Kensington & Chelsea v Hislop

This appeal concerns a conflict between a landlord’s claim to possession and a tenant’s claim to exercise her right to buy, both being claims arising under the Housing Act 1985. On the 23^rd July 2003 His Honour Judge Knight Q.C. sitting at the Central London County Court dismissed the claim to possession of the landlord, The Royal Borough of Kensington & Chelsea ("the Borough") against its tenant. The landlord now appeals. At the conclusion of the hearing before me I indicated that the Borough’s appeal was dismissed. However, Mr Easton, representing the Borough, asked to me to give such guidance as I felt able to give to assist Local Authorities in their dealing with this type of conflict. Accordingly I indicated I would give a reasoned judgment later. That I now do.

Marilyn Hislop ("the Tenant"), represented by Mr Brounger, is a secure tenant of No. 26, St Ervans Road, London, W10 ("No. 26"), a three-bedroom maisonette belonging to the Borough. Her mother was a secure tenant of No. 26 before her, from January 1981. The Tenant and her sister Angela ("Angela") were living at No. 26 at that date. Angela acquired other premises without wholly giving up occupation of No. 26 and then gave up the other premises in May 2002, from which date she had, until the hearing below, been fully in occupation of No. 26, with the Tenant. The Tenant, who has continued to live in No. 26 from 1981, became secure tenant by succession on her mother’s death on the 27^th November 2001 – Housing Act 1985 sections 87 and 89. At the time of the hearing below the rent for No. 26 was £106 per week.

As a secure tenant the Tenant is able to allow any person to reside as a lodger in No. 26 – 1985 Act, section 93. Angela is, in a strict sense, a lodger, as also, at the date of the hearing below and for some 9 months before, was the Tenant’s nephew, Conrad Hooper, who wished to continue to stay with his aunt.

The Tenant’s secure tenancy cannot be brought to an end except by the Borough obtaining an order of the Court for possession, whereupon the tenancy will end on the date on which she is to give up possession in pursuance of the order – 1985 Act, section 82 (1) and (2).

On the 29^th May 2002 the Borough served notice on the Tenant under section 83 of the 1985 Act. Such a notice is an essential precursor of any order for possession – section 83 (1). The ground for seeking possession specified in the notice – section 83 (2) (b) – was that of Ground 16 of Schedule 2 to the 1985 Act, namely that the accommodation afforded by No. 26 was more extensive than was reasonably required by the Tenant. The section 83 Notice was served as early as it could be if it was to be within the 6-12 months’ period from the date of the Tenant’s succession to the secure tenancy.

In the events that happened, as a secure tenant by succession to her mother the Tenant was entitled, immediately upon that succession, to claim to exercise a right to buy – 1985 Act sections 118, 119 and Schedule 4, paragraph 4. In her case it was a right to acquire a long lease – section 118 (1) (b). However, in a provision important to consideration of this appeal, section 121 of the Act provides:-

The right, which is advantageous to a tenant in several respects, is to be claimed by notice under section 122 of the Act. The Tenant claimed the right by such a notice served on the Borough on or before the 2^nd August 2002. On the basis that her sister, Angela, had by then moved wholly back into No. 26, the Tenant claimed the right to buy also for Angela. The extensive form RTB1 of the Department of Transport, Local Government and the Regions headed "Notice claiming the right to buy", which the Tenant completed and sent to the Borough, says, inter alia:-

The form does not mention anything as to what a tenant might do if the landlord does not honour those obligations. The form RTB1 in the passage cited had summarised section 124 of the 1985 Act which, so far as relevant, provides:-

Within that prescribed period the Borough on the 27^th August 2002 served on the Tenant a notice, complying with section 124, in form RTB2 admitting her right to buy. The Borough denied Angela’s right to buy on the basis, in effect, that she had not been resident at the property for the whole of the preceding 12 months. No question is raised as to that. The form RTB2 included a note to the Tenant indicating to her that the landlord was required to send her notice stating the proposed terms of sale, including the purchase price, within the next twelve weeks. The form said nothing about what a tenant was to do if that period was not honoured.

The next stage in a due implementation of the right to buy process, as foreshadowed in RTB2, is prescribed by section 125. The notice required by that section is required to describe the dwelling-house, to state the price at which, in the opinion of the landlord, the tenant is entitled to have the lease granted to him and is to show how the price has been arrived at. Components in arriving at that price are the value, improvements and the size of the discount to which the tenant is entitled – see section 125 (2) (a) – (c). Such a notice is also to state what provisions the landlord requires in the ways more particularly set out in section 125 (3), (4), (4A) and (5). However, although there is nothing in the papers before me to indicate that this was made known to the Tenant, the Borough had decided not to serve any landlord’s notice as to purchase price and other matters under section 125 of the Housing Act. That was decided notwithstanding that section 125 provides for no exceptions. Its terms, plainly mandatory, are as follows:-

On the 12^th September 2002 the Borough began proceedings for possession of No. 26 in the Central London County Court. The claim for possession was made (consistently with its earlier notice under section 83) on the sole ground that:-

It was said in the Borough’s additional Particulars of Claim that the Tenant lived alone at No. 26. The Borough said it sought possession in order to allocate No. 26 to a family needing more space than the Tenant. Suitable alternative accommodation, said the additional Particulars, would be made available for the Tenant. The Borough, in other words, set out to satisfy section 84 of the 1985 Act which, so far as relevant, provides as follows:-

Under the heading of Ground 16 in Schedule 2 to the 1985 Act one finds that matters to be taken into account by the Court in determining whether it is reasonable to make an order under Ground 16 include the age of the tenant, the period during which the tenant has occupied the dwelling-house as his or her only or principal home and any financial or other support given by the tenant to the previous tenant. No mention is made of the case where a tenant is claiming the right to buy but nothing expressly excludes factors relating to that being taken into account. As to the provisions of Part IV of Schedule 2, which are to be referred to in determining whether suitable accommodation will be available to a tenant, that Schedule provides, so far as relevant:-

On the 16th October 2002 the Tenant informed the Borough that her nephew had moved in with her and was occupying the third bedroom in No. 26. That was on the basis that Angela occupied the second bedroom.

On the 21^st November 2002 the Tenant put in her Defence. She denied that she was under-occupying the flat. She alleged she was living there with her sister and nephew. She claimed that it would not be reasonable to make a possession order, relying on the facts that No. 26 had been her only home for over 20 years, that she was occupying with members of her family, that her application to exercise her right to buy had been accepted by the Defendants on the 27^th August and that she had a legitimate and reasonable expectation of being able to exercise that right. It is plain from her Defence that by its date in November 2002 she was in the hands of Solicitors and Counsel.

Where, as in the case before me, the landlord fails to serve a timely notice under section 125 the Tenant may serve a notice under section 153A which puts in train a process which can lead to the continuing rent paid by the tenant going not as rent but towards the later-established purchase price arrived at under the right to buy machinery – section 153B. The Tenant was enabled to serve a section 153A Notice on and after the 12^th November 2002 but although she was, not later than 21^st November, acting under advice, no such notice was served. There is, though, no obligation on a tenant to serve such a Notice and although, strictly speaking, its service should have no disadvantageous effect upon a tenant, one could understand a tenant feeling that it might be best not to complain about the landlord and perhaps get upon its wrong side before even the price or other terms of the enfranchisement had been specified.

On the 12^th December 2002 His Honour Judge Green Q.C. sitting at the Central London County Court gave directions for the further hearing of the proceedings. He was not, it seems, invited to exercise any procedural discretion as to whether the possession or the right to buy side of the proceedings should be heard first; the Tenant’s right to buy remained raised only as one of the factors by reason of which it was, she claimed, not reasonable for a possession order to be made.

The Borough offered a number of properties to the Tenant as alternative accommodation but none was accepted. By the time of the substantive hearing before the Learned Judge, which was on the 23^rd July 2003, the then-current offer was of Flat 8, 40 Elm Park Gardens, London, SW10 ("Flat 8"), a two-bedroomed fourth floor flat the rent, water rates and heating and hot water charges for which together came to £137.06p per week.

There have been a number of authorities which have dealt with some only of the issues which can arise when a conflict occurs or looms between a tenant’s right to buy and a landlord’s right to possession. It is a conflict made especially difficult by the failure of the legislature to make any provision whatsoever which might point to some intended precedence, priority or balance as between the potentially conflicting rights. The authorities, in my judgment, establish the following propositions:-

It will have been seen that there is virtually no guidance as to how a Court should react when it has before it what has the potential to be a sound case by a tenant for further implementation of his right to buy and, on the other hand, an apparently good case for possession on the landlord’s part but where "reasonableness" within section 84 (2)(c) is a prerequisite on an order for possession. Whilst reference is made to the circumstances of the case there has been no identification of what circumstances might be relevant nor of what weight might be attached to each of them. I have already mentioned that no intended policy of preference for one claim or another clearly emerges from the legislation and it is in that circumstance that Mr Easton on behalf of the Borough asks that I should mention what factors may be relevant one way and the other. Faced with both diffidence about my entering a field which the legislature has left empty yet recognising also that Local Authorities, in particular, may feel let down if the Courts decline to give any guidance, I will mention some factors that seem to me appropriate to take into account where it is not just the procedural discretion that is in issue but rather substantive cases. The list cannot hope to be exhaustive nor will all arise in every case. I approach the matter on the assumption, firstly, that it is only by way of consideration of "reasonableness" for the purposes of section 84 (2) (c) that the right to buy may obstruct or deny the landlord’s claim to possession and, secondly, that, as section 84 (2) (c) separates "reasonableness" and the suitability or not of alternative accommodation, so also considerations going only to that suitability do not play any part in assessing "reasonableness".

On such bases, then in the tenant’s favour will be that he (and, where appropriate, his family) is long established at the premises as to which he asserts a right to buy, that moving therefrom would be unusually disruptive, that he is not in breach of any covenant or term of his tenancy, that his claim to buy is well-founded and genuine in the sense that it is capable of being carried through to completion rather than being merely a device to delay possession, devoid of any real prospect of being carried through. So, too, see Bickers supra – may it favour the tenant (whilst not of itself being necessarily determinative) if the landlord has deliberately failed to perform his statutory duty in processing the tenant’s claim, thereby deliberately prolonging the period during which the tenant’s claim under the right to buy is at risk of being negated by an order of possession or, for example, by reason of the tenant’s bankruptcy or of any other of the events within section 121 (2).

It will be in the landlord’s favour if the tenant is in persistent or serious breach of the terms of his tenancy; it is difficult to see why, in such a case, a tenant who fails to perform the terms of his tenancy should have any great claim to one of its fruits, namely the benefit of the advantageous provisions under which the legislation enables tenants to buy at a discount. Where the landlord is a Public Authority seeking possession and offering alternative accommodation in order the better to deploy its housing stock (and where that better deployment is shewn to be likely) that will favour the landlord, whereas if its claim can be seen to be merely a device to impede the right to buy that will ordinarily militate against the claim to possession being enabled to prevail. If the right to buy would create an enfranchised pocket in otherwise ordinarily rented land of the authority in such a way as might create property management or other difficulties, that would assist the landlord to resist it. If enfranchisement of the tenant’s existing premises would inflict a continuing nuisance upon his neighbours whereas a move to alternative accommodation would contain or reduce that risk, that, too, would assist the landlord. A factor which, in my view, is likely to tip the balance one way or another is that, if the right to buy prevails, then the landlord, if a Local Authority, loses the premises as part of its housing stock for ever whereas, upon a tenant being given alternative accommodation by a Local Authority, in many cases the right to buy on the tenant’s behalf will be once again available after an appropriate further period and will, in alleged under-occupation cases, then apply to premises which will less deplete the Local Authority’s available supply of space.

Whilst it may benefit the tenant if the landlord has continued to fail to honour its statutory right-to buy obligations even where a section 153A Notice has been served, I do not see it as a demerit in the tenant counting towards the "reasonableness" of an order for possession being made that the Tenant has failed to serve one. The Tenant has a discretion and may feel it wise not to serve such a notice and in any event the landlord should perform its statutory obligations whether prompted to do so or not. It would be especially difficult to see the failure to serve a section 153A Notice as a demerit in the tenant’s position where the landlord had not indicated that it had decided deliberately not to take the right to buy process further. Correspondingly, I would see it as an added weakness in a landlord’s position if, having decided not further to pursue the right to buy mechanism, it failed to tell the tenant of that decision.

I would not think it right for the Court to ask itself whether, but for the right to buy, it would have granted possession nor, conversely, whether, but for the claim to possession, it would have let the right to buy process continue an unimpeded process to its completion. Either of such courses would be likely to create, unintentionally or not, an onus of proof which should not be there.

The Borough’s first ground of appeal is that the Learned Judge, in deciding as to the reasonableness or otherwise of his making an order for possession, gave disproportionate weight to the Borough’s ceasing to process the Tenant’s right-to-buy application.

His Honour Judge Knight Q.C. rightly held that the issue of reasonableness was crucial. He referred himself to each of McKeon, Lovell and Bickers supra. He recites argument from the parties as to the Tenant’s age, her strong association with No. 26 and the validity of the Borough’s argument as to its housing needs and supply. But it is plain that he did attach real weight to the Borough’s deliberate decision (as he held it to be) to thwart the Tenant’s rights. That, he held, was the Borough’s sole reason for putting her application on hold. He took into account that if there was a move to Flat 8 Conrad Hooper would have to be displaced. He felt that the arguments as to reasonableness were, this next factor apart, equally balanced, but he continued:-

The Borough’s second ground of appeal alleges that there was an inconsistency between two findings of the Learned Judge; he held that Flat 8 was unsuitable alternative accommodation as it was so expensive that the Tenant could not afford it yet at the same time he held the Tenant to be able to afford to implement the right to buy No. 26. As for the first limb of that alleged inconsistency, it was not unreasonable for the Learned Judge to expect the rent of No. 26 to be split three ways between the Tenant, Angela and Conrad Hooper and for its cost thus to represent an outgoing of 106/3 equals £35.33 per week. Flat 8, though, could accommodate only two and was offered at £137.06 per week or, in effect, £68.53 per week each, a very substantial per capita increase. I see no error in the Learned Judge holding that he was satisfied "in view particularly of the significant rent increase" that Flat 8 was unsuitable on the grounds of the Tenant’s means.

As for the second limb of the alleged inconsistency, Mr Easton’s argument is unusually bold given that it was by reason of the Borough’s breach of statutory duty that no price was ever specified under section 125 (2) for the right to buy No. 26. Still less was there any proof that the right to buy would cost more than £106 per week, especially given the availability of the so-called "rent to mortgage" terms of sections 143, 143A and 143B of the 1985 Act, provisions designed to assist purchasers otherwise unable to afford to buy. This second ground of appeal is in my judgment quite hopeless and is only made still weaker once it is pointed out that when the Learned Judge himself proposed postponing his judgement to see if the Tenant would indeed pursue her right to buy, it was the Borough that opposed her being put to the test in that way.

The remaining two grounds of appeal do not touch the Learned Judge’s decision as to reasonableness and so the Borough’s appeal must fail. I shall therefore deal with them only briefly.

The third ground of appeal asserts that the Learned Judge failed to take into account that the Tenant (my emphasis) "may have been entitled to Housing Benefit to assist her in making rental payments". But there was no evidence she would have been so entitled had she moved to Flat 8. It is a point that, if it was to be raised at all, needed to be grounded in relevant evidence but of that there was none.

The fourth ground of appeal was that the Learned Judge wrongly took into account that were she to have to move to Flat 8 the Tenant would be put to a disadvantage in going to work. As, at the date of the hearing, the Tenant was unemployed and knew not where her next job would be, there is therefore real force in the Borough’s objection but, of course, as I mentioned earlier, it does not suffice for the Borough to succeed on the argument as to alternative accommodation if it fails, as I have held it does, on "reasonableness".

As I indicated at the conclusion of the hearing, for the reasons I have now given the Borough’s appeal is dismissed.