England and Wales Court of Appeal (Civil Division) Decisions

IN THE HIGH COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE WOOLWICH COUNTY COURT
District Judge Lee
Claim No. 8WO00110

		Royal Courts of Justice Strand, London, WC2A 2LL
		16th March 2010

Lord Justice Patten :

1. The Appellant, Mr Elton Joseph, is the tenant of the basement flat ("the Flat") at 7 Nettleton Road, London, SE14. This is one of eight houses in Nettleton Road owned by the Respondent. There are three other flats in No. 7 together with a communal area and the tenants also share a garden with the residents of one of the adjoining houses.
2. The Respondent ("the Co-operative") is a fully mutual housing association within the meaning of s.1(2) of the Housing Associations Act 1985 ("HAA 1985"). It is also registered as a co-operative housing association under the provisions of the Industrial Provident Societies Act 1965. Fully mutual housing associations are non-profit making organisations set up for the benefit of their members. They operate in accordance with rules under which the business of the association is managed through general meetings of its members on a democratic basis. The Co-operative has adopted model rules under which each registered member is entitled to attend the meetings and has one vote. There is an annual general meeting but the management of the day-to-day running of the Co-operative is delegated to a committee made up of members who are elected at the AGM.
3. Under the rules all tenants of the Co-operative must be members and all members must be tenants or prospective tenants: see Rule 7(b). Membership terminates on death, resignation, expulsion or the termination of the member's tenancy. The rules contain no provisions governing the circumstances in which a tenancy may be brought to an end but Rule 10 specifies a procedure governing expulsion under which a resolution has to be passed by two-thirds of the members present and voting at a general meeting of the Co-operative at which at least 50% of its members are present. The member must be given advance notice in writing of the complaint at least 28 days before the meeting and the details of the complaint and the member's response to it are then considered at the meeting.
4. The Co-operative also operates a procedure for resolving disputes which is commonly referred to as the Grievance Procedure. This is designed to deal with issues arising between members or between members and the Co-operative and may, in some cases, lead to expulsion from membership. There is also a provision in Rule 40 which allows certain disputes between members and the Co-operative to be referred to arbitration. But in this case none of these procedures was invoked by either Mr Joseph or the Co-operative nor was any attempt made to expel him from membership under the provisions of Rule 10.
5. Tenancies granted by fully mutual housing associations as defined in s.1(2) HAA 1985 are neither assured nor secure tenancies. They are excluded from being assured tenancies by s.1(2) and paragraph 12(h) of Schedule 1 Part 1 to the Housing Act 1988 ("HA 1988"). As a consequence, they do not enjoy the statutory protection conferred by HA 1988 which preserves the tenancy until determined by an order of the court and requires the landlord to bring the case within one of the grounds for possession set out in Schedule 2 to the Act. Even when grounds for possession exist, the court has an extended discretion under s.9 to make a suspended order for possession on conditions such as compliance with the terms of the tenancy agreement.
6. A fully mutual housing association does not satisfy the landlord condition under s.80 of the Housing Act 1985 ("HA 1985") because it is not a registered social landlord within the meaning of s.5(4) of the Act. The tenancies it grants are not therefore secure tenancies and consequently do not enjoy the statutory protection imposed by s.82-85 HA 1985 which require the statutory grounds for possession to be established and for an order of the court to be made. As in the case of assured tenancies, s.85 gives to the court power to make suspended orders for possession on terms and thereby to control the claim for possession at all stages in the process: see (e.g.) Sheffield City Council v Jepson (1993) 25 HLR 299.
7. Mr Joseph was a founding member of the Co-operative and has been a tenant of the Flat since 1983. A copy of his original tenancy agreement does not survive but it is common ground that in 1995 each member agreed to enter into a new tenancy agreement which replaced the original contract.
8. The tenancy agreement grants to the member a monthly tenancy at a rent which may be varied on four weeks' notice. Changes to the rent are approved by the Co-operative from time to time in general meeting. Clause 6 of the agreement sets out the tenant's covenants. These include (in clause 6.17) a covenant that:-

"6.17 The tenant shall not, without the Co-operative's written permission:

…

6.17.6 Keep any pet in the premises. Such permission will only be granted by the Co-operative if it has the agreement of all other tenants affected."

9. Clause 12 of the agreement is headed "Ending the Tenancy". So far as material it provides:-

"12.1 The tenant may bring the tenancy to an end by giving the Co-operative 4 weeks written notice.

12.2. The Co-operative may bring the tenancy to an end by giving the tenant 4 weeks written notice to quit. This shall only be in the following circumstances:

…

12.2.3 If the tenant has committed any breach of the agreement and the Management Committee has given the tenant written notice of the breach complained of and the tenant has failed to remedy it within the period of time stated in the notice.

…

12.3 When a notice to quit has been served by the Co-operative and has expired the Co-operative may apply to the court for a possession order."

10. From 1985 until 1996 Mr Joseph kept a Doberman dog in the flat with the permission of the then members of the Co-operative. In about August 2007 he acquired a Staffordshire bull terrier. The dog, he says, belonged to a friend who was in hospital suffering from cancer, although no mention was made of this at the time. He did not ask either the Co-operative or his neighbours at No. 7 for permission to bring the dog onto the premises. His attitude seems to have been that he did not need their permission because he had in the past kept a dog there.
11. On 9^th September 2007 there was a general meeting of the Co-operative at which the dog was discussed. Mr Joseph did not attend. One of the tenants in the house, Ms Kelly Martinez, complained that the other residents had not been asked for permission and that at least two of them objected to it. Mr Joseph's attitude was reported to be that it was his dog and he was going to keep it. The meeting agreed that the secretary should write to Mr Joseph informing him that he was in breach of covenant and giving him two weeks to re-home the dog. A letter to this effect was sent to Mr Joseph on 25^th September. He was told that keeping the dog was a breach of clause 6 of the tenancy agreement and was asked to remove it within 14 days, failing which further action would be taken.
12. The next meeting of the Co-operative took place on 15^th October. Again Mr Joseph was not present. By then there had been no response to the letter and the dog had not been removed. The members agreed that they should call a meeting to discuss the next step which could involve invoking the grievance or expulsion procedures.
13. At the monthly general meeting of the Co-operative on 11^th November Mr Joseph was present. By then he had sought and obtained advice from the Evelyn 190 Centre in Deptford who had written a letter to the secretary of the Co-operative on his behalf. The letter complained that Mr Joseph had been unreasonably singled out and treated less favourably than the other members. Some of them, it said, had been allowed to keep pets, although Mr Joseph had been refused permission to do so. The letter did not suggest that Mr Joseph was simply looking after the dog for a friend nor did it propose a timescale in which he would be able to dispose of it.
14. The letter was discussed at the 11^th November meeting. The terms of clause 6 were read out and the point was made that the other members of the Co-operative were not agreeable to the dog remaining in the Flat. Mr Joseph denied that the dog had damaged and messed in the garden. But he made no proposals for its removal. The end result of the meeting was that consent for the dog was refused and a decision made to serve a notice to quit.
15. The notice was served on 13^th November. It required possession to be given up on 10^th December 2007 or the day on which a complete period of the tenancy expired next after the end of four weeks from the service of the notice. It therefore complied with the minimum period of notice required both under the agreement and under the provisions of the Protection from Eviction Act 1977.
16. On 26^th November Mr Joseph responded to the notice by writing to the secretary of the Co-operative asking for permission to keep the dog. Again there was no mention of his keeping it for a friend or any offer to re-home it. Mr Joseph explained in the letter that he had not previously asked for permission because he had kept a dog there before and therefore thought that he did not need it. If consent was denied he said that he intended to raise the issue of why other members should be allowed to keep their pets.
17. On 5^th December Mr Joseph's solicitors, Messrs Cunningham Blake, wrote to the Co-operative disputing the validity of the notice to quit on the ground that it failed to give their client the requisite 28 days' notice to which he was entitled. This was clearly wrong but the letter went on to repeat the complaint that Mr Joseph was being unfairly treated and asked that a less drastic course of action be followed to resolve the dispute.
18. On 18^th December the Vice-Chair of the Co-operative replied to Mr Joseph's letter of 26^th November explaining that consent was needed before any pet could be kept and that no consent would be given for the dog. She explained that the keeping of the other pets had been agreed to by the Co-operative but that the animals in question were not dogs. On one occasion objections had been made to the keeping of a cat and it had been removed. In a separate letter of the same date to Cunningham Blake she explained why the notice to quit was effective to give 28 days' notice and pointed out that Mr Joseph had failed to remedy the breach of clause 6 within the 14 days specified in the letter sent to him on 25^th September.
19. On 13^th January 2008 Mr Joseph attended the monthly general meeting of the Co-operative and told those present that he would be returning the dog to its owner when he had recovered but did not know when that would be. Some of the members queried his account of the dog belonging to a friend but he was asked to make a proposal as to when it would be removed. He did not respond to this. The meeting therefore decided that the possession action should continue.
20. In his judgment District Judge Lee described Mr Joseph's attitude to the breach of covenant in these terms:-

"7. He was obviously aware of why any reasonable neighbour would be aggrieved at the dog being in the property, because he concurred that there was no 100% guarantee that the dog would not be a nuisance, and if he were to leave it alone in the property at any time, there would be no safeguard against it barking for prolonged periods. Taking all this into account, I was somewhat taken aback by his intransigence over the dog, and could sympathise with the claimant's view that whatever they tried to do to ameliorate the position, he would not have changed his stance anyway. For instance, in his witness statement he admits he was "a little intransigent" at the meeting on the 13^th January 2008. Indeed, when asked if he had any proposals, he had none – and so it was decided that the proceedings would continue. It had been plainly put to him that he had adamantly insisted that the dog was his, and the sudden news that it was somebody else's was novel to the other members. Indeed it appeared that as late as the 11^th February 2008 meeting, it was not entirely clear the dog had gone. I do not believe, on the balance of probabilities, that the dog was other than his own. All this highlighted an obduracy on the part of the defendant that demanded a robust response from the claimant. He had been given fair warning."

21. Later in his judgment he considered whether Mr Joseph had been given sufficient time to allow him to remove the dog:-

"33. In the face of the defendant's assertion that the time for removing the dog was insufficient, Mr Potts, witness for the claimant, stated that there were dogs' homes around which would be willing to take the dog in. Had the defendant been more proactive in conveying any difficulties he may have had, more time might have been considered. I can see no objection to 14 days being given as reasonable, where the landlord has been confronted with a situation that could potentially cause mutiny within the ranks of the other occupiers on account of nuisance by way of noise, smell and hygiene which were complained of in the Minutes of the meetings. Any reasonable landlord would look upon time being of the essence in such circumstances. What is more, Mr Joseph candidly admitted in cross-examination that when he went to seek advice from the Evelyn 190 Centre, he never told them that he thought the time was too short, so he himself must have had some inkling that it would not have been impossible to meet the time allowed.

34. However an important point is that, as it turned out, Mr Joseph had longer than the two weeks to remove the dog, so he had ample time to consider his position, despite his obduracy. He himself ultimately recognised that permission was required, so he could never have acted to his detriment. He was served with the letter of warning around 25^th September 2007. The general meeting that noted he had not yet removed the dog was on the 15^th October 2007, and the next crucial meeting when the issue was again discussed was on the 11^th November 2007, when the defendant was present and when a decision was made to issue the notice. The defendant had already had seven weeks by then to remove the dog. But still at that meeting he would not recognise the need to comply, despite objections voiced by the other tenants over faeces in the garden and other problems. I do not see any justification in implying that the breach had to be "serious". The parties had agreed in clause 12.2 that the agreement could be terminated by "any" breach. Even so, given the very sore contentions over the dog on all sides, I could not conceivably classify such breach as not serious, nor the notice as being draconian."

22. The possession proceedings were issued on 22^nd January 2008. After various adjournments, the trial took place on 3^rd and 4^th March 2009 when the District Judge made an order for possession of the Flat on or before 19^th June 2009. At the trial Mr Joseph accepted that he was a non-secure tenant of the Flat because of the operation of the statutory provisions to which I have referred. But he disputed that he was in breach of covenant and contested the validity of the notice to quit. In his defence he contended that an order for possession would breach his rights under Article 8 ECHR because it was not a proportionate remedy and that, in any event, the legislative scheme covering fully mutual housing co-operatives was itself incompatible with Article 8. It was also alleged that terms should be implied into the tenancy agreement on grounds of business efficacy or public policy to the effect that a tenant will be given reasonable time to remedy any breach of covenant and that a notice to quit will only be served in circumstances which are sufficiently serious to justify eviction.
23. The Co-operative responded to Mr Joseph's reliance on those implied terms with an alternative submission that the imposition of any conditions on the service of a notice to quit in relation to a periodic tenancy (whether by the implied terms contended for or even by the express terms of clause 12 of the tenancy agreement) was ineffective as a matter of law. For this they relied on the decision of the House of Lords in Prudential Assurance Company Limited v London Residuary Body [1992] 2 AC 386.
24. The issue in the Prudential Assurance case was whether the grant of a tenancy which was to continue until the land was required by the landlord council for road widening was a grant for a term certain. The House of Lords held that a lease on these terms was of uncertain duration and therefore void and that the land was held instead on a yearly tenancy created by the payment and acceptance of rent. The question therefore arose as to which of the terms in the original lease were incorporated by implication into the yearly tenancy. The House of Lords decided that the tenancy was determinable on the usual six months' notice notwithstanding the provision referred to above. At page 392 Lord Templeman said that:-

"Now it is said that when in the present case the tenant entered pursuant to the agreement and paid a yearly rent he became a tenant from year to year on the terms of the agreement including clause 6 which prevents the landlord from giving notice to quit until the land is required for road widening. This submission would make a nonsense of the rule that a grant for an uncertain term does not create a lease and would make nonsense of the concept of a tenancy from year to year because it is of the essence of a tenancy from year to year that both the landlord and the tenant shall be entitled to give notice determining the tenancy."

25. This statement of the law is based on a series of cases beginning with the decision of Lord Ellenborough CJ in Doe d. Warner v Browne (1807) 8 East 165 who held that a yearly tenancy was determinable on 6 months' notice notwithstanding a provision in the lease that the landlord would not evict the tenant so long as the rent was paid and there was no breach of covenant. The tenant paid the rent on time and observed the terms of the lease but his tenancy was held to be determinable by a notice to quit that was served by the landlord. After considering these cases Lord Templeman (at page 394) went on:-

"A tenancy from year to year is saved from being uncertain because each party has power by notice to determine at the end of any year. The term continues until determined as if both parties made a new agreement at the end of each year for a new term for the ensuing year. A power for nobody to determine or for one party only to be able to determine is inconsistent with the concept of a term from year to year: see Doe d. Warner v. Browne, 8 East 165 and Cheshire Lines Committee v. Lewis & Co., 50 L.J.Q.B. 121 . In In re Midland Railway Co.'s Agreement [1971] Ch. 725 there was no 'clearly expressed bargain' that the term should continue until the crack of doom if the demised land was not required for the landlord's undertaking or if the undertaking ceased to exist. In the present case there was no 'clearly expressed bargain' that the tenant shall be entitled to enjoy his 'temporary structures' in perpetuity if Walworth Road is never widened. In any event principle and precedent dictate that it is beyond the power of the landlord and the tenant to create a term which is uncertain.

A lease can be made for five years subject to the tenant's right to determine if the war ends before the expiry of five years. A lease can be made from year to year subject to a fetter on the right of the landlord to determine the lease before the expiry of five years unless the war ends. Both leases are valid because they create a determinable certain term of five years. A lease might purport to be made for the duration of the war subject to the tenant's right to determine before the end of the war. A lease might be made from year to year subject to a fetter on the right of the landlord to determine the lease before the war ends. Both leases would be invalid because each purported to create an uncertain term. A term must either be certain or uncertain. It cannot be partly certain because the tenant can determine it at any time and partly uncertain because the landlord cannot determine it for an uncertain period. If the landlord does not grant and the tenant does not take a certain term the grant does not create a lease."

26. The District Judge held that the reasoning in Prudential did apply to Mr Joseph's tenancy so as to exclude the operation of the provisions of clause 12 of the lease and any of the implied terms contended for. If this is right the notice to quit served by the Co-operative was, on any view, effective to terminate Mr Joseph's tenancy. The principal ground of appeal is that the exclusion of any system of statutory protection by the provisions of HA 1988 coupled with the removal even of clause 12 under the common law rules affirmed in Prudential have combined to create a situation in which the tenants of fully mutual housing associations can be evicted from their houses on an arbitrary and capricious basis and in a way which is wholly incompatible with the provisions of either Article 8 or Article 14.
27. It is now accepted (as the District Judge held) that the Co-operative is not a public body for the purposes of s.3 of the Human Rights Act 1998 and we are not therefore concerned with an argument that the decision to serve the notice to quit and to pursue the possession proceedings was itself disproportionate and therefore unlawful. The challenge on Article 8 grounds is directed to the statutory provisions themselves and a declaration of incompatibility is sought in the notice of appeal unless it is possible to construe the legislation as effective both to override or oust the common law rules of certainty of term so far as applied to periodic tenancies operated by fully mutual housing associations and to imply into such tenancies the terms relied on in the defence.
28. Mr Drabble QC has helpfully re-formulated the argument and it can be summarised in this way. The exclusion of the tenancies granted by the Co-operative and other fully mutual housing associations from the protection given to secure and assured tenants is clearly attributable to their mutual status. The contractual relationship between members and the rights of each member to participate in the decision-making process was presumably considered to provide a sufficient safeguard against arbitrary evictions and to make the imposition of statutory controls unnecessary. For this assumption to be made good the service of a notice to quit which (because of the lack of statutory protection) gives to the association an unfettered right to possession if valid must be subject to a procedure which enables the tenant to address any breaches of covenant he may have committed and to remedy those breaches within a reasonable time before becoming liable to have his tenancy terminated by the service of a notice.
29. The rule in Prudential makes this a contractual impossibility and therefore defeats the underlying intention of Parliament in enacting the relevant provisions of HA 1988. By nullifying the provisions of clause 12 of the tenancy agreement it allows Mr Joseph to be evicted without any safeguards and without the benefit of the grievance procedures inherent in the provisions of Rule 10 of the Co-operative's rule. The correct approach therefore is to regard HA 1988 as having, by implication, excluded the operation of the rule in Prudential from the tenancy granted by the Co-operative thereby leaving clause 12 of the agreement intact. Consistently with this, those provisions should be construed as requiring the period of time which the tenant is given to remedy the breach to be reasonable. Mr Drabble accepts that no process of statutory construction can succeed in replicating the security of tenure provisions applicable to assured and secure tenancies. That would require the court to be given the power to suspend orders for possession or to make them conditionally. But this is an additional reason, he submits, why the notice period should be generous to the tenant and give him every opportunity to avoid the loss of his home.
30. In this case the period given should have allowed Mr Joseph time not only to have disposed of the dog but also to have overcome his own recalcitrance caused by his belief that he need not seek a further consent to keep the animal and that he was being unfairly discriminated against having regard to other residents who were allowed to keep pets. In the circumstances of this case, neither the 14 days specified in the letter of 25^th September 2007 or the seven weeks from the date of that letter to the service of the notice to quit was adequate.
31. Mr Bhose, on behalf of the Co-operative, submits that we should follow Prudential and reject any suggestion that the common law principle it applied to periodic tenancies was excluded by the provisions of HA 1988. He points to the fact that Prudential was decided three years after the passing of the Act. He also relies on the fact that fully mutual housing co-operatives grew out of the squatting movement and were used to take on short-life housing stock from local housing authorities. This required there to be flexibility in their letting arrangements and Parliament did not confer statutory security of tenure on their tenants either under the Rent Act 1977 or the Housing Act 1980. The 1988 Act simply continued this position.
32. In terms of precedent he contends that we are bound by the decision in Prudential (as we clearly are) and that the correct approach when faced with an argument that the decision is inconsistent either with a subsequent decision of the Strasbourg Court or with the application of the ECHR under the Human Rights Act 1998 is to apply the decision and leave it to the Supreme Court to decide whether to depart from its earlier decision. It will only be in exceptional cases that the Court of Appeal will be entitled to depart from the decision on those grounds: see Kay v Lambeth LBC [2006] 2 AC 465.
33. The complexity and importance of all these arguments seem to me to make it imperative that we should not decide this appeal on grounds which do not really arise. The Co-operative is a small association with limited funds. It would be quite wrong in my view to expose it to the risk of a further appeal and perhaps subsequent costly litigation by attempting to decide points which are not essential for the disposal of the appeal.
34. I am prepared to accept (without deciding) that Prudential does have the effect for which the Co-operative contended before the District Judge. But the reality of this case is that the Co-operative operated the procedures set out in clause 12 of the tenancy agreement and only resorted to the Prudential point when faced with an argument in the proceedings that the time given to Mr Joseph to remedy the breach was inadequate. I have very serious doubts as to whether it is possible to construe the relevant provisions of HA 1988 in the way that Mr Drabble suggests. The provisions in question remove tenancies granted by various specified public and other bodies from the protection conferred on assured tenancies. They do not therefore attempt to regulate such tenancies and it is difficult to see how even the most purposive construction of the statute can attribute to Parliament an intention to do what, on the face of the legislation, is the very opposite of what it provides. But on his argument the requisite degree of compatibility with both Article 8 and Article 14 could be achieved by the implication of a term requiring the tenant to be given a reasonable opportunity to remedy the breach of covenant before the service of a notice to quit.
35. Mr Bhose accepts that if clause 12 is effective as a term of the tenancy then clause 12.2.3 has to be construed as requiring the tenant to be given sufficient notice to allow him to comply. That seems to me to be right. The only implied terms contended for by Mr Joseph in addition to this are that the notice to quit will only be served where the breach is sufficiently serious and that the decision to evict will be taken in accordance with any existing policies or procedures of the Co-operative such as those affecting anti-social behaviour.
36. Even if Mr Joseph were to succeed in all his arguments on the law, his appeal fails in my judgment on the facts. The breach of covenant was a serious breach. To bring a dog like a Staffordshire bull terrier into the house without the consent and against the wishes of the other residents seems to me to show a complete disregard for the interests of the other tenants and a breach of the fundamental principle of consent which underpins associations of this kind. The terms of clause 6 are clear and Mr Joseph's reliance on his previously having kept a dog there or on other members of the Co-operative having other pets was misguided. Those points were made clear to him at an early stage but, notwithstanding this, he persisted in his determination to keep the dog right up to and beyond the service of the notice to quit. On the judge's findings, Mr Joseph did not care about the terms of the tenancy agreement; he had an altercation with Ms Martinez and told her that he was not getting rid of the dog; and he refused every opportunity at the meetings and in correspondence to offer a date by which he would re-house the dog. The judge was therefore entitled to conclude as he did that this was a serious breach of covenant and that the decision to serve the notice to quit was not an excessive or disproportionate response.
37. Mr Drabble's argument, concentrating as it does on the validity of the notice to quit, depends upon the period for compliance being inadequate. But again this argument is, I am afraid, hopeless. Whatever may have been the position about 14 days, the Co-operative invoked its usual procedures of attempting to deal with the problem through dialogue at the monthly meetings, some of which Mr Joseph attended and at which he was able to put his case. He knew well before the 11^th November meeting and, as a result of what was said at that meeting, that no consent would be given to his keeping the dog. By then he had had seven weeks in which to re-home it. It is clear from the notes of that meeting that had he offered even then to dispose of the animal he could have avoided eviction. The decision to serve the notice to quit was taken in the face of his refusal to comply. The District Judge found that Mr Joseph had ample time between September and 11^th November to remove the dog and to consider his own position. In the circumstances, it is not possible in my judgment to say that the period given to him in which to remedy the breach was either inadequate or unreasonable.
38. For these reasons, I would dismiss this appeal.

Lord Justice Ward:

39. I agree.