England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE WANDSWORTH COUNTY COURT
(His Honour Judge Compston)

		Royal Courts of Justice Strand London WC2
		Wednesday, 21st March 2001

1. LORD JUSTICE HENRY: I will ask Lady Justice Hale to give the first judgment.
2. LADY JUSTICE HALE: This is a defendant's appeal against the order of His Honour Judge Compston in the Wandsworth County Court on 4th December 2000. He granted the claimant a possession order in respect of the ground floor flat at 121 Sternhold Road [sic], London SW2 and ordered the defendant to leave on 15th January 2001. He also gave a money judgment for £2,400 in unpaid rent and damages for use and occupation of £40 per month from 1st December 2000 until possession was delivered up. The basic question in the proceedings was whether the defendant had a tenancy protected under the Rent Act 1977.
3. The house, 121 Sternhold Avenue, had been bought by the defendant's father in 1960. The family had then moved elsewhere. In 1972, as a student, the defendant went into occupation. On 19th July 1974 he became the tenant of the whole of the ground floor from his father. He had a rent book and he paid rent to his father. The judge accepted that evidence, although he found it "quite a tall suggestion to swallow". The judge accepted, therefore, that in 1974 the defendant had been the Rent Act tenant of the whole of the ground floor from his father. His father died in 1976 and his mother took over the property.
4. From 1982 until 1990 the defendant occupied only the back room on the ground floor, for which he paid a lower rent. Other tenants, a Mr and Mrs Severs, lived in the rest of the ground floor. Mr Severs' evidence was that their accommodation was entirely independent of each other's. The Severs moved out in March 1990. The defendant then moved back into the whole ground floor. He said that he paid rent of £40 per month plus an annual insurance premium of £250.
5. In November 1995 the whole house was sold by auction to the claimant company for £40,000. It was bought from the trustee in bankruptcy of the defendant's mother.
6. In August 1997 a possession action brought by the claimant against the defendant was dismissed. The claimant's director, Mr Schwartz, states that the judge found that the defendant was a tenant. However, we do not know on what basis the judge made that finding and no copy of the order seems to have been available to His Honour Judge Compston in this case.
7. Before His Honour Judge Compston there were two later sets of proceedings. The first was begun on 16th July 1998, claiming possession on the basis that the claimant was an assured tenant in rent arrears. The rent had been increased to £600 per month on 1st February 1988. The second was begun on 21st January 1999, claiming possession on the basis that the tenancy was created on or after 1st April 1990 and exempt from protection because it was at a low rent. The judge accepted that the defendant had attempted to pay the claimant rent on two occasions, but that Mr Schwartz had declined it on legal advice.
8. What, therefore, was the defendant's status? The defendant's primary argument was that he was a Rent Act protected tenant of the whole ground floor from March 1990. His secondary argument was that he was a Rent Act tenant of the back room, which he had always occupied.
9. To succeed on his primary argument the defendant would have to show two things: first, that the 1990 tenancy was covered by section 34(1)(b) of the Housing Act 1988. The commencement date of that Act was 15th January 1989. Section 34(1)(b) provides:

"A tenancy which is entered into on or after the commencement of this Act cannot be a protected tenancy, unless ...

(b)it is granted to a person (alone or jointly with others) who, immediately before the tenancy was granted, was a protected or statutory tenant and is so granted by the person who at that time was the landlord (or one of the joint landlords) under the protected or statutory tenancy;"

10. In Laimond Properties v Al-Shakarchi (1998) 30 HLR 1099, this Court held that that provision was not limited to old and new tenancies of the same or substantially the same premises. At p.1106 Roch LJ said this:

"Sub-paragraph (b) of section 34(1) is clearly designed to shield the tenant who had security of tenure under the 1977 Act and who has been persuaded by his landlord to enter into a new tenancy after January 15 1989 so as to prevent him from losing the 1977 Act protection. It is designed to defeat an argument that the tenant has lost his 1977 Act protection because he has voluntarily surrendered the tenancy entered into prior to January 15 1989 which attracted the provisions of the 1977 Act in exchange for a new tenancy which, being post January 15 1989, did not qualify for that security. Section 34(1)(b) has in my opinion no application in a case such as the present where the landlord has gone to the court and obtained an order for possession."

11. Roch LJ then cited a passage from the commentary on section 34(1)(b) in Woodfall, Landlord and Tenant, Vol 3, p.24/43. That passage pointed out that:

"This paragraph does not state that the new tenancy must be of the same or substantially the same premises as the former protected or statutory tenancy. It appears, therefore, that where a landlord re-houses a protected or statutory tenant, the new tenancy will itself be a protected tenancy."

12. The passage then went on to suggest that consideration of sub-paragraph (c) in that subsection

"... may lead to the conclusion that section 34(1)(b) ought to be read subject to an implied limitation that the new tenancy must be a tenancy of the same premises as the old."

13. Roch LJ continued:

"I can see no reason why section 34(1)(b) ought to be read subject to the suggested limitation; a view apparently shared by the judge in the case of Goringe v Twinsactra Ltd decided on April 20 1994, reported in the Legal Action Group Bulletin for June 1994 at 11."

14. The judge was aware of that case, but he said that it could, and should, be distinguished. It is not entirely clear how he managed to do that, but it appears to be on the basis that section 34(1)(b) was aimed at the situation where a tenant had voluntarily accepted a tenancy of suitable alternative accommodation; thus being contrasted with sub-paragraph (c), which allows a protected tenancy where suitable alternative accommodation has been provided as a result of possession proceedings. He found that this was not the case here and therefore that section 34(1)(b) did not apply. He also held that, if it applied at all, it applied only to the back room. But he went on to hold that the defendant had surrendered that tenancy when he took over the whole of the ground floor and that this was a new tenancy. No challenge is now made to that finding.
15. Secondly, the defendant would have had to show that the tenancy was not excluded from protection, either under the 1977 Act or as an assured tenancy under the 1988 Act because it was a tenancy at a low rent. That issue depends upon which definition of low rent applies. A tenancy created before 1st April 1990, or created after that date pursuant to an agreement made before that time, only failed to qualify if the rent was low under the old regime: that is, if the rent was less than two-thirds of the rateable value of the property on the appropriate day: see Rent Act 1977, section 5(1). A new tenancy on or after 1st April 1990 cannot qualify for protection if the rent in Greater London is £1,000 or less: see Rent Act 1977, section 5(2A). If the old regime applied, the rent of £40 per month plus the insurance premium was well above the rateable value of the premises on the appropriate day. If the new regime applied, the rent was below £1,000.
16. The judge found that the new regime applied. His basis for doing so was that the Severs, who left in March 1990, would have paid rent up to the end of the month and that the claimant would not have started paying rent until 1st April. Hence he held that the tenancy was excluded from protection on that basis.
17. The consequence of those findings, although not spelt out by the judge, was that the tenancy was not protected either under the Rent Act 1977 or as an assured tenancy under the 1988 Act. It was a tenancy created after 1st January 1989, to which section 34(1)(b) did not apply, but it was subject to the new low rent exclusion. The judge went on to say that, if he was wrong about the low rent regime, Ground 8 in Schedule 2 to the 1988 Act was fatal, because the defendant was more than two months behind with his rent at the time.
18. It is against those findings that the appellant defendant now appeals. First, Mr Cronshaw, on his behalf, argues that section 34(1)(b) of the 1988 Act does apply. It is the identity of the landlord and tenant that matters, not the identity of the premises. That is the ratio in Laimond, and there was no good reason to distinguish it. It is not limited to the offer of suitable alternative accommodation.
19. As I understand it, Mr Bailey-King, for the respondent claimant, does not seriously challenge that argument before this court. In my view, he is right not to challenge it. It is clearly correct. The example of an offer of suitable alternative accommodation, which is compromised rather than taken to court, is just one example of why section 34(1)(b) should apply to different premises. But there is nothing in section 34(1)(b) itself either to suggest that the premises should be the same or to suggest that, if they are different, it is limited to that particular situation.
20. If section 34(1)(b) can apply to different premises, Mr Bailey-King nevertheless argues that there was not the same landlord in this case. The tenancy was granted by the father in 1974. The defendant only surrendered part of it in 1982, when Mr and Mrs Severs came in. He still had his old tenancy of the back room. The new tenancy was granted by his mother in 1990, and therefore the section does not apply for that reason. The section, however, clearly refers to a grant at a later date by the person who was the landlord at the time of that later grant. Mr Bailey-King argues that we do not know when, between the death of the father in 1976 and the sale of the property by the mother's trustee in bankruptcy in 1995, the mother took over the property. A reasonable inference would be that she took it over within a reasonable time of the death, either taking it over as the person entitled as beneficiary under his estate or as administratrix of his estate, he having died intestate. In any event, it makes no sense at all to suggest that she could be the landlord for the purpose of granting a new tenancy on a day in March 1990, but not for the purpose of the old one that was surrendered at the same time. That simply does not make sense. So for my part I would conclude that section 34(1)(b) does apply to this tenancy.
21. Secondly, Mr Cronshaw argues that the judge was wrong to conclude that the new tenancy started on 1st April 1990, so that the new low rent regime applied. There was no evidence to support the suggestion that the rent day was the 1st of the month. There was no evidence as to whether Mr and Mrs Severs paid their rent in advance or in arrear. That is surprising, as Mr Severs himself gave evidence. It is, to my mind, somewhat unusual for an argument which is based upon facts, and for which there is a witness available who may or may not be able to give evidence as to those facts, to be put before a judge without questions ever having been asked about that matter to that witness. Of course, I accept that Mr Severs may not have been able to remember or may not have been very clear in the evidence that he did give, but it is quite obvious that there was no evidence at all on which the judge could reach that conclusion. The obvious inference from the clear evidence that the Severs moved out in March and that the defendant moved in then was that, without anything to the contrary, the tenancy started when he moved in or, at the very least, that an agreement for a new tenancy was made then. I would therefore accept Mr Cronshaw's argument on this point too.
22. The consequence of that is that the defendant is a protected tenant under the Rent Act 1977. If that is the conclusion, Mr Cronshaw invites us to make declarations to that effect and to the effect that the rent was £40 per month. I assume that he would also add to that the £250 insurance premium which the judge said was part of the rent. He then invites us to remit the case to the County Court. Arrears of rent are of course a discretionary ground for possession under Case 1 of Schedule 15 to the Rent Act 1977. There is a counterclaim for lack of repair which may be offset against those arrears, and in any event, of course, there will be the question of any discretion which the judge would wish to exercise.
23. For my part, therefore, I would allow this appeal and accede to Mr Cronshaw's suggestions as to the order of this court.
24. LORD JUSTICE HENRY: I agree.
Order: appeal allowed with costs and matter remitted to the County Court for resolution of outstanding issues; counsel to lodge an agreed minute of all declarations and orders made by the court following post-judgment discussion. [DOES NOT FORM PART OF APPROVED JUDGMENT]