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Cite as: [2009] 1 P & CR 22, [2009] 1 AC 636, [2008] NPC 137, [2009] AC 636, [2009] 2 WLR 78, [2009] 2 All ER 829, [2009] HLR 17, [2008] 50 EG 73, [2009] 1 EGLR 131, [2009] PTSR 281, [2008] UKHL 70, [2009] L & TR 13

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Judgments - Knowsley Housing Trust (Respondents) v White (FC) (Appellant) Honeygan-Green (Respondent) v London Borough of Islington (Appellants) Porter (FC) (Appellant) v Shepherds Bush Housing Association (Respondents)

HOUSE OF LORDS

SESSION 2008-09

[2008] UKHL 70

on appeal from: [2007] EWCA Civ 404
[2008] EWCA Civ 363
[2008] EWCA Civ 196

OPINIONS

OF THE LORDS OF APPEAL

FOR JUDGMENT IN THE CAUSE

Knowsley Housing Trust (Respondents) v White (FC) (Appellant)

Honeygan-Green (Respondent) v London Borough of Islington (Appellants)

Porter (FC) (Appellant) v Shepherds Bush Housing Association (Respondents)

Appellate Committee

Lord Hoffmann

Lord Walker of Gestingthorpe

Lord Brown of Eaton-under-Heywood

Lord Mance

Lord Neuberger of Abbotsbury

Counsel

Appellant (Knowsley):

Jan Luba QC

Adam Fullwood

(Instructed by Keoghs and Nicholls, Lindsel & Harris)

Appellants (Honeygan-Green):

Andrew Arden QC

Iain Colville

(Instructed by London Borough of Islington)

Appellant (Porter):

Richard Drabble QC

Miles Croally

(Instructed by Sharpe Pritchard for Oliver Fisher )

Respondents (Knowsley):

Edward Bartley Jones QC

Michael Singleton

(Instructed by Anthony Collins Solicitors LLP)

Respondent (Honeygan-Green):

Richard Drabble QC

Adrian Jack

(Instructed by Wilson Barca Solicitors)

Respondents (Porter):

Ashley Underwood QC

Catherine Rowlands

(Instructed by Prince Evans)

Interveners (Knowsley and Porter)
Treasury Solicitors

Christopher Baker

(Instructed by Secretary of State for Communities and Local Government)

Hearing dates:

8, 9, 13 OCTOBER 2008

ON

WEDNESDAY 10 DECEMBER 2008

HOUSE OF LORDS

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT

IN THE CAUSE

Knowsley Housing Trust (Respondents) v White (FC) (Appellant)

Honeygan-Green (Respondent) v London Borough of Islington (Appellants)

Porter (FC) (Appellant) v Shepherds Bush Housing Association (Respondents)

[2008] UKHL 70

LORD HOFFMANN

My Lords,

I have had the advantage of reading in draft the speech of my noble and learned friend Lord Neuberger of Abbotsbury. For the reasons he gives, with which I agree, I would allow the appeals in Knowsley Housing Trust v White and Porter v Shepherds Bush Housing Association, but dismiss the appeal in Honeygan-Green v Islington London Borough Council.

LORD WALKER OF GESTINGTHORPE

My Lords,

I have had the privilege of reading in draft the magisterial opinion of my noble and learned friend Lord Neuberger of Abbotsbury. I am in full agreement with it, and for the reasons that Lord Neuberger gives I would dispose of these three appeals as he proposes.

I venture to add one brief footnote, and I do so largely as a matter of respect for Lord Browne-Wilkinson, who gave the leading speech in this House in Burrows v Brent London Borough Council [1996] 1 WLR 1448. Lord Browne-Wilkinson did not, as I read the authorities, invent the rather unfortunate phrase "tolerated trespasser." It seems to have been coined by counsel for the local authority when that case was before the Court of Appeal: see Auld LJ (1995) 27 HLR 748, 752, quoted by Millett LJ in London Borough of Greenwich v Regan (1996) 72 P & CR 507, 517 (decided on 31 January 1996, while Burrows was on its way to this House). Both Auld LJ (in Burrows) and Millett LJ (in Regan) set out the expression "tolerated trespasser" in inverted commas, rather as if they were holding it at arm's length. Millett LJ went on to explain that it was not an appropriate expression because in Regan the Court of Appeal (for good reason, on the facts of that case) had not considered the effect of section 85 of the Housing Act 1985.

When Burrows reached this House Regan was approved and section 85 was given its proper significance. Lord Browne-Wilkinson quoted the expression "tolerated trespasser"—again, in inverted commas—at pp 1452E and 1455C, and in the latter passage he could be said to have tolerated it. He did not wholly-heartedly endorse it. But it has since then become too firmly embedded to be dislodged.

LORD BROWN OF EATON-UNDER-HEYWOOD

My Lords,

I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Neuberger of Abbotsbury. I agree with everything he says and would dispose of these appeals exactly as he suggests.

LORD MANCE

My Lords,

I have had the benefit of reading in draft the speech of my noble and learned friend, Lord Neuberger of Abbotsbury. I agree with him that the appeals should be allowed in Knowsley Housing Trust v White and Porter v Shepherds Bush Housing Association, but dismissed in Honeygan-Green v Islington London Borough Council, in each case for the reasons he gives, subject to one qualification not critical to the outcome.

The qualification relates to the operation of sections 85(2) and (4) of the Housing Act 1985 and the Court of Appeal authorities of Marshall v Bradford Metropolitan District Council [2001] EWCA Civ 594; [2002] HLR 22 and Swindon Borough Council v Aston [2002] EWCA Civ 1850; [2003] HLR 610. These are areas covered in my noble and learned friend's speech at paras 94 to 113. They concern the interplay of sections 85(2), (3) and (4) in a situation where a possession order is made against a secure tenant but stayed or suspended on conditions relating (usually) to the payment of arrears, rent, mesne profits and/or costs. They are areas which were not, unfortunately, the subject of any full argument before the House.

Full argument and a decision on these areas would have been called for in Porter v Shepherds Bush Housing Association, if the parties in that case had not at an early stage during the hearing agreed that the tenant's appeal should be allowed (on the basis that Swindon Borough Council v Aston was wrong) and the case remitted for the County Court to exercise jurisdiction accordingly under section 85(2); after that the parties and their counsel withdrew, with permission, from the hearing before the House. While the House, in noting the parties' agreement, reserved the right to consider the case on a wider basis, the position remains that it heard no full argument in support of any such basis.

Section 85 provides inter alia:

"(2) On the making of an order for possession of such a dwelling-house on any of those grounds, or at any time before the execution of the order, the court may

(a) stay or suspend the execution of the order, or

(b) postpone the date of possession,

for such period or periods as the court thinks fit.

(3) On such an adjournment, stay, suspension or postponement the court

(a) shall impose conditions with respect to the payment by the tenant of arrears of rent (if any) and rent or payments in respect of occupation after the termination of the tenancy (mesne profits), unless it considers that to do so would cause exceptional hardship to the tenant or would otherwise be unreasonable, and

(b) may impose such other conditions as it thinks fit.

(4) If the conditions are complied with, the court may, if it thinks fit, discharge or rescind the order for possession."

Where the execution of an order is stayed or suspended on conditions with which the tenant complies, no problem arises. Assuming the order to be silent as to the position, the tenant can by application under section 85(4) apply for its discharge or rescission in the light of the compliance with the conditions.

In practice, possession orders also contain a provision, designed to avoid the necessity for a separate application under section 85(4), providing prospectively for their discharge or rescission (or for them to "cease to be enforceable") upon satisfaction of the conditions. In Payne v Cooper [1958] 1 QB 174 the Court of Appeal acknowledged that "As a matter of English, at first sight it might be said with force that it is only when the conditions have in fact been complied with that [the] power [to discharge or rescind] arises, and may be invoked", but, in the event and in the light of existing practice, took a pragmatic view. It held (in relation to similar statutory wording to section 85(4) contained in section 4(2) of the Rent and Mortgage Interest Restrictions Act 1923) that such a provision could be regarded as a "proleptic" exercise of the power of discharge which the statutory wording provides. A further, separate application by the tenant after compliance with the conditions was therefore unnecessary. Payne v Cooper was evidently overlooked by all involved in Marshall, where one issue was whether proleptic discharge was possible. As Lord Neuberger, indicates in paras 94 to 99, the third reason given by Chadwick LJ in para 37 in Marshall cannot stand in the light of Payne v Cooper.

Lord Neuberger concludes in paras 109-110 that compliance with the conditions in the context of section 85(4) and of the type of orders made in the cases before the House must mean strict compliance. While it is not critical to the conclusions that I reach, I am by no means confident that it does. Time is not normally of the essence in a non-commercial context, unless the wording makes clear expressly or by implication that it is; and Bennion on Statutory Interpretation (5th ed) (2008) p 868 notes that "as with all enactments, expressions relating to time are to be construed with common sense. So a strictly literal meaning will not be applied if the purpose of the enactment requires otherwise". Here the wording of the order made in Islington London Borough Council v Honeygan-Green does not make clear that time is of the essence, and I fully understand the argument that Parliament may not have envisaged that minor failures to comply with the conditions set under section 85(3) would preclude the exercise of the court's power under section 85(4). So there may be a considerable case for saying that substantial compliance with such conditions suffices. It may be objected that this could involve a distinction between non-compliance which converts a tenant into a tolerated trespasser under section 85(2) and (3) and non-compliance which precludes use of section 85(4). But, I am not even sure that it would necessarily do that. Substantial performance could be regarded as the test both of compliance under paragraph 5 of the order in Honeygan-Green setting the conditions regarding payments and of compliance for the purposes of paragraph 6 proleptically discharging that order in the event of compliance with such conditions.

Whether this is so or not, however, a substantial case could be made for reading the word "substantially" into subsection (4) before the words "complied with". This would mean that, even where the court imposed precise conditions which fell to be performed punctiliously under section 85(3), the court would have a degree of flexibility in relation to the discharge or rescission of the order under section 85(4). I do not see such a result as unworkable. It might be objected that any test of substantial compliance involves uncertainty. But it would on any view be open to a court expressly to introduce conditions with which the tenant was required to do no more than substantially comply under subsection (3) as well as subsection (4). The situation most obviously in mind in subsection (4) is (as the court acknowledged in Payne v Cooper) one where a court is exercising its power after the event (ex post facto), at which stage it should be possible to judge with relative ease whether or not there has been substantial compliance. The extension of the operation of subsection (4) to permit prospective discharge (para 11 above) may leave some scope for uncertainty in a situation in which the parties are not bound to go to court. But that is a mere side-effect of extending the subsection to a situation other than that with which it was on its face primarily concerned. It provides no reason to treat subsection (4) as requiring more than substantial performance if it should otherwise be so construed.

It is of course also open to a court to avoid all these difficulties by framing conditions which are appropriate in all the circumstances, bearing in mind amongst other things the consequences of non-compliance. In Bristol City Council v Hassan [2006] EWCA Civ 656; [2006] 1 WLR 2582, the Court of Appeal showed the way, by holding that it was open to a court to order a tenant to give up possession on a date to be fixed by the court on an application by the landlord, not to be made so long as the tenant paid the current rent and the regular periodic payments towards arrears, etc required by the order and to be determined (wherever possible) on the papers without a hearing. That neatly avoids all the difficulties discussed in the previous paragraphs.

Where there is an order for possession, a secure tenant will often fail to comply with its conditions. The secure tenant thereupon becomes a tolerated trespasser. Later, however, he or she may satisfy all arrears. Marshall also held that, in this situation, a provision in the order that it should "cease to be enforceable when the arrears …. are satisfied" could not and did not have the effect under section 85(4) of reviving the original secure tenancy. Swindon held that this position could not be redeemed by an application under section 85(2), on the ground that "an application to postpone the date of possession was not possible since the order had ceased to be enforceable" (para 20).

I agree that Swindon was wrong, for the reasons given in relation to that case in paras 111 to 113 of Lord Neuberger's speech. Otherwise the problem arises that a secure tenant who has become a tolerated trespasser, but then pays up all the arrears, cannot in any way revive his or her tenancy. However, once Swindon is overruled, subsections (2) and (3) of section 85 provide the sufficient solution. The tenant can, even after paying up all arrears, apply for a variation of the possession order to cover the late payment of the arrears, and so obtain discharge.

Marshall holds that section 85(4) does not enable a court proleptically to discharge a stayed or suspended order for possession in the situation mentioned in the preceding two paragraphs. In my opinion (and subject to the possibility that substantial compliance suffices), Marshall was right on this particular point, which represents the second reason given by Chadwick LJ in para 37:

"Second, in a case where the secure tenancy has been brought to an end under the provisions of section 82(2) of the Act, section 85(4) does not, of itself, empower the court to discharge or rescind the order for possession. The power to discharge or rescind conferred by section 85(4) of the Act arises only "if the conditions are complied with". In this context, "the conditions" must be a reference to the conditions (if any) imposed - either initially or by way of variation - under section 85(3) in the existing possession order. In a case where the secure tenancy has come to an end under section 82(2), either there will have been no conditions or, ex hypothesi, the conditions will not have been complied with. The point is recognised by Lord Browne-Wilkinson in the Burrows case [Burrows v. Brent London Borough Council [1996] 1 WLR 1448] (at page 1455G)." (emphasis in bold added)

This reasoning seems to me impossible to fault. Parliament empowered the court in subsection (3) to "impose conditions" and, in the next subsection, "if the conditions are complied with" to discharge or rescind the order. The "conditions" referred to can only be one and the same set of conditions. It may be that a reference to "substantial" compliance can and should be read in. But one thing is clear: subsection (4) does not give the court power to discharge or rescind an order if the conditions set under subsection (3) have not been (either punctiliously or, if one reads the word into subsection (4), substantially) complied with. Subject therefore to the possibility that substantial compliance suffices, the power conferred by subsection (4) does not extend to situations, where, in or after breach of the conditions, arrears of rent are paid up late. However, since Swindon was wrongly decided, the tenant can always seek to resolve the situation, by applying under subsections (2) and (3) to vary the conditions (or in the case of an absolute order to introduce conditions: see para 21 below) in order to regularise what has in fact happened and in this way revive the original secure tenancy.

This analysis means that the occurrence of discharge or rescission will depend on punctilious (or, if one reads this into subsection (4), substantial) compliance with the conditions which appear in the possession order as made or varied. The contrary analysis makes discharge or rescission depend on the happenchance of payment in full of the arrears, whenever the tenant may decide or be able to procure that that should occur and even if the tenant has been up till then in very substantial non-compliance with the conditions. A tenant may default, become a tolerated trespasser, be sued by the landlord and then at the door of the court tender the whole outstanding arrears, months or maybe even years after the default. The proceedings are rendered nugatory. A landlord contemplating or bringing proceedings will have no idea whether, and no influence over whether, they will succeed or be undermined at some future time. Such an analysis also undermines legal certainty. The onus ought in this situation to be on the tenant who has defaulted and who has become a tolerated trespasser to seek and obtain relief, which the court may then decide whether to give on further conditions (eg as to interest or costs). It is appropriate that the court should in this context have a discretion.

I add these three points. First, although the practice has developed otherwise, the situation most obviously in mind in subsection (4) is one where the power under subsection (4) is invoked after the event, rather than on the proleptic basis to which the Court of Appeal in Payne v Cooper was prepared to extend it. In that situation, the tenant would have to apply to the court for discharge or rescission of the possession order. If "the conditions" imposed under subsection (3) had been complied (or substantially complied) with, the application would be under subsection (4), and, if they had not been, it would fall naturally under subsections (2) and (3) and be for the court in its discretion to decide whether to grant a further stay, suspension or postponement on varied conditions with which the tenant could comply.

Second, in the case of an absolute order for possession, there is no question of the order including any additional "proleptic" paragraph under section 85(4). So there can be no question of any subsequent payment of arrears reviving the secure tenancy. The tenant's position is as described by Lord Browne-Wilkinson in the passage at p1455G referred to by Chadwick LJ in Marshall, para 37:

"Finally, there is a method (albeit a clumsy one) whereby the order for possession even if an immediate unconditional order, can be discharged or rescinded if so desired under section 85(4). The power in that subsection to discharge or rescind only arises "if the conditions are complied with", a requirement which cannot be satisfied in the case of an unconditional order. But there is no reason why the order cannot be discharged by consent or, if such consent is not forthcoming, by the court varying the original order so as to impose the agreed conditions and then discharging the varied order."

All other members of the House agreed with Lord Browne-Wilkinson's reasoning. If therefore, in the case of an absolute possession order, late payment of arrears can only lead to discharge of the order by means of a further court order under section 85(2) and (3), it cannot be unlikely that the same procedure should apply in the case of a conditional order where the conditions are not complied with and the order has thus become unconditional.

The third point is that there is nothing in Payne v Cooper which gainsays the analysis of section 85(4) which seems clear on the face of the statute. In Payne v Cooper an absolute possession order was made against a statutory tenant, but, on later application to suspend, vary or discharge this order under section 4 of the Rent and Mortgage Interest Restrictions Act 1923, the statutory tenant obtained a further order postponing the date for possession by 28 days on condition that the tenant pay the arrears within that period. The order further provided ("proleptically") that "on such payment the order for possession shall be discharged". The landlord challenged the court's jurisdiction to convert an absolute order into a conditional order for possession. The Court of Appeal rejected the challenge in the light of the clear contrary wording of section 4(2) (a rejection accepted as correct in this House in Lord Browne-Wilkinson's reasoning in Burrows: see para 21 above). The landlord further challenged the legitimacy of the proleptic discharge provision contained in the order, and, as mentioned in para 11 above, the Court of Appeal also rejected this challenge. The case was not concerned with a situation in which the tenant had failed to comply with the conditions imposed. There was no suggestion of any such failure. But the judgments contain dicta which make it clear that the Court of Appeal contemplated that proleptic discharge under the relevant wording in section 4(2) (equating with the wording in section 85(4) of the Housing Act 1985) would only be possible if the conditions imposed under the equivalent wording to section 85(2) were complied with. At p 185, Lord Evershed MR said in relation to the possibility of proleptic discharge :

"The last two lines of the subsection are: "and if such conditions are complied with, the court may, if it thinks fit, discharge any such order". As a matter of English, at first sight it might be said with force that it is only when the conditions have been in fact complied with that that power arises, and may be invoked. In the present case it will be recalled that the judge combined all the operations into one order".

In going on to accept the legitimacy of proleptic discharge, Lord Evershed was therefore dealing only with a situation where the conditions imposed had been complied with. Likewise, at p 189 Romer LJ explained that section 4(2) showed that the court could suspend execution or postpone the date for possession on terms

"and that, if those terms are complied with, then the court may discharge or rescind the original absolute order". (emphasis added)

He continued:

"… the county court judge made in the present case ….[a] compendious form of order directing that on fulfilment of conditions, the original order should be discharged, instead of making an order imposing conditions, and then waiting to see if the conditions had been performed, and, if they had been performed, then making another order. I agree with the Master of the Rolls in thinking there is nothing wrong, or beyond the power of the court, in making an order in that compendious form …" (emphasis added)

Again there is nothing to suggest that an order could be made imposing conditions, but providing for its proleptic discharge upon non-fulfilment (or, if one reads this into subsection (4), substantial non-fulfilment) of such conditions. Any such order would fly in the face of the statutory language, and fall outside anything contemplated by either Lord Evershed or Romer LJ.

There is also nothing to support such a suggestion in the previous Court of Appeal decision in Sherrin v Brand [1956] 1 QB 403 to which Lord Evershed referred at p 186 in Payne v Cooper and on which both he and Romer LJ had sat. The issue in Sherrin v Brand was one of succession by a family member to a statutory tenancy in circumstances where a conditional possession order had been made against the deceased tenant, with the conditions of which he had not complied. In that case, it was provided by various orders that a judgment for possession should not be enforced "for twenty-eight days and for so long thereafter as the [tenant] punctually pays …. the arrears of rent, mesne profits and costs by instalments of £10 forthwith and 13s 7d per week in addition to the current rent", and that "the judgment shall cease to be enforceable when the arrears of rent, mesne profits and costs referred to above are satisfied". The concluding provision was regarded as a proleptic discharge of precisely the same type as fell for consideration in Payne v Cooper. This was expressly explained by Romer LJ in Payne v Cooper at p 429:

"In my opinion, the meaning and effect of this judgment [the judgment for possession], when taken as a whole, and especially in view of the concluding paragraph, is that the defendant might remain on as tenant of the premises so long as he performed the conditions as to payment of the prescribed instalments in addition to the current rent; and that, on payment of the final instalment, the operation of the judgment would automatically cease. In other words, the judgment for possession was not intended to have an immediate effect, and would never indeed take effect at all provided that the conditions as to payment were fulfilled." (emphasis in bold added)

So the concluding paragraph of the judgment for possession was not, and was not regarded as, an order for discharge if the conditions were not complied with. There was also no question of it being necessary to treat it as such - the only issue in Sherrin v Brand was whether a sufficient statutory tenancy still existed (despite the failure to comply with the conditions or to pay the arrears at any stage) to enable the family member to succeed to the statutory tenancy.

It follows that I can see no basis for saying that a court has under section 85(4) power - whether ex post facto or proleptic - to discharge or rescind a conditional order for possession where the conditions imposed under section 85(3) have not been (either punctiliously or, if one reads the word into subsection (4), substantially) complied with and no variation of such conditions has been obtained. I do not find this analysis in any way surprising, when applied to situations in which the proleptic power recognised in Payne v Cooper has been exercised, and it is what the statute clearly prescribes. The method of dealing with this situation is for the tenant to seek and obtain under section 85(2) and (3) (either by consent or on contested application) a variation of the possession order to impose fresh conditions with which the tenant can comply or has already complied.

I also see no ground for construing paragraph 6 of the order in Honeygan-Green ("Upon payment of the arrears in full, claim do stand dismissed") as intended or capable of doing anything other than that which the court was empowered to do under section 85(4). In other words, read in context, this paragraph means no more than that the possession order would be discharged upon payment of the arrears in full in compliance (or, if one reads this into subsection (4), substantial compliance) with the schedule provided by the immediately preceding paragraph. But, if the order were (in my opinion wrongly) to be construed as purporting to provide more, it was to that extent at least beyond the statutory power.

Lord Neuberger suggests that it might however be possible under the court's inherent common law or procedural powers to make an order suspending or staying the execution of a possession order on one set of conditions, but providing for discharge or rescission of the order in other substantially different circumstances (such as payment of the net arrears, without interest, at any such future date as the tenant might please or be able to procure). In the circumstances which I have described in para 8 above, we heard no argument upon this possibility. The court has of course substantial inherent powers as well as powers under the rules of court to vary or discharge its own orders, particular in the light of changed circumstances. But it seems to me improbable that it should be taken to have exercised such powers proleptically by paragraph 6 of the order in Honeygan-Green in any manner going further than its proleptic statutory power under section 85(4). I understand the common law in relation to claims to possession to be that the extent to which a court can either deny or postpone a private owner's entitlement to possession is extremely limited - a view which lay at the basis of the decision of the majority in this House in Harrow London Borough Council v Qazi [2003] UKHL 43; [2004] 1 AC 983 as I noted in Doherty v Birmingham City Council [2008] UKHL 57; [2008] 3 WLR 636, paras 129-130. CPR 3.1(2)(a), enabling a court to extend or shorten the time for compliance with any order is no different in substance from long-existing procedural powers under the former rules of court. If a court, when or after making a possession order, has a free hand under its inherent or procedural powers to suspend, stay or order its discharge proleptically (or even ex post facto), in circumstances not envisaged by the detailed statutory provisions of section 100 of the Rent Act 1977, section 85 of the Housing Act 1985 and section 9 of the Housing Act 1988 and of their predecessor provisions, one asks why such statutory provisions (developed and built on by the legislature over the last century) were necessary at all. The whole argument in Payne v Cooper would also have been misconceived, in so far as it proceeded on the basis that, unless the power was to be found in the relevant section (there, section 4(2) of the 1923 Act), it did not exist at all.

Apart from the qualification discussed in this speech, which does not affect the outcome of these appeals, I am, as I stated at the outset, in full agreement with Lord Neuberger's reasoning and conclusions in respect of all three appeals.

LORD NEUBERGER OF ABBOTSBURY

My Lords,

These three appeals raise questions about the effect of suspended possession orders on the status and rights of secure tenants under the Housing Act 1985 and assured tenants under the Housing Act 1988. Your Lordships were told that the resolution of these questions will affect tens of thousands of tenants who are subject to such orders, and indeed their landlords.

To understand the issues requires me first to give a brief (and highly simplified) summary of the legislation relating to residential security of tenure and the right to buy for secure tenants, and to set out a few centrally relevant statutory provisions.

The law governing residential security of tenure

Security of tenure for most residential tenants in England and Wales was first introduced by the Increase of Rent and Mortgage Interest (War Restrictions) Act 1915. As its name suggests, this was emergency war-time legislation, which accorded protection from eviction to the great majority of residential tenants, irrespective of the identity of their landlords. The 1915 Act was supplemented or replaced by a number of subsequent Rent Acts between 1919 and 1965, perhaps most significantly by the Rent and Mortgage Interest (Restrictions) Acts 1920 and 1923 and the Rent Act 1965. The legislation was then consolidated (with amendments) in the Rent Act 1968 and, finally, the Rent Act 1977. Until the 1968 consolidation, the drafting of the Rent Acts was somewhat opaque (MacKinnon LJ's description of "that chaos of verbal darkness", in Winchester Court Ltd v Miller [1944] KB 734, 744, was only one of many judicial derogatory descriptions), and they often required substantial constructive input from the courts.

Well before the 1977 Act came into force, section 33 of the Housing Repairs and Rents Act 1954 had removed Rent Act protection from tenancies under which the landlord was a local authority, a housing association or a similar entity.

Accordingly, by 1980, tenants of private sector landlords had protection pursuant to the Rent Act 1977, whereas tenants whose landlords were local authorities and housing associations had no statutory protection. However, chapter II of Part I of the Housing Act 1980 introduced a new form of protection for tenants of local authorities and housing associations (and other entities as now prescribed in section 80 of the 1985 Housing Act): their tenancies became secure tenancies. By chapter I of Part I of the 1980 Act, most secure tenants were given the right to buy their properties (the freehold in the case of a house, and a long lease in the case of a flat). These two chapters of the 1980 Act were repealed and re-enacted (with amendments) as, respectively, Parts IV and V of the Housing Act 1985.

The Housing Act 1988 changed the landscape yet again. Rent Act protection was prospectively abolished, and private sector tenants were accorded a new form of protection in that their tenancies were designated as assured tenancies under the 1988 Act (albeit that a very limited, short-lived, and limited type of assured tenancy had been introduced by sections 56 to 58 of the 1980 Act). The 1988 Act also provided that any future tenancies granted by housing associations should be assured, rather than secure, tenancies.

Accordingly, in very summary terms (and subject to exceptions), the current position is as follows. Private sector tenancies granted before the 1988 Act came into force remain governed by the 1977 Act, but private sector tenancies created thereafter are assured tenancies under the 1988 Act. Housing association tenancies are secure tenancies under the 1985 Act if granted between 1980 and 1988, but they are assured tenancies under the 1988 Act if granted thereafter. All local authority tenancies are secure tenancies under the 1985 Act.

The protection afforded to protected, secure and assured tenants is effected through the medium of circumscribing the landlord's right to possession. At least one of the grounds specified in the relevant legislation (section 98 of, and Schedule 15 to, the 1977 Act; section 84 of, and Schedule 2 to, the 1985 Act; and section 7 of, and Schedule 2 to, the 1988 Act) normally has to be established by a landlord before the court can make an order for possession.

The most commonly invoked of those grounds, and the most relevant for present purposes, is non-payment of rent. Under ground 8 of Schedule 2 to the 1988 Act, this can, in some circumstances, entitle a landlord under an assured tenancy, as of right, to an order for possession. Although such a ground is often open to landlords under assured tenancies (including one of the instant cases, as my noble and learned friend Lord Walker of Gestingthorpe pointed out in argument), we were told that ground 8 is something of a last resort so far as housing associations are concerned.

In practice, it is normally the case under the 1988 Act, and it is always the position under the 1977 and 1985 Acts, that, in rent arrears cases, the landlord will rely on case 1 of Schedule 15 to the 1977 Act, ground 1 of Schedule 2 to the 1985 Act or grounds 10 or 11 of Schedule 2 to the 1988 Act, as may be appropriate. These grounds require a landlord, in addition to establishing that the tenant is in arrear with the rent, to satisfy the court that it is reasonable to make such an order before the court will order possession — see section 98(1)(a) of the 1977 Act, section 84(2)(a) of the 1985 Act and section 7(4) of the 1988 Act.

Under each of the three regimes, in any case where the landlord has to establish that it is reasonable to make a possession order, the court is given very wide and flexible powers. The relevant provisions are section 100 of the 1977 Act, section 85 of the 1985 Act, and section 9 of the 1988 Act. These three sections are very similar in their wording, but there are some differences. In the light of the issues in these appeals, it is necessary to set each of them out.

Section 100 of the 1977 Act provides:

"Extended discretion of court in claims for possession of certain dwelling-houses

(1) …. [A] court may adjourn, for such period or periods as it thinks fit, proceedings for possession of a dwelling-house which is let on a protected tenancy or subject to a statutory tenancy.

(2) On the making of an order for possession of such a dwelling-house, or at any time before the execution of such an order (whether made before or after the commencement of this Act), the court … may —

(a) stay or suspend execution of the order, or

(b) postpone the date of possession,

for such period or periods as the court thinks fit.

(3) On any such adjournment as is referred to in subsection (1) above or any such stay, suspension or postponement as is referred to in subsection (2) above, the court shall, unless it considers that to do so would cause exceptional hardship to the tenant or would otherwise be unreasonable, impose conditions with regard to payment by the tenant of arrears of rent (if any) and rent or payments in respect of occupation after termination of the tenancy (mesne profits) and may impose such other conditions as it thinks fit.

(4) If any such conditions as are referred to in subsection (3) above are complied with, the court may, if it thinks fit, discharge or rescind any such order as is referred to in subsection (2) above.

…."

Section 85 of the 1985 Act is in these terms:

"Extended discretion of court in certain proceedings for possession

(1) Where proceedings are brought for possession of a dwelling-house let under a secure tenancy on any of the grounds …([being] cases in which the court must be satisfied that it is reasonable to make a possession order), the court may adjourn the proceedings for such period or periods as it thinks fit.

(2) On the making of an order for possession of such a dwelling-house on any of those grounds, or at any time before the execution of the order, the court may —

(a) stay or suspend the execution of the order, or

(b) postpone the date of possession,

for such period or periods as the court thinks fit.

(3) On such an adjournment, stay, suspension or postponement the court —

(a) shall impose conditions with respect to the payment by the tenant of arrears of rent (if any) and rent or payments in respect of occupation after the termination of the tenancy (mesne profits), unless it considers that to do so would cause exceptional hardship to the tenant or would otherwise be unreasonable, and

(b) may impose such other conditions as it thinks fit.

(4) If the conditions are complied with, the court may, if it thinks fit, discharge or rescind the order for possession.

Section 9 of the 1988 Act says this:

"Extended discretion of court in possession claims

(1) … [T]he court may adjourn for such period or periods as it thinks fit proceedings for possession of a dwelling-house let on an assured tenancy.

(2) On the making of an order for possession of a dwelling-house let on an assured tenancy or at any time before the execution of such an order, the court … may —

(a) stay or suspend execution of the order, or

(b) postpone the date of possession,

For such period or periods as the court thinks just.

(3) On any such adjournment as is referred to in subsection (1) above or on any such stay, suspension or postponement as is referred to in subsection (2) above, the court, unless it considers that to do so would cause exceptional hardship to the tenant or would otherwise be unreasonable, shall impose conditions with regard to payment by the tenant of arrears of rent (if any) and rent or payments in respect of occupation after the termination of the tenancy (mesne profits) and may impose such other conditions as it thinks fit.

(4) If any such conditions as are referred to in subsection (3) above are complied with, the court may, if it thinks fit, discharge or rescind any such order as is referred to in subsection (2) above.

…..".

All three sections also contain subsections (in the case of section 100 of the 1977 Act, inserted by the 1980 Act) which confer the right on the present or former spouse (or indeed civil partner) of the tenant to apply for relief under the relevant section in the same way as the tenant, provided such a spouse is "in occupation" and the tenancy "is terminated as a result of those proceedings".

Where a landlord seeks an order for possession solely in reliance on the tenant's arrears of rent, the court will only very rarely consider it reasonable to make an outright order for possession - that is, an order which simply directs the tenant to vacate on or before a certain date. Much more commonly in such a case, the court will consider it reasonable to make a suspended order for possession - that is, an order which, while directing the tenant to vacate, suspends the implementation of that direction so long as the tenant pays off the arrears (and costs, if any have been ordered) at a specified rate.

These regimes of statutory security against eviction required the legislation to address the status of a tenant whose tenancy has contractually determined. A tenancy which is protected under the 1977 Act is allowed to determine in accordance with its contractual terms, but, by virtue of section 2(1)(a), such a tenant then becomes a "statutory tenant" "if and so long as he occupies the dwelling-house [in question] as his residence". Protected tenancies and statutory tenancies are together often called "regulated tenancies".

By contrast, section 82 of the 1985 Act effectively extends the contractual term of a secure tenancy. Subsections (1) and (1A) provide that a secure tenancy "cannot be brought to an end by the landlord" save by obtaining an order of the court, of which the most common and relevant is an "order for possession". Section 82(2) states that where such an order is made, "the tenancy ends on the date on which the tenant is to give up possession in pursuance of the order". (Section 86 provides that if a secure tenancy expires by effluxion of time, it is automatically followed by a periodic tenancy, which itself will be within the ambit of section 82).

Under the 1988 Act, the legislature adopted a fairly similar approach for assured tenancies. Except if the assured tenancy was a shorthold, section 5(1) lays down that an assured tenancy "cannot be brought to an end by the landlord except by obtaining an order of the court in accordance with the following provisions", which provisions, most importantly, and most relevantly for present purposes, include section 7 which, as mentioned, enables the court to make an order for possession. However, the 1988 Act has no provision expressly stating when an assured tenancy subject to a possession order comes to an end - in other words, section 5 of the 1988 Act has no equivalent to section 82(2) of the 1985 Act. (Section 5(2) of the 1988 Act has a similar effect to section 86 of the 1985 Act.)

The three Acts also contain provisions which enable specified members of a tenant's family to succeed to the tenancy on the tenant's death - see section 2(1)(b) of the 1977 Act for regulated tenancies, section 87 of the 1985 Act for secure tenancies, and section 17 of the 1988 Act for assured tenancies.

Secure tenants' right to buy

The "right to buy" under Part V of the 1985 Act is accorded by sections 118 and 119 to a "secure tenant" who has been such for at least five years. Section 121 provides:

"Circumstances in which the right to buy cannot be exercised

(1) The right to buy cannot be exercised if the tenant is obliged to give up possession of the dwelling-house in pursuance of an order of the court or will be so obliged at a date specified in the order.

(2) The right to buy cannot be exercised if the person, or one of the persons, to whom the right to buy belongs —

(a) has a bankruptcy petition pending against him,

(b) …

(c) is an undischarged bankrupt, or

(d) has made a composition or arrangement with his creditors the terms of which remain to be fulfilled."

(It is right to mention, for completeness, that section 121(1) has been amended by section 304(1) of the Housing and Regeneration Act 2008 but this has no application to the current case: see section 304(2).)

Section 122 provides for the right to buy procedure to be initiated by a "secure tenant" serving notice on the landlord. Section 124 states that the landlord must then serve a notice admitting or denying the tenant's right. By section 125, the landlord is required to provide the tenant with details of the purchase price. According to section 126, this price is to be the market value of the property at the date of service of the section 122 notice, less a discount which, under sections 129 to 131, is (subject to a maximum) dependent on the length of time the tenant has been a secure tenant. Sections 125D and E (inserted in 1993) require the tenant thereafter to serve notice indicating whether he or she intends to buy, and, if no such notice is served, the landlord can serve a default notice, which, if not complied with, results in the tenant's section 122 notice being "deemed to be withdrawn".

By section 128, the tenant, if unhappy with the landlord's valuation, may refer the issue to the district valuer within three months of the landlord's section 125 notice. The terms on which the property is to be transferred are governed by section 139. Once all outstanding matters have been agreed, section 138(1) imposes a duty on the landlord to transfer the property to the tenant. However, by virtue of section 138(2) there is no such duty so long as the rent is more than four weeks in arrear.

If the tenant does not complete, sections 140 and 141 provide for the landlord to serve two successive notices requiring completion, and, if, after expiry of the second of those notices, the tenant has still failed to complete, his or her section 122 notice is "deemed to be withdrawn". Section 141(5) states that, if such a second notice is served and under section 138(2) "the landlord is not bound to complete, the tenant shall be deemed not to comply with the [second] notice".

Section 153A (added in 1988) provides that, where a landlord is guilty of delay in relation to any step in the procedure, the tenant can serve a notice of delay, followed, if the delay persists, by a second, "operative", notice of delay. If such an operative notice is served, and the delay persists, section 153B provides that the aggregate of the rent then paid by the tenant shall be set off against the purchase price, and, where the delay is more than twelve months, a further 50% of that aggregate is to be set off against the purchase price.

Sections 125A, B and C (inserted in 1986) provide that, where the property concerned is a flat, the landlord must include in its section 125 notice estimates of the likely level of service charge for a specified period. That period is five years from the date "beginning … not more than six months after the notice is given as the landlord may reasonably specify as being a date by which" the property is to be transferred. In such a case, para 16B of Schedule 6 to the 1985 Act provides that a tenant, who is in due course granted a long lease of the flat shall (subject to an allowance for inflation) not be liable for a greater sum in respect of service charges than that indicated in the section 125 notice.

Where a secure tenant has a right to buy, and the reversion to the tenancy is then transferred to a person who is not within section 80 of the 1985 Act, so that the tenancy ceases to be a secure tenancy, the tenant's right to buy under the 1985 Act is normally preserved against the new landlord, by virtue of and in accordance with sections 171A to H (inserted in 1986).

The facts underlying the three instant appeals

In Knowsley Housing Trust v White, the facts are as follows. Mrs White was granted a weekly tenancy of 34 Chesterfield Drive, Tower Hill, Kirkby, Liverpool by Knowsley Borough Council on 19 April 1993. As the Council was a local authority, this was a secure tenancy within the 1985 Act. On 15 July 2002, Knowsley Housing Trust ("Knowsley") acquired the whole of the Council's housing stock, whereupon Mrs White became an assured tenant under the 1988 Act. However, her right to buy was preserved by sections 171A to H of the 1985 Act.

Mrs White fell into arrears, and, after serving notice of intention to do so, Knowsley issued possession proceedings in the Liverpool County Court on 15 April 2004 on the grounds of non-payment of rent. On 8 June 2004, the District Judge made the following order, which was in the form then generally in use in the County Courts:

"… The court orders that

(1) The defendant give the claimant possession … on or before 6 July 2004.

(2) The defendant pay the claimant £2,132.52 for rent arrears.

(3) The defendant pay the claimant's costs of the claim £130.00.

(4) The defendant pay the total of £2,262.52 to the claimant.

(5) This order is not to be enforced so long as the defendant pays the claimant the rent arrears and the amount for use and occupation and costs totalling £2262.52 by the payments set out below

in addition to the current rent

Payments required

£5.00 per week, the first payment being made on or before 14 June 2004."

Although she remained in occupation, Mrs White failed to pay in accordance with these terms, and Knowsley obtained a warrant to enforce the possession order. Mrs White applied to suspend the possession order, and, on 26 October 2004, the District Judge suspended the warrant on terms that she pay a lump sum and the "current rent … together with £5 per week off the arrears". Thereafter, Mrs White did not comply with the terms of this latter order, although she made significant payments from time to time, so that her total arrears have remained, and to this day remain, at a fairly constant figure, around £2000 to £2500.

Meanwhile, on 20 January 2005, Mrs White served notice under section 122 of the 1985 Act claiming the right to buy the property. Knowsley admitted her right to buy, and thereafter both parties took the steps provided for by the 1985 Act with a view to completing the sale. However, on 13 February 2006, Knowsley contended that Mrs White had ceased to have the right to buy, as she was no longer an assured tenant following her failure to comply with the terms of the court orders. Mrs White then applied for a declaration that, notwithstanding that failure, she remained an assured tenant. That application was dismissed by His Honour Judge Mackay on 14 September 2006, and his decision was upheld by the Court of Appeal (Buxton, Longmore LJJ and Sir Martin Nourse) on 2 May 2007 ([2007] EWCA Civ 404, [2007] 1 WLR 2897). Mrs White now appeals to your Lordships' House.

In the second appeal, Porter v Shepherds Bush Housing Association, the facts are as follows. Shepherds Bush Housing Association ("the Association") granted Mr Porter a tenancy of Flat 3, 1 Bolingbroke Road, London W14 on 26 July 1983. As the tenancy was granted by a housing association between 1980 and 1988, it was a secure tenancy, which, at all material times, was within the ambit of Part IV of the 1985 Act. Mr Porter fell into arrears with his rent, and the Association claimed possession in the West London County Court. On 18 August 1997, the District Judge made the following order, which reflected the standard form then in use:

"1. The court has decided that unless you make the payments as set out in paragraph 3 you must give the plaintiff possession … on 15 September 1997.

2. You must also pay to the plaintiff £2,338.40 for unpaid rent, use and occupation of the property ….

3. You must pay the plaintiff the total amount of £2338.40 by instalments of £5 per week in addition to the current rent. The current rent is £34 per week: The first payment of both these amounts must be made on or before 1 September 1997.

4. When you have paid the total amounts mentioned, the plaintiff will not be able to take any steps to evict you as a result of this order.

5. If you do not pay the money owed and costs by the dates given and the current rent, the plaintiff can ask the court bailiff to evict you…" (paragraph numbering added).

Mr Porter failed to comply with the terms of para 3 of this order, although some arrears were paid off. The Association then obtained a warrant for possession, but, on 30 August 2000 pursuant to an application by Mr Porter, the District Judge ordered that the warrant be suspended "on condition that [Mr Porter] do pay current rent and £5 per week towards the arrears, the next payment to be made on or before 13 September 2000". Mr Porter failed to comply.

On 29 April 2004, at a time when his arrears were some £1,400, Mr Porter issued proceedings against the Association for damages for disrepair. The Association defended the claim on the basis that, in the light of his failure to comply with the terms imposed by the two orders, Mr Porter had ceased to be a tenant, and therefore could not claim damages for disrepair.

On 9 January 2006, Mr Porter made a payment which put his rent account into credit, thereby discharging all the arrears. Meanwhile, on 3 January 2006, in anticipation of the arrears being cleared, Mr Porter made an application for the discharge of the suspended possession order made against him. That application was dismissed by the District Judge on 16 June 2006, and, although he gave Mr Porter permission to appeal, His Honour Judge Simpson dismissed his appeal on 22 December 2006. A second appeal by Mr Porter to the Court of Appeal (Pill, Sedley and Longmore LJJ) was dismissed on 19 March 2008 ([2008] EWCA Civ 196). Mr Porter now appeals to your Lordships' House.

In the third appeal, Islington London Borough Council v Honeygan-Green the facts are these. Islington granted Mrs Honeygan-Green a secure tenancy of 73B Crouch Hill, London N4 on 2 July 1990. On 23 May 2000, Mrs Honeygan-Green exercised her right to buy by serving a notice under section 122 of the 1985 Act. Although Islington accepted that she had the right to buy, completion of the transaction was delayed through no fault of hers: indeed, she served notices of delay on Islington in June and July 2002.

Meanwhile, Mrs Honeygan-Green fell into arrears with her rent, and, on 14 July 2002, Islington issued proceedings for possession against her in the Clerkenwell County Court. On 4 October 2002, the District Judge made an order that:

"1. The defendant give the claimant possession … on or before 1 November 2002.

2. The defendant pay the claimant £482.45 for rent arrears.

3. The defendant pay the claimant's costs of the claim; £120 to be added to arrears.

4. The defendant pay the total of £602.45 to the claimant.

5. This order is not to be enforced so long as the defendant pays the claimant the rent arrears and the … costs totalling £602.45 by the payments set out below in addition to the current rent

Payments required

£50 per week, the first payment being made on or before 18 October 2002.

6. Upon payment of the arrears in full, claim do stand dismissed."

Mrs Honeygan-Green failed to pay the amounts stipulated in accordance with para 5 of this order, although she did make some payments. In March 2003 Islington contended that she had therefore lost her secure tenancy. Thereafter she paid off all the arrears and costs, and, pursuant to her application, the District Judge made an order on 8 July 2003 discharging the possession order.

However, Mrs Honeygan-Green then fell into arrears again, and Islington issued fresh possession proceedings against her on this ground on 23 February 2005. Mrs Honeygan-Green served a defence and counter-claim. In her counter-claim, she sought a declaration that, subject to her paying off any arrears which had accrued, she was entitled to buy the property pursuant to her section 122 notice of 23 May 2000. Having paid off the arrears, she then sought summary judgment on her counter-claim, in the form of an injunction requiring Islington to transfer the property to her. On 28 April 2006, His Honour Judge Marr-Johnson acceded to her application, but Islington's appeal was allowed by Nelson J on 25 May 2007. Mrs Honeygan-Green's appeal was allowed by the Court of Appeal (Pill, Keene and Maurice Kay LJJ) on 22 April 2008 ([2008] EWCA Civ 363). Islington now appeals to your Lordships' House.

The issues to be determined

The three appeals give rise to the following principal issues:

(a) Where a suspended order for possession, such as that made in Mrs White's case, is made under the 1988 Act, when does the tenancy come to an end?

(b) (i) Can the court, when making a suspended possession order under the 1985 Act, proleptically direct that the order be discharged once the terms have been complied with?

(ii) If so, can the court proleptically direct that the order be discharged even if the terms of the suspension have not been strictly complied with?

(c) In the case of a suspended order under the 1985 Act, without a proleptic discharge provision, can a tenant who has not complied with the terms of suspension, but has paid off the arrears and costs, seek a discharge or variation of the order?

(d) If a tenant who has served notice exercising the right to buy is then made subject to a suspended possession order, does the right to buy pursuant to the notice revive if and when the order is discharged?