Knowsley Housing Trust v Prescott & Anor

This is an appeal from a decision of His Honour Judge MacMillan given in St Helen’s County Court on 9 May 2008. The case concerns a house on a housing estate in Knowsley. The Defendants, Mr. and Mrs. Prescott, are the joint tenants of the house, the address being 28 Deepfield Drive, Huyton, Knowsley. Their tenancy began in 1988. They became the assured tenants of the claimants, Knowsley Housing Trust, in 2002 when a large number of houses (of which their house was one) were transferred to the Trust by Knowsley Metropolitan Borough Council. On 11 April 2006, Mr. Prescott pleaded guilty to conspiracy to supply cocaine and amphetamines, and on 12 June 2006 he was sentenced to eight years imprisonment.

The Housing Trust brought proceedings for a possession order based on arrears of rent and on these convictions. The question of the rent is not a live one on this appeal. But the Housing Trust submitted at the trial that by reason of the convictions, an immediate order for possession should be made. Judge MacMillan disagreed, making a postponed order for possession instead. The order was postponed on condition that the Prescotts paid the current rent and something towards the arrears as well as not allowing the house to be used for drug dealing. As regards Mrs. Prescott, he made no order for costs. Permission to appeal was refused on the papers by Blake J on 31 October 2008. On the renewed application of the Housing Trust at an oral hearing on 23 March 2009, Coulson J gave permission to appeal both in respect of the postponement issue, and in respect of the judge’s refusal to make an order for costs against Mrs. Prescott. I have therefore these two matters to determine on this appeal.

The grounds for possession against an assured tenant are set out in Schedule 2, Housing Act 1988. The only ground I need mention is ground 14, which applies where “the tenant … (b) has been convicted of … (ii) an indictable offence committed in, or in the locality of, the dwelling house”. By section 7 (4), the court must not only be satisfied that the ground is made out but also that it is reasonable to make a possession order. In the event that the court considers it reasonable to make a possession order, it must then go on to consider whether any such order should be adjourned, stayed, suspended or postponed (Housing Act 1988 s.9). In the present case, the judge decided that it was reasonable to make a possession order, and that part of his ruling is not disputed. The question is whether he was correct to exercise his power to postpone the order.

At the trial on 9 May 2008, the Housing Trust was represented by Mr. Paul Burns, who has also represented it on the appeal. Mr. Prescott, who was serving his sentence, was neither present nor represented. Mrs Prescott was represented by Mr. Adam Fullwood, who again has represented her on this appeal. Both parties put in substantial skeleton arguments for the trial. The case was listed for a day, but in the event only took I am told about one hour. The Housing Trust called four witnesses, two of whom were officers with the Serious Organised Crime Agency. The other two were a neighbourhood manager and a tenancy enforcement officer for the Trust. In the usual way, each had produced witness statements. None of them was asked any questions on behalf of Mrs. Prescott (nor did the judge ask any questions). So their evidence went unchallenged. She was present at the hearing, but the judge was told that she had “elected not to give live evidence”. Her statements were tendered, and the judge indicated that he had read them.

After closing submissions, the judge briefly gave his reasons for refusing to make an immediate order for possession. As regards Mr. Prescott, he said that “… although I appreciate and indeed applaud the claimant’s attitude of zero tolerance to drug dealing in connection with their premises, I feel that Mr. Prescott has been punished for his crime and in the absence of any evidence of dealing, directly or indirectly, from the claimant’s premises … it seems to me wrong to further punish Mr. Prescott by taking his home away from him”. So far as Mrs. Prescott was concerned, he said that there was no suggestion that she had played any part in the conspiracy. It was right that she had benefited from her husband’s criminal lifestyle in an number of ways by way of holidays, the standard of furniture in the house, jewellery and clothing, “… but one really recognises that, down the ages, since Bill Sykes and Dick Turpin and so forth, partners of criminals, highwaymen, robbers, drug dealers and so forth, have benefited from their husband’s lifestyle … the alternative to enjoying the proceeds, indirectly or directly, of a criminal lifestyle is what? To divorce the man who she loves and is the father of her children and so forth? I think not. She, of course, is herself being punished by the fact that her husband is now languishing in [prison]”. As regards children, the Prescotts have a daughter aged 21 who lives at home and who is studying at university in Liverpool. It is right to make it plain that there has never been the slightest suggestion that she has been involved in her father’s activities in any way whatever.

The parties’ contentions can be briefly summarised. Both parties recognise that the judge’s decision to postpone was a discretionary one, and that a court on an appeal will be slow to interfere with such a decision. This principle was recently reaffirmed by the Court of Appeal in the context of possession orders. In Bracknell Forest Borough Council v Green [2009] EWCA Civ. 238, Mummery LJ (with whom Lawrence Collins LJ and Rimer LJ agreed) said that the court should be slow to upset the trial judge’s evaluation of reasonableness on the possession order issue, unless it is clear that he acted under an error of principle, or unless his decision was obviously wrong (see [30]). The same test plainly applies to the decision whether or not to suspend the order.

At [25]¸ Mummery LJ cited Lord Hoffmann in Biogen v. Medeva plc [1997] RPC 1 to the effect that it must be borne in mind that a judge’s findings of fact are inherently an incomplete statement of the impression that was made on him by the primary evidence. At [27], he said that appellate reticence to interfere is not confined to cases turning on the assessment of the credibility of witnesses who have given oral evidence or to cases involving an exercise of discretion, but extends to the lower court’s overall evaluation of facts on the application of an imprecise legal standard rather than of a particular legal principle. Mr Fullwood submitted (and I agree) that this approach applies in this case where the issue is as to the imprecise legal standard of reasonableness.

For the appellants, Mr. Burns nevertheless contends that the judge both erred in principle, and was obviously wrong. He makes a number of detailed submissions, but in essence his submission is that the reasons which the judge gave were wrong in law, and that he failed to apply the approach established in the case law. He submits that I should exercise the discretion anew, and substitute an order for immediate possession. No representations have been made on behalf of Mr. Prescott. On behalf of Mrs. Prescott, Mr. Fullwood submits that the order which the judge made was well within the ambit of his discretion. Not too much should be deduced from the admitted brevity of the judge’s reasons. This, he submits, was a case in which an experienced judge exercised his discretion in a manner that was available to him, and whether or not this court might have reached a different conclusion is beside the point. On the basis of the principles I have mentioned, he submits that the appeal should be dismissed.

As I have said, a feature of the trial was that the evidence adduced by the Housing Trust was not challenged, and Mrs. Prescott elected not to give her evidence orally. The Housing Trust set out its factual case in considerable detail in its written submissions to the court below, and has relied on the same matters on appeal. The key points relate to the nature of the drugs offences. In brief, following a major police operation in the Huyton area in 2006, a drugs factory was located at an address in Cowper Way, which is about half a mile from the Prescotts’ house. Mr. Prescott was one of seven defendants who came before His Honour Judge Boulton at Liverpool Crown Court for sentence on 12 June 2006. In his sentencing remarks, Judge Boulton dealt first with the conspiracy to supply amphetamines. He said that over a period in excess of a year, an amphetamine producing factory had been in existence. The factory was discovered at the end of the year, and on the day of seizure the quantity of drugs recovered could have fetched anything up to £7.1 million at street level. It followed (the judge said) that there must have been much more produced and distributed in the course of the year. The scale of the dealing was “industrial and national”. One of the two prime movers was Mr. Prescott.

As regards to the cocaine, there was only one seizure, in which three blocks were recovered totalling just over three kilograms in weight, with a purity of 87, 80 and 80 respectively. This produced something like two and a half kilograms of pure cocaine. As Judge Boulton said, the purity was such that the receipt must have been very close to the source of supply. On this charge, Mr. Prescott did not admit that he was involved with that particular seizure, but Judge Boulton notes that he accepted that he was intending to possess large quantities of cocaine and supply it to others. The judge noted that Mr. Prescott had ten previous convictions, though none of them were in relation to drugs offences. On that basis, and giving full credit for his pleas of guilty, he received a sentence of eight years imprisonment concurrent on each count.

It is plain therefore that Mr. Prescott was involved in the supply of cocaine and amphetamines in a very substantial way. Judge MacMillan did not specifically mention the size of the operation in his judgment, but rightly noted in argument that the supply must have been on a large scale. Following conviction, proceedings were taken against Mr. Prescott under the Proceeds of Crime Act. At the confiscation hearing (and again this is not in dispute) it was decided that he had benefited to the sum of £696,383.00. The recoverable amount (in other words the amount he could actually pay back) was £29,059.00. He was ordered to pay that sum within six months with a further period of twelve months imprisonment in default. The judge refers to the recoverable amount in his reasons, though not specifically to the amount by which Mr Prescott benefited by reason of his drugs dealings.

In her first witness statement, Mrs. Prescott said that she would “accept that Paul [her husband] may have been involved in serious criminal activity in the area but this was not so proximate to my property either in geographical terms or in relation to the time the activity went on that I realised what he was doing nor was it sufficient that I would be bound to realise what was going on”. In its written submissions at trial, and on appeal, the Housing Trust made it quite clear that it did (and does) not accept that she is telling the truth in that regard. It submits that she plainly knew that her husband was dealing in drugs at a high level which resulted in the couple being well off. It cites matters such as the improvements to their house, the high standard of fittings, decking, and the fitted kitchen, in circumstances in which they had been in receipt of housing benefit and job seekers allowance/income support. References are made in its evidence to a caravan, a car and a holiday abroad all paid for in cash. When the police searched the property, they found cash receipts totalling £14,236.75. None of this evidence was disputed.

As Coulson J pointed out in giving permission to appeal in this case, there have been a number of authorities in recent years in respect of applications for possession by councils and housing associations made against those responsible for anti-social behaviour or convicted of criminal offences. The case of Manchester City Council v. Higgins [2005] EWCA Civ 1423 concerned anti-social behaviour by a tenant’s children, and in the course of his judgment, Ward LJ considered the factors that are relevant in deciding whether or not the order for possession should be postponed. At [30] referring to the “wide value judgment for the court to make”, he says that:

“The interests of the parties are engaged but so are the interests of the public at large. The interests of the tenant will include all reasons which bear on why his personal circumstances are such that it would still be reasonable for him to continue in possession. The interests of the landlord lie in his protecting those affected by the nuisance and annoyance and in the management of his estate, this being a particular concern for social landlords such as a local authority housing department, which has the difficult task of allocating increasingly precious housing stock.”

At [37], having referred to the decision in Canterbury CC v. Lowe (2001) 33 H.L.R. 53 as regards future breaches, he emphasised that, “There must, however, always be a sound basis for the hope that the anti-social behaviour will cease”. At [44] he said that the behaviour of the defendant and her children was quite intolerable, and that “Absent any expression of remorse or any well-founded expectation of improvement it was disproportionate not to make an immediate possession order”.

At [55] Gage LJ, who gave the second judgment, sets out a two stage test, namely whether or not it is reasonable to make an order for possession, and whether or not it is reasonable to suspend that order. He says that at the “second stage there will be a greater focus on the future rather than the past. In other words, when deciding whether or not to suspend the order the court will amongst other things be concerned to devise the best method of protecting the needs of neighbours against recurrence of the anti-social behaviour which gave rise to the order for possession being made”. In the event, the Court allowed the appeal, and made an immediate order for possession. See also the decision of Lewison J in Fletcher v. Sheffield City Council [2007] EWHC 419 (Ch) where a tenant, who was again responsible for children who were behaving in an antisocial way, had not expressed any remorse at all and there were no assurances for the future. In those circumstances the judge rejected an application by the tenant for permission to appeal against an immediate possession order.

In Sheffield CC v Shaw [2007] H.L.R. 25, the judge had decided on the evidence not to make an outright possession order because he was persuaded that there was a genuine chance that the tenant might cease his anti-social behaviour. There was also evidence of the “massive consequences” of an immediate possession order. In reaching his conclusion, the judge went on to make an anti-social behaviour order in very strict and extensive terms. In all the circumstances, May LJ (with whom Sedley LJ and Sir Paul Kennedy agreed) held that the judge was entitled to conclude that the order he made was a proportionate solution to a very difficult situation. Again, one sees the Court looking to the future and considering whether the conduct in question will be continued (or as in that case, whether it may be contained).

The decision in Sandwell MBC v. Hensley [2007] EWCA Civ 1425 is directly analogous on the facts of the present case. In that case, the tenant had been cultivating herbal cannabis at the house in question. In due course, he received a suspended prison sentence. In the possession proceedings, the judge made an order for possession which was suspended for two years. The local authority’s appeal was allowed by the Court of Appeal, and an outright order for possession was substituted. At [17], Gage LJ (with whom the Chancellor agreed) said that where a criminal offence had been committed and was the foundation for the application for possession, the more serious the offence the more serious the breach, and convictions for several offences will be even more serious. In a passage which is directly applicable to the present case he said that, “In such circumstances it seems to me the court should only suspend the order if there is cogent evidence which demonstrates, as Ward LJ put it in Manchester City Council v. Higgins [2005] EWCA Civ 1423, a sound basis for the hope that the previous conduct will cease”. On that basis he concluded at [26] that, “Unless there was cogent evidence providing a real hope that the defendant had mended his ways, the council was in all the circumstances entitled to an outright order”.

At [27], Arden LJ said in terms that I consider apply in the present case as well that:

“For my part, I do not consider that the question of whether the serious conduct would cease is the only factor, since the court has a very wide discretion, including the duty to consider the effect on those living in the locality. This was a serious and serial drug-related offence and that would, in my judgment, normally give rise to a necessity for a tenant to have to show a strong case to resist an immediate possession order. I think that the making of a stay in this type of case is likely to be exceptional.”

Of course, the facts of the offending in the present case are far more serious than those in Sandwell.

In the light of these principles, I come to consider the detailed grounds of appeal, and the respective submissions on behalf of the Housing Trust and Mrs. Prescott. First, it is submitted that the judge failed in exercising his discretion to take account of the unwillingness of Mrs. Prescott to give oral evidence. Mrs. Prescott responds that whilst the judgment makes no reference to this fact, the judge was plainly well aware of it. Accepting that point, in my view, the judge must have had her failure to give evidence well in mind. On the other hand, no good reason was given for this course of action, such as illness or the like. Indeed, she was present in court during the trial, and it must follow that her witness statements were to be given very little weight. In reality, the Housing Trust’s evidence was, as I have said, unchallenged.

Second, it is submitted that the judge placed too great weight on the fact that the drug factory was not at the Prescott’s own house. In this regard, he pointed out in his reasons that there was no suggestion either by the prosecution in the course of the criminal proceedings or by the claimants that any dealing in illicit drugs was being carried out directly or indirectly from the Prescotts’ house. That, as I understand it, is correct as a matter of fact, and it plainly materially influenced the judge’s decision to postpone the possession order. But in agreement with the Housing Trust’s submissions in this regard, the point seems to me to lack much substance on the facts of this case. I have already explained the nature of the operation described by Judge Boulton as being on an “industrial scale”. This was no amateur operation in which drugs paraphernalia would be expected to be found at the offender’s home. The factory was I am told on the same housing estate, and about half a mile from the Prescotts’ house. Officers of the Housing Trust timed the journey by car, and it is not in dispute that it takes one minute and 38 seconds to get there.

I accept that in general terms the more closely the criminal conduct in question is connected to the house in respect of which possession is sought, the more compelling the case for an immediate order of possession, and the converse must also be true. However as a matter of law, the criminal conduct need not have been carried on in the house in question. This appears from the language of ground 14 in Schedule 2 Housing Act 1988, which distinguishes between convictions of the tenant (or a person residing in or visiting the house) as a ground for possession in two types of instance. These are convictions for (i) using the dwelling house or allowing it to be used for immoral or illegal purposes, or, (ii) an indictable offence committed in, or in the locality of, the dwelling house (italics added). The second instance is the relevant one in the present case.

In his sentencing remarks dealing with the conspiracy to supply amphetamines, Judge Boulton commented that he could not see that it was possible to commit the offence in a more serious fashion. It is evident that the amphetamine dealing in respect of which Mr. Prescott was a prime mover, particularly when taken with his intention to supply large quantities of cocaine to other people, had the potential of blighting the neighbourhood where he lived. The scale of the operation also seems to me to answer a point made on behalf of Mrs Prescott as to the lack of substantial evidence of complaints by neighbours. Whether or not Mr Burns was right to mention the possibility that witnesses might fear to come forward, the potentiality of damage in this case is manifest. In those circumstances, in agreement with the Housing Trust, and in respectful disagreement with Judge MacMillan, it does not appear to me that the fact that Mr. Prescott was careful to keep his own house free from drug dealing reduces the seriousness of the offences in the context of the making of an immediate possession order where the drugs factory was maintained in the locality.

Third, it is submitted that the judge made no findings about Mrs. Prescott’s case as to her knowledge of her husband’s activities. A significant part of the Housing Trust’s case was that it was “clear beyond peradventure that (i) she knew what was going on; and (ii) she benefited knowingly and willingly from the illegal activity”. The judge accepted the second point, but as appears from the passage from his reasons quoted above, discounted it as a relevant factor. He made no findings in respect of the first point. Mrs. Prescott’s response is that he had the skeleton argument in which the Housing Trust made this point. That is certainly true, but the question of her knowledge about the drug dealing is relevant on the postponement issue, where the cases show that the court requires a clear assurance as to future conduct. The inference to be drawn from Mrs. Prescott’s decision not to give oral evidence is that she did not consider that her denials in this respect would stand the scrutiny of cross examination. Nor is there any reason to suppose that they would have done so in circumstances in which her witness statements provide no explanation of how her family’s lifestyle was supported if not from the proceeds of drug dealing. It was, in my view, a relevant matter which pointed towards the making of an immediate possession order, but which the judge does not appear to have taken account of.

Fourth, it is submitted that the judge was wrong to base his finding in favour of Mr Prescott on the fact that he had been punished for his crimes already, and that it would be wrong to further punish him by taking his home away from him. In Sandwell at paragraph 23, Gage LJ accepted as correct a submission that it was irrelevant that the tenant in that case had been punished in the criminal court, and I think that the same must follow in the present case, and that this part of the judge’s reasons was incorrect in principle.

Fifth, it is submitted that the judge was wrong to take the view so far as Mrs. Prescott was concerned that she had no alternative to enjoying the proceeds of a criminal lifestyle. Mr. Fullwood said that this issue really concerns her culpability, which I think is right, though the passage from the judge’s reasons set out above does not appear to take account of whether she was telling the truth in her witness statement about her knowledge of her husband’s drug dealing. I do not think I need say any more on this ground.

Sixth, it is submitted that there was no evidence providing a real hope that the defendants had mended their way. It is said in response on behalf of Mrs Prescott that when one looks at the evidence in this case, there is sufficient material to form a “well-founded expectation of improvement”. It is submitted that the material before the judge included the fact that the criminal activity was not based at the premises, that Mrs Prescott was not aware of the conspiracy, that before the conviction the Prescotts had been living at the premises for approximately 17 years without complaint, that Mr Prescott had been in custody for a significant period of time, and that no allegations against of drug dealing had been made against Mrs Prescott or her daughter who remain in occupation. Further, it is submitted that there are no allegations against visitors who still go or may go to the premises, no evidence that warnings had been ignored or that the Prescotts would fail to cooperate with the Housing Trust in the future, or that they intend to repeat the behaviour relied upon. There was clearly (Mrs Prescott submits) some material upon which the judge was able to base a real expectation of improvement for the future and that was a matter for him.

I do not find these submissions convincing. As regards Mr Prescott, there has been silence during these proceedings. In neither of her witness statements does Mrs Prescott express any real regret for her husband’s behaviour, or give any undertakings that might give comfort for the future. There is an absence of any real appreciation of the gravity of what had happened. She had the opportunity to go into the witness box to convince the court that at least so far as she could prevent it, this course of conduct would not be repeated. She chose not to do so, doubtless for obvious reasons, and in my view, Mr Burns is correct to submit that there is an absence in this case of cogent, and indeed the absence of any, evidence which demonstrates the sound basis required in the authorities for the hope that the previous conduct will cease.

It is plain from the decision in Green and other authorities that on an appeal of this kind, the court will be slow to upset the trial judge’s decision on the postponement of a possession order, particularly when made by an experienced judge as in the present case. However, in giving permission to appeal on the renewed application, Coulson J explained why he considered that the judge’s decision in this case was at least arguably wrong, and having heard argument from both sides, I have reached the conclusion that the appellants have crossed the threshold. In my respectful opinion, the learned judge gave too little weight to the scale of Mr. Prescott’s drug dealing, gave too much weight to the fact that it was not happening at the house itself (when it was happening in the near locality), and did not direct himself in accordance with the principle that so far as postponement of possession in such cases is concerned, the court is looking to the future, and thereby erred in principle. Before the judge could contemplate postponing the possession order, there had to be cogent evidence that the course of conduct which gave rise to the convictions would not be repeated, and there was none. As a matter of principle, this was an issue which had to be addressed, as the decisions in Higgins and Sandwell show.

In those circumstances, I will allow the appeal as regards this aspect of the learned judge’s order. Mr. Fullwood submitted in his written argument that in this event, the matter would have to be remitted to the County Court for a rehearing in order to ensure a fair hearing in accordance with ECHR Article 6. Rightly, he did not press this point in oral argument. The defendants’ Article 6 rights are satisfied by the hearing before the judge and the hearing on appeal. Nor do I think it would be desirable to remit the matter for a rehearing, because the case has not proceeded as quickly as it might have done, through no fault of the parties (or indeed any one else). Further, as Mr. Burns points out, this is not a case in which the judge’s appraisal of the witnesses is a factor, since there was no cross examination of the claimants’ witnesses, and neither defendant gave oral evidence. It seems to me that in such circumstances the right course to take is that adopted in Higgins and Sandwell, and for this court to exercise the discretion afresh.

There are factors in favour of suspending the order, particularly the length of time that the tenancy has subsisted. There is as I have said a child living at home, though she is now 21 and in full time study. But taking into account the scale of the drug dealing that Mr. Prescott was conducting in the locality, and the lack of any evidence from either defendant demonstrating a sound basis for the hope that such conduct would cease, together with the Housing Trust’s duty as a provider of social housing to try to keep its estates free from this sort of pernicious activity, in my view the proportionate order is an outright order for possession. In relation to the last point, I cite the following passage from Gage LJ’s judgment in Sandwell at [25] which appears to me to be applicable to this case also:

“I would add that the council, as a provider of social housing, have a duty to make sure (so far as it can) that its properties are properly managed and are kept free from the sort of activity with which we are concerned. This, in my judgment, is another factor which weighs the balance in favour of an outright order.”

In those circumstances, it is not necessary to say much as regards the appeal on costs. The judge’s decision to make no order as to costs as regards Mrs. Prescott followed from his decision to suspend the possession order. I agree that there may be said to be some inconsistency since he did make an order for costs against Mr Prescott against whom the order was also suspended, but Mr Fullwood (who has said everything that could possibly be said for his client) may be right to say that this was because Mrs Prescott’s solicitors had indicated earlier that she would be prepared to submit to a suspended order. In any case, on the basis of his findings in that regard, the judge was entitled to make the order as to costs which he made, and this does not in my view give rise to a separate ground of appeal.

I express my appreciation to counsel for their helpful submissions, and will hear them as to the appropriate terms of the order to be made.