Residential tenancies

Citation

Waterson, G. and Lee, R. (2001), "Residential tenancies", Property Management, Vol. 19 No. 2. https://doi.org/10.1108/pm.2001.11319bab.009

Residential tenancies

Residential tenancies

Taj v. Ali [2000] 43 EG 183

In a slightly unusual case, where the tenant had apparently not paid his landlord any rent since 1992, and in consequence had clocked up arrears in the order of £20,000, the Court of Appeal had to consider the landlord's application to overturn the suspended possession order made in the county court. At the earlier hearing judgement had been given in favour of the landlord for approximately £14,500, representing arrears of £20,000 plus interest, less agreed damages of £10,000 plus interest in respect of the landlord's own failure to carry out his repairing obligations. The judge at the Central London County Court had granted a possession order suspended on condition that the tenant pay the current rent of £49 per week, plus £5 per week off the judgement debt in respect of the arrears of £14,500. The only problem was that even if the tenant managed to keep up the payments, it would take him 55 years to pay off all the arrears. It was not appropriate, said the Court of Appeal, to suspend a possession order in such circumstances and ordered possession in 28 days.

Cadogan Estates Ltd v. McMahon [2000] EGCS 119; The Times, 1 November 2000

In this case the House of Lords had to decide whether the statutory tenant's having gone bankrupt was "a breach of an obligation of the previous protected tenancy which is applicable to the statutory tenancy" so as to fall within Case 1 of Schedule 15 of the Rent Act 1977 for the purpose of giving the landlord a discretionary ground of possession.

Briefly, the tenant had originally occupied the property under the terms of a lease made in August 1979, which had contained a forfeiture clause permitting the landlord to forfeit the lease and re-enter the property in the event inter alia of the tenant's bankruptcy. The lease had expired by effluxion of time and in consequence the tenancy had been converted into a statutory tenancy on effectively the same terms and conditions as the original contractual tenancy. There had been a history of late payments, and in March 1998 the tenant had been declared bankrupt. However, at the present time all rent due had been paid up-to-date. The question to be decided, therefore, was whether the reference to the possibility of forfeiture on bankruptcy contained in the original lease created an "obligation" which could be carried over into the subsequent statutory tenancy for the purposes of Schedule 15. Yes, said the House of Lords, (Lord Millett dissenting): the Rent Act 1977 "was a consolidation of a series of exactments going back to the First World War. They had not been framed with any scientific accuracy of language and it was essential that they should be construed in a broad practical, commonsense manner". Accordingly, the tenant's appeal was dismissed by the House of Lords as it had been already by the Court of Appeal.

Eaton Square Properties Ltd v. O'Higgins [2000] EGCS 118

Here, the question was whether a "company let" was a "sham" intended only to put the tenancy outside the scope of the Rent Acts. The facts, briefly, were as follows: in March 1979 the tenant had moved into the property in question apparently on the basis of a quarterly periodic tenancy which he had taken over, with the knowledge of the landlord, from the previous tenant. Subsequently, the landlord had granted a new 20-year lease to a company of which the defendant owned 75 per cent of the shares, the defendant acting as guarantor under the lease and in fact occupying the property as his residence. The reason that the matter was arranged in this way was so that the costs involved in refurbishing the premises could be set off against the company's tax liabilities. Eventually the lease expired and the landlord sought possession. When the matter came before the County Court the judge below had held that the true common intention of the parties had been that the defendant should be the tenant of the property and that he accordingly had the benefit of statutory protection under the Rent Act 1977.

The Court of Appeal disagreed: the agreement had not been a sham; it had not been intended to give a misleading impression as to the true relationship between the parties. Accordingly, the company was indeed the tenant, and in consequence the tenancy was not protected.

R v. Secretary of State for the Environment, Transport and the Regions, ex p. Spath Holme Ltd [2000] The Times, 13 December 2000

Finally under this heading, the interesting little question of whether the Secretary of State had been acting unlawfully when he (and the Secretary of State for Wales) had made the Rent Acts (Maximum Fair Rent) Order, (S. I. 1999/No 6) which responded to the courts allowing the use of open market rent comparables as a basis for fixing registered "fair rents" by limiting any increases of existing registered fair rents by reference to the Retail Price Index except where the rise in rent level was attributable to repairs or improvements.

The Order had been made pursuant to s. 31 of the Landlord and Tenant Act 1985, replacing s. 11 of the Housing Rents and Subsidies Act 1975. Section 11 had conferred a reserve power to be exercised by the Minister if he reasonably judged it necessary or desirable to protect tenants from hardship caused by increased or excessive rents. Prior to that there had been similar powers conferred by Parliament in the Counter Inflation Act 1973 and its predecessor the Counter Inflation (Temporary Provisions) Act 1972. Counsel for the landlords argued that if regard were to be had to the legislative history of the earlier provisions it was clear that such an Order would only be intra vires where excessive rent increases represented a significant cause of general inflation, and that this interpretation would be supported by Ministerial statements made at the time that the earlier legislation had been passing through Parliament.

There were five different judgements in the law report, but all to broadly similar effect: the wording of s. 31 of the Landlord and Tenant Act 1985 were clear and unambiguous; they were not to be limited by any interpretation which might be attached to the earlier legislation by virtue of the then social, economical or political context; no categorical undertaking had been given by the Minister at the time of the passage of the earlier legislation to indicate that it should be limited in the manner suggested by counsel for the landlord; and finally, the House was not all that enthused by the idea of counsel trawling through Hansard in the hope of finding something helpful anyway.