The Law Commission

PART 5

POWERS OF THE COURT

INTRODUCTION

5.1      The last Part considered the rules relating to the termination of occupation contracts. This Part deals with the powers of the court^[1] in relation to possession claims. For the most part, the recommended scheme replicates the effect of the current law. There are however two important reforms we recommend.

5.2      First, we received widespread criticism both in submissions to the Commission and in comments made at public meetings about judicial inconsistency. There was considerable feeling that too often it took too long for a party to proceedings to get a final order from the court. Given the complexity and variety of circumstances that come to court, especially in possession proceedings, it is unreasonable to expect complete uniformity and predictability of outcome. Nonetheless we think that there is a case for providing judges with some additional framework within which to exercise their discretion. This Part sets out our recommendations on structured discretion.

5.3      Second, we floated some radical ideas about the possible abolition of suspended possession orders and their replacement with hearings more focussed on the real issues landlords were usually concerned about, in particular the payment of arrears of rent. Reaction to these ideas was generally hostile, though some consultees saw the logic of what we were proposing. Here we recommend a power to set up pilot studies for dealing with rent cases, to test whether a new approach might in fact work.

5.4      Since we published Renting Homes^[2] it was agreed that we should undertake a more wide-ranging review of housing problems and disputes. We have recently published an Issues Paper on these matters. ^[3] This new project does not remove the need to implement the recommendations in this Part.

POSSESSION CLAIMS

5.5      The basic outline of the law on the powers of the court in possession claims follows existing legislation. As noted, the principal change we recommend is that, when exercising their discretion, the approach to be adopted by judges should be structured, as currently happens in nuisance and anti-social behaviour cases. The structuring of discretion is discussed below.^[4]

The possession notice

5.6      The court cannot normally entertain a claim for possession unless the landlord has first given a possession notice.^[5] The court has power to dispense with the notice requirement if it thinks this would be reasonable.^[6] This replaces and widens the present "just and equitable" test, which is not currently applicable in every case.^[7]

Deemed possession claims

5.7      There is no notice requirement in cases described as "deemed possession claims".^[8] These arise where the court has granted the landlord an injunction against the contract-holder for breach of the prohibited conduct term^[9] and the landlord now claims there has been a breach of the injunction.^[10]

5.8      Should the landlord decide to take proceedings for breach of the injunction, they are entitled to include in those proceedings a claim for possession.^[11] If the landlord does this, the proceedings will be treated as a claim for possession in which the landlord relies on the breach of contract ground.^[12] However, in these cases, the landlord cannot use the injunction proceedings to seek possession on a quite different factual basis. The landlord may only rely on facts that were relied on when the initial injunction was sought, and the facts alleged to constitute the breach of the injunction.^[13]

Possession orders

5.9      We have already noted that the number of grounds for possession set out in the Bill is much smaller than the long lists of grounds for possession that are currently set out in the Housing Acts 1985 and 1988 (as amended).^[14] In the recommended scheme there are just six, which cover all occupation contracts:

(1) breach of contract;^[15]

(2) the estate management grounds;^[16]

(3) contract-holder's notice;^[17]

(4) landlord's notice;^[18]

(5) landlord's notice in connection with the end of a fixed term; and

(6) serious rent arrears.^[19]

5.10      Any order for possession of premises subject to an occupation contract must be made on one or more of these grounds.^[20] The court cannot make an order for possession on a ground not specified in the original possession notice,^[21] though the court may allow the ground(s) specified in that notice to be altered or added to at any time before the court makes the possession order.^[22]

Special conditions

5.11      Each of the six grounds for possession has special conditions attached to them.

Breach of contract

5.12      A court may not make an order for possession on the ground of breach of the contract unless it considers that it is reasonable to do so.^[23] This retains the key feature of the present law, judicial discretion, though in future the discretion will be structured.^[24]

5.13      It is often assumed that if a person is not in breach at the time of any hearing, the court will not make an order for possession. While this may be the practice of some judges, we do not think this should be regarded as, effectively, a rule of law. To counter this suggestion, the Bill specifically provides that the court has power to make an order even though the contract-holder ceased to be in breach before the landlord made the possession claim.^[25] This is designed to deal, for example, with the person who frequently pays the rent late, thus imposing additional burdens on the landlord, but who always pays in the end.

Estate management grounds

5.14      Where possession is sought on the estate management grounds, the court must not only consider that it is reasonable to make the order^[26] but also be satisfied that suitable alternative accommodation is available, or will be available when the order takes effect.^[27] Detailed guidance on what constitutes suitable alternative accommodation is set out in the Bill.^[28]

5.15      The provisions relating to suitable alternative accommodation are similar to the current law. There is one important change. The Bill provides that there are circumstances in which, when a possession order is made on an estate management ground, the landlord should pay the contract-holder a sum of money to meet the expenses of removal.^[29] The Bill provides that, if the sum to be paid cannot be agreed between the landlord and the contract-holder, it is to be determined by the court.^[30] The Bill also provides that the sum is recoverable from the landlord as a civil debt.^[31]

Contract-holder's notice

5.16      If a contract-holder gives notice that they wish to terminate the contract, but fails to give up possession of the premises, the landlord may take proceedings for possession in reliance on the contract-holder's notice. The landlord must still give the normal possession notice to the contract-holder.^[32] But if the court is satisfied that the ground is made out, the court is obliged to make an order for possession.^[33] In other words, this is a mandatory ground for possession.

Landlord's notice

5.17      Any landlord under a periodic standard contract, which incorporates the relevant fundamental provisions relating to the landlord's notice,^[34] may seek possession on this ground. In other words, the procedure currently available to private landlords letting under assured shorthold tenancies is extended to all circumstances in which a standard contract has been made incorporating these fundamental provisions. In this case, no separate possession notice need be served. If the court is satisfied that the ground is made out, the court must make the order for possession.^[35]

5.18      Likewise, where a fixed term standard contract incorporates a landlord's break clause, no separate possession notice need be served. If the court is satisfied that the ground is made out, it must make the possession order.^[36]

Landlord's notice in connection with end of fixed term

5.19      Where the landlord under a fixed term standard contract gives the contract-holder notice before or on the last day of the fixed term, requiring the contract-holder to give up possession of the premises on a date specified in the notice, and the contract-holder does not give up possession, the landlord may bring a possession claim on that ground. If the court is satisfied the ground is made out, it must make a possession order.^[37]

Serious rent arrears

5.20      Where a landlord under a standard contract makes a possession claim on the ground of serious rent arrears,^[38] and the court is satisfied that the contract-holder is in serious rent arrears, as defined, the court must make an order for possession.^[39]

REVIEWABLE LANDLORDS

5.21      The four previous rules are subject to a very important exception. Where the landlord is in a class of public bodies whose actions may be subject to judicial review, the contract-holder may during the possession proceedings^[40] apply to the county court for a review of the landlord's decision to seek possession on one of the notice grounds or the serious rent arrears ground.^[41] The court hearing the application may confirm or quash the landlord's decision.^[42] If it quashes the decision, it may also set aside the possession notice and dismiss the proceedings for possession, and make any order the High Court can make when making a quashing order on an application for judicial review.^[43]

5.22      These are decisions that a tenant could challenge now by way of judicial review in the Administrative Court. Allowing the challenge to be made in the county court means that the same court can consider both the judicial review and the possession proceedings at the same time. It also avoids the expense of proceedings in the Administrative Court. It builds on procedural precedents already set in the context of reviews of decisions relating to homelessness determinations.

POWERS OF THE COURT Discretionary grounds

5.23      In deciding possession claims on discretionary grounds, the Bill gives broad powers to the court. These are essentially the same as those that exist under the current law, subject to new rules on the structuring of discretion.

5.24      The court has power:

(1) to adjourn proceedings;

(2) to postpone possession dates;

(3) to stay or suspend the execution of an order for possession;

(4) to impose conditions regarding payment of rent arrears and future rent; and

(5) to impose any other conditions it thinks fit.^[44]

5.25      If the contract-holder complies with the conditions, the court also has a discretion to discharge the possession order.^[45]

5.26      The one innovation in the Bill is that, in deciding whether to adjourn, postpone, stay or suspend – which can only occur when the court thinks it reasonable – the principles relating to the structuring of discretionary decisions also apply to these decisions.^[46]

Mandatory grounds

5.27      Where a court is required to make an order for possession, the date for giving up possession can be no later than 14 days after the date on which the order was made, unless there is exceptional hardship, in which case the order may be postponed for no more than six weeks after the date of the making of the order. The giving up of possession may be postponed by the possession order or by suspending or staying execution of the possession order. This restates the current law. ^[47]

Deception

5.28      Where the court is satisfied that a possession order has been obtained by misrepresentation or concealment of material facts, it may order the landlord to pay the contract-holder sufficient compensation for damage or loss sustained by the contract-holder as a result of the making of the order.^[48]

Persons with "home rights"

5.29      A person with home rights under the Family Law Act 1996 (as amended)^[49] is entitled, so long as they remain in occupation, to be a party to proceedings for possession, or to proceedings connected with an order for possession.^[50] This could apply, in theory, to any possession proceedings.

5.30      In addition, such a person may, in their own right, seek an adjournment, postponement, stay or suspension.^[51] This provision can only apply where the grounds on which the court would make an order for possession were discretionary.

STRUCTURED DISCRETION

5.31      We received a large number of comments, both in written evidence, and at public meetings, on judicial inconsistency, particularly in the context of possession proceedings. The extent of this was hard to quantify – not least because a degree of inconsistency must be expected where judges are required to exercise discretion. Nevertheless, it was an issue we concluded needed to be addressed.

5.32      In the specific context of orders for possession on the ground of nuisance the Court of Appeal had already undertaken this task.^[52] We concluded that this process should be taken further, and that there was a case for structuring judicial discretion more broadly.

5.33      Although the Law Commission is now engaged on a wider review of dispute-resolution in the context of housing problems, our recommendations relating to the structuring of discretion are an important reform, the introduction of which should not be delayed.

5.34      The Bill sets out provisions to structure the courts' discretion to make an order for possession, when their decisions are based on the test of reasonableness.^[53] The principles apply not only when an order is being contemplated, but also where the judge is deciding whether to adjourn proceedings, or postpone the giving up of possession.^[54]

Relevant circumstances

5.35      The key concept used is "relevant circumstances". In deciding whether it is reasonable to make an order or decision, the court must consider whether it is reasonable to make it, having regard to the relevant circumstances.^[55] The court is required to take into account general relevant circumstances, together with those relating to the contract-holder, those relating to the landlord, and those relating to others.

General relevant circumstances

5.36      The general relevant circumstances to be taken into account are:

(1) the nature, frequency or duration of the breach or breaches of the contract; the more serious, the more often or the longer the breach(es), the more reasonable it will be to make the order sought;

(2) the degree to which the contract-holder (or a permitted occupier of the premises such as a co-resident, lodger or sub-holder) is responsible for the breach; it is less reasonable to make an order where someone else is responsible for the breach;

(3) the likelihood of a recurrence of the breach; and

(4) any action to end the breach or prevent a recurrence by the landlord before the possession claim was made.^[56]

5.37      Relevant circumstances may also include whether the landlord has offered or undertaken to offer a new occupation contract (whether for the same or other premises) to one or more persons living in the premises.^[57] Thus, if a landlord has offered a new occupation contract to a person driven from her home by a violent partner, this will be relevant to the question of whether or not possession should be ordered against the violent partner. However, it is specifically provided that whether a person will be assisted by a housing authority under the provisions of Part 7 of the Housing Act 1996 (which deals with applications for assistance by the homeless) is not a relevant circumstance.^[58]

Relevant circumstances regarding the contract-holder

5.38      As regards the contract-holder, the court is required to consider:

(1) the probable effect of making a possession order on their private and family life or the private and family life of any permitted occupiers; and

(2) where the court may decide to suspend execution of a possession order, the likelihood that the contract-holder will comply with any terms imposed by the court.^[59]

Relevant circumstances regarding the landlord

5.39      As regards the landlord, the court must consider:

(1) the probable effect of not making an order on the landlord's interests, including their financial interests;

(2) where the landlord is a community landlord, the probable effect of not making the order on the landlord's ability to fulfil its housing functions, including the assistance of others in need of accommodation.^[60]

5.40      In addition, where a landlord has issued a management code^[61] the court may also consider whether the landlord has taken this into account when it made its claim for possession in relation to the premises.^[62]

Circumstances regarding other persons

5.41      The court may also take into account:

(1) the effect of making an order for possession on contract-holders and permitted occupiers who occupy other premises of the landlord;

(2) persons who have asked the landlord to provide them with housing accommodation (that is persons on the housing waiting list); and

(3) others living, visiting or otherwise engaging in lawful activity in the locality or who wish to do so;^[63] and

(4) where possession is sought for breach of the prohibited conduct term,^[64] the general public interest in restraining the conduct prohibited by that term.^[65]

Special cases

5.42      There are two special cases, arising in the context of the estate management grounds for possession, in which particular circumstances are to be taken into account.

(1) Where, wholly or partly relying on ground G,^[66] the landlord seeks possession against a contract-holder who is a successor, the relevant circumstances also include:

(a) the age of the contract-holder;

(b) the period during which that person occupied the premises as their only or principal home; and

(c) any financial support given by the contract-holder to their predecessor.^[67]

(2) Where, wholly or partly relying on ground H,^[68] the landlord seeks possession following the departure of a joint contract-holder, the relevant circumstances include:

(d) the age of the remaining contract-holder(s); and

(e) the period during which the remaining joint contract-holder or holders occupied the premises as their only or principal home.^[69]

RENT ARREARS CASES

5.43      Although not, perhaps, strictly dealing with claims for possession, this is the appropriate place to consider other powers of the court in relation to rent arrears cases.

Abolition of distress for rent

5.44      Following an earlier Report from the Law Commission,^[70] we recommend that where premises are subject to an occupation contract, no distress for the rent may be levied. However, this does not apply to distress levied under County Courts Act 1984 section 102.^[71]

Pilot schemes

5.45      The Bill gives the Secretary of State power to establish pilot schemes in relation to rent cases.^[72] The scheme may consist of:

(1) a new action for the recovery of rent arrears – the rent arrears claim;

(2) provision for a possession claim in a rent case to be treated as a rent arrears claim;

(3) provision for the court to adjourn proceedings on a possession claim, subject to issuing a warning to the contract-holder on the consequences of not paying the rent;

(4) provision for the court to adjourn proceedings on a possession claim, subject to an order directing the contract-holder to pay the rent and arrears (if any).^[73]

5.46      Each pilot must be reviewed.^[74] No pilot may be established more than three years after the commencement date, and must be time limited.^[75] While the Secretary of State has power to end a scheme at any time,^[76] he also has power to make the scheme permanent and generally applicable.^[77]

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Note 1    Cl 231(1) defines court as a county court or the High Court. In practice, the vast majority of housing possession cases are dealt with in the county court. The Bill also provides that provisions in this Act are subject to s 1 of the Courts and Legal Services Act 1990, which deals with the allocation of business between the High Court and county courts: cl 231(2). Power to make rules of court is also conferred: cl 231(3).     [Back]

Note 2    (2003) Law Com No 284.    [Back]

Note 3    Housing: Proportionate Dispute Resolution: An Issues Paper (2006) available on the Law Commission website at http://www.lawcom.gov.uk/docs/issues_paper.pdf.    [Back]

Note 4    See below, at paras 5.31 to 5.42.    [Back]

Note 5    Cl 190(1). Possession notices are discussed above, at para 4.49.    [Back]

Note 6    Cl 190(2).    [Back]

Note 7    We think that a test of reasonableness is simpler and achieves much the same outcome. The principal exception to the “just and equitable” rule is that currently in cases brought under ground 8 – the mandatory ground available to landlords under assured tenancies, where they are seeking possession on the basis of more than 2 months’ rent arrears – courts cannot dispense with the notice requirement.    [Back]

Note 8    Cls 190(3)(b) and 191.    [Back]

Note 9    Discussed below in Part 9.    [Back]

Note 10    Cl 191(1).    [Back]

Note 11    Cl 191(2).    [Back]

Note 12    Cl 191(3). The breach of contract ground is discussed at para 4.47.    [Back]

Note 13    Cl 191(4).    [Back]

Note 14    See above, at para 4.45(1).    [Back]

Note 15    Cl 183.    [Back]

Note 16    Cl 185.    [Back]

Note 17    Cl 168.    [Back]

Note 18    Cl 175.    [Back]

Note 19    Cl 187.    [Back]

Note 20    Cl 192(1).    [Back]

Note 21    Cl 192(2).    [Back]

Note 22    Cl 192(3).    [Back]

Note 23    Cl 199(2).    [Back]

Note 24    Cl 199(4) and sch 7; see below, at paras 5.31 to 5.42.    [Back]

Note 25    Cl 199(3).    [Back]

Note 26    The same principles relating to the structuring of the court’s discretionary power apply in this context as well; cl 200(3) referring to sch 7. See below, at paras 5.31 to 5.42.    [Back]

Note 27    Cl 200(2).    [Back]

Note 28    Cl 72(3) and sch 5.    [Back]

Note 29    Discussed in the estate management grounds: see above, at para 4.75.    [Back]

Note 30    Cls 185(3) and 200(6)(a).    [Back]

Note 31    Cl 200(6)(b).     [Back]

Note 32    Discussed above, at paras 4.27 and 4.28.    [Back]

Note 33    Cls 168(2) and 195(1) and (2)(a).    [Back]

Note 34    Cls 173 to 179.    [Back]

Note 35    Cls 175(2), 195(1) and (2)(b).    [Back]

Note 36    Cls 175(2), 182(2) and 195(1) and (2)(b).    [Back]

Note 37    Cl 175(4) and 195(1) and (2)(c).    [Back]

Note 38    Discussed above, at para 4.64(2).    [Back]

Note 39    Cl 196(2). Serious rent arrears are defined in cl 187, discussed above, at para 4.64(2).    [Back]

Note 40    No application can be made if an order for possession has been made: cl 197(6).    [Back]

Note 41    Cls 197(1) and (2).    [Back]

Note 42    Cl 197(3). The principles to be used in reaching this decision are those used by the High Court in judicial review cases: cl 197(4).    [Back]

Note 43    Cl 197(5).     [Back]

Note 44    Cls 201(1) to (5).    [Back]

Note 45    Cl 201(6).    [Back]

Note 46    Cl 201(7) and see sch 7.     [Back]

Note 47    Cl 198. Housing Act 1980, s 89.     [Back]

Note 48    Cl 194. This provision repeats the current law applicable to assured tenancies: Housing Act 1988, s 12.    [Back]

Note 49    Cl 193(2). Such a person is defined in the Family Law Act 1996, s 30(2) as a spouse or civil partner who (a) if in occupation, has a right not to be evicted or excluded from the dwelling-house or any part of it by the other spouse or civil partner except with the leave of the court given by an order under s 33; or who (b) if not in occupation, has a right with the leave of the court so given to enter into and occupy the dwelling-house.    [Back]

Note 50    Cl 193(1)(a).    [Back]

Note 51    Cl 193(1)(b).     [Back]

Note 52    See Gil v Baygreen Properties [2002] EWCA Civ 1340, [2003] HLR 119. See too the Anti-Social Behaviour Act 2003, s 16.    [Back]

Note 53    Sch 7.    [Back]

Note 54    Sch 7 para 1(b).     [Back]

Note 55    Sch 7 para 2.    [Back]

Note 56    Sch 7 para 3.    [Back]

Note 57    Sch 7 para 4.    [Back]

Note 58    Sch 7 para 5. This is to make clear that it is not the function of the court to second guess the homelessness decision that should properly be made by a local authority in such cases.     [Back]

Note 59    Sch 7 para 6.    [Back]

Note 60    Sch 7 para 7.    [Back]

Note 61    Discussed below, at para 11.8.    [Back]

Note 62    Sch 7 para 8.    [Back]

Note 63    Sch 7 para 9.    [Back]

Note 64    See above, at para 4.96.    [Back]

Note 65    Sch 7 para 10.    [Back]

Note 66    See above, at para 4.82(1).    [Back]

Note 67    Sch 7 para 11.    [Back]

Note 68    See above, at para 4.82(2).    [Back]

Note 69    Sch 7 para 12.    [Back]

Note 70    Distress for Rent (1991) Law Com No 194.    [Back]

Note 71    Cl 70. This deals with claims for rent where goods are seized in execution.    [Back]

Note 72    Cls 206(1) and (2). Rent cases are those where the landlord is only relying on the breach of contract ground, and the only breach is failure to pay the rent. The case is also a rent case if, but for the pilot scheme, the landlord could have made a possession claim: cl 206(3). The power to implement the scheme is in cl 207. This includes, subject to consultation with the National Assembly for Wales, power to extend a pilot scheme to courts in Wales.    [Back]

Note 73    Cl 206(4).    [Back]

Note 74    Cl 208.    [Back]

Note 75    The details are in cl 209.    [Back]

Note 76    Cl 209(3).    [Back]

Note 77    Cl 210.    [Back]

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