England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM WANDSWORTH COUNTY COURT
MR RECORDER SPON-SMITH
Claim No: 6WT11503

		Royal Courts of Justice Strand, London, WC2A 2LL
		19/12/2007

Mr Justice Mann :

Introduction

1. This is an appeal from a decision of Mr Recorder Spon-Smith given on 13^th March 2007 on an appeal from a review of a homelessness matter carried out by the London Borough of Croydon ("Croydon") in relation to the appellants. The question which arises on this appeal is whether it can be said that Croydon erred in law in failing to make all the necessary inquiries when carrying out that review. After hearing argument, this court gave its decision in the appeal, which was that the appeal should be dismissed, with reasons to be given later. These judgments contain those reasons.

Factual background

2. Until its determination by a possession order made on 4^th January 2006, the appellants were the tenants of property known as 4 Newlands Road, Norbury, London SW16. They held pursuant to a tenancy agreement dated 2^nd January 2001 which created an assured shorthold tenancy agreement. The rent provided in the tenancy agreement was £650 per month. After about a year, the landlord indicated that the rent was going to be increased to £700 per month. From January 2002 the appellants paid that increased sum as their rent, though from time to time there were arrears. It is plain on the facts that that was the rate that, in terms of payments made, the appellants treated as being due. The landlord did not serve any formal notice of increase. The appellants say that they registered a query when the landlord's agents said that the rent was going up, and the agents said they would get the matter sorted out but the appellants never received a new tenancy agreement.
3. By October 2005 the amount of the arrears that had built up, and the pattern of arrears (calculating the rent as £700 per month) was such that the landlord served a notice seeking possession. He did so on grounds 8, 10 and 11 of the Housing Act 1996 – all rent arrears related grounds. The "current rent" in that document was stated as being £650 per calendar month. On 27^th October 2005 the landlord issued possession proceedings. In the particulars of claim, which are in the prescribed form, the current rent was again described as being £650 and the daily rate was said to be calculable at £21.36 per day – a figure which again reflects a rent of £650. However, details of the rent arrears were shown on an attached rent statement. That statement was a multi-column document, and three of the columns were the amount demanded from time to time, the credits received from time to time since January 2004, and the balance. The monthly amount demanded is indicated as being £700, and many credits of £700 appear. There is no credit for £650 until 3^rd October 2005, when a single one appears. There are some odd amounts shown to have been received which are obviously either part payments or payments on account of the arrears. The arrears shown as at date of the statement (5^th November 2005) were £1,730.
4. The possession proceedings were due for hearing on 4^th January 2006. Between service of the proceedings in about October and the hearing date, Mr Green had several interviews with Croydon Housing Department. The hearing took place on 4^th January 2006. Mr Green said that he was surprised that the council did not send a representative to assist because he was expecting that they would, and at the hearing he became tongue tied and as a result did not take a point about the quantum of the rent being £650 and not £700. It seems to be common ground that if the rent was indeed at the lower amount, then there would have been no arrears, or no significant arrears. There is little direct evidence of what happened at the hearing, but it is likely to have been a short one. The matter was heard by District Judge Freeborough. He made a possession order on ground 8, ordered a money judgment in the sum of £2,830 and made a further order that the appellants pay the landlord £23.01 per day for use and occupation from 1^st February 2006 until possession be given. That figure of £23.01 reflects a passing rent of £700 per month when annualised.
5. The possession order having been made, the appellants applied to Croydon for housing. A number of meetings took place and they provided information to the council. It seems the possession order was executed on 6^th March 2006, and on the same day they were informed that the council had determined that they were intentionally homeless because they had not paid rent. The effect of such a determination is that the council owes a different, and lower, set of duties to the appellants than would be owed if they had been found to be unintentionally homeless. The appellants sought a review of that decision pursuant to s.202 of the Housing Act 1996, which they were entitled to do. The review confirmed the decision. The appellants then appealed to the county court from that review under s.204 of the 1996 Act. That appeal came before Mr Recorder Spon-Smith and on 13^th March 2007 he dismissed it. The ground of appeal before him, as it was before us, was that Croydon had failed to investigate properly assertions made by the appellants that their rent was only £650 and not £700, on which basis there would have been no arrears. They said that on that footing a possession order should not have been made, and they were therefore not intentionally homeless. He recorded his decision on that point in paragraph 8 of his judgment:

"As I have already said, I think, the complaint against the local authority is that, having had it drawn very clearly to their attention or/and [sic] in writing on more than one occasion by both the appellants and latterly by the appellants' solicitors, that the appellants asserted that in fact there had been no rent arrears at the time the possession order was made, the local authority failed to make proper or perhaps any, it could be said, inquiries into whether or not that was the case. Was that an unreasonable approach on the part of the local authority? In my judgment, plainly it was not. The local authority were faced with a judicial decision to the effect that, on 4^th January 2006, when the possession order was made, they were in arrears of rent to the extent of £2,830 and that they had been in arrears of rent at least to the extent of two months' rent at the time when the proceedings were issued. If the District Judge had not made findings to that effect, he would not have made the order that he did.

…..

10. I cannot accept that it was unreasonable on the part of the local authority to decline to go in some way behind that judicial decision. If the appellants were unhappy with the decision made by the District Judge on 4^th January, their remedy was possible to apply for the order to be set aside, alternatively to appeal against the order. But neither of those courses was taken…"

6. That is the decision appealed from. Permission to appeal was given by Sir Henry Brooke on 21^st June 2007.

The argument on this appeal

7. The point taken on this appeal is the same as that run in the county court, namely that the local authority did not make proper inquiries. Mr David Carter, who appeared for the appellants, said that the reviews officer, a Miss Duncan, was put on notice of the disputed arrears and should have made further inquiries to establish whether or not the district judge's decision that the appellants had fallen into arrears was correct. Inquiries should have been made of the landlord in order to find out the position and consideration should have been given as to why there were inconsistencies in the particulars of claim (between the stated passing rent and the passing rent shown in the arrears statement). There should have been an investigation as to whether the appellants continued to pay under protest, or whether in fact there was an agreement to pay at the new rent. This would have involved, amongst other things, an investigation as to whether the discrepancies in the particulars of claim were drawn to the attention of the district judge, and Mr Carter went so far as to say inquiries should have been made of the district judge himself. These were all, said Mr Carter, inquiries which it was necessary for the reviews officer to make, and she made none of them.

Was the council in breach of duty?

8. The duty of a local authority considering applications from those who claim to be homeless is set out in s.184 of the 1996 Act:

"184(1) If the local housing authority have reason to believe that an applicant may be homeless or threatened with homelessness, they shall make such inquiries as are necessary to satisfy themselves –

(a) whether he is eligible for assistance, and

(b) if so whether any duty, and if so what duty, is owed to him under the following provisions of this Part." [my emphasis]

The emphasised words are important. The inquiries have to be "such…as are necessary". The question is therefore what is necessary in any given circumstances?

9. That concept was elaborated by Neill LJ in R v Royal Borough of Kensington ex p Bayani (1990) 22 HLR 406 at 409:

"But the introduction of the word 'necessary' indicates that there is a standard which these inquiries must observe. In other words, the inquiries must be those which are 'necessary' to enable the authority to make a decision. If the court is to intervene by way of judicial review, it must be on the basis, as I see it, that the inquiries have not reached the required standard in the circumstances of the case. The appropriate test in a case of possible intentional homelessness is whether a reasonable authority, having made the inquiries and only the inquiries which the authority in question in fact made, could have been satisfied that the applicant was homeless intentionally…. In deciding how a reasonable authority would have acted and what inquiries they would have made in the circumstances, the court must have regard to the speech of Lord Brightman in R v Hillingdon LBC ex parte Puhlhofer [1986] AC 484…"

10. A challenge to the decision of a reviewing officer presents a high hurdle, as Mr Carter accepted. This is made clear by what Brooke LJ said in Cramp v Hastings BC [2005] 4 All ER 1014. Having drawn attention to the fact that since Bayani a review stage in the local authority had been introduced and challenges to that review went to the county court rather than the high court on a judicial review application, he then made observations about the approach to a challenge to the reviewing officer's decision. He went on to say:

"68. …although a decision of a judge in the county court has no binding force in precedential terms, these two cases evidence a worrying tendency in judges at that level to overlook the fact that it will never be easy for a judge to say that an experienced senior housing officer on a homelessness review, who has considered all the reports readily available, and all the representations made by the applicant's solicitors, has made an error of law when she considered that it was unnecessary to put in train further detailed inquiries, not suggested by the applicant's solicitors, before she could properly make a decision on the review. The need to correct that tendency raises an important point of practice. The duty to decide what inquiries are necessary rests on her, and her decision will be a lawful decision unless no reasonable council could have reached the same decision on the available material."

11. It is therefore necessary to consider the facts of this case against that background. The central question is whether or not the reviews officer was entitled to assume the correctness of, or to rely on the judgment of the county court on whether there were or were not rent arrears in this case, or whether she was obliged to make her own inquiries as to what the rent was despite the order made by the county court and the findings implicit in that order?
12. The findings of the reviews officer appear in a letter that she wrote to Messrs Flack & Co, the appellants' solicitors, on 8^th May 2006. The following material points emerge from that letter:

i) It is a long and ostensibly very thorough document, running to some seven pages.

ii) It sets out the sort of material relied on in assessing the position of the appellants, which is said to include information from the council's housing benefit records, information concerning the county court action and a rent account statement. It is also claimed that there was a consideration of the fruits of various meetings between the council's housing officers and the appellants.

iii) The correct statutory background is referred to.

iv) So far as the payment of rent is concerned, it says this on page 2:

"At the beginning of the tenancy…Mr Green and Miss Coyne agreed to pay a rent of £650 per month…The rent increased to £700 during the course of the tenancy and from the information and rent receipts provided by the applicants and rent account statement provided by the agents for the landlord, arrears began to accrue on the account from May 2002. Whilst payments were received from Mr Green and Miss Coyne, these were paid in arrears, were frequently not in the amount owing and cheques were returned as unpaid by the bank on nine occasions between August 2002 and November 2004."

v) It refers to the "notice seeking possession" and identifies the discrepancy in rent amounts appearing in the claim form:

"A Notice Seeking Possession was issued on 7^th October 2005 when the arrears again amounted to over £1,700. It is noted that the claim form quotes the original rent and not the rent as had been due since at least May 2002 and which had been accepted by your clients. Nevertheless, this had become the rent for the property since that time and at no point prior to the possession proceedings did your clients question this amount or seek the advice of the authority in this regard. Indeed, Mr Green admitted to having £2,000 rent arrears as at 3 January 2006 and the rent account statement shows no further payments following £500 in early December 2005. Mr Green also confirmed at interview that the rent was increased by verbal agreement with the agents in 2002. It would be unreasonable to expect that a market rent would not increase at some point in the course of a five year tenancy and your clients had clearly accepted this as the amount due since 2002. In addition, a file note of 6^th March 2006 shows Mr Green as stating that he received housing benefit payments but if a bill arose, he would use the housing benefit money to pay."

vi) It deals with a suggestion made by Messrs Flack & Co, who were solicitors for the appellants by that time, that the council was at fault in not making sure that the appellants received legal advice much earlier than they in fact did, and in particular before the possession order was made. This is not a point which arises on this appeal.

vii) It states that inquiries made of Miss Jones about the meeting immediately before the possession hearing revealed that Miss Jones said that the appellants had already partially completed a form of defence and she advised them to include their concerns about the accuracy of the arrears statement in their defence at court, and Mr Green told her he had already done so. I deal below with the contents of the defence. At this point I would observe that that information from Miss Jones does not appear in an attendance note that she took at the meeting.

viii) It rejects, as an issue in the review, whether the outcome of the possession proceedings would have been different had the appellants been legally represented. It states that this is no more than speculation.

ix) It rejects a number of other allegations about failures to make inquiries. It makes the point that the appellants were aware of their obligation (in general terms) to pay rent for premises which they occupy. It refers more than once to the claiming of housing benefit, and in particular says this:

"Indeed, they claimed housing benefit for part payment of their rent and cashed the cheques sent to them, yet still failed to pay in full the rent due to the landlord, Mr Green admitting that the housing benefit payments were not always used to pay rent."

What the reviews officer's letter does not do is state what the appellants claimed their rent to be in their applications for housing benefit. There is no direct evidence before us of what they said their rent was, but it seems to me to be highly likely that the appellants claimed housing benefit on the footing of a rent of £700 per month and not £650 per month.

x) Having considered a large number of matters put to them by Messrs Flack & Co, the letter concludes that there was a persistent failure to pay rent, and taking all of the matters into consideration, the reviews officer came to the conclusion that the failure to pay rent was a deliberate act and that the appellants were intentionally homeless.

13. It is said that that letter reveals that the reviews officer did not conduct an investigation into whether or not the rent was £700 or £650. That is true, to an extent. However, it is plain from the letter, and from the material available to the reviews officer, that some material other than the decision of the county court was available to and considered by her. That material was as follows:

i) The housing benefit records.

ii) A long letter from Messrs Flack & Co drawing various matters, including the alleged unreliability of rent arrear figures, to the attention of the reviews officer.

iii) A rent schedule showing £700 per month to have been demanded and paid on a large number of occasions.

iv) A large number of receipts for rent, provided by Mr Green, which again show £700 to have been frequently paid.

v) It is said that the form of defence was available to the reviews officer, and I am prepared to assume that it was. That document contained two elements which are said to be inconsistent with each other and which should have put the reviews officer on inquiry as to the true rental position. On the first page, under a tick box indicating that the appellants did not agree with what was said about the premises and the tenancy agreement in the particulars of claim, the following reason was given:

"Tenancy agreement states rent of £650 but for the past three years we have been paying £700. Nothing was signed to agree the increase."

Over the page, against the question "Do you agree that there are arrears of rent as stated in the particulars of claim?" a tick is put in the "Yes" box.

vi) An interview note taken by Miss Jones on 3^rd January 2005 contains the following words: "Cust [i.e. customer] claim form filled in and I have advised him to speak to me tomorrow to let me know the outcome". That is probably a reference to the defence form being filled in at that time. The evidence is equivocal as to when and by whom the defence form was filled in. However, nothing in this note or in any other note records an agreement by Mr Green that the increased rental was agreed. To that extent there is no support for the statement to that effect in the reviews officer's decision letter.

vii) On 6^th February 2006 a standard form inquiry was made of the landlord. In answer to the question "How much was the weekly/monthly rent?" the landlord's agents have answered (by marking the amount in the appropriate place on a copy of the letter) "£700". That letter seems to have been followed up by an oral inquiry on 6^th March 2006 in which the agents are reported as having complained about "constant arrears" and bounced cheques. The note of Miss Yamin who apparently took the telephone call records "As can see on rent statement printout rent was never paid up to date, very erratic payment". The agents were thereby reinforcing the landlord's case that £700 per month was due.

viii) The possession order showed a daily rate figure which, as pointed out above, is consistent only with £700 per month being paid as rent. It also showed that counsel had attended the hearing for the claimant.

14. That, then, was what the reviews officer did and the basis on which she did it. Was it necessary for her to do more, and embark on an active consideration of what the rent was? On the one hand she was faced with a decision of a court of competent jurisdiction which was consistent only with a finding that the monthly rent was £700. That was supported by evidence that the tenants had been paying rent at that rate, without a continued protest, for some 3 years, and it is probable that that was the basis on which they had been claiming housing benefit. On the other side of the coin she had some equivocal documents from the landlord, and an indication that the tenants had raised some point about the rent when it was increased, but not subsequently. I am afraid that I find it impossible to say, in those circumstances, that any reasonable reviews officer would have carried out an investigation into the subject in the light of the court's decision. Apart from the fact that the evidence supported the inferences to be drawn from the court's decision, it seems to me to require an impracticable degree of inquiry in the circumstances. A further inquiry would require the officer to conduct the sort of investigation that a county court would carry out when faced with such a question, but without the advantages that the court would have (including, probably, having the full participation of the landlord). The county court had apparently declined to do that - had the district judge thought that there was an arguable defence (or something that needed investigation) he would have been required to have adjourned the case for that purpose. He did not do so. Of course, if the court decision had not been there, then further inquiries might have been necessary (I do not consider it necessary to consider whether that was in fact the case), but on the facts of this case she had the court's decision and was entitled to assume that the court would do what was (in these circumstances) the court's job. In those circumstances she was entitled to rely on the court's decision and not embark on inquiries designed to go behind it. It was not necessary to embark on them, and it cannot be said that any reasonable officer would have formed the view that it was. Such inquiries would go well beyond the test set out by Brooke LJ in Cramp. I therefore agree with the recorder; he was right to dismiss the appeal from the review.
15. This second appeal has reached this court because Sir Henry Brooke considered that it raised an important point of practice, which might almost be considered a point of principle. In giving his reasons for giving permission to appeal he said:

"There is an important point of practice here, namely, what is the breadth of a housing authority's duty to make inquiries when there is credible evidence before it to the effect that the basis on which unrepresented litigants were evicted from their home was clearly wrong."

It is now apparent that this question does not arise in this case because there is no case for saying that the decision of the district judge was clearly wrong. There is merely a basis for saying that there might have been an issue for the district judge to consider. Mr Beglan, who appeared for Croydon, sought to establish a point of principle about this. He said that it was the case that the authority was never obliged to go behind what a court had seemingly decided on a possession action when the authority was considering whether an applicant had been rendered intentionally or unintentionally homeless. I do not think that it is necessary to make a decision on that point, and in saying that I would not wish either to encourage or to discourage any future case on which that point may arise. This appeal turns on the facts of this particular case. The reviews officer cannot be criticised for having not embarked on any further inquiry. I do not decide anything going beyond that. This is not the case to test the boundaries (if there are any) of the housing authority's duties in this respect so as to consider whether there would ever be circumstances in which the authority could not properly rely on what a court of competent jurisdiction had apparently decided. While it can certainly be said that in the normal case a housing authority can rely on what a court decides or seems to have decided, it will have to be decided elsewhere whether there can ever be a case which is abnormal enough to require a different view to be taken. All I will say is that I would expect that to be an extreme case, if it exists at all.

Conclusion

16. It follows that this appeal should be dismissed with costs.

Lord Justice Jacob

17. I agree.

Lord Justice Mummery

18. I also agree.