels of rent. Their protection, in practice far from ineffective, was to be found in political pressure and understanding and, to a much less significant extent, in public law. The second type of rented accommodation existed in the private sector, with individuals and private bodies as the landlords. Both rent levels and powers of eviction had been subject to legislative control since as long ago as the Increases of Rent and Mortgage Interest (Restrictions) Act 1920, the statutory scheme being thereafter compendiously known as "The Rent Acts".
- So far as security of tenure is concerned, the Rent Acts provide in relation to all but a few special types of tenancy that when the contractual tenancy comes to an end, for whatever reason, the tenant has an absolute right to continue living in the premises, largely on the same terms as under the contractual tenancy. The tenant is then called by the Rent Acts a "statutory tenant", a concept to which I shall have to return. The landlord can only obtain possession of premises occupied by a statutory tenant by applying to the court, and establishing one of a number of statutory grounds, one of which relates to arrears of rent. By section 100(2) of the Rent Act 1977 the court may on making such an order for possession:
(a) stay or suspend execution of that order, or
(b) postpone the date of possession
for such period or periods as the court thinks fit.
- The 1980 Act introduced radical alterations. Those relevant to our concerns in this case are as follows. First, Chapter I of Part I created the right to buy for public sector tenants. Second, Chapter II of that Part created security of tenure for public sector tenants by converting their holding to a "secure" tenancy, originally introduced by section 28 of the 1980 Act. Third, Part II introduced a new type of holding for private sector tenants, the "assured" tenancy, which was intended to reduce the influence of Rent Act tenancies on the rental market. That latter step was taken further by the 1988 Act, which provided that after a date in early 1989 no further Rent Act tenancies could be created, and which assumes that any letting after that date by a person who is not qualified to be the landlord of a secure tenancy will be an assured tenancy. That is how Mrs White's tenancy, with a body, Knowsley, that is not now recognised as a "public" landlord able to grant secure tenancies, is and has to be an assured tenancy.
Secure and assured tenancies compared
- There are two kinds of assured tenancy, assured shorthold tenancies and assured non-shorthold tenancies. Because Mrs White's tenancy is of the latter kind I will confine myself to that category in comparing assured tenancies with secure tenancies.
- As will have been seen from the brief account given above, these two types of tenancy were introduced for significantly different reasons. The secure tenancy was designed to give public sector tenants rights that they had previously altogether lacked. The assured tenancy was designed to loosen up the private sector market, and in the longer term it has become the instrument for new tenancies in that market. That said, there were significant similarities in the machinery adopted in each case. First, a matter to which I shall again have to return, both operated by placing restrictions on the enforcement of the terms of a contractual tenancy, rather than, as in the case of the Rent Acts, by creating new statutory rights that only arose after the contractual tenancy had terminated. Second, each type of tenancy can only be brought to an end by an application to the court, on grounds that are largely similar in each case; .although the limitation on the ending of the tenancy is expressed in somewhat different language in section 82 of the 1985 Act (as to secure tenancies) and section 5 of the 1988 Act (as to assured tenancies), a matter to which I will again have to return. Third, statute gives in each case a valuable right of succession on the death of the original tenant, though again in different terms as between a secure and an assured tenant.
The effect of suspension or postponement
- We have seen in § 9 above the provisions for postponement of the date of possession or suspension of the execution of an order that relate to Rent Act tenancies. The statutory provisions in respect of secure and of assured tenancies reproduce the same provisions in effectively the same language, while envisaging also that an application for possession may also be adjourned: 1985 Act s 85(2) (secure tenancies); 1988 Act s 9(2) (assured tenancies). However, both schemes then go on to make provision for what should happen in the case of postponement of the date of possession or suspension of the execution of the order. Thus in the case of secure tenancies section 85 (2)-(4) of the 1985 Act provides:
(2) On the making of an order for the possession of…a dwelling-house on any of [the statutory] grounds, or at any time before the execution of the order, the court may-
(a) stay or suspend 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.
In the case of assured tenancies section 9 (2)-(4) of the 1988 Act provides:
(2) On the making of an order for possession of a dwelling-house let on an assured tenancy or at any time before the execution of such an 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 just.
(3) On any such adjournment…or on any such stay, suspension or postponement….the court, unless it considers that to do so would cause exceptional hardship to the tenant or would otherwise be unreasonable shall impose conditions with regard to 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) and may impose such other conditions as it thinks fit.
(4) If any such conditions as are referred to in subsection (3) above are complied with, the court may, if it thinks fit, discharge or rescind any such order as is referred to in subsection (2) above [meaning thereby the order for possession of the premises]
- Important comment was made on these provisions by this court in Harlow DC v Hall  1 WLR 2116. Chadwick LJ (with whose judgment Sir Paul Kennedy agreed in full) said at §23:
Section 85(2) of the  Act empowers the court, on making an order for possession….(a) to stay or suspend the execution of the order or (b) to postpone the date of possession. It is important to keep in mind that a stay or suspension of the execution of the order can only operate in respect of a period after the date that the tenant is to give up possession. An order that the tenant give up possession cannot be executed until after that date in any event…..On a true analysis the court, when considering the exercise of its powers under section 85(2), must first decide whether to postpone the date of possession-under paragraph (b)-and then decide whether execution of the order for possession should be stayed or suspended for a further period under paragraph (a). The court's task under section 85(2) would, perhaps, be more readily understood if the order in which paragraphs (a) and (b) appear had been inverted.
- Those observations were made in the case of a secure tenancy, but they are also apposite to the provisions in respect of assured tenancies, which are in the same terms as those construed by Chadwick LJ.
"Tolerated trespassers" and allied matters
- Section 82(2) of the 1985 Act provides that
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.
That provision has been seen in a series of cases to cause difficulties in cases where a possession order has been made but its execution has been suspended on terms, either by agreement or under the provisions described in §§ 14-15 above. In Burrows v Brent LBC  1 WLR 1448 the House of Lords was faced with an argument that in such a case the effect of the suspension, the original tenancy having come to an end, was to create a new tenancy, giving the tenant new rights of occupation. Lord Browne-Wilkinson pointed to the inconvenience of such a conclusion, since it would deter landlords from granting to their tenants the sort of humane opportunity to put their affairs in order that had been granted in Burrows. He accordingly held that such an agreement, or order, had no more effect than it said on its face, of forbearance from executing the possession order.
- Some explanation had therefore to be found for the legal status of the former tenant. Lord Browne-Wilkinson said,  1 WLR at p1455C:
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 landlord has agreed not to evict-a "tolerated trespasser"-pending either the revival of the old tenancy or the breach of the agreed conditions.
- That approach, necessary though it was to avoid the exorbitant claims in that case, and humane though it is in avoiding immediate expulsions of socially deprived tenants from their accommodation, has encountered many criticisms and claims of impracticability, not least that the former tenant remains in a tenant-like condition, but without the ability on either side to enforce either the covenants in the lease or the normal incidents of a landlord-tenant relationship. A range of such objections was quoted by this court, with apparent approval, in Bristol CC v Hassan  1 WLR 2582. To address those problems, and to avoid the secure tenant losing that status on the making of a suspended possession order, this court adopted a suggestion that the standard form of order in such a case should order the delivery of possession, but postpone the date for delivery until a date to be fixed. In the event of breach further application in court would not be required, but merely an administrative application demonstrating that the terms of the suspension not been observed.
- We were told from the bar that the decision in Harlow that in the case of a secure tenancy the tenancy did indeed end on the making of a suspended order, and the perceived need to avoid that outcome, had focused attention on the parallel case of the assured tenancy, and whether in that case also the making of a suspended order had the same effect. Hence the importance of the present litigation. It is certainly surprising that the issue has only come for decision in the year 2007. As long ago as 1989 the problem was identified by Sir Robert Megarry and Mr Arden at p 134 of volume three of The Rent Acts. And although in many cases the parties will no doubt simply muddle on, obeying or not obeying the terms on which execution has been suspended, there are a range of circumstances in which the issue of whether a tenancy exists is significant: for example, eligibility for the right to buy (at least in the estimation of Mrs White's then advisers); eligibility for succession to a deceased tenant (it having been decided in Brent LBC v Knightley (1997) 29 HLR 857 that there can be no succession to a tolerated trespasser under a former secure tenancy); the effect of bankruptcy (which was the event that gave rise to the litigation in Harlow DC v Hall); and whether the tenancy remains part of the matrimonial property. Those examples are sufficient to show that the answer matters, however long the question has been in the asking.
When does an assured tenancy terminate?
- In § 13 above I have referred to the provisions in section 9 (2)-(4) of the 1988 Act with regard to the suspension of execution of an order for possession or the postponement of the date for possession. In careful submissions Mr Luba said that those provisions were significant here, and many other cases, because his case was that as a matter of law an assured tenancy that was made the subject of an order for possession only came to an end when possession was given up in pursuance of the order.
- In the present case, District Judge Sykes' order on 8 June 2004 (see §3 above) was in these terms:
1. The defendant give the claimant possession of [the premises] on or before 6 July 2004
[a money judgment for [£2250] for rent arrears and costs]
5. This order is not to be enforced so long as the defendant pays the claimant the rent arrears and the amount for use and occupation and costs totalling [£2250] by the payments set out below in addition to the current rent.
Payments required: £5.00 per week, the first payment being made on or before 14 June 2004.
Accordingly, Mr Luba argued, at the time of the application before HHJ Mackay (see §5 above) Mrs White had not given up possession of the premises and was thus still an assured tenant of them: with all of the incidents, rights and effects of such a tenancy, including those mentioned at the end of §19 above.
- Mr Luba advanced three arguments in support of that construction. First, the scheme for postponement or suspension of the date of giving possession in the case of assured (and secure) tenancies, set out in §13 above, was the same, and expressed in the same statutory terms, as that applying to Rent Act tenancies (see §9 above), and indeed had stood in the latter case since section 5(2) of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920. There was clear authority of this court, in Sherrin v Brand  1 QB 403, that in a Rent Act case such an order did not terminate the statutory tenancy, which could therefore pass by succession. The same scheme ought to have the same effect in respect of an assured tenancy. Second, there was conspicuously missing from the provisions in relation to assured tenancies the specific provision in section 82(2) of the 1985 Act that
Where the landlord obtains an order for the possession of the dwelling-house [held on a secure tenancy], the tenancy ends on the date on which the tenant is to give up possession in pursuance of the order.
That indicated that, without that provision, the tenancy would not have ended on the date for possession, but (like the case asserted for assured tenancies) would have ended only when possession was actually delivered. Third, Mr Luba said that there were good policy reasons supporting the construction that he advocated, not least the desirability of avoiding in the case of assured tenancies the difficulties that had arisen from the status of tolerated trespasser after the termination of a secure tenancy: difficulties forced on the courts solely by the termination provisions in section 82(2) of the 1985 Act.
- I will review those arguments in turn, and also mention some further considerations brought to our attention by Mr Bartley Jones.
Rent Act statutory tenancies
- In Sherrin v Brand Phelps, the defendant's predecessor, held under a Rent Act statutory tenancy, the court's order having provided that he should continue to pay the rent fixed under the preceding contractual tenancy. He fell into arrears and an order for possession was obtained, not to be enforced on terms that he paid off the arrears in addition to the current rent. He defaulted under that order, but the order was not enforced before he died, the defendant then purporting to take the tenancy by succession. This court held that she could do so, since Phelps still held the statutory tenancy at the date of his death. The point was put most clearly by Romer LJ at pp 429-430:
the judgment for possession was not intended to have an immediate effect, and would never indeed take effect at all provided that the conditions as to payment were fulfilled. If this be the true meaning and construction of the order, it is clear that it cannot have resulted in determining Phelps's statutory tenancy on the date upon which it was made, for the object of the order was to preserve Phelps's position (albeit conditionally) and preservation is the antithesis of destruction……At Phelps's death there was a tenancy which was subsisting, and not defunct; and I can see no valid reason why the defendant should not be entitled to it by succession.
- I fear, however, that that approach cannot coerce the law as to assured tenancies in the direction that Mr Luba seeks. It is quite true that the power of suspension under which the county court acted in Sherrin v Brand was in the same terms, and conferred the same powers, as section 9(2) of the 1988 Act. But that provision is in each case ministerial or facultative. The effect of its exercise in any particular case depends on the terms and nature of the tenancy to which it is applied. And there is a fundamental difference between the Rent Act tenancy and an assured tenancy.
- The Rent Act tenancy is indeed a statutory tenancy, created not by agreement between the parties but by statute: even though its terms, apart from those relating to termination or succession, mirror those of the contractual tenancy. That was underlined in the early days of the statutory tenancy by Bankes LJ in Keeves v Dunn  1 KB 685 at p 690, when he said:
I think that it is a pity that that expression ["statutory tenant"] was ever introduced. It is really a misnomer, for he is not a tenant at all; although he cannot be turned out of possession so long as he complies with the provisions of the statute, he has no estate or interest in the premises such as a tenant has.
It was no doubt such considerations that led Evershed MR to speak in Sherrin v Brand of the "so-called" statutory tenant. But before the suspended order for possession is made the assured tenant, unlike the Rent Act tenant, is a contractual tenant in the ordinary understanding of that expression. Statute intervenes in his case, not to create a new relationship that has its origin and authority only in statute, but to limit the freedom with which the landlord can enforce the existing contractual terms. The order in Sherrin v Brand was seen by this court as simply continuing the former tenant's protection of his statutory possession of the premises. It by no means follows from that that an order in the same terms directed at an assured tenancy has the effect of continuing the contractual tenancy: particularly when that order removes the characteristic right of a contractual tenant, an absolute right to possession of the premises, and replaces it with a quite different right, to avoid the enforcement of the termination of the tenancy provided that the conditions stated by the court are met.
- I would therefore reject the first of Mr Luba's arguments.
Section 82(2) of the 1985 Act
- This is a much more formidable consideration. Mr Luba was not so ill-advised, in this day and age, as to say expressio unius exclusio alterius, but that was the substance of his argument. Assuming, as Knowsley argued, that an assured tenancy by its terms ended according to the terms of a possession order, suspended or not, then the same must be true of the in all material respects identical secure tenancy. If that assumption were correct, section 82(2), which said that in terms, would be redundant.
- Mr Luba was able to point to a number of instances of judges relying on section 82(2) as demonstrating when a secure tenancy ended, in particular Morritt C and Chadwick LJ in Harlow DC v Hall  1 WLR 2116 , and Brooke LJ in Bristol CC v Hassan  1 WLR 2582. But in neither of those cases was section 82(2) used other than as a convenient statement of a binding statutory rule as to the date of termination of a secure tenancy. When the tenancy would have terminated in the absence of that statutory rule was not at all in issue. That, however, was said not to be so in the case most relied on in this respect, Thompson v Elmbridge BC  1 WLR 1425.
- Thompson arose out of matrimonial proceedings. The wife was the secure tenant of the premises, against whom the local authority landlord obtained a possession order on grounds of arrears of rent, not to be enforced on payment of a weekly sum off the arrears in addition to what the order described as "the current rent". The wife defaulted on the terms and left the premises, leaving the husband in occupation. The landlord obtained a warrant for possession against the wife. The husband applied to be added as a defendant in the possession proceedings, so as to be able in the matrimonial proceedings to apply for the transfer of the tenancy to him. This court held that since under section 82(2) a secure tenancy ends on the date on which the tenant is to give up possession in pursuance of a possession order, in the case of an order suspended on terms the tenancy ended as soon as any of the terms were breached. The present tenancy therefore ended on the wife's first default, and thus no longer existed at the date of the husband's application.
- Russell LJ, at p 1428G, said of the suspended order for possession:
It is to be observed that on the face of the order it does not purport to terminate the tenancy. The tenancy, in my judgment, plainly continues and is recognised by the order as continuing. The judgment for possession, however, is suspended so long as the current rent is paid in addition to the arrears. If that were not the true interpretation of the order, then plainly the words "the current rent" to which I have adverted, would not appear.
He then turned to the applicant's argument that the wife was still the secure tenant until possession had actually been obtained, relying on Sherrin v Brand. Having mentioned an in his view immaterial difference in the facts of the two cases, Russell LJ continued, at p 1430E:
What I think is more important, and indeed crucial, is that Sherrin's case was dealing with an entirely different code of legislation, namely, the Rent Acts, to that with which this case is concerned, namely, the Housing Act 1985. And, in particular, in the instant case, the court has the advantage of the statutory provision, to which I referred earlier, namely section 82(2) which seeks to define the date when a tenancy is to come to an end. Accordingly, I am of the opinion that this court is free to distinguish Sherrin v Brand both on the facts and on the law. Indeed the case is an illustration of how dangerous it can be to rely on judgments delivered where the statutory structure is different from that with which this court is concerned. I repeat section 82(2) provides:
Where the landlord obtains an order for the possession of the dwelling-house, the tenancy ends on the date on which the tenant it to give up possession in pursuance of the order.
I return to the terms of the order, which provide:
judgment for possession shall not be enforced for 28 days in any event, and for so long thereafter as the defendant punctually pays….the arrears…in addition to the current rent.
In my judgment, once the defendant in proceedings of this kind where there is a suspended order for possession, ceases to comply with the conditions of the order, namely, "the punctual payment of the current rent and arrears", and there is a breach of the terms of the order, the tenancy, whatever it may be, from that moment comes to an end.
- In that passage Russell LJ emphasised the difference between the Rent Act and the secure tenancy regimes, and that authority in the one case could not simply be applied to the other. It is, however, fair to say that the feature of the secure tenancy provisions that he identified as being absent from the Rent Acts was section 82(2). He was not taken in argument to the more fundamental difference between the two regimes that is set out in §26 above. How Russell LJ would have decided the case in the absence of section 82(2) did not arise, and therefore cannot be deduced from the judgment. For that reason it is not possible to draw with certainty from Thompson, any more than it is possible to draw from the other cases in which section 82(2) has been discussed, what is the correct construction of the similar scheme for assured tenancies that contains no direct equivalent to section 82(2).
- But that conclusion requires us to address whether there is any other reason for the inclusion of section 82(2) in the 1985 Act, if the purpose of the sub-section was not to offset or reverse the effect of provisions that are said in the case of the assured tenancy to bring the tenancy to an end only on the giving up of possession. Mr Bartley Jones said that the provision was there to reinforce or explicate the provision in section 82(1) that a periodic secure tenancy can only be brought to an end by the landlord obtaining an order of the court. That was a novel provision in the case of a contractual tenancy, which is what the secure tenancy is. In the case of a contractual tenancy not covered by these provisions, the tenancy is determined by service of a notice to quit. As Lord Goddard CJ put it in Clarke v Grant  1 KB 104 at p 105:
if a notice to quit has been given in respect of a periodic tenancy such as a yearly tenancy, the result is to bring the tenancy to an end just as effectually as if there had been a term which had expired.
Accordingly, when section 32(1) of the 1980 Act, which section 82 of the 1985 Act consolidates, introduced the new rule that a secure tenancy could not be brought to an end by the landlord except by his obtaining a court order, it may well have been thought both necessary and prudent to make a specific provision that the date on which the tenancy ends is the date for possession stated in the order, and not, as under the pre-1980 rule, the date of the notice to quit.
- What of the position under an assured tenancy? Section 5(1) of the 1988 Act says, in respect of periodic tenancies:
An assured tenancy cannot be brought to an end by the landlord except by obtaining an order of the court….and, accordingly, the service by the landlord of a notice to quit shall be of no effect in relation to a periodic assured tenancy.
The draftsman here thought it necessary to say expressly that the common law rule about the effect of a notice to quit did not apply: which certainly undermines any argument that implied reference to notice to quit in section 82(2) of the 1985 Act would have been redundant in view of the provision in section 82(1), in the same terms as in section 5(1) of the 1988 Act, that the tenancy can only be brought to an end by the landlord by obtaining an order of the court. More directly, however, section 5(1) says nothing, one way or the other, on the issue specifically addressed by section 82(2), of the date on which the assured tenant is to give up possession. It is very difficult to see why it follows that that date must be the date of surrender of possession, just because a different date is specified for secure tenancies by section 82(2).
- Moreover, the effect of section 5(1) was specifically addressed by this court in Artesian Residential Developments Ltd v Beck  QB 541. An immediate order for possession was made against an assured tenant on grounds of rent arrears. The tenant, after the order had been made but before its execution, applied for the suspension of the order, and also applied, under the terms of the contractual tenancy, for relief against forefeiture. This court saw many reasons why that relief should not be imported into the statutory scheme of the assured tenancy, but it seems to me that central to its reasoning was Hirst LJ's conclusion, at p 549A, as to the effect within that statutory scheme of section 5(1):
the problem which Mr Luba poses as to the termination of the contractual tenancy is met by the express words of section 5(1) itself, which makes it abundantly clear that the order for possession ipso facto brings the assured tenancy to an end.
Where, in contrast to the order in Artesian, execution of the order is suspended, other considerations may apply, to which we will have to come. But I do not see how, consistently with Artesian, it can be said that an order for possession has no effect on the existence of the tenancy until possession is actually delivered up.
- There are a number of other considerations that point away from Mrs White's contention that a periodic assured tenancy only comes to an end upon actual delivery-up of possession.
- First, the essence of a contractual tenancy is that the tenant has a right to exclusive possession of the demised premises. If authority is needed for that banal observation, I would cite Street v Mountford  1 AC at p 818. Where an immediate order for possession has been made, as in Artesian, that right is removed, so the tenancy cannot be said to continue. Where an order is in the terms of the order in this case (see § 21 above), the only right that the tenant retains after the making of the order is a right to remain in the premises provided she observes the terms on which enforcement was suspended. That is significantly different from the right to possession of the premises that is the essence of a tenancy.
- Second, HHJ Mackay placed considerable weight on the ability of the court, on making an order for suspension or postponement under section 9(2) of the 1988 Act, to impose conditions
with regard to 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): ibid, s 9(3), cited in § 13 above.
The judge thought that the reference to mesne profits in itself indicated that the tenancy had terminated. A good deal of argument was addressed to that issue. However, I would think the shorter point to be that if Mrs White is right, and the tenancy cannot end until possession is actually given up, there could be no case in which a former tenant could be in occupation after the termination of the tenancy.
- Mr Luba argued that the court should strain to avoid the creation in the case of assured tenancies of the same class of tolerated trespassers as now exists in the case of (former) secure tenancies: see §§ 16-18 above. Such arguments cannot withstand contrary indications from the statutory language; but in any case it is far from clear, and despite the view apparently adopted by this court in Bristol CC v Hassan, that the arguments are all one way. If Mrs White's assertions are correct, she retains all of the powers and privileges of a tenant, including succession rights and, as she contends, the right to buy the premises at a substantial discount from the market price, even though she has not only defaulted on her own obligations as a tenant, but also has failed to respect the terms on which she was relieved from the immediate consequences of that default. And in the case of a non-profit-making registered social landlord, such as Knowsley, such default on the part of one tenant means, as Mr Bartley Jones pointed out, that she is supported, and retains her privileges as a tenant, at the expense of other tenants who do pay their rent. I would say no more than that the merits of the outcome sought by Mrs White are not immediately obvious in policy terms.
- That said, the approach adopted by the House of Lords in Burrows sprang from, and sought to rationalise from the legal institutions that were available, some of the very pressing problems associated with social housing. Those problems are a matter for law reform, as indicated by the Law Commission's extensive work on renting homes. The courts are not equipped for that task. In the interim, this court in Bristol CC v Hassan suggested a way in which the status of tolerated trespasser could be avoided, albeit at the expense of withholding sanctions for a tenant's breaches: see § 18 above. That approach is equally available in the case of the assured tenant. The only footnote to be mentioned is that CPR PD 55, section IV, making the necessary provision for the two-stage process invented in Hassan, is in its terms limited to orders postponing possession in the case of secure tenancies. That Practice Direction should be extended as a matter of urgency to include such orders in the case of assured tenancies.
Conclusion as to the date on which an assured tenancy terminates.
- For the reasons set out above I reject Mrs White's contention that an assured tenancy can only terminate when possession is delivered up.
- The alternative, advocated both by Knowsley and by the Secretary of State, is that the statutory provisions do not mandate any particular solution, but that the answer must be found in the construction of the order made by the county court. That will be particularly so when the court exercises its wide powers under section 9 (2)-(4) of the 1988 Act to suspend execution or postpone the date of possession. Where the order is not suspended or postponed, either on its making or at a time before execution, Artesian would appear to be authority for the proposition that the order for immediate possession terminates the tenancy.
- I would accept that submission. It is therefore necessary to look at the terms of the order made in the present case. That enquiry will be illuminated by the general considerations already discussed.
The order in this case: form N 28.
- The significant terms of the order are set out at § 21 above. This was in a standard form, form N28 issued at the same time as CPR 55, and described as "order for possession (rented premises) (suspended)." As such, it is used in the case both of secure and of assured tenancies, with the same principal term, that the defendant should give the claimant possession of the premises on or before the stated date.
- Before us, the Secretary of State argued that form N28 in its terms did not terminate the tenancy on the date for possession, but was neutral on that issue. Termination on the date for possession was achieved in the case of secure tenancies only by the operation of section 82(2) of the 1985 Act. While I agree that section 82(2) does have that effect, just as it was seen to do in Harlow DC v Hall, Bristol CC v Hassan and Thompson v Elmbridge BC, for the same reasons as are discussed in §§ 29-31 above it does not follow from that that an order in the form of N28 does not in any event terminate the tenancy on the date for possession. To see whether that is so we must look at the terms of the order.
- This issue can be taken quite shortly. Mr Bartley Jones contended that the true construction of form N 28 had been determined in Bristol CC v Hassan, Brooke LJ at § 27 having held that the "stark language" made it clear that possession was only postponed until the date stated in the order. But that observation cannot be conclusive of the effect of the order, since (in a secure tenancy case) Brooke LJ went on to say that the tenancy terminated on that date "through the operation of section 82(2)". But as pointed out in §29 above, that is not conclusive as to when, absent section 82(2), the N28 formula would terminate the tenancy. For the reasons set out in §37 above, it would be inconsistent with basic principles of landlord and tenant law to hold that a tenant retains a contractual tenancy after he has lost the right to possession by being ordered to give that possession up to the landlord.
- Against that, it was urged, particularly by the Secretary of State, that the order to pay "current rent", rather than mesne profits, after the date for giving up possession must show that during the period of payment the tenant was still a tenant. It will be recalled (see §31 above) that a similar point impressed Russell LJ in respect of an order suspending possession of a Rent Act tenancy in Sherrin v Brand. But whatever the position in respect of a statutory tenancy, I do not think that this expression in our order drives us to accept that the assured tenancy is extended after the date for possession. As was pointed out in the course of argument, the purpose of this order is to tell the tenant (often, as was Mrs White, without legal representation) what she has to do to keep her home. An order that said that she must pay an amount equivalent to the current rent as mesne profits would be more likely to produce bafflement. Granted the meaning and implications of the principal clause of the order, as discussed in §46 above, the requirement to pay "the current rent" can be understood as, and means no more than, that a weekly amount equivalent to the current rent has to be paid.
- I therefore hold that under the order made in her case Mrs White's assured tenancy expired on the last date for giving possession, 6 July 2004. That would not be so with a differently drawn order, for instance along the lines adopted in Bristol CC v Hassan, see §18 above. I appreciate that that means that the many tenants against whom such orders have been made are tolerated trespassers. It was not possible to gauge from the material put before us what and how extensive the effects of that realisation will be; but for reasons already indicated that cannot drive the court to construe the order in a way that its terms will not bear.
The appeal against the order of DJ Sykes
- How this appeal arose is described in §5 above. The submission is that, given that, by this court's decision on the main appeal, an order for possession under an assured tenancy does not have the effect, or rather lack of effect, contended for by Mrs White, then the order made by the District Judge should be amended to achieve that conclusion.
- That submission could be described as startling. It rested in argument on the claim that the District Judge cannot have intended to terminate Mrs White's tenancy, and thus deprive Mrs White of the benefits of the tenancy; so the order as drawn did not represent what the court wished to achieve. We have been shown a transcript of the proceedings before DJ Sykes, which reveal no such settled intention on her part. What the District Judge intended to do, and what on drawing the order on the basis of her notes the court staff did, was to make an order in the terms of form N28. Thereafter, the effect of that order is a matter for the objective construction of its terms, an exercise carried on in §§ 46-48 above.
- And quite apart from that, the fact that the time for applying for permission to appeal was extended (in this case, by some two and a half years) does not prevent the court, on the hearing of the appeal, from reverting to the effect of delay. In this case, as Mr Bartley Jones urged, to reopen the order now would cause great uncertainty, not just in Mrs White's case, and if it assisted Mrs White in her right to buy application would be unfair to Knowsley by, at the least, moving the date of assessment of the acquisition price. I would in any event dismiss this appeal on the basis of delay alone.
The right to buy
- The Secretary of State, but neither of the actual parties, asked us to determine that in any event Mrs White had lost her right to buy. I appreciate that at least in respect of liability for costs an intervener who supports a particular case becomes in practice a party to the appeal: R v Bow Street Magistrate ex p Pinochet (No 2)  1 AC 119 at p 134A. But it is a long step from that to say that an intervener can ask the court to decide a question that is not in issue between the protagonists to the appeal. We did not allow this point to be pursued.
- I would dismiss both appeals.
Lord Justice Longmore :
- My Lord has set out the facts of this case and the statutory scheme against which the issues which arise on this appeal have to be addressed. The question to my mind is whether the order made by District Judge Sykes in the Liverpool County Court on 8th June 2004 terminated Mrs White's tenancy and, if so, when.
- If the matter were free from authority, I would not construe the District Judge's order as, on its face, terminating Mrs White's tenancy because:-
(a) an unenforceable order that Mrs White should give the claimant possession of 34 Chesterfield Drive on or before 6th July 2004 is not, to my mind, an order which terminates the tenancy on that or any other date;
(b) the fact that arrears and costs are expressed to be payable "in addition to the current rent" tends to show that a tenancy continues to exist.
If the order to give up possession becomes enforceable, however, because eg the tenant fails to make a payment on which the lack of enforceability of the order depends, the order to give possession becomes enforceable and it would be natural to say that the tenancy then terminated. This court held that this was indeed the position in Thompson v Elmbridge Borough Council  1 WLR 1425 in a case of a secure tenant where (it is true) no specific date for possession was set in the order.
- The matter is not, however, free from authority, since a materially identical order made by District Judge Pelly in the Harlow County Court, albeit again against a secure tenant, that the tenant do give possession of a dwelling-house on or before 9th February 2005 has been held in Harlow District Council v Hall  1 WLR 2116 to mean that the secure tenancy ended on 9th February 2005. From this it follows to my mind that we are bound to construe the order made by District Judge Sykes as meaning that the tenancy ended on 6th July 2004 unless there is good ground for distinguishing the two cases.
- Mr Luba QC submits that there is indeed a good ground for distinction since Mrs White is an assured tenant and not a secure tenant. He submits that both Harlow and Thompson were decided by reference to section 82(2) of the Housing Act 1985 (applying to secure tenants) and that there is no equivalent provision among the provisions of the Housing Act 1988 which apply to assured tenants. Section 82(2) provides:-
"Where the landlord obtains an order for 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, he says, only by virtue of this provision that this court has decided that tenancies have terminated on the date set out in the order; in the absence of that provision, the tenancy can only terminate when the tenant surrenders her tenancy by voluntarily leaving the premises or is evicted by the execution of a warrant of possession as was the position under the Rent Acts, see Sherrin v Brand  1 QB 403.
- This submission involves the proposition that while a secure tenancy necessarily ends on a date when a tenant is to give up possession in pursuance of an order of a court, an assured tenancy does not necessarily end when such a tenant is to give up possession in pursuance of a court order. Of course, the court order might say nothing about when a tenant is to give up possession in which case Mr Luba's submission as to the time of its termination might be correct. But if the order of the court does specify a date when the tenant is to give up possession, I cannot follow an argument which says that the tenancy ends on some other date. The order with which this case is concerned does specify a date when the tenant is to give up possession. It must, therefore, be on that date that the tenancy terminates.
- It is not surprising that section 82(2) of the 1985 Act figured in the judgments in Harlow and Thompson since the cases concerned secure tenants and that was a relevant provision. But I do not see that its absence from the 1988 Act can make any difference to the proper construction of an order for possession made against an assured tenant. If such order in fact specifies a date for the giving up of possession, then at that date the tenancy will terminate. If a tenant wishes to retain her tenancy until she is evicted, she can always ask the court not to insert in the order any date on which she is to give up possession. It would then be in the discretion of the court whether to make an order in that form.
- For these reasons which do not, I think, materially differ from my Lord's reasons I would dismiss the first appeal. I agree with my Lord's reasons for dismissing the second appeal also.
Sir Martin Nourse :
- I agree with both judgments.