United Kingdom Upper Tribunal (Lands Chamber)

UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2015] UKUT 69 (LC)

UTLC Case Number: RAP/13/2014

 

                                                                                                                                                      

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

                                                                             

                                                                                                                                                      

LANDLORD AND TENANT – Rent Determination – application for determination of rent under section 14, Housing Act 1988 – First-tier Tribunal declining jurisdiction on grounds that tenancy was a regulated tenancy under Rent Act 1977 – nature of tenancy – appeal allowed

 

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE FIRST TIER TRIBUNAL (PROPERTY CHAMBER)

                                                                             

BETWEEN                                                        

SWANBRAE LIMITED

Appellant

and

 

MISS JANET M RYDER

Respondent

 

Re: 81 Mayville Road,

London E11

 

 

Before: Martin Rodger QC, Deputy President

 

 

Sitting at: Royal Courts of Justice, Strand, London WC2A 2LL

on

11 February 2015

 

Mr James Tye, a director, appeared for the Appellant

No appearance or representation for the Respondent

 

No cases are referred to in this decision

 

© CROWN COPYRIGHT 2015

 

DECISION

Introduction

1.             The respondent, Miss Ryder, has lived at 81 Mayville Road since 1980.  In 1984 the appellant, Swanbrae Limited, became the owner of the premises.  In 1994, in settlement of proceedings for possession of the premises brought by Swanbrae in the Bow County Court, it granted Miss Ryder a new tenancy.  It was agreed that the new tenancy was to be an assured tenancy under the Housing Act 1988 (“the 1988 Act”) and on that basis the rent was liable to periodic increases to raise it to the level of a market rent. 

2.             Between 1994 and 2013 notices of increase of rent given under s.14 of the 1988 Act were referred on five occasions to rent assessment committees and on four of those occasions the rent was increased to the prevailing market rate. 

3.             In 2013 the appellant sought a further increase but, by a decision made on 17 February 2014 the First-tier Tribunal (Property Chamber) (“the FTT”) struck out the application on the grounds that it did not have jurisdiction under s.14 of the 1988 Act because the respondent’s tenancy was a regulated tenancy under the Rent Act 1977 and not an assured tenancy under the 1988 Act.

4.             With the permission of the FTT the appellant now appeals the decision under s.11, Tribunals, Courts and Enforcement Act 2007. 

5.             At the hearing of the appeal Swanbrae was represented by Mr James Tye, a director.  Miss Ryder did not appear and was not represented, but she has written a number of letters to the Tribunal explaining the history of her occupation of 81 Mayville Road. 

The facts

6.             Since the hearing before the FTT a number of additional documents have been produced by both parties.  Those documents provide a fuller history of Miss Ryder’s occupation of her home than was previously available.  The only documents which the FTT saw were a consent order made at the conclusion of the proceedings in the county court in 1994 and the tenancy agreement granted by Swanbrae to Miss Ryder on 18 August 1994 pursuant to that consent order.  It is nonetheless appropriate that I explain the factual background to this appeal with the benefit of the documents I have seen and the explanations given by Mr Tye and Miss Ryder.

7.             Miss Ryder moved into 81 Mayville Road in 1980.  There is correspondence addressed to her from Waltham Forest Borough Council (“the Council”) in 1981 and from the solicitor administering her late father’s estate in 1983 which confirms that she was resident at that time. 

8.             When Miss Ryder moved to 81 Mayville Road it was owned by a Mrs Bent.  Mrs Bent’s immediate tenants were Mr and Mrs Kavanagh.  The Kavanagh’s did not live at the property but from correspondence between the Council and Miss Ryder in 1981 it appears that they continued to claim a rate rebate and a rent allowance.  Mr Kavanagh had informed the Council that Miss Ryder was simply looking after the house and occasionally sleeping there overnight but on 6 July 1981 the Borough Treasurer wrote to Miss Ryder informing her that in light of her reply to his earlier inquiries, he was withdrawing the rate rebate and rent allowance previously granted to Mr and Mrs Kavanagh.  On 27 November 1981 the Council wrote again to Miss Ryder informing her that it would grant her a rate rebate in her own name following her recent application.  The letter went on:

“Although you are paying rent I gather you are not doing so direct to the owner and that Mr and Mrs Kavanagh have sub-let without his permission.  In these circumstances I consider it likely that you cannot be considered to be a tenant for the purposes of the Rent Allowance Scheme.  However this matter will be given further consideration, if you wish, if you provide me with evidence of the sum being paid.”

I infer from the letter that the Council’s source of information concerning Miss Ryder’s rent and the status of her occupation as sub-tenant came from Miss Ryder herself.

9.             Although the Council appeared to have appreciated by 1981 that Mr and Mrs Kavanagh no longer resided at 81 Mayville Road there is no evidence that Mrs Bent was aware of that fact.  When Mrs Bent died Swanbrae acquired her freehold interest in the property and in the neighbouring property at 83 Mayville Road.  Mr Tye understood that the tenants of the property which his company had purchased were Mr and Mrs Kavanagh although he had not personally been involved in collecting rent from them and had not seen a copy of their rent book.

10.         Mr Tye told me that he had first become aware of Miss Ryder’s occupation of the premises when he was informed by Swanbrae’s managing agents that she was living there and had requested a rent book in her own name.  Mr Tye had then investigated the situation personally and had visited the premises where he was informed by Miss Ryder that Mr and Mrs Kavanagh had gone away and that she was the tenant.

11.         Shortly after Mr Tye’s conversation with Miss Ryder, Swanbrae instructed solicitors who commenced proceedings in the Bow County Court against Mr and Mrs Kavanagh and Miss Ryder seeking an order for possession of the property.  I infer that possession was sought against Mr and Mrs Kavanagh on the grounds that their tenancy had come to an end and that, no longer being in occupation, they were not entitled to the status of statutory tenants under the Rent Act 1977.  Possession was claimed against Miss Ryder on the grounds that she was an unlawful sub-tenant who had no right to remain after the termination of her immediate landlord’s interest.  The possession proceedings were commenced in 1991 (as is shown by the case number on the consent order by which they were finally concluded) but no copy of the pleadings is now available.

12.         In 1991 the rent for the property was £23.50 a week, the sum registered by the rent officer on 12 July 1990.  The extract from the Rent Register which I have seen states that Mr Kavanagh was the tenant and that his status was that of “statutory tenant” which implies that a previous contractual tenancy granted to him had been terminated and that he was entitled to security of tenure only if and so long as he occupied the dwelling as his residence.

13.         Miss Ryder was granted legal aid to defend the county court proceedings and to counterclaim for damages for breach of Swanbrae’s repairing obligations.  The proceedings were settled immediately before they were due to be heard at a trial listed on 18 August 1994 which was expected to last for 3 days. 

14.         The consent order signed by firms of solicitors acting on behalf of Swanbrae and Miss Ryder records that Mr and Mrs Kavanagh were not represented before the court.  The claim for possession against them was nonetheless dismissed, as was Miss Ryder’s counterclaim for a declaration that she was the lawful tenant of the premises.  All other claims by Swanbrae against Miss Ryder, and all of her counterclaims against the company were stayed on terms of settlement recorded in a schedule to the order.  The claims which were stayed therefore included Swanbrae’s claim for possession of the property and Miss Ryder’s claim for damages for disrepair. 

15.         The schedule to the consent order included an agreement by Swanbrae to carry out certain works of repair to the satisfaction of Miss Ryder’s surveyor.  As far as the future occupation of the property was concerned paragraph (1) of the schedule contained this agreement:

          “The Plaintiff [Swanbrae] shall grant and the Third Defendant [Miss Ryder] shall accept an assured tenancy of the premises, 81 Mayville Road, Leytonstone, London E11 for a term of 1 year from the date hereof at a rent of £23.50 pw payable weekly in advance on the terms of the Tenancy Agreement annexed hereto.”

By paragraph 5 of the schedule Miss Ryder agreed to pay the appellant the sum of £1,500 in respect of her occupation of the premises pursuant to Order 13 Rule 12 of the County Court Rules 1981 (by which payments could be made for the occupation of land without prejudice to the contentions of either party concerning the status of the occupier).

16.         The tenancy agreement between the parties was entered into on the same day as the consent order.  It was in accordance with the terms agreed and was for a term of 1 year at a weekly rent of £23.50.  Miss Ryder duly paid the sums she had agreed and, as correspondence between Miss Ryder and her own solicitor confirms, in the main the work which Swanbrae had undertaken to carry out was completed by June 1996.

17.         From 1994 onwards the tenancy was treated by the parties as an assured tenancy governed by the 1988 Act.  At intervals of two years Swanbrae served notice on Miss Ryder proposing a new rent in accordance with s.13(2) of the 1988 Act, and on each occasion Miss Ryder exercised her right to refer the notice to the rent assessment committee under s.14(1).  The rent was increased to £100 in September 1997 and periodic increases thereafter saw it rise to £160 a week by November 2010.  On the reference to the committee in 2012 it was not increased, but in 2013 Swanbrae gave notice of a further proposed increase to £250 a week.  That notice was referred to the FTT (the statutory successor of the rent assessment committee) on 18 October 2013.  After carrying out an initial inspection the FTT gave notice on 30 December 2013 of its concern that it may not have jurisdiction.  Both parties made written representations and on 15 January 2014 the FTT gave formal notice to Swanbrae to show cause why its application should not be struck out under Rule 9(3) of the Property Chamber Rules 2013.

18.         In answer to the FTT’s notice Swanbrae relied on the tenancy agreement of 18 August 1994 and explained the circumstances in which it had come to be granted.  It referred to determinations by previous rent assessment committees under the 1988 Act and asserted that although Miss Ryder had initially been granted a sub-tenancy by the lawful tenant of its predecessor, that sub-tenancy was in breach of the terms of the tenants’ tenancy.

The FTT’s decision

19.         By its decision of 17 February 2014 the FTT struck out Swanbrae’s application for the determination of a new rent on the grounds that it did not have jurisdiction.  It referred to the tenancy agreement, a copy of which it had been provided with, and to Swanbrae’s submission that the agreement had been made in pursuance of the consent order compromising its claim for possession.  The FTT then referred to s.45(1) of the Rent Act 1977 which provides:

          “Except as otherwise provided by this Part of this Act, where the rent payable for any statutory period of the regulated tenancy of a dwelling-house would exceed the rent recoverable for the last contractual period thereof, the amount of the excess shall, notwithstanding anything in any agreement, be irrecoverable from the tenant.”

20.         The FTT reasoned that it was unnecessary for it to decide whether or not the 1994 tenancy agreement had been part of a court order because it was clear that any such order had been a consent order made as the result of an agreement between the parties, rather than by a decision of the court.  It went on:

          “Therefore, on any view, the 1994 tenancy agreement came into being as a result of an agreement, which is caught by s.45(1) of the Rent Act 1977.  It follows that the tenancy is a regulated tenancy – not an assured tenancy and that both the landlord’s notice proposing a new rent and the tenant’s notice referring the matter to the tribunal are nullities and tribunal has, at present, no jurisdiction to determine the rent.”

21.         Finally, the FTT referred to the fact that previous tribunals had determined market rents on the basis that the tenancy was an assured tenancy, but pointed out that those decisions were not binding on it and that it was required to proceed on the basis of the evidence it had received.

22.         In granting permission to appeal the FTT said that there was a realistic prospect of Swanbrae succeeding in arguing that, if the 1994 tenancy agreement was part of a court order then it was effective to create an assured tenancy, despite s.45(1) of the Rent Act 1977.  It also considered that there were a number of points of potentially wide implication which merited consideration by this Tribunal, in particular whether it had been entitled to decide that the tenancy was a regulated tenancy when neither party had raised that point.

 

The relationship between the Rent Act 1977 and the Housing Act 1988

23.         The 1988 Act came into force on 15 January 1989.  After that date, and subject to exceptions, a tenancy under which a dwelling-house is let as a separate dwelling is an assured tenancy if and so long as the tenant is an individual who occupies the dwelling-house as their only or principal home (s.1(1), 1988 Act).

24.         With a number of irrelevant exceptions, a tenancy of a dwelling granted before the commencement of the 1988 Act was a “regulated tenancy” i.e. a protected or statutory tenancy under the Rent Act 1977 (designated a regulated tenancy by section 18(1), 1977 Act).  A “protected tenancy” is a contractual tenancy under which a dwelling house was let as a separate dwelling prior to 15 January 1989 (s.1, 1977 Act).  A “statutory tenancy” arises on the expiry or termination of a protected tenancy if the tenant occupies the dwelling as their residence and the status of statutory tenant is retained, subject to any order by the court, only for as long as that condition is satisfied (s. 1(2), Rent Act 1977).

25.         A sub-tenancy is not prevented from being a protected or statutory tenancy.  The 1977 Act made provision in s.137 for the effect on a protected or statutory sub-tenancy of the determination of the superior tenancy out of which it was granted.  The only provision relevant to this appeal is s.137(2) which was in the following terms:

          “Where a statutorily protected tenancy of a dwelling-house is determined, either as a result of an order for possession or for any other reason, any sub-tenant to whom the dwelling-house or any part of it has been lawfully sub-let shall, subject to this Act, be deemed to become the tenant of the landlord on the same terms as if the tenant’s statutorily protected tenancy had continued.”

The expression “statutorily protected tenancy” includes a protected or statutory tenancy under the 1977 Act (s.137(4)).

26.         On the commencement of the 1988 Act it was necessary for there to be transitional provisions.  It was confirmed by para. 13 of Sch. 1 to the 1988 Act that a protected tenancy within the meaning of the Rent Act 1977 could not be an assured tenancy.  New protected tenancies under the 1977 Act were restricted to special cases provided for by s.34, 1988 Act.  Of relevance to this appeal is s.34(1)(b), 1988 Act, which provides that:

“(1) A tenancy which is entered into on or after the commencement of this Act cannot be a protected tenancy, unless—

(a) …

(b) it is granted to a person (alone or jointly with others) who, immediately before the tenancy was granted, was a protected or statutory tenant and is so granted by the person who at that time was the landlord (or one of the joint landlords) under the protected or statutory tenancy; or …”

 

Discussion

27.         The FTT considered that Miss Ryder was a regulated tenant.  I will first consider whether there was material which justified that conclusion.  It must be remembered that the only relevant material to which the FTT had access was the 1994 Tenancy Agreement, the consent order and the common ground between the parties that Miss Ryder had been in occupation since before Swanbrae acquired its interest in the premises in 1984.

28.         The status of regulated tenant under the 1977 Act is not one which the parties to such a tenancy may contract out of.  Authority from the earliest years of Parliament’s intervention in the housing market to confer security of tenure and rent control on the tenants of residential premises establishes that where the Rent Acts lay down a definite rule, any agreement intending to ignore or vary that rule will be of no effect.  Thus an agreement by a tenant to give up the security of tenure conferred by the 1977 Act cannot be enforced, and the rights created by the Act will prevail even against a court order for possession if it is made without proper consideration of the mandatory statutory procedures (see Woodfall: Landlord and Tenant, para 23.006).

29.         The FTT was therefore right to be concerned about Miss Ryder’s true status, and not simply to assume that a consent order agreeing that she should be granted an assured tenancy would be conclusive of it.  On the face of it she had occupied the same house under a residential tenancy since before the commencement of the 1988 Act and would, initially at least, have been a regulated tenant.  As the 1988 Act rent review procedures which the FTT was being asked to apply depended on the tenancy being an assured tenancy, it was legitimate for the FTT to investigate that question.  Any court or tribunal is entitled to consider the question of its own jurisdiction, whether or not it is raised as an issue by the parties.  If Miss Ryder was not an assured tenant the FTT would have had no jurisdiction to make a determination in relation to the rent payable under her tenancy pursuant to s.14 of the 1988 Act.  Once the doubt over its own jurisdiction had been raised in the mind of the FTT it was necessary for it to satisfy itself on that issue. 

30.         The evidence before the FTT was that Miss Ryder had entered into a new tenancy agreement in 1994, after the commencement of the 1988 Act.  The tenancy was granted pursuant to a consent order made by the court and it was therefore appropriate for the FTT to consider the effect of that agreement.

31.         Although Miss Ryder’s 1994 tenancy had been granted after the commencement of the 1988 Act, there were circumstances in which it might nonetheless have been found to be a protected tenancy under the 1977 Act.  A tenancy entered into on or after 15 January 1989 can still be a protected tenancy if one of the circumstances in section 34(1) exists.  The only possible candidate in this case is section 34(1)(b).  That provision would only apply if two conditions were satisfied, namely, that Miss Ryder was a protected or statutory tenant immediately before the grant of her new tenancy on 18 August 1994 and, that Swanbrae was her landlord under that protected or statutory tenancy.  If both those conditions were met the tenancy granted pursuant to the consent order would be a regulated tenancy, irrespective of the stated intention of the parties that it should be an assured tenancy.

32.         In my judgment it was for Miss Ryder to adduce sufficient evidence to establish that her tenancy was not an assured tenancy. Having been granted after the commencement of the 1988 Act, her tenancy ought to be treated as being an assured tenancy unless the contrary was demonstrated.

33.         Although the first of the necessary conditions in s.34(1)(b) was satisfied, there was simply no evidence before the FTT in relation to the second, namely that, prior to 18 August 1994 the relationship of landlord and tenant had existed between Swanbrae and Miss Ryder.  The FTT was entitled to be satisfied that Miss Ryder was a protected or statutory tenant of the premises immediately before the 1994 tenancy agreement was entered into, but it was not entitled from the evidence to be satisfied that Swanbrae had been a party to that protected or statutory tenancy.  Swanbrae denied that any such relationship existed, Miss Ryder did not assert in terms that Swanbrae was her landlord and produced no document to that effect and the FTT did not direct its mind to that question.

34.         The FTT focused attention on s.45(1) of the 1977 Act but that focus was misplaced.  Section 45(1) places a limit on the rent recoverable during the statutory period of a regulated tenancy (i.e. after the termination of the contractual tenancy and for so long as the tenant remains in occupation of the dwelling house as a residence).  During that period the tenant is not required to pay any greater sum than the rent which was payable for the last contractual period of the tenancy.  The purpose of s.45(1) is to ensure that an agreement by a tenant to pay an increased rent during the statutory period of the tenancy is unenforceable and that only the registered rent (determined by the rent officer or rent assessment committee) is payable. Section 45(1) does not determine whether a tenancy entered into after the commencement of the 1988 Act is or is not a regulated tenancy.  That question is answered by section 34(1). 

35.         I am therefore satisfied that the FTT was not entitled to assume, on the evidence before it, that Miss Ryder’s tenancy was a regulated tenancy, and that accordingly its decision to decline jurisdiction was flawed.  However, for the reasons given in paragraph 30 above, it is appropriate for this Tribunal now to consider Miss Ryder’s status afresh in light of the fuller information now available.  Having done so I am satisfied that her tenancy is not a regulated tenancy but is an assured tenancy and that there is jurisdiction to determine a rent under s.14 of the 1988 Act.  I will briefly explain why.

36.         The material now before the Tribunal and in particular the correspondence between Miss Ryder and the Council in 1981, establishes that Miss Ryder’s tenancy was granted to her not by Mrs Bent, but by Mr Kavanagh.  The 1990 rent register named Mr Kavanagh as the tenant and Swanbrae as his landlord, and is consistent with there having been no direct relationship of landlord and tenant between Swanbrae and Miss Ryder at that time.  In 1991, when Swanbrae became aware of Miss Ryder’s occupation of the premises, it acted in a manner inconsistent with there having been a previous landlord and tenant relationship between them.  The proceedings which it commenced against Mr and Mrs Kavanagh, with Miss Ryder as third defendant, were on the basis that the Kavanaghs were its tenants and Miss Ryder their sub-tenant.

37.         The absence of a direct relationship of landlord and tenant between the appellant and Miss Ryder is fatal to the application of s.34(1)(b) of the 1988 Act.  Only where, immediately before the tenancy was granted, there existed a protected or statutory tenancy between the same parties, will the new tenancy be capable of being a protected tenancy under the 1977 Act.  If the tenant was a protected or statutory tenant of a different landlord then any new tenancy granted to her cannot be a protected tenancy and must therefore be an assured tenancy.

38.         I have considered whether section 137(2) of the 1977 Act makes any difference to the position.  I am satisfied that it does not, or at least that there is insufficient evidence on which to conclude that it does. 

39.         The effect of s.137(2), when it applies, is that a lawful sub-tenant whose own landlord is themselves a protected or statutory tenant, will become the direct tenant of the head landlord on the determination of the intermediate tenancy.  The provision only applies where the intermediate tenancy (in this case the tenancy of Mr Kavanagh) was a protected or statutory tenancy. 

40.         It is very unlikely that by 1994 Mr Kavanagh was still a protected tenant; he would only have been such a tenant if he held the premises under a contract of tenancy which had not been determined either by effluxion of time, notice to quit, or service of a notice of increase of rent under s.45(2), 1977 Act (which would operate to convert the protected tenancy into a statutory tenancy by virtue of s.49(4), 1977 Act).  Swanbrae had commenced proceedings for possession against Mr Kavanagh in 1991, and as those proceedings would have had no chance of success unless any protected tenancy had already been terminated, it seems very likely that a notice to quit would have been served before the proceedings began.  Exactly when Mr Kavanagh ceased to be a protected tenant is however unknown.

41.         On the evidence, it does not seem to be possible that Mr Kavanagh was a statutory tenant at any time after 1981.  The existence and continuation of a statutory tenant is dependant on the tenant continuing to occupy the dwelling as his home (s.2(1)(a), 1977 Act). The correspondence between Miss Ryder and the Council in 1981 establishes that Mr Kavanagh was not then in occupation (as do manuscript annotations on that correspondence by Miss Ryder).

42.         The other matter which is uncertain is whether the premises were “lawfully sub-let” by Mr Kavanagh to Miss Ryder.  A sub-letting in breach of a covenant against sub-letting is not a lawful sub-letting for the purpose of s.137(2), 1977 Act (see Woodfall, paragraph 23.141). Although there is no direct evidence that it was a term of Mr Kavanagh’s tenancy that he was not permitted to sub-let the whole of the premises, such a term would have been standard in residential tenancies in the 1970s and 1980s.  The proceedings against Miss Ryder in the county court were based on the contention that she was not lawfully in occupation and would easily have been defeated if Swanbrae had been unable to plead that there was a prohibition on subletting  in Mr Kavanagh’s tenancy.  The fact that the proceedings were compromised by Miss Ryder by the acceptance of an assured tenancy, at a time when she was in receipt of legal aid and not at risk of liability for either her own or Swanbrae’s costs in the event of the failure of her defence, strongly suggests that there was doubt over her prospects of demonstrating that she was a lawful sub-tenant.   

43.         There is, therefore, no sufficient basis on which the Tribunal could find that the tenancy granted to Miss Ryder in 1994 was a regulated tenancy.  The parties agreed that it was to be an assured tenancy and acted at all times on the basis that it was such a tenancy.  The FTT had jurisdiction to determine a new rent on the basis of the information provided to it and, the further information made available subsequently does not alter the position.

44.         I therefore allow the appeal and remit the application to the FT T for it to determine a new rent under s.14, 1988 Act.

 

                                                                                         

                                                                                          Martin Rodger QC

                                                                                          Deputy President

 

                                                                                          24 February 2015