England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SHEFFIELD COUNTY COURT
RECORDER ARMITAGE
6BY02241

		Royal Courts of Justice Strand, London, WC2A 2LL
		07/02/2008

Lord Justice Sedley :

1. Both appellants are long-serving police constables. PC Holmes, who will become eligible for a pension in September 2011, reaches 50 in January 2013 and intends to retire then. PC Bailey becomes eligible for a pension in September 2008 and intends to retire in September 2012. Each of them at the time these proceedings were issued lived in rent-free accommodation provided under statutory powers by the respondent police authority. PC Bailey, we are told, has just given up his tenancy and moved into local authority accommodation. He therefore no longer pursues his appeal; but it will be convenient to continue to deal with the case in the form in which it was argued and decided below.
2. What has prompted these proceedings is a policy decision by the respondent police authority to divest itself of its remaining police dwellings. Any occupier who does not choose to buy his or her home will be required in July 2008 to vacate it, albeit with a replacement allowance.
3. The proceedings were commenced in the Administrative Court. The present issues were transferred by Langstaff J to the Sheffield County Court. The remaining claim, based on breach of legitimate expectation, stands adjourned at the permission stage.
4. The claimants were unsuccessful in their claim for declarations that they were either secure tenants or entitled in equity to remain in occupation until they retired. By permission of Pill LJ they appeal to this court against the judgment of Ms Recorder Armitage, given on 20 March 2007 following a hearing on the previous day, refusing them relief on either basis.

The legal framework

5. The regulations under which this accommodation was provided were at their inception the Police Regulations 1987, made under the Police Act 1964, which by Reg. 72 required constables who were not paid a rent allowance to be "provided with a house or quarters free of rent and rates". This was the provision by virtue of which both claimants obtained their tenancies.
6. Any such tenancy was governed by paragraph 2(2) of Sch 1 to the Housing Act 1985:

"….. a tenancy is not a secure tenancy if the tenant is a member of a police force and the dwelling-house is provided for him free of rent and rates in pursuance of regulations made under s.33 of the Police Act 1964…"

The final reference, for self-evident reasons, has since been amended to s.50 of the Police Act 1996. By paragraph 1 of Sch.8 to the 1996 Act it was expressly provided that neither the continuity of the law nor the effect of subordinate legislation should thereby be affected.

7. The 1987 regulations were amended by the Police (Amendment) (No.2) Regulations 1994, which abolished the obligation to provide either tenancies or housing allowances to police officers joining after 1 September 1994 but did nothing overtly to interfere with existing tenancies. A replacement allowance was, however, provided for on vacation of police accommodation.
8. A police authority enjoys no express power under the successive Police Acts to own and let accommodation, but by virtue of s.146A of the Local Government Act 1972 it ranks as a local authority for the purpose, among others, of s.111 (which gives a general supplementary power and in my view has no bearing here) and of s.123. The latter section allows a local authority to dispose of land as it wishes, but not (absent ministerial consent) by parting with it at an undervalue save on a tenancy expiring within 7 years.
9. The present lettings are governed by conditions of occupancy which do not greatly resemble a lease or tenancy agreement. By virtue of s.79(3) of the Housing Act 1985, however, it does not matter if they are in law no more than licences: they will still be secure provided the police exemption does not apply to them. They are apparently of indefinite duration. The most relevant provision is under the heading "Termination of Occupation":

"When the occupant of a police house ceases to be a serving officer, a Notice to Quit will be served. This must be observed within the specified period."

An officer wishing to vacate is require to give 4 weeks' notice. In my judgment a fair construction of this document is that it creates not a periodic tenancy but one limited in time to the duration of the tenant's police service provided a notice to quit is then served. We are not required to decide whether it is subject to sooner termination on notice.

The arguments

10. The first argument advanced on the claimants' behalf was that the regulations under which the authority had originally provided the accommodation had become spent in 1994, with the result that it was no longer provided "in pursuance of regulations" and that these were now secure tenancies. The second argument was that the tenancies were in any event not "free of rent and rates" because the tenants had to pay water charges, formerly known as water rates. The third argument was that clear representations had been made to each officer by the police authority that they would be able to occupy their accommodation until they retired or left the police service and that each had relied on it to his detriment by remaining in the accommodation rather than buying a home, creating an equitable estoppel against evicting them.
11. The police authority argued that it could not be estopped from exercising a statutory discretion or power. The recorder rejected this argument and it has not been resurrected before us.

Have the tenancies become secure tenancies?

12. Although Mr Westgate has developed it in some detail, his first argument is a simple one. It is that, once the power to grant a tenancy rather than a rent allowance had ceased to exist, as it did in 1994, the dwelling-house of each appellant was no longer "provided … in pursuance of regulations" and so was no longer deprived of security by §2(2) of Sch 1 to the Housing Act 1985.
13. The recorder dealt with it with comparable brevity:

"The effect [of the argument] would be that where a pre-1994 officer has the benefit of housing rather than a rent allowance at the choice of the police authority the Regulations would nonetheless operate to give a greater security than that which the officer had before. That cannot be right … The objective was to preserve the entitlement, not to improve upon it…."

14. The recorder relied also on the provisions for legal continuity in Sch. 8 to the Police Act 1996. I am not convinced, speaking for myself, that this is directly in point, since it concerns only provisions repealed and re-enacted, which by then included the amended regulations. Nor can an argument from consequences suffice. I agree, however, with the recorder's final comment that if it had been intended to confer security of tenure on hitherto unprotected constables who had the benefit of free accommodation – a step with large public cost implications, one might add, and one which will have carried a right to buy the property at a major discount or for a family member to succeed to the tenancy – one would expect it to be spelt out in the legislation and not to be fetched in by a sidewind.
15. But I think the real answer, at which the recorder also arrived, is that the prospective removal in 1994 of the power contained in the regulations to grant rent-free tenancies to police officers did not have the effect of depriving extant police tenancies of their basis in the earlier regulations. On the contrary, the regulations expressly contemplate the preservation of extant police tenancies.
16. Mr Westgate accepts realistically that if §2(2) said "and the dwelling-house was provided … in pursuance of regulations…", he would have no case. But that, in my judgment, is the meaning and effect of the provision. In the absence of any intervening variation or regrant, and notwithstanding the assurance mentioned in §25 below, at the date of the hearing the claimants' homes were still provided for them, as they always had been, in pursuance of the 1987 regulations, notwithstanding that the power contained in those regulations to accommodate police officers was now spent. The current requirement in §2(2) that the material regulations be under s.50 of the 1996 Act rather than (as originally) under s.33 of the 1964 Act, is in my judgment rendered inconsequential by the continuity provisions to which I have referred. It may also be that the preservation in §2(2) as amended in 1996 of a reference to rates as well as rent indicates that the legislature was consciously referring to police tenancies as they originally were.
17. The test in §2(2) of Sch.1 to the Housing Act 1985 was therefore, in my judgment, met. I would add that, if the 1994 amendment had had the nullifying effect for which Mr Westgate contends, it is difficult to see how the police authority could have lawfully continued to provide the accommodation (save arguably by way of a licence), since the terms of the lettings appear to take them outside the general power contained in s.123 of the Local Government Act 1972.

Is the accommodation provided "free of rates"?

18. Mr Westgate's next point is that the accommodation anyway falls outside the statutory exclusion from security because it is not provided free of rates: the tenant is expected to pay the water charges on the property, and these were defined in the Police Regulations 1987, §49(7)(c), as "any rate or charge for a supply of water for domestic purposes".
19. The recorder rejected this argument on the straightforward ground that rates were abolished in 1990 (to be replaced first by the community charge and then by council tax), making the reference to them in Sch 1, paragraph 2, of the Housing Act 1985 redundant. Implicit in this finding is that "rates" in that paragraph meant only the general rate.
20. I think the issue is slightly more complex than this. Both the general rate and the water rate ordinarily fell by law upon the occupier without the need of a covenant. If a tenancy was to be free of rent or rates, a covenant was required on the part of the lessor to discharge them; absent such a covenant the tenant as occupier was liable for them, though leases and tenancy agreements also commonly included a tenant's covenant to pay them. When the Housing Act 1985 was passed, therefore, a police tenancy needed strictly speaking to include a covenant on the part of the police authority to pay all rates on the property if the tenant was to be deprived of security by paragraph 2 of Sch 2 – unless by some other means rates were not levied on the property. In the event, however, what seems to have happened was that the police authority did discharge the rates for as long as there were rates.
21. In 1990 the general rate was abolished and replaced by the community charge, a per capita tax. Water rates were abolished by the Water Industries Act 1991 and replaced by water charges. In 1990 the Police Regulations were amended to limit the accommodation power to the provision of accommodation free of rent alone, with no reference to rates. The police authority accordingly ceased to pay its officers' water charges. But the mirror provision in Sch 1, paragraph 2(2) of the Housing Act 1985 remained unaltered: the police authority must pay all the rates if the tenancy was not to be secure, and this, Mr Westgate argues, while it can no longer include the general rate, includes water charges.
22. In my view this ingenious argument skips a beat. Mr Westgate accepts that there is no longer a general rate, and although this has been replaced by what is now the council tax he does not argue that the latter ranks as a surrogate general rate. Yet he continues to argue that the water rate, which has also ceased to exist, survives in the form of water charges and so, if these fall on the tenant, nullifies the exemption from security. But Mr Westgate's problem is that he cannot use the expanded meaning of rates in the Police Regulations as an aid to the construction of the Housing Act. Without that semantic bridge the abolition of water rates has exactly the same effect as the abolition of the general rate: there is no longer anything for the exemption to bite on, assuming – what I doubt – that "rates" in §2(2) of Sch. 1 to the Housing Act 1985 included water rates in the first place.
23. Like the recorder, therefore, I would reject this submission.

Is the police authority bound by its promise?

24. The legal characterisation of the means by which the courts will hold a party to its word in non-contractual circumstances is less important than the conditions upon which they will do so. Whether the mechanism is regarded as an estoppel preventing the promisor from exercising an inconsistent legal entitlement or as an equitable right to relief against unconscionable conduct, the conditions for the court's intervention are by common consent well stated in Megarry and Wade The Law of Real Property (6th ed.) p. 727-8:

(i) An equity arises where –

(a) the owner of land (O) induces, encourages or allows the claimant (C) to believe that he has or will enjoy some right or benefit over O's property;

(b) in reliance upon this belief, C acts to his detriment to the knowledge of O; and

(c) O then seeks to take unconscionable advantage of C by denying him the right or benefit which he expected to receive.

(ii) This equity gives C the right to go to court to seek relief. C's claim is an equitable one subject to the normal principles governing equitable remedies.

(iii) The court has a wide discretion as to the manner in which it will give effect to the equity, having regard to all the circumstances of the case and in particular to both the expectations and conduct of the parties.

25. The recorder's findings were, in summary, that in December 2000, when much police housing was being sold off, both constables were assured that if they did not buy their homes or move elsewhere they could continue to live in them until they left the police service or retired; that both officers chose to remain in their homes; but that in so doing they had done nothing which they would not otherwise have done, and so had not acted to their detriment in reliance on the authority's promise.
26. The foundation of these findings, which – it must be stressed – are findings of fact, is set out with clarity in the judgment of the recorder. She posed her task in this way:

19. …. Assurances were certainly given that serving officers could expect to stay in their existing homes until retirement. I must ask myself: did either man act to his detriment, to the knowledge of the police authority? If he did, then the burden shifts to the defendant to show that that detrimental act was not done in reliance on the assurance…

27. Of PC Holmes the recorder found:

30. The question is whether had he known in 2000 that he could not remain beyond 2008 he would have done other than to remain? Has he acted to his detriment in remaining or would he have remained anyway? If he has to leave in 2008 he will have to rent earlier than he would have done, albeit that he now says he may buy, and he will have to rent a three bedroom house because of his family needs, albeit that he will get a rent allowance of £240 per month that he does not now receive. Again, I am sorry indeed to say that I see little evidence at all that Officer Holmes would have bought any property in 2000 had he known he could not stay beyond 2008. There is simply a one line statement in his supplementary statement, and not in his original statement, that he would have done so. Again, there is no evidence at all of his ability to do so; how he could have done so; what his mortgage capacity might have been, and so on. And so I find, reminding myself again of the principles relating to proprietary estoppel that I set out earlier, I find that the reality is that Police Officer Holmes would have stayed in his present house so long as he was able and then sought other rented accommodation. If, in fact, he would have sought to buy on retirement he is not prevented from doing so.

28. Mr Westgate seeks to upset these findings by submitting that the recorder has inverted the burden of proof on the question of detrimental reliance. But in my judgment the decided cases do not support Mr Westgate. Snell's Equity, cited with approval by this court in Watts v Storey (1983) 134 NLJ 631, says:

"Once it is shown that O gave assurances or other encouragement to A, and A suffers detriment, it will readily be inferred that the detriment was suffered as a result of the encouragement; the burden of proof is on O to show that A's conduct was not induced by the assurances".

This, with respect, depends upon the very thing that Mr Westgate lacks, namely proof of detriment. As to this, as Farquharson LJ held in Stevens and Cutting Ltd v Anderson [1990] 11 EG 70, it is for the party claiming detriment to show that he sustained it.

29. While Mr Phillips, for the police authority, submits, as he is entitled to, that such an onus can legitimately be discharged on the claimant's own evidence, the prior and conclusive answer to Mr Westgate, in my judgment, is that the recorder's critical findings go not to reliance but to detriment. She has found, on evidential grounds set out in her judgment, that PC Holmes would have continued for as long as he could with the undoubted benefit of rent-free accommodation even if the assurance of security had not been given or abided by because, financially, he had no other option. Neither claimant, she found, had suffered any appreciable harm by reason of his reliance on the authority's assurance: with or without it, each would have remained a rent-free tenant of the authority for the duration of his service and would then have had to find rented accommodation elsewhere.
30. Mr Westgate has sought to demonstrate from the transcript that PC Holmes did in fact give evidence that he would have sought to buy a house on mortgage had he known in 2000 that his tenure was not secure. This evidence, such as it was, was little and late and unspecific: PC Holmes' case up to that point was that he would sooner or later have rented other accommodation, which made remaining in rent-free police accommodation the reverse of a detriment. The recorder dealt with this, as has been seen, in her judgment. I do not accept that any greater burden rested on the police authority than to satisfy the recorder on such evidence as there was that PC Holmes would not have bought another house but would probably have stayed where he was; and this they did.
31. If this is wrong, and if a presumption of detrimental reliance arises from the bare assurance given to the present claimants, then I accept Mr Phillips' submission that on the recorder's findings the police authority has discharged the burden of rebuttal. These are, as has been seen, affirmative evidence-based findings that neither claimant had done anything in reliance on the assurance which was different from, or therefore more detrimental than, what he would have done in their absence.

Conclusion

32. Despite Mr Westgate's able submissions I consider that the recorder was right to dismiss the claim under all three heads canvassed before her. I would dismiss the appeal.

Lord Justice Rimer:

33. I agree.

Lord Justice Hooper:

34. I also agree.