PB Investments Ltd. v McInnes

Miss McInnes has been living in her flat in Bowdon for 20 years or more. She wants to be able to stay there and that is entirely understandable. The flat is, among other things, reasonably spacious but, importantly, it is her home. It is, however, the last remaining occupied flat in the building, which had a number of other flats, which the respondent landlord, or another company, wants to redevelop and for which they have planning permission.

This is a series of applications, as it turns out, for permission to appeal against the order of HHJ Holman, sitting in the Manchester County Court on 7 and 8 December 2006. The applicant’s tenancy was and is protected under the Rent Act 1977. The respondent sought possession under section 98.1 of the Act and the issue before the court was whether suitable alternative accommodation was available for Miss McInnes and whether the granting of a possession order was reasonable.

Tuckey LJ gave limited permission to appeal but matters have changed somewhat since then, as will appear. There was a subsequent application for permission to amend the Notice of Appeal which was considered on paper by Lloyd LJ and he adjourned that matter to this court. Again, the application which Lloyd LJ considered was upon proposed amended grounds of appeal which had yet again changed since he looked at it.

The respondent acquired the property or properties in which Miss McInnes’ flat is at 58 and 60 Stamford Road, Bowdon in 2004. They were divided into ten flats. In the same year planning permission was obtained to redevelop the properties and the respondent reached agreements with a number of the other tenants as to the terms on which they would vacate their premises. The applicant, however, was not happy about this; she being, as I say, a protected tenant under the 1977 Act and no accommodation enabling the landlords to have possession of her flat was obtained. The respondent made various proposals, including an offer to re-house the applicant temporarily during planned refurbishment. I understand that that was an offer which envisaged she would return to the renovated property. She did not respond to that.

The respondent also proposed one or more other properties, none of which were acceptable to her. The last of these properties was 13 Birch Tree Close, Bowdon and on 25 July 2005, she rejected that property also without then explaining the grounds on which she considered it to be unsuitable. So it was that on 28 July 2005, the respondent served a notice to quit and they subsequently sought possession. The proceedings started in Manchester County Court. There was an order of District Judge Lettall dated 13 December 2005, when the claim was allocated to the fast track. But in April 2006, District Judge Clegg ordered that the claim be allocated to the market track and the applicant was granted permission to amend her claim and the district judge ordered that there should be jointly instructed psychiatric evidence relating to the possible psychiatric effect on Miss McInnes if she had to move out of her flat.

On 1 September 2006, Deputy District Judge Flanagan granted the respondent’s application relating to access to the flat. The applicant did not attend on that occasion and sent a medical report by way of excuse for non-attendance. The joint psychiatric expert who had been instructed called Dr O’Brien had also encountered some difficulties in getting the necessary medical records. The judge considered the medical report that there was to be insufficient and ordered that the expert should have unrestricted access to the applicant’s medical records for the purpose of his report. The order also provided that unless the applicant confirmed in writing within seven days that the expert would be granted full access, the defence and counterclaim would be struck out.

She did not comply with the terms of the order as to medical documents and on 31 October 2006 Deputy District Judge Corscadden heard the appellant’s application for the order of 1 September 2006 to be reconsidered, it having been made in her absence. The deputy district judge refused that application. The unless order accordingly took effect, since the applicant had not complied with it and her defence and counterclaim were struck out and she was barred from defending the claim. The order also records that judgment be entered for the claimant, but that was incorrect as HHJ Holman later said, because the court had to be satisfied, and had not at that stage been satisfied, that it was reasonable to make a possession order whether the claim was defended or not.

On 7 December 2006 the matter came before HHJ Holman. We now have a transcript of the judge’s careful judgment in which he refused permission to appeal against the order of Deputy District Judge Corscadden debarring the applicant from defending the claim. He narrated the background in detail; he concluded that without cooperation from the applicant and her agreement to the disclosure of her medical records which Dr O’Brien had rightly said he could not, as jointly instructed expert, censor, there was no valid basis on which Dr O’Brien could operate. The deputy district judge had, in HHJ Holman’s view, approached the reconsideration of the order properly, in particular with reference to rule 3.9 of the Civil Procedure Rules. HHJ Holman recognised that giving effect to the unless order was draconian because it prevented the applicant from defending the claim, but he concluded that there was no prospect of showing that the deputy district judge’s order was outside the ambit of proper judicial discretion. He refused permission to appeal.

Incidentally, it appears from HHJ Holman’s subsequent judgment that the appellant had also failed to comply with another part of the order of 1 September 2006, that is that she should permit a surveyor, a Mr Martin, to enter her flat to inspect it.

There is, by statute, no appeal against that refusal of permission to appeal (see section 54.4 of the Access to Justice Act 1999 and paragraph 4.8 of the part 52 practice direction of the Civil Procedure Rules). There is, as will appear, an application before this court to amend the Notice of Appeal, to appeal this order on the ground that an order debarring the defendant to possession proceedings of a dwelling house should never be made, and that the limit of any permissible order in this case was to strike out so much of the defence as would need to rely on the psychiatric evidence. I see the general force of this, although I would certainly not go so far as to say that a debarring order of the kind made should never be made, however egregious the default which might lead to it. The fact remains that this court has no jurisdiction to entertain the part of the proposed appeal on this subject which appeared in the proposed amended substituted grounds of appeal. I shall come a little later to the rather different way in which Mr Woolf now seeks to put this point.

HHJ Holman, having refused permission to appeal on that order, proceeded to hear the claim for possession. He did so in circumstances where Miss McInnes was debarred from defending but again, as will appear, the judge allowed her to some extent to participate in the hearing. The issues which she had to decide were whether suitable alternative accommodation was available for her and whether, if it was, it was reasonable to make an order for possession, those issues arising under section 98.1 of the Rent Act 1977. He decided in the respondent’s favour on those issues and accordingly a possession order was granted.

The relevant statutory provisions are as follows. In part 7 of the Rent Act 1977 under the title “Security of Tenure”, section 98 is as follows. Under the heading “Grounds for Possession of Certain Dwelling Houses” it is provided:

“(1)

Subject to this Part of this Act, a court shall not make an order for possession of a dwelling-house which is for the time let on a protected tenancy or subject to a statutory tenancy unless the court considers it reasonable to make such an order and either-

“a)

the court is satisfied that suitable alternative accommodation is available to the tenant or will be available for him when the order in question takes effect, or

“b)

the circumstances are as specified in any of the Cases in Part 1 of Schedule 15 to this Act.”

Subsection 4 then provides:

“Part IV of Schedule 15 shall have effect for determining whether, for the purposes of subsection (1)(a) above, suitable alternative accommodation is or will be available for the tenant.”

Part 4 of schedule 15 to the 1977 Act is as follows:

“3.

For the purposes of section 98(1)(a) of this Act, a certificate of the [local housing authority] for the district in which the dwelling-house in question is situated, certifying that the authority will provide suitable alternative accommodation for the tenant by a date specified in the certificate, shall be conclusive evidence that suitable alternative accommodation will be available for him by that date.

“4.

[(1)] Where no such certificate as is mentioned in [paragraph 3] above is produced to the court, accommodation shall be deemed to be suitable for the purposes of section 98(1)(a) of this Act if it consists of either-

(a)

premises which are to be let as a separate dwelling, such that they will then be let on a protected tenancy [(other than one under which the landlord might recover possession of the dwelling-house under one of the Cases in Part II of the Schedule)], or

(b)

premises to be let as a separate dwelling on terms which will, in the opinion of the court, afford to the tenant security of tenure reasonably equivalent to the security afforded by part VII of this Act in the case of the protected tenancy [of a kind mentioned in paragraph (a) above],

“and, in the opinion of the court, the accommodation fulfils the relevant conditions as defined in paragraph 5 below.”

The relevant part of paragraph 5 is in these terms:

“5.

(1) For the purposes of paragraph 4 above, the relevant conditions are that the accommodation is reasonably suitable to the needs of the tenant and his family as regards proximity to place of work, and either-

(c)

similar as regards rental and extent to the accommodation afforded by dwelling-houses provided in the neighbourhood by any [local housing authority] for persons as needs as regards extent are, in the opinion of the court, similar to those of the tenant and his family; or

(d)

reasonably suitable for the means of the tenant and of the needs of the tenant and his family as regards extent and character; and

“that if any furniture was provided for use under the Protective or Statutory Tenancy in question, the furniture is provided for use in the accommodation which is either similar to that so provided or is reasonably suitable to the needs of the tenant and his family.

“(2)

For the purposes of sub-paragraph (1)(a) above, a certificate of a [local housing authority] stating-

(a)

the extent of the accommodation afforded by the dwelling-houses provided by the authority to meet the needs of tenants with families of such numbers as may be specified in the certificate, and

(b)

The amount of the rent charged by the authority for dwelling houses affording accommodation of that extent,

“shall be conclusive evidence of the facts so stated.”

The judge’s decision set out the factual background of the case and in particular the communications between the parties before the dispute came before the court. The judge noted that to grant the order the court must consider it reasonable to make an order and in this particular instance must also be satisfied that suitable alternative accommodation was available to the applicant. He said that the issue of suitable accommodation was linked to the issue of reasonableness and, referring to the decision of Cummings v Denson, said that that indicated that the claimant’s task in establishing reasonableness was less onerous where suitable alternative accommodation had been offered.

The judge noted that the issue of suitable accommodation had to be determined within the provisions of part 4 of schedule 15 of the 1977 Act and he identified questions which arose in the case before him. The first question identified was: will the new property be let upon a protected tenancy or one of similar protected status? The judge answered that question “yes”, saying that the replacement tenancy at 13 Birchfield Close would be an assured tenancy under the 1988 Housing Act and this might be seen as satisfactory, unless there was good reason to insist on a tenancy protected under the 1977 Rent Act.

The judge’s second question was: was it reasonably suitable to the needs of the tenant as regards proximity to her place of work? The judge answered that question “yes”. He considered the comparative distances between the two premises and Miss McInnes’ place or work. 13 Birch Tree Close was a longer walk to her work in Altringham but she could use her car and there was parking for her at work.

The judge’s third question was: was the offered property either similar to the type of property which would be offered by the local housing authority or, alternatively, was it reasonably suitable as regards extent and character? As to the type of property which would be offered by the local housing authority, there was no certificate as there might have been contemplated by the legislation and Trafford Borough Council had disposed of its entire housing stock to a housing trust. But the relevant housing trust had written to say that they would normally offer a single person in housing need a one-bedroom flat at a rent of about £50 a week. The offered property was a two-bedroom house with a garden and parking.

The alternative, in paragraph 5(1)(a) of schedule 15 of the 1977 Act, was accordingly satisfied and, for this reason, the judge concluded that 13 Birch Tree Close was suitable alternative accommodation within the terms of the statute. He went on, however, to say that if he had had to decide the matter under paragraph 5(1)(b) of part 4 of schedule 15 of the 1977 Act he would have decided that it was not suitable alternative accommodation essentially because, in many respects, the rooms in 13 Birch Tree Close were meagre in size compared to those in Flat A, 58 Stamford Road. The judge had, incidentally, during the course of the hearing adjourned to inspect personally both these properties.

On the question of reasonableness, the judge said this, paragraph 29 of his judgment:

“I return, then, to the general issue of reasonableness. I have to look at all the circumstances. It is desired to modernise 58/60 Stanford Road. All the other tenants have gone. The property is now deteriorating, although in terms of general structure it remains sound for the time being. There is, on any objective view, a real risk of vandalism and/or of squatters moving in, and I apprehend that the Defendant herself is somewhat nervous about living there on her own.

“The Defendant has in the past intimated a willingness to move, albeit at a price unacceptable to the Claimant, which would suggest that she is not in fact wedded to living there come what may. It is not possible to redevelop with the Defendant still in residence. The Defendant did not ultimately respond to the offer of temporarily decanting, despite the fact that she first floated it, and she rejected other properties, one of which, namely Apartment 10, on the face of the evidence which I have got in the form of the sales particulars, appears to have been a rather more attractive proposition than 13 Birch Tree Close. I have already mentioned that the burden on the landlord is lower where suitable accommodation is available. Accordingly, having regard to those circumstances, whilst I bear in mind that the Defendant has been living in the property for a considerable period of time, and at present would appear to want to remain there if at all possible, I am satisfied that it is reasonable to make a possession order.”

The applicant applied for permission to appeal on very lengthy grounds which she prepared herself and which have since been superseded. The original grounds emphasised the following points: firstly, that flat A, 58/60 Stamford Road, had been her home for 20 years; secondly, that the offered alternative accommodation was not suitable because it was much too small and would not contain anything like all her furniture; thirdly, that because she was debarred from defending she did not have a fair trial; and fourthly, that she had a significant mental health condition in that, as she put it, she is bipolar with mood swings and she is, so she says, a suicidal risk.

Tuckey LJ gave limited permission to appeal on two possible grounds, only one of which in a modified form is now pursued. The ground which is not pursued related to the rent; it being suggested that the judge had been wrong to regard 13 Birch Tree Close as similar as regards rental when the offered rent was £350 a month and the rent specified in the Housing Trust’s letter, to which I have referred, was around £50 a week. That point has been dealt with in a respondent’s notice, which it is no longer necessary for me to pursue, where it is pointed out first that £350 a month was offered because it is the same rent as the applicant is paying under her present protected tenancy and, secondly, that the matter of rent was never raised at the trial. In any event, the point now being raised is the respondents have offered the 13 Birch Tree Close tenancy at £50 a week and accordingly the point about rent has disappeared from view.

The remaining ground of appeal for which Tuckey LJ did not give permission on an analytic analysis of his order but which, nevertheless, Mr Woolf pursues, is simply that although the judge found that 13 Birch Tree Close was not within paragraph 5(1)(b) of schedule 15 of the 1977 Act -- that is, that it was not reasonably suitable for the means of the applicant and her needs as regards extent and character, in that it was of meagre size in comparison with her present flat -- he did not, it is suggested, take this into account when considering whether it was reasonable to make an order for possession. Mr Woolf points to the terms of paragraphs 29 and 30 of the judgment, which I have read in full, and to passages of the transcript of proceedings which, he says, indicate the judge’s thinking was devoid of this point. Mr Woolf says that the judge was wrong here: he should have considered the issue as part of the issue of reasonableness and he points to McIntyre v ANR & Hardcastle [1948] 2 QB 82.

Mr Wood QC in writing submitted as follows: that a finding that it is reasonable to make an order for possession where a ground for possession has been made out is a finding of fact. Where the trial judge has taken into account all relevant matters and given the question of reasonableness due consideration by weighing them up, the Court of Appeal will not interfere. He refers us to Abrahams v Wilson [1971] 2 QB 88 and also to Tendler v Sproule [1947] 1 AER 193 where Morton LJ said at page 195 that when a judge gives a decision giving possession to the landlord, this court will always assume that he has applied his mind to the question of reasonableness before giving his decision. That was a case in which the note of the judgment did not record that the judge had said that he considered it reasonable to make an order.

In the present case it is submitted that HHJ Holman clearly had in mind all the factors in the case which were relevant to the question of whether it was reasonable to make an order for possession. He had formed a definite conclusion that 13 Birch Tree Close did not comply with paragraph 5(1)(b) of part 4 of schedule 15 of the 1977 Act and that flat A was superior to 13 Birch Tree Close. It is suggested that it is implausible that these were findings which the judge had forgotten or failed to take into account when he embarked upon the final exercise of considering whether it was reasonable to make a possession order. His judgment was delivered, as I have indicated, on the very day that he visited both properties. He had simply said, at the end of paragraph 28 of his judgment, that it was reasonable to make an order for possession. It is submitted that if the judge had simply said at the end of paragraph 28 of his judgment that it was reasonable to make an order for possession, his decision would have been unchallengeable, but he did not do that; he embarked upon a wider discussion of the issue of reasonableness and said at the beginning of it in terms: “I have to look at all the circumstances”. He then discussed other circumstances relevant to the question of reasonableness of making an order which were additional to the circumstances which had been relevant to his finding that the alternative accommodation offered was suitable within the statute.

It is submitted that, looking at the judgment as a whole, it is a carefully structured and detailed survey of all the circumstances relevant to the issues which he had to decide, none of which was forgotten or overlooked when he found that it was reasonable to make an order for possession. No error of law is disclosed and it is submitted that no useful purpose would be served by asking the judge to reconsider his decision.

I accept these submissions on behalf of the respondent. It is true that in the final two paragraphs of his judgment the judge, in the main, refers to matters in favour of making the order but in truth, absent another side to the question, the question answered itself. The other side of the question was the comparative suitability of the properties and the very obvious reasons why the applicant did not want to move. Reading the judgment as a whole it is, in my view, plain that the judge did have these matters well in mind. The judge said in terms in paragraph 29 that he had to look at all the circumstances and the matter relied on as not having been considered by the judge appeared in terms, but one page earlier in the transcript. I would technically refuse the permission to appeal that is needed on this first issue.

The referred application for permission to appeal on the two further issues seeks to raise obviously two additional matters. First, it is said that the judge was wrong to conclude under paragraph 4(1)(b) of schedule 15 of the 1977 Act that 13 Birch Tree Close would afford the appellant security of tenure reasonably equivalent to the security afforded under part 7 of the 1977 Act in the case of a protected tenancy. The judge had referred to Laimond Properties Limited v Al-Shakarchi, a decision of 10 February 1988 where it was accepted in this court that an assured tenancy under the 1988 Act would afford reasonable equivalent security of tenure to a protected tenancy under the 1977 Act, but the matter went by default in that case. Mr Woolf accepts that an assured tenancy under the 1988 Act gives a fair amount of protection (see section 7 of the 1988 Act); his main point is, however, that if a claim for possession comes within part 1 of schedule 2, the court has no discretion and does not consider if it is reasonable to make an order for possession -- contrast section 7(3) with section 7(4).

The main point made refers to ground 8 in part 1 of schedule 2 and that concerns if there are substantial arrears of rent, both at the date of the service of the notice under section 8 of the Act and at the date of the hearing. A point taken in the present case was that the appellant is going to have rent at 13 Birch Tree Close which is no more than £50 a week and she has shown herself well able to pay more than this. Mr Woolf submits, in opposition to that, that nevertheless there is a degree of greater insecurity arising from the fact that if rent is in arrears, as specified in ground 8, then the court has no discretion but to make an order for possession.

The respondent submitted at some length to this court that the assured tenancy offered in this case would offer security of tenure reasonably equivalent to the security afforded by part 7 of the 1977 Act in the case of a protected tenancy, but took an alternative comment arising out of section 34 of the Housing Act 1988. Relevantly, that section provides that a tenancy which is entered into on or after the commencement of this Act cannot be a protected tenancy unless one or other of certain conditions are fulfilled. One of those is, in subsection (c) to section 34.1:

“(c)

it is granted to a person (alone or jointly with others) in the following circumstances -

“i)

prior to the grant of the tenancy, an order for possession of a dwelling-house was made against him (alone or jointly with others) on the court being satisfied as mentioned in section 98(1)(a) of Case 1 in Schedule 16 to, the Rent Act 1977 or Case 1 in Schedule 4 to the Rent (Agricultural) Act 1976 (suitable alternative accommodation available); and

“(ii)

the tenancy is at the premises which constitute the suitable alternative accommodation to which the court would stay satisfied; and

“(iii)

in the proceedings for possession the court considered that, in the circumstances, the grant of an assured tenancy would not afford the required security and, accordingly, directed that the tenancy would be a protected tenancy ...”

The submission, then, was that if the judge had not been satisfied on the first point, a direction could have been made and the respondent would have been content in those circumstances if it should be made that there should be a protected tenancy of 13 Birch Tree Close. Upon being asked, Mr Wood took instructions and having received those instructions told the court that the respondents would be content if this court were to direct that in this case the applicant should have a protected tenancy under section 34.19(c)(iii) of the 1988 Act. In those circumstances, in my view, it is not necessary to decide the earlier point because, in my view, it would be appropriate in the facts of this case and having had that indication on behalf of the respondent that this court should give that direction, that disposes of the second proposed ground of appeal.

I have already alluded to the third proposed ground of appeal and it is put now in these terms -- I say “now in these terms” because the amended substituted grounds of appeal put the point as follows: the learned judge made a serious procedural error and/or other irregularity in refusing the appellant’s appeal against the order of Deputy District Judge Corscadden dated 1 November 2006 striking out the appellant’s defence and counterclaim and refusing to reinstate her defence and counterclaim.

Mr Woolf puts it in writing in these terms: he says that the applicant was prevented from defending the claim brought by the respondent for possession because she was debarred from defending it. It was not the intention of the appeal to revisit the question of whether on the particular breaches of orders the deputy district judge in the first place and the learned judge thereafter was correct in imposing the debarring order. As put in writing, this ground of appeal simply asserted that it could never be appropriate to debar a party from defending a claim for possession when the question of reasonableness is to be determined. I have already indicated that I do not accept that submission in its bald form. It is not difficult to envisage circumstances in which such an order would be the only course open to the court.

Mr Woolf goes on to say that is accepted that when the question of reasonableness is to be considered, all factors are required to be thrown into the melting pot. It is impossible, he says, to envisage a situation arising where that requirement could be fulfilled when the tenant is prevented from giving evidence before the trial judge, immediately prior to the judge considering whether to make an order for possession or not. As I have said, the court has no jurisdiction by statute to entertain the appeal in the way that it was put in the amended grounds of appeal. I note in this context that Mr Woolf does not raise conceivable issues with reference to Article 6, Article 8 and Article 1 of Protocol 1 of the European Convention on Human Rights. I am sure that in the circumstances of this case he was right not to do so.

Mr Woolf, accepting the statutory jurisdiction point, has reformulated the proposed ground of appeal. He puts it in this way: he is not seeking on behalf of the applicant permission to appeal the judge’s refusal of permission to appeal against the debarring order of the deputy district judge, but he submits that there was nevertheless a serious irregularity in the judge’s conduct of the trial. It was, he says, within his discretion to conduct it in any way he thought fit and that did not, despite the debarring order, prevent the judge from enabling the applicant to give evidence. He should have done so and he should have listened to her on the matter of reasonableness.

The respondent, in the alternative to raising the jurisdiction point, addressed the merits of the debarring order which is impugned, submitting that the court was right to make the orders that it did and that HHJ Holman was fully entitled to refuse permission to appeal for the careful reasons he gave. I can see the force of this, at the same time seeing the general force of the submission that the extent of the debarring order may have been disproportionate.

The respondent then goes on to submit that if the applicant were granted a new trial, there is no real prospect that any different result would be reached. Apart from the matter of her medical condition, which it is assumed would still be excluded from the evidence, he does not put forward in this court any additional circumstances which he would like the judge to take into account but which he did not take into account at the original hearing. Despite the fact that she was formally debarred from defending, the judge nevertheless permitted her to make interventions during the course of the hearing from time to time and it is clear from the transcript, it is said, that he had fully in mind all the various concerns which she had expressed about leaving the flat and the alternative accommodation which was offered to her.

Mr Woolf’s submission has to steer a very fine line between saying that the judge should have allowed the applicant to do that which the order said she might not do and allowing her to participate sufficiently to enable him to make the reasonableness judgment he had to make. Mr Woolf accepts, in making this submission, that the judge was bound by the order which the deputy district judge had made and he accepts that the judge did in fact enable the applicant to participate in the hearing. He had to decide the issue of reasonableness and he did, in my view, enable the applicant to participate to the extent that he thought was appropriate. I have looked at the transcript and read the passages referred to by Mr Woolf in full. In my view, the transcript shows that the judge did allow her to make points of importance and, importantly, that he did in fact consider all the main points which were capable of being made on her behalf. In my view there is no real prospect of this point succeeding before this court and I would refuse permission to appeal on it.

In summary, in my judgment the application should be refused on the reformulated ground allied to that for which Tuckey LJ gave permission. I am sure that the judge did take account of all relevant matters in reaching his conclusion on reasonableness. If that were wrong I would still hold that this ground should fail because taking the decision fresh and taking all matters into account, I would reach the same conclusion as the judge. As to the second proposed ground of appeal, that is now dealt with by the direction which, in my view, should be given under section 34.1(c)(iii) of the 1988 Act and for the reasons which I have just given I would refuse permission to appeal on the third point. There is no jurisdiction to entertain an appeal on this ground in the way that it was originally put and in the way that it is now put the judge’s actual conduct at the hearing is not properly to be criticised.

I agree.

I also agree. Subject to the form of the order, to which I shall come in a moment, permission to appeal is refused in relation to each of the three new issues. Accordingly, permission to amend the appellant’s notice to raise these issues is also refused and the appeal for which limited permission was granted on 28 February 2007 is formally dismissed.

The convenient course, I think, is to allow the parties to note the order that I would suggest that the court makes and then, if they wish, to make comments on that. The order should take this form: