The latest episode in the ongoing saga of the unlawful moneylender Dharam Prakash Gopee [or sometimes Ghopee] has just been handed down. (To catch up with the extraordinary history of the predatory, unlawful secured lending of Mr Gopee’s many and various companies, the many possession proceedings and the complicated current court cases, see here, or the July 2014 summary of HHJ Mackie QC)

Gopee & Ors v London Mercantile Court [2015] EWCA Civ 944

When last we saw Mr Gopee, the position was as set out in HHJ Mackie QC’s July 2014 summary. All Mr Gopee’s possession or debt related proceedings, under any of the multifarious company names he used, were either gather together into one set of proceedings, or if Gopee had not so transferred them, struck out. The Land Registry were on notice to refuse any of Gopee company transfers of title, the liquidator of Barons Finance was chasing the ‘assignments’ of the debt book and interests of Barons Finance to other companies shortly before a demand for payment of a default costs certificate – which led to the liquidation. There were also failed attempts by Mr G to appeal to the Court of Appeal and a failed attempt to join the Land Registrar, as well as rejected applications to bring proceedings against the MoJ as vicariously responsible for HHJ Mackie QC, who kept finding against Gopee. The reasons for this appear to have escaped Mr Gopee.

Mr Gopee asserts that I am prejudiced. I can understand why he has that impression but consider that he is mistaken. In Makanju I identified between paragraphs 14 and 22 a series of reasons apparently applicable in all these cases why the borrower had real prospects of showing that the lenders and their assignees could not recover the loans or enforce their security. At no point since I gave that judgment have the lenders shown any coherent reason why those provisional conclusions are not correct.

What this latest judgment deals with are various applications to appeal out of time by Mr Gopee, via various companies, against the July 2013 order and January 2014 extended order by HHJ Mackie QC. Mr Gopee argued that:

i) HHJ Mackie was biased in that he had prejudged all matters in which Mr Gopee and his associated companies were involved. He had pursued a crusade against Mr Gopee which was entirely unjustified.

ii) As a result Mr Gopee and his associated companies have been and will be continued to be deprived of their right to a fair trial contrary to the Human Rights Act 1998 if all the actions are dealt with by HHJ Mackie.

iii) HHJ Mackie had disregarded the changes in legislation to the Consumer Credit Act 1974.

iv) HHJ Mackie had wrongly reopened past cases without regard to authorities such as Henderson v Henderson (1843) AER 378.

v) As a result of the extended order dated 29 January 2014, associated companies of Mr Gopee, which had purchased properties, or which had acquired charges over properties through subrogation as a result of paying off debts owed to previous chargees, had been unable to have their purchases, or charges, protected on the register or protected by way of a notice on the Register of Titles maintained by HM Land Registry. The result of the extended order was that Ghana Commercial Investments Limited and Moneylink Finance Limited were unable, despite the fact that they had acquired properties, or obtained rights to charges through subrogation or as assignees to submit any application to HM Land Registry to protect their interests in the properties. Accordingly by the extended order HHJ Mackie had effectively deprived Mr Gopee and the applicant companies of their right to peaceful enjoyment of their possessions and protection of their properties contrary to the Human Rights Act 1998.

vi) The extended order was accordingly made without jurisdiction, or in excess of jurisdiction, without any valid justification. It was highly oppressive and of an exceptionally Draconian nature and ought to be set aside or quashed.

vii) The fact that HHJ Mackie had stated that there were no pleadings in the action and that the decision was by way of the court’s own motion deprived Mr Gopee and his companies of their rights to a fair trial by an independent and impartial tribunal in breach of the Human Rights Act 1998.

Alas for Mr Gopee, his applications, made as late as March 2015, had left out both the transcripts and any mentions of HHJ Mackie QC’s judgment of 5 February 2014 and the 31 July 2014 judgment. The Court was provided with those judgments (but not by Mr Gopee), and the detail therein made a significant impact on the Court’s view of the merits of his proposed appeals.

Although I was initially concerned at the hearing by the extent of the relief granted in this case by HHJ Mackie not only under his original order dated 19 July 2013 but also under the extended order, and the effect which it had on Mr Gopee and his associated companies to exercise their right to purchase properties and, by means of discharging sums owing under previous charges, to acquire the benefit of charges by subrogation, I am satisfied, on a full reading of the papers, that Mr Gopee and his associated companies have no reasonable prospect of success on appeal either against the order made on 19 July 2013 or against the extended order made on 29 January 2014.

On the specific issues raised by Mr Gopee:

i) HHJ Mackie has now retired and therefore will not be hearing any cases. All cases will be dealt with either in the London Mercantile Court by a different judge (if they raise issues of principle) or by a judge of the Central London County Court, reserved to District Judge Langley or District Judge Lightman. Accordingly no questions of bias or prejudice can arise in the future and there is nothing to support the allegations of past bias.

ii) Neither Mr Gopee nor his associated companies have lost their ability to acquire properties, or interest in properties such as charges, or to protect their interests accordingly by means of registration at HM Land Registry. The fact that the results of the extended order requires them to issue proceedings to justify their entitlement to do so is merely as a result of the case management directions given by HHJ Mackie which, given the appalling past history of Mr Gopee and his associated companies’ loans in breach of the requirements of the Consumer Credit Act 1974, are entirely justifiable. The fact that Mr Gopee and his associated companies are required to go through the hoops of issuing proceedings against HM Land Registry to satisfy the court that their loans or acquisitions are not yet another example of an appalling breach of the Consumer Credit Act 1974 cannot possibly in all the past circumstances be regarded as a breach of their human rights. If HM Land Registry wrongfully object to a request for registration in circumstances where there are no possible objections on Consumer Credit or other grounds, then no doubt it will have to bear the costs of any application made by Mr Gopee and/or his associated companies to obtain the Court’s sanction to the transaction.

iii) In other words the orders of HHJ Mackie have not precluded Mr Gopee and his associated companies from protecting or establishing their rights in appropriate proceedings in the London Mercantile Court or in the Central County Court. These orders were a legitimate means of protecting the interests of the numerous borrowers whom Mr Gopee’s companies had dealt with in serious breach of the requirements of the Consumer Credit Act. HHJ Mackie had by the time of the extended order had extensive experience of dealing with the problems to which these cases gave rise. His response was in my judgment a practical and proportionate one.

Whether this will be the end of Mr Gopee’s procedural challenges to the various orders and case management directions made by HHJ Mackie QC will have to remain to be seen. Certainly this latest batch of applications have run into the ground. Failing to provide the Court with details of relevant judgments in the appealed matters is never a good move, particularly if they are damning of you.

Although HHJ Mackie QC has now retired, his management of the Gopee cases has been an epic task and one accomplished with a clear view of the demands of justice as between the (many) parties.

Sooner or later – let us hope sooner – Mr Gopee is going to have to face the task of defending the validity and recoverability of the loans made by his companies in breach of Consumer Credit Act 1974 at trial. So far, there has been no sight of such a defence.

I have heard that Mr Gopee is still threatening borrowers with court proceedings unless payments are made. Anyone who has borrowed from one of Mr Gopee’s companies should be aware that he can’t start proceedings without permission of the Mercantile Court and that there are forthcoming trials on the issue of whether the debts are legally enforceable.

*The title is Chief’s fault entirely and I declaim any responsibility

We though it would be bad. And thanks to the JCWI, we can now have an evidence based stab at an answer. JCWI co-ordinated an evaluation of the West Midlands pilot of ‘Right to Rent’ and have published the report (summary here, and full report here).

Notably, the Home Office has not released its evaluation of the pilot, despite the announced commitment to a national roll out.

As well as various meetings and evidence from organisations on observed impact, the evaluation involved questionnaires for completion by both landlord/agents and tenants. These were received in roughly 40/60 proportion.

Headline figures

42% of landlords said that the Right to Rent requirements have made them less likely to consider someone who does not have a British passport.

27% of landlords are reluctant to engage with those with foreign accents or names.

Checks are not being undertaken uniformly for all tenants, but are instead directed at individuals who appear ‘foreign’. (Only one British citizen in the pilot area who responded to the survey had been asked by their landlord whether they had permission to be in the UK. It is noteworthy that they did not describe their ethnicity as ‘White British’.)

50% of respondents who had been refused a tenancy felt that discrimination was a factor in the landlord’s decision. (Evidence has been received through the survey and submissions of cases where individuals with valid leave to remain or a pending Home Office application have been refused tenancies despite having legal status in the UK and, therefore, the Right to Rent.)

65% of landlords are much less likely to consider tenants who cannot provide documents immediately. (So anyone, possibly including the 17.5% of the British population who do not have a passport, who cannot immediately provide adequate docs may be rejected. The ’48 hour response’ promised by the Home Office on queries, does not impress landlords enough to wait).

57% of landlords and agents nationwide and 40% in the pilot area feel they have not effectively understood the Right to Rent changes or remain unaware of them. (Confusion is greater among landlords who are not a member of a professional body and those who own fewer properties. 72% of landlords who were not members and 70% who leased less than five properties felt that they had not understood or were unaware of the changes.)

Confusion in undertaking the checks is also widespread. Data obtained through a Freedom of Information request shows that 86% of enquiries to the Home Office Online Checking Tool related to individuals with valid leave to remain in the UK, who therefore had the Right to Rent.

65% of landlords have not read or feel they have not fully understood the ‘Code of Practice on preventing illegal immigration’ or the ‘Code of Practice on Avoiding Discrimination’.

56% of tenants in the ‘pilot’ area remain unaware of the Right to Rent scheme. 81% have not received any advice on how to prepare for the checks when applying for a tenancy or their rights in relation to the Equality Act 2010.

44% of tenants within the pilot area had not been asked for identity documents. This shows that the checks are not being undertaken by all landlords and agents in the ‘pilot’ areas.

One third of respondents from the ‘pilot’ area had been charged a handling fee of over £50 in order to process their application, including undertaking the Right to Rent checks. 20% had been charged a fee of over £100. One landlord also stated that he charged over £100 to undertake the checks.

69% of landlords do not feel that they should be made to undertake these checks. 77% are not in favour of a national roll out.

In two out of the three cases where a survey respondent from within the pilot area did not have valid leave to remain or an outstanding application with the Home Office at the time of applying for a tenancy (and therefore did not have the Right to Rent) they stated that they had subsequently found a property and were renting privately.

Data received through a Freedom of Information request also demonstrates that enforcement during the ‘pilot’ has been very low. Between 1 December 2014 and 22 May 2015, only two landlords were issued with a civil penalty notice as a result of renting a property to someone who does not have the Right to Rent. Data from JCWI’s Irregular Migrant Advice Line shows that the majority (66%) of irregular migrants who have contacted the advice line rarely enter into private tenancy agreements, instead staying with friends or ‘sofa-surfing’.

Comment

While based on a smallish data set, there seems to be no reason to believe that the results are unrepresentative, particularly on the landlord responses, which included larger and smaller landlords, members of landlord organisations and non-members.

The results are actually even worse than I expected.

The majority of landlords not being prepared to accept the 48 hour delay for a Home Office check shouldn’t have surprised me, but the 65% is higher than expected. And there will be a very significant effect resulting – regardless of immigration status, or indeed nationality – not being able to produce obviously acceptable documents right away will lose people tenancies.

The discriminatory impact is also obvious and very significant. Of course, refusing tenancy because someone does not have a British passport or has a ‘foreign’ accent or name is straightforwardly unlawful/illegal discrimination under Equality Act 2010, but unless or until there are some discrimination claims brought (pour encourager les autres), this is hardly likely to register with landlords and agents who, and let’s face it understandably, see problems and potential prosecution under Right to Rent as the alternative to the ‘easy’ route.

Add in the lack of comprehension amongst both landlords and tenants, the lack of any actual results and, of course, the unsurprising fact that most of those without immigration status do not take on formal tenancies, and this policy is going to have to take some quite astonishing justification in any Home Office evaluation to take forward nationally. It is, on a purely practical basis, a fiasco.

When do local authorities have to conduct Housing Act 2004 hazard assessments as part of their homelessness duties?

The first part of the answer to this question was provided by the Court of Appeal in Temur v LB Hackney [2014] EWCA Civ 877 (our note here), where it was held that there was no obligation for an assessment when deciding whether a property was reasonable to continue to occupy under s.175(3) of the 1996 Act. The same Court has provided the second part of the answer in Firoozmand v LB Lambeth [2015] EWCA Civ 952, this time in connection with accommodation offered in discharge of the s.193 duty.

Mr F is an Iranian national with a long history of mental illness and acute sensitivity to noise. The local authority accepted a duty to rehouse Mr F on 17/9/13 and they kept him in the hostel room he was occupying temporarily at Studio 48, 40 Kenbury Street in discharge of that duty. A review of its suitability was requested on the grounds that Mr F was unable to tolerate the living conditions and he was moved to Flat 52 on an upper floor. Mr F remained troubled by neighbour noise in that new flat and a further review was requested, which culminated in a negative s.202 decision and an appeal to the County Court. The decision was quashed because the issue of suitability had not been properly addressed.

The reviewing officer then concluded that Mr F’s medical conditions were being adequately managed and that any noise and disruption within the building was at a low level. Taking into account inner-city living, the property was considered suitable. A County Court appeal was dismissed and permission to the Court of Appeal was granted on the sole ground that the review did not take account of Parts 9 and 10 of the Housing Act 1985 (“HA 1985”) and Parts 1 to 4 of the Housing Act 2004 (“HA 2004”) in assessing the suitability of the appellant’s accommodation, in breach of s.210 HA 1996.

Mr F’s argument was that by virtue of s.4 of the 2004 Act, the authority came under a duty to inspect the premises for any Category 1 or Category 2 hazards, which they failed to do. In addition, s.210(1) of the 1996 required the authority at least to have regard to the need for an assessment. As there was no mention of the 2004 Act in the decision letter, the authority could not, it was argued, have had regard to it.

The Court’s observations on this point begin at paragraph 30:

Much is likely to turn on the seriousness of the complaint about the condition of the premises or of the reasons for the inspection. This is a matter of judgment for the local housing authority in each individual case.

The Court rejected the contention that there must be a hazard assessment whenever a homeless applicant complains about a relevant matter. In Temur the CoA merely remarked that an assessment of suitability of s.193 accommodation may involve carrying out a hazard assessment. Furthermore, at 35:

I therefore accept Mr Beglan’s submission that, as in other cases involving an inquiry by a local housing authority, it is for the authority to decide whether it has sufficient information in order to make a decision subject only to a challenge on grounds of misdirection or irrationality.

On the question of whether the council ‘had regard’ to the 2004 Act (at 38):

We are dealing here with experienced housing officers who can be assumed to have relevant background knowledge of what they should consider in relation to the various homelessness applications with which they deal. It seems to me much more likely in the light of the detailed consideration which the Council did give to the noise issue that none of the officers responsible thought that the scale of the problem merited a full hazard assessment. Nor is it clear to me what such an assessment would have achieved.

There is a suggestion in paragraph 39 that for the council to have breached its s.210 duty would have required a failure to investigate a possible Category 1 hazard. In any event, that is probably the practical effect of this judgement and it limits significantly the cases where this argument can be raised, except possibly in out of time reviews where natural overcrowding or dilapidations have occurred over a long period of time.

Three job ads..

Tenancy at Garden Court North Chambers

Want to join us?

In line with our continuing expansion policy we would like to invite applications from experienced housing and immigration law practitioners (five years’ post qualification experience).

We recently moved premises to Blackfriars House in the heart of Manchester.  Our new home has a custom-built layout with fantastic conference and meeting facilities, enabling superior service to clients and supporting co-operative working practices amongst our barristers.

Applications should be submitted with CV and at least two references to:

The Tenancy Committee
Garden Court North Chambers
3rd Floor, Blackfriars House
Parsonage
Manchester
M3 2JA

Closing date: 2nd October 2015 

Chambers operates an equal opportunities policy and is committed to diversity amongst its members.  We are happy to make reasonable adjustments to enable disabled candidates to demonstrate their suitability for the position.

Philcox Gray Solicitors

GT Stewart Solicitors & Advocates

HOUSING SOLICITORS

We are a leading Legal Aid firm with vacancies in London and Kent for Housing solicitors to work within the Housing Team Department.

We are seeking the following:-

1. A Housing solicitor who is very experienced in housing law or can attain Legal Aid Agency Housing Category Supervisor Status for our Dartford Office.

2. 2 Housing solicitors for our Camberwell office.

Interested candidates should email CVs and covering letter to recruitment@gtstewart.co.uk

The closing date for applications is  7 October 2015

Kazadi v Martin Brooks Lettings Estate Agents Limited & Faparusi, Edmonton County Court 14 May 2015

Thanks to Legal Action September 2015 Housing law updates for this one.

An assured shorthold tenancy deposit and unlawful eviction case in which everyone involved save the tenant – letting agent, landlord and police – did things about as wrongly as they could possibly have done.

Mr K had a one year AST from March 2006. A deposit of £1300 (2 months rent) was paid. The tenancy became a statutory periodic in March 2007. A further (new) tenancy of the same property was entered into in April 2008 and then a statutory periodic tenancy.

The deposit was not protected at any stage, nor was prescribed information served.

At no point was the identity of the landlord, Mr Faparusi, provided to Mr K.

From the start of the tenancy there were problems with the central heating, which was not fully functional, and the toilet did not flush properly. This was reported to the managing agents, Martin Brooks Lettings, but nothing was done.

On 8 January 2014, an employee of Martin Brooks Lettings came to the property. He tried to force his way inside and was abusive to Mr K. He said Mr K would be evicted. Mr K said he would rely on the legal process.

On 11 January 2014, Mr Faparusi came to the property with another 8 men. Mr K’s visitors were thrown out, and Mr K was held down by the group. A blade was held close to his eye and he was told that if he continued to struggle he would lose an eye. Mr K was held in the flat until the police arrived, some 20 minutes later.

The police, being as utterly clueless on illegal eviction as they so often are, escorted Mr K out of the property, after a few minutes to collect some belongings. The police refused to help Mr K regain entry. (At this point, we should all recall Naughton v Whittle and Chief Constable of Greater Manchester Police. Manchester County Court 30/11/2009 ).

An agent of Mr F then contacted Mr K to collect his belongings, but when he arrived he found they had been thrown out of a window into the street and not all his belongings were returned.

After being thrown out, Mr K sofa surfed with friends for some 277 days, as his student status and relying on housing benefit made finding an equivalent tenancy very difficult.

Mr K found solicitors. Martin Brooks Lettings refused to answer to demands for the landlord’s name and address or for Mr K’s re-admission. An injunction and order under s.1 Landlord and Tenant Act 1985 were sought. This did not result in re-admission (presumably due to re-letting) but Mr Faparusi was identified and joined to the claim.

Mr K’s claim was for return of deposit and s.214 HA 2004 penalty, damages for assault and false imprisonment, disrepair, unlawful eviction and special damages for  unreturned belongings.

The managing agents failed to file a defence. Mr Faparusi’s defence was struck out for break of an unless order.

At final hearing the Court awarded:

Return of the deposit of £1300

£1,300 for the breach of deposit requirements in 2008 (on the basis that the requirements were relatively new!)

£2,600 for breach of deposit requirements for the subsequent statutory periodic tenancy (2 x deposit on basis that landlord ‘should then have been aware of the law’)

£1,000 for the assault on 11 January 2014

£300 for false imprisonment

£4,450.52 in special damages for belongings not returned.

£6,825 for disrepair based on 15% of rent for 70 months.

£31,850 for unlawful eviction based on a daily rate of £170 for 186 days (being the six months that the court found it would have taken the landlord to have gained possession lawfully).

£3,000 aggravated damages.

£2,000 exemplary damages (presumably based on the costs of lawful possession proceedings)

The managing agents were ordered to pay £400 for pre-eviction harassment and 5% of the costs of the case for the failure to comply with s.1 LTA 1985.

Comment

The agents (apparently ‘under new management’ from April 2015) were undoubtedly badly behaved and ignored their legal responsibilities. But they might fairly consider themselves hard done by for damages for harassment on the basis of what appears to have been one incident on their part (harassment requiring a course of conduct).

The problem with giving the courts discretion on the tenancy deposit penalty is clearly demonstrated here. A 1x penalty because ‘the law was relatively new’ (actually a year old) is dubious.

I am also not sure about the 6 month limit on the unlawful eviction damages as being the period it would have taken to get lawful possession. The principle is that damages run until the evicted tenant obtains (or reasonably should have obtained) equivalent accommodation. Setting a time limit of hypothetical lawful possession proceedings seems to me to be an unmerited limit on damages for a statutory tort. No notice or possession proceedings were brought, so why should the landlord escape the full consequences of their unlawful act?

The police actions were, of course, completely wrong. Indeed so wrong that I wonder if a Naughton style claim might be possible. For heavens sake, how long does this utter ignorance of the law on illegal eviction in police forces have to go on!

On 1 October 2015, a whole range of changes come in, which affect whether or not a landlord can serve a s.21 notice on an assured shorthold tenancy (in England). There are some sensible ones, and then there are some which, because of the way the requirements have been set out, will inevitably cause confusion and problems. There is also a whole new prescribed form of section 21 notice.

The changes are a combination of the Deregulation Act 2015 and The Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 (SI 2015 No. 1646). There are also supposed to be the Smoke Detector regulations, which fell apart in Parliament despite being supposedly in force by 1 October.

Specific changes – these apply for all new assured shorthold tenancies starting after 1 October 2015 (and then after 3 years, to all tenancies). By new, that means new – not a statutory periodic arising or a renewal tenancy.

Retaliatory Eviction – the provisions of s.33 and s.34 Deregulation Act will come into effect for all new assured shorthold tenancies granted on or after 1 October 2015. We have discussed these here.

End date for a section 21 notice. The new section 21(4ZA) Housing Act 1988 removes the need for any s.21 notice, even under s.21(4)(a), to expire on the last date of a period of a tenancy (at least in England). Two months notice (for a weekly or monthly rent period) is all that is required.

To accompany this is the requirement to repay the tenant pro rata the ‘unused’ proportion of any rent paid in advance where the s.21 expires in the course of a rent period and the tenant leaves. (Bewilderingly, this is to be enforced by any court making an order for possession under s.21. But if there are possession proceedings, the tenant probably didn’t leave…).

Date for serving a section 21 notice. The new sections (4B) to (4E) of s.21 HA 1988 mean that:

• A s.21 cannot be served in the first 4 months of a tenancy (but not applicable to a statutory periodic arising).
• A possession claim cannot be started on a section 21(1) or (4) notice after the end of 6 months from the date the notice was given. Or for a s.21(4) notice where the notice period has to be longer than two months, a possession claim cannot be started based on that notice more than 4 months after the end date specified in the notice.

Prescribed form of s.21 notice – in the schedule to the SI here. Must be used for all ASTs starting on or after 1 October 2015. May be used for existing tenancies.

Prescribed legal requirements. The new s.21A HA 1988 – No s.21 notice can be given unless (from the SI):

• The tenant has been provided with the Energy Performance Certificate for the property (probably before the commencement of the tenancy in order to be compliant)
• The tenant has been provided with a current gas safety certificate (before the tenant occupies the premises and annually thereafter).

Prescribed information – the new s.21B – no s.21 notice can be given unless the tenant has been given (by landlord or agent) the prescribed information.

This prescribed information is the CLG booklet “How to rent: the checklist for renting in England” (Current version). It can be given in hard copy or where the tenant has notified the landlord/agent of an email address where the tenant is prepared to accept service of notices, by email.

Now things get a bit complicated. The landlord does not have to provide a further copy whenever the booklet is updated, during the course of the tenancy. However, where a ‘new’ replacement tenancy has been granted (including a statutory periodic, I think), there is no requirement to give a further copy, unless there is a new version of the booklet out before the first day of the new tenancy.

Yes, a stroke of genius there. Rather than make it a ‘once only’ provision, or alternatively require the booklet to be given at the start of any ‘replacement tenancy’ as well as the original one, the Regulations make it conditional on whether the booklet has been updated before the start of the replacement tenancy.  Never mind, there is to be a review in 5 years.

Comment

Lots to go wrong here. Not least given the relative paucity of information on these changes (and the last minute approval of the regulations).

The requirements for providing EPC and gas certificate before the tenant moves in will no doubt trip up quite a few landlords and agents. Likewise, the ban on service of a notice within the first 4 months of a tenancy will trip up the inveterate ‘serve s.21 on day one of tenancy’ brigade.

Moreover, the actual provisions make it impossible for a s.21 notice to expire on the last day of a 6 month fixed term. (Can’t be served in first four months, but must give two months notice).

The ‘use it or lose it’ provisions will also come as a shock to many, used to letting a s.21 dangle over their tenant’s heads for months, if not longer.

But it is the ‘How to rent’ booklet provisions that seem most likely to cause long term chaos to me. The expectation that landlord (and agents) will check before the start of each replacement tenancy to see if the booklet has been updated since, oh, a year ago, strikes me as hopelessly optimistic.

It also makes me think that someone had better keep an archive of updated editions of the booklet, with dates, for both landlords and tenants purposes. I’ll set up a page for this, I think.

In any event, expect there to be a lot of invalid s.21 notices from 1 February 2016 onwards…

(And we shouldn’t forget the prescribed form for section 8 notices, required from 7 April 2015 onwards. Form 3 here.  Nor should we forget the now ridiculously complicated deposit regulation requirements after the Deregulation Act, as examined here.)

A trio of job ads

Shelter Training

Shelter Training are recruiting freelance housing and homelessness law trainers to deliver advanced courses both at their London training venue in EC1 and for groups of staff at organisations around the country. For an application pack please email training@shelter.org.uk

Brent Community Law Centre

Brent Community Law Centre provides quality advice and casework in relation to housing, debt, employment, welfare benefits, public law, community care and immigration and asylum for the benefit of people who live, work or study in the London Borough of Brent and organisations based in the area.  We also provide a generalist telephone legal advice service.

We are looking to recruit the following to join our small but effective team:

Debt & Housing Caseworker 

Part-time – 24 hours a week.

Salary – £25,000 per annum pro rata (incl London weighting)

The post will initially be for a fixed-term contract of twelve months with a view to becoming a permanent post thereafter, dependant on performance and the continuation of current Law Centre funding streams.

If you are interested in applying, please e-mail  alisonplaku@brentlaw.org.uk for an application pack.

Closing date: 5.00 p.m. on Wednesday, 30 September 2015

Interviews will take place in the week commencing 12 October 2015.

Brent Community Law Centre is an equal opportunities employer.

TV Edwards LLP

Housing/Community Care Solicitor Vacancy

Our continued expansion of the social welfare department provides another opportunity to Join our team of renowned lawyers, who thrive on delivering access to justice across all fields of social welfare. Supported by our colleagues in family, crime and mental health law, we offer holistic “outside the box” advice to our client base.

This is an exciting opportunity to join a pioneering Legal Aid team (18 strong) at a time of growth. The vacancy is in our Whitechapel office although we have 3 other offices across London.

Our staff are without doubt our best asset and we reward performance, provide flexible working practices and positively encourage every individual’s contribution as to how we deliver services.

Market leaders in legal sector IT infrastructure systems and billing, we offer excellent support and training opportunities acknowledged in our Lexcel accreditation and Investors in People awards.

We need someone of 0-3 years’ PQE but are flexible subject to your talents.

Experience in advising clients on all areas of homelessness and defending possession proceedings advantageous.

Hours – 9.30 – 5.30 Mon – Fri.

Salary subject to experience.   23 days annual leave.

An application pack, application form and equality monitoring form can be downloaded from the website at http://www.tvedwards.com/site/careers/opportunities.

The closing date for applications is 25^th September 2015.

Completed applications together with equality monitoring data must be sent by email to:  Christine.woolfenden@tvedwards.com

The Immigration Bill 2015 has been published and will have a Second Reading in the House of Commons on October 13, 2015. It contains some truly remarkable provisions about housing. But first, short re-cap to remind you how we got to this stage.

The Immigration Act 2014 introduced the concept of the “right to rent”. In short, if you don’t have a right to rent (very broadly, if you’re not lawfully present in the UK), then you’re disqualified from renting most residential accommodation. The penalty, however, fell on the landlord or agent, who was liable for a civil penalty (a fine, with a right of appeal).

Given that many landlords can’t even get the tenancy deposit provisions right, the prospect of requiring them to identify Zambrano carers and other immigration issues was, frankly, ludicrous. So the government announced that the 2014 Act would be introduced on a trial basis in a few local authority areas.

Following the general election, the government returned to this topic. The Prime Minister made a speech indicating that he wanted to make it easier to evict persons unlawfully present in the UK and then we got more detail in the Queen’s Speech and in a subsequent CLG/Home Office announcement. Whilst this was going on, independent research into the 2014 Act trial areas revealed that the obvious discriminatory risks inherent in the legislation had indeed come to pass.

Which brings us back to the 2015 Bill. It amends the Immigration Act 2014 in two ways.

First, new criminal offences are created (cl.12, introducing new ss.33A-C, 2014 Act). A landlord commits an offence if (i) his property is “occupied by an adult who is disqualified as a result of their immigration status from occupying premises under a residential tenancy agreement” (i.e. an adult without a 2014 Act “right to rent”); and, (ii) the landlord knows or had reasonable cause to believe that this is so (new s.33A(1)-(3)). It appears that can be committed either through own knowledge/belief or because the Secretary of State has served a notice on the landlord, informing him that the property is so occupied (s.33(5)). It is also possible to commit this offence where a limited right to rent has expired (s.33A(7)). Similar provisions exist for agents (s.33B).

The penalty is up to five years imprisonment (on indictment, 12 months on summary conviction) and/or a fine (s.33C). Now, I accept that five years is likely to be reserved for repeat offenders, but still, WTAF?!

Secondly, we have some major reforms to the law on eviction. Clause 13 introduces new s.33D, 2014 Act. It works like this. If the Secretary of State becomes aware that a person without a right to rent occupies the property, he serves a notice on the landlord (s.33D(2)). The landlord can then serve a notice on the tenant, giving 28 days notice (s.33D(3)-(4)), bringing the tenancy to an end. That notice is enforceable as if it were an order of the High Court (s.33D(6)). The service of the notice by the Secretary of State has the effect of turning the tenancy into an excluded tenancy (s.3A, Protection from Eviction Act 1977).

For assured and Rent Act tenants mandatory grounds for possession are also introduced (s.33E).

Comment

There are many, many things to say about this and I suspect my fellow NL authors will want to add to this list in the comments, but, for starters:

I’m not entirely clear if the “notice enforceable as if a High Court order” is intended to only apply to lettings which are not governed by the HA 1988 or Rent Act. If they are, what is the point of the new mandatory grounds? Why would you ever use the mandatory ground? Surely it’s pretty dangerous to use the “notice enforceable as High Court order” route since, as drafted, the Bill doesn’t provide any defence if you turn out to have erroneously evicted someone.

What happens if rent is paid in advance and the tenancy is terminated, where are the rent repayment provisions (cf the Deregulation Act 2015 position)?

What happens if the Secretary of State serves an erroneous notice? How does the landlord or occupier challenge that? Is it by judicial review and, if so, how is the tenant suppose to know when the landlord has been served? Or can you simply seek an injunction to prevent enforcement because a jurisdictional (or precedent) fact is not made out?

How many people are unlawfully present in the UK and are Rent Act tenants? Surely anyone in that position would have an exceptionally strong case to be allowed to remain in the UK given that it’d mean they’d been here since at least 1989.

*and it is English, this hateful bilge doesn’t extend to Wales, Scotland or NI yet, see cl.15.

Following hard on the heels of J’s excellent post on the Immigration Bill, we now have further discussion of the EU right to reside rules by the CJEU in Jobcenter Berlin Neukolln v Alimanovic  Case C-67/14 (to which I might say, good luck landlords).  To say that the EU right to reside rules are politically contested is of course a given; but what politicians don’t seem to have cottoned on to is that they are also contested as a matter of law.  I should say that I’m not discussing here the ambit of “special non-contributory cash benefits – on that point and for a discussion of all the issues in Alimanovic, readers are re-directed to Steve Peers’ characteristically insightful discussion on the EUlawanalysis blog.

There is significant controversy over the scope and lawfulness of the right to reside rules contained in the Citizenship Directive (2004/38, Art 7).  These rules provide that EU citizens have a conditional right to reside in another member state after three months and if they have resided there for less than five years (Art 7(1)).  The condition is that the national is either a worker or a jobseeker or “have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State” (there are other categories which are not relevant for the moment).  The category of “worker” is extended by Art 7(3) to include those who are temporarily unable to work as a result of illness or accident; are involuntarily unemployed after having been employed for more than one year and are registered as a jobseeker; or you can retain the status of worker for six months if you have been a worker for less than 12 months and are registered as a jobseeker; or you embark on vocational training.  States are entitled not to confer any right to social assistance on persons other than “workers”.  I haven’t got on to the extension of the right to family members but that is superfluous to this discussion.  If you have no right to reside in the host member state, then that state can exercise its right to use an expulsion measure.

Now, without going in to unnecessary detail (and there is a lot of that), homelessness assistance and allocation of accommodation in the UK relies on the status of “worker” (that is, of course, a simplification – see Immigration (European Economic Area) Regulations 2006; Allocation of Housing and Homelessness (Eligibility) (England) Regulations 2006).  All of this would be great and relatively easy to appreciate, if not quite understand, were it not for the CJEU’s interventions.  Let me just summarise four such interventions, the first two of which (on one view, ie mine) are logical and defensible, the second two of which appear to be problematic and flatly contradictory:

(a) There is the extension of the extension of right to reside to Zambrano carers (as to which, see Sanneh v SSWP [2015] EWCA Civ 49), which one can justifiably say (I think) constitutes a purposive reading of the Directive.

(b) The right to reside is extended to persons who are temporarily unable to work as a result of pregnancy and childbirth, even though formally they have lost their status as worker, because the classification of “worker” and the rights of workers of do not necessarily depend on the actual or continuing existence of an employment relationship.  Thus, Art 7(3) is not exhaustive in its list of the extension of the category of worker: St Prix v SSWP  C-507/12.

(c)  Even where the person loses the status of worker, the question of whether that person is an unreasonable burden to a host member state’s social assistance system requires an individual overall assessment “of the specific burden which granting that benefit would place on the national social assistance system as a whole, by reference to the personal circumstances characterising the individual situation of the person concerned”: Pensionsversicherungsanstalt v Brey C-140/12.  This is because of the narrow interpretation of the conditions in light of Arts 18 and 20 of the Treaty of the Functioning of the European Union (TFEU).

(d) A member state can refuse “social benefits to economically inactive Union citizens who exercise their right to freedom of movement solely in order to obtain another Member State’s social assistance although they do not have sufficient resources to claim a right of residence”: Dano v Jobcenter Leipzig C-133/13, [78].  Provided that an assessment of the financial situation of each person is conducted to determine the unreasonable burden question, that is sufficient to comply.

The apparent contradiction between Brey and Dano was as to the nature and requirement of this individual assessment; and it might also be argued that the specific facts of Dano were against the precepts of the TFEU: “Although her ability to work is not in dispute, there is nothing to indicate that she has looked for a job” ([39]).

It was hoped that Alimanovic would resolve this contradiction.  The Advocate General’s opinion both recognised it and suggested a way around it ([87]-[111]), drawing a distinction between the legal response in three situations: that of the national of a Member State who moves to the territory of another Member State and stays there for less than three months, or for more than three months but without pursuing the aim of seeking employment there (situation 1 – Dano); that of the national of a Member State who moves to the territory of another Member State to seek employment there (situation 2 – Dano rationally extended to this situation); and that of the national of a Member State who has stayed in the territory of another Member State for more than three months and who has worked there (situation 3).  Situation 3 is the problem case and reflects the facts in Alimanovic.  The AG’s view was that “the requirement of an individual examination actually concerns the application for social assistance and not the lawfulness of the residence” so that the assessment should “take into account, inter alia, not only the amount and regularity of the income received by the citizen of the Union, but also the period during which the benefit applied for is likely to be granted to them”, and further “the demonstration of a real link with that State ought to prevent automatic exclusion from those benefits” ([105], [106], [107] respectively).

Now, let’s just stop there for a moment.  If the AG was right, then local housing authorities would be required to conduct this individual assessment in all cases where the applicant for homelessness assistance or an allocation was not a worker.  Under the Immigration Bill, it is perfectly possible that private landlords and their agents would have been required to conduct that assessment (although others will have a better understanding of that mess than me).

The CJEU appears – and I mean “appears” because the way I read the judgment is that it is a little eliptical – to have decided differently on this point.  First, they say that no Brey-type individual assessment is necessary in “circumstances such as those at issue” in this case.  Secondly, they go on to say:

60 Directive 2004/38, establishing a gradual system as regards the retention of the status of ‘worker’ which seeks to safeguard the right of residence and access to social assistance, itself takes into consideration various factors characterising the individual situation of each applicant for social assistance and, in particular, the duration of the exercise of any economic activity.

61      By enabling those concerned to know, without any ambiguity, what their rights and obligations are, the criterion referred to both in Paragraph 7(1) of Book II, read in conjunction with Paragraph 2(3) of the Law on freedom of movement, and in Article 7(3)(c) of Directive 2004/38, namely a period of six months after the cessation of employment during which the right to social assistance is retained, is consequently such as to guarantee a significant level of legal certainty and transparency in the context of the award of social assistance by way of basic provision, while complying with the principle of proportionality.

62      Moreover, as regards the individual assessment for the purposes of making an overall appraisal of the burden which the grant of a specific benefit would place on the national system of social assistance at issue in the main proceedings as a whole, it must be observed that the assistance awarded to a single applicant can scarcely be described as an ‘unreasonable burden’ for a Member State, within the meaning of Article 14(1) of Directive 2004/38. However, while an individual claim might not place the Member State concerned under an unreasonable burden, the accumulation of all the individual claims which would be submitted to it would be bound to do so.

63      Having regard to all the foregoing considerations, the answer to the second question is that Article 24 of Directive 2004/38 and Article 4 of Regulation No 883/2004 must be interpreted as not precluding legislation of a Member State under which nationals of other Member States who are in a situation such as that referred to in Article 14(4)(b) of that directive are excluded from entitlement to certain ‘special non-contributory cash benefits’ within the meaning of Article 70(2) of Regulation No 883/2004, which also constitute ‘social assistance’ within the meaning of Article 24(2) of Directive 2004/38, although those benefits are granted to nationals of the Member State concerned who are in the same situation.

I recently found myself reading and writing about the Court of Appeal judgement in Edwards v Kurasamy (our report here). Doing so made me think about the recent spate of judgements given by Lewison LJ that have touched on the private rental sector. I am thinking here of Spencer v Taylor (which we analysed here), Charalambous v Ng, and now Edwards v Kumarasamy. (our report). All of these are cases that touch primarily on the Private Rented Sector and all of them feature leading judgements by Lewison LJ. These are not of course the only big PRS cases to come from the CoA recently so I am not suggesting that Lewison LJ is the only CoA judge dealing with the PRS (see McDonald v McDonald for example) but he does seem to be getting a healthy majority right now.

There are notable parallels in these judgements:

• They were fairly controversial
• They all involved a return to the statute and a tight reading of it
• They upset received wisdom about what the provision meant.

To throw in my own piece of controversy I also think every one of these decisions was absolutely correct. Not correct in a moral sense or even correct on the sense that this is what was intended all along but undoubtedly correct in that they give a precise reading of the statue and must therefore be seen as an accurate reflection of the will of Parliament. The fact that they caused surprise and upset is perhaps more a reflection of the manner in which housing lawyers (and I include myself in this critique) have become complacent in their reading of the law.

Consider the evidence more carefully.
In Spencer Lewison engaged in a close reading of s21(1) and 21(2), Housing Act 1988. He concluded that s21(2) used the word “may” and therefore must on a plain English reading be seen as permitting the service of a notice under s21(1)(b) rather than directing it. He then looked at s21(1)(b) and again reading it plainly concluded that it in no way prevented the service of a notice provided that there had previously been a fixed term tenancy of some sort. Notably this was not how the case had been argued before him and differed somewhat from previous readings but he drew support from this material and used it to bolster the essential close reading of the Act. This decision has been criticised but notably primarily on the basis of policy and on what Parliament is assumed to have intended more than on the actual wording of the Act.
In Charalambous we had a close reading of s213 and particularly s215, Housing Act 2004. Here a diasctintion was drawn between the financial penalties fund under s213 and the s21 penalties under s215. Lewison LJ made clear that the penalties under s215 bite on this case because they plainly state that they required the registration of a deposit before service of a notice under s21. Again the intention of Parliament was raised but dismissed as a point in the face of the cold wording of the Act. It is worth noting paragraph 17 of this decision in which Lewison LJ begins:

Let me begin by looking at what section 215 (1) actually says.

No clearer statement of his approach to these cases could be made by me.
In Edwards Lewison’s attention was turned to s11, Landlord & Tenant Act 1985. By this stage we should have been expecting it. But actually Lewison LJ tells us again how he is reading these statutes. In dismissing an argument put to him he states that he “cannot find it in the words of the statute”. Again, no clearer statement of his approach is required. And so we find that a landlord’s repairing obligations extend beyond that which he has demised to the tenant and into any part in which he has a property right and further that outside the ambit of the demised property a tenant is not obliged to give notice to the landlord of a want of repair.

Lewison LJ appears not to be the only judge doing this. Consider Superstrike v Rodrigues (our report here) in which Lloyd LJ gave the leading decision (although Lewison LJ was on that panel too and may well have had an influence). There the word “received” in s213(1) of the Housing Act 2004 was given a very plain reading. Lloyd LJ concluded that this meant any receipt of money in respect of security whether as a direct payment or by way of transfer from one contract to another. Not as clear an example as those given above and without the very direct flags given by Lewison LJ but still with a similarity of approach.

So what does this mean for housing law?
It is a concern that these cases have come up recently. It leads me to the conclusion that I have been lazy! Essentially residential landlord and tenant lawyers have stopped looking closely at the legislation and simply become parrots of received wisdom. In the terms of an Americanism that I heard recently we have been “drinking the Kool Aid”. If there are three or four areas in which we are wrong as to what the law says then there are likely to be more. The second point is that the CoA here appears to be looking at the legislation without considering the policy issues and largely avoiding the Hansard as an aid to interpretation unless the wording of the Act is very unclear. Is this the start of a new trend in the CoA? If so then lawyers approaching them had best make sure they know what the relevant Act really says rather than what they think or want it to say.

I expect there will be more surprises to come in 2015. I know I will be looking at the core legislation that I previously thought I knew to make sure I am right!

There is reason for Rigsby to look worried in Uddin & Anor v LB Islington (2015) CA Civ Div 10/03/2015 [Lawtel note only so far.]

This was Islington’s appeal of a first instance decision awarding the tenants damages for breach of repairing obligations.

The property was a maisonette on the basement and ground floors of a converted Victorian house. Soon after the start of the tenancy, the tenants complained of rising damp, which went unremedied for, it appears, many years. Works in 2009 had not prevented the problem.  At first instance trial, the Judge held for the tenants, finding a defective damp proof course caused the rising damp and that there was a breach of s.11 repairing obligations.

Islington appealed, arguing variously:

(1) the judge had been wrong to rely on two 2004 surveyors’ reports included in the trial bundle;
(2) there was not sufficient evidence to support the judge’s finding that there had been a defective damp-proof course;
(3) the claim had been insufficiently pleaded;
(4) the judge had wrongly changed the date in his draft judgment from which damages were to run.

On the various procedural points:

The surveyors’ reports had been included in the trial bundle without dissent, so the reports were admissible under CPR PD 32 para 27 to prove the truth of their contents. Islington’s argument that the judge admitted the reports not as evidence of the truth of their contents but only as showing that the property had been inspected and reports had been made was dismissed.

On the Particulars, pleadings were not an end in themselves and it had been plain to Islington what the case was it had to meet. Any doubt could have been addressed by Part 18 request.

On the change of date for the start of damages in the draft judgment, the Judge had received further submissions on that date in response to the draft, and could vary the judgment before it was handed down. Circumstances for this to happen did not have to be exceptional.

So, to the main issue.

It appears that Islington argued that the Judge at first instance was wrong to find that there was a defective damp proof course, as there was no damp proof course. From there, the argument appears to have been that this was an inherent defect.

The Lawtel note gives no detail of Islington’s argument, but my guess would be reliance on a line of cases such as Pembery v Lamdin [1940] 2 All ER 434, Post Office v Aquarius Properties Ltd [1987] 1 All ER 1055, and Janet Reger International v Tiree [2006] EWHC 1743 (Ch), where an absence of deterioration (where there were absent or even defectively installed DPCs) meant a lack of liability for works to rectify damp penetration. As per Pembery, works would involve giving the tenant a different thing from that which was demised. It would be an improvement.

The Court of Appeal disagreed. If there was no DPC, resulting in rising damp, the first question was whether it had resulted in disrepair. The mere existence of damp was not disrepair. If there was damage or deterioration, such as defective plaster, the repairing obligation would be engaged and might extend to installing a DPC to prevent further damage (as per Elmcroft Developments Ltd v Tankersley-Sawyer (1984) 15 HLR 63). While Elmcroft concerned an ineffective DPC, the same principle applied where there was no DPC.

Thus an inherent defect could give rise to liability for breach of repairing obligation if it gave rise to damage, and may require remedying of the inherent defect as a part of the repairing obligation.

In the present case, there was some evidence of a post-Victorian DPC, which was clearly ineffective or had become so, but in any event, the Judge’s decision was that, whether or not there was a DPC, there was a duty to repair and the existence of the rising damp and the damage it had caused indicated a failure to repair by Islington.

Comment

If anyone has a copy of the actual Court of Appeal Judgment, I would be very keen to see it.

It is perhaps worth pointing out that in Janet Reger International, there was substantial damage caused by the water penetration, but only to parts covered by the tenant’s repairing obligation, not the landlord’s. There was no deterioration to the structure, or to the ineffective DPC. So, the damp caused by an absent DPC must cause damage which would itself fall under the landlord’s repairing obligation in order to give rise to liability for the inherent defect. This may be less straightforward to establish in leasehold cases than in tenant cases.

Nonetheless, this is welcome clarity from the Court of Appeal on the issue of absent DPCs. Certainly the inherent defect/improvement line has been argued by plenty of landlords to deny liability. It is now much more clearly a question of fact and degree as to whether installing a DPC is a reasonable or necessary step to remedy the disrepair. In principle, there certainly can be liability.

On the issue of whether damp in itself is disrepair, it is worth recalling this County Court case on saturated plaster as disrepair, which I understand was appealed and the appeal judgment due shortly.

There are new pre-action protocols in force from today, 6 April 2015, including the following:

• The Pre-Action Protocol for Judicial Review
• The Pre-Action Protocol for Housing Disrepair Cases
• The Pre-Action Protocol for Possession Claims by Social Landlords
• The Pre-Action Protocol for Possession Claims Based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property

The only problem is that they haven’t been made available. The Justice.gov.uk protocols page was last updated on 21 October 2014.

So, while hoping that they magically appear first thing on the morning of 7 April 2015, we are currently required to rely on and comply with completely mysterious pre-action protocols.

Davis Solicitors LLP v Raja & Anor [2015] EWHC 519 (QB)

A cautionary tale on how, when things go badly wrong, it is, by and large, better not to take active steps to make them worse.

Davis Solicitors LLP (a sole practitioner practice run by Nancy Ballard, who appeared for the claimant) had acted for the Defendants, Raja and Riaz, in a disrepair claim relating a boiler in the property in which they were tenants.

It appears that the claim was not particularly well dealt with, because when Davis made a claim for fees of £2,970 plus interest and costs, the Defendants counterclaimed for damages for consequential losses incurred as a result of the alleged breach of duty and negligence of the Claimant. And won, at a one and a half day trial. They were awarded £6590 plus costs and interest, with the total judgment sum against the Claimant being £21,613.08 to be paid by 28 February 2014. The Deputy District Judge’s judgment found

“It is difficult to conceive of a worse case in relation to poor service and a breach of the implied term in relation to reasonable skill and care.

The work undertaken by this Claimant has been shoddy, has failed to consider or make an assessment of the case as it developed, has failed to advise or have regard to the fact that the Defendants were not indigenous to England and their knowledge of the law and customs was challenging to them. Above all the Claimant has been negligent. I am satisfied to the requisite standard of proof.”

The Claimant, via Ms Ballard, filed a notice of appeal, seeking permission to appeal. On 11 February 2014 HHJ Wulwik at Central London County Court granted a stay of execution and ordered the Claimant to file a transcript of the hearing before the DDJ. Then on 3 March 2014 HHJ Wulwik ordered the Claimant to file a skeleton argument and appeal bundle by 17 March, with a unless order striking out the appeal and discharging the stay of execution in default.

On 31 March 2014, following a letter form the Defendants, and noting that a skeleton argument had been filed on 17 March, but no appeal bundle in accordance with CPR PD 52B.6, HHJ Wulwik struck out the application and discharged the stay. The Claimant wrote complaining that “This is extremely unfair and concerning when the appeal bundle was filed with the Court on the 31st December 2013. The bundle consisted of the full papers in the Trial bundles.”

The Court’s response was that a) there was no trace of a bundle filed on 31 December 2013 [To be fair, it has to be said that this will not necessarily surprise many users of CCLC at that time.], b) Filing the original trial bundle would anyway not have complied with the requirements of CPR Practice Direction 52B.6 at 6.4. The Claimant must make such application as it saw fit.

Davis applied for relief from sanctions. This was dismissed by HHJ Mitchell on 1 August 2014 on the basis that 1) no appeal bundle had been served on the Defendants, 2) no CPR PD 52 compliant bundle had been filed with the Court and in fact still hadn’t been.

this is not a trivial breach. It could have been remedied by filing an appellant bundle, with the application for relief from sanctions and I would almost certainly have granted relief. But the case has just wandered on without that having been done and I am being faced with having to rummage through the papers to try and make sense of what is being said.

HHJ Mitchell also observed that the merits of the appeal did not seem at all strong.

Davis then filed a notice of appeal to the Court of Appeal. On oral permission hearing, Davis’ grounds were:

i) the breach was not significant;

ii) but for the Defendants’ solicitor sending a letter dating 19 March 2014 to Judge Wulwik contending that the Claimant had not complied with his order, the judge would not have struck out the Claimant’s appeal. The Defendants’ action in this regard was “opportunistic” (per judgment in Denton at para 40);

iii) the judge erred in considering the merits of the appeal.

It would be fair to say this did not go well. At all or in any respect.

On the insignificance of the breach, the Court of Appeal is forthright on the requirements for an appeal bundle:

Paragraph 6.3 of PD 52B requires an appeal bundle, paginated and indexed, to be filed as soon as practicable, but in any event within 35 days of the filing of the Appellant’s Notice, which in this case was by 4 February 2014. Paragraph 6.4 identifies the documents that must be included in the appeal bundle and the documents that should also be considered for inclusion. Not only did the Claimant fail to comply with the Practice Direction, but Ms Ballard ignored the ‘unless’ order of Judge Wulwik of 3 March 2014 relating to the lodging of an appeal bundle. She made no application to set aside the ‘unless’ order. It was only after the order of 31 March 2014 striking out the appeal that she wrote to the court. In fact, as Mr Dean, for the Defendants, observes it was not strictly necessary for the judge to make the order of 31 March 2014 as the Claimant’s failure to lodge an appeal bundle by 4pm on 17 March 2014 would have resulted in the appeal being struck out without further order, pursuant to the terms of the order of 3 March 2014.

Ms Ballard’s explanation for not having even filed the appeal bundle before the hearing of the application for relief from sanctions also went down badly:

she states that the reason she made no attempt to correct the breach or even to serve an appeal bundle before the hearing before Judge Mitchell was because she did not think that filing an appeal bundle would assist. She thought, she says, that what was important was to make an application for relief from sanctions as promptly as possible. She stated that she thought it was only necessary to have an appeal bundle once permission has been granted. She did not appear to appreciate the need for applications for permission to appeal to be presented in accordance with the rules so as to ensure the effective management of the appeal process at the permission stage.

And apparently, Davis had still not actually filed a compliant appeal bundle.

Ms Ballard made the point before Judge Mitchell, in her grounds of appeal (para 9) and in her written submissions to this court (para 2), that the Claimant was not in breach of PD 52B 6.5. This is correct, however it illustrates her failure to appreciate the importance of complying with PD 52B 6.3 and 6.4. Even now Ms Ballard has produced an incomplete and not properly paginated “Appeal Bundle”. I can well understand the difficulties that Judge Wulwik and Judge Mitchell must have encountered when dealing with this case in the absence of any appeal bundle.

The breach was serious and significant. Ms Ballard’s attempt to explain continuing non-compliance “indicate a continuing lack of understanding of the importance of the rules.”

The idea that the Defendants had pounced opportunistically was dismissed, as the order of 3 March 2014 had resulted in an automatic strike out when the Claimant failed to comply. In any event, the order of 31 March 2014 didn’t rely on the Defendant’s letter.

And having considered the grounds of appeal, HHJ Mitchell was “plainly entitled to form the view that the merits of the appeal “do not seem to be very strong”

Appeal dismissed.

Comment
So what lessons to draw from this?

1. Don’t mess up a disrepair claim so badly you end up owing your clients £20K in a judgment debt.

2. If you have ignored 1. then make sure you have filed a CPR PD 52B 6 compliant appeal bundle within 35 days of the notice of appeal (or got extensions from the court if needed).

3. If you have ignored 2. don’t ignore any unless orders and file the compliant bundle in time. Really.

4. If you have overlooked 3. and are applying for relief from sanctions, file the compliant appeal bundle. No, really, really this time.

5. If 4. escaped you and you are seeking permission to appeal from the Court of Appeal, make sure the appeal bundle for the Court of Appeal is CPR PD 52B 6 compliant. Given that this is the issue in your appeal.

6. Oh, and have grounds of appeal at stages 2, 4 and 5 that actually have some perceivable merit and address the relevant bits of the judgment against you.

*the old joke of a local being asked for directions to X by a tourist and getting the reply ‘Well I wouldn’t start from here’.

Williamson v Khan. Birmingham County Court. Claim No: 3YS66585 (12 March 2015).

Disrepair claims against private landlords are often interesting. Not least because said landlords have a tendency to take ridiculous positions and stick with them to trial, even when represented. This case is a glorious example of that. (A full copy of the judgment can be downloaded here, if interested.)

Ms Williamson had been the assured shorthold tenant of Mr Adalat Khan since October 2002. She was evicted in April 2013 after Mr Adalat Khan brought a possession claim for rent arrears – of which more later on, including the money judgment for £1,237.75 involved.

Ms W subsequently brought a claim for disrepair (damages only, due to the eviction. It is worth noting that legal aid funding was granted pre LASPO. it would no longer be possible to get legal aid funding for such a case).

The property was a one bedroom flat on the ground floor of a detached house converted into 5 flats. The claimant’s case was that there had been disrepair throughout the tenancy:
i) No hot water between February 2004 – October 2007 and January 2011 – April 2013
ii) Inadequate and defective heating throughout the tenancy
iii) Rising and penetrating damp
iv) leaks from kitchen waste pipe, bathroom basin and defective rainwater goods
v) infestations of rats due to defects in the structure
vi) Perished and defective plasterwork
vii) Holes in floorboards
viii) External brickwork, rendering and boundary wall in disrepair
ix) External paving damaged
x) Drainage problems resulting in offensive odours in the property.

This was largely supported by an expert report from 8 March 2013 and photographs taken by Ms W’s solicitor at the time.

Much of the case rested on the Claimant’s evidence. This can be tricky (I am still smarting from a recent trial, even though successful in the end), and here the Defendant’s approach was to attack the Claimant in every way possible.

Ms W was open that she suffered from poor mental health, with bi-polar disorder, depression, agoraphobia, extreme anxiety and insomnia. She had had a heroin addiction and remained on a prescribed substitute.

The Defendant’s case was basically that there was no disrepair, or if there was he wasn’t told about it, except on two occasions when works were done in a couple of days. The boundary wall and paving weren’t covered by section 11 Landlord and Tenant Act 1985. Any other defects had been caused by the Claimant – she had failed to pay gas and electric bills because of her drug habit, and this caused condensation. He further alleged that the Claimant hadn’t contacted him because other tenants had complained about her behaviour and her visitors, who had also caused damage to the property.

The Defendant also counterclaimed for rent arrears of £4293.52 and bailiff’s fees of £210, over and above the arrears in the previous money judgment.

The trouble for the Defendant was that he could not substantiate any of this (apart from the other troubles, which we’ll come on to).

The Defendant alleged that the original rent was £89.50 pw (not £89 as asserted by the Claimant) and that on 1 October 2008, the rent rose to £110 pw, which the Claimant denied. But the Defendant could produce absolutely no paperwork about this at all, apart from a retrospective rent schedule. An HB award of full rent of £89 pw was the only real record. As the court found

“Even after extensive cross examination of the point it was clear that not only did the Defendant have no idea what sums he alleged were outstanding but neither did both counsel or the Court. Despite repeated efforts to understand the Defendant’s case on the point I was, even by the end of the case, still unclear as to how he alleged he had calculated the alleged arrears. Indeed, by the end of the case both the Defendant and his own counsel accepted that they did not understand how the Defendant’s counterclaim had been calculated”. In fact, the Defendant admitted he couldn’t even be certain how the sum of arrears in the judgment debt had been calculated.”

It should not be a surprise after that that the counterclaim failed entirely. But the problems did not end there for Mr Khan. The assessment of the reliability of witness evidence was clearly going to be key to the case. This was not least because while the Claimant had permission to rely on her expert evidence, the Defendant had done nothing in that regard until applying shortly before trial to rely on an expert report obtained a whole year before. That application had been refused.

Mr Khan’s credibility went out of the window when it became clear that he was lying about the number of properties he owned, which was between 71-81, not the 25 he stated in evidence. He also lied about leaving the Midland Landlord Accreditation Scheme, when he had actually been expelled. He then went on to say he ‘couldn’t recall’ being prosecuted in relation to any of his properties, but had to accept that he had been, twice, for failure to provide fire safety precautions and for failing to conduct gas safety checks.

Mr Khan asserted that his lack of documentary evidence about, well, everything, was because he had lost his files, and the lack of any receipts from workmen was because he didn’t bother to set them against tax. The court did not believe this.

Mr Khan made a last minute – on the first day of trial – application to amend to plead limitation. This despite having had representation, and the claim being some 17 months old. This application was refused, the Defendant ‘having failed to discharge the heavy onus upon him to justify the lateness of the application to amend’.

The Court accepted the Claimant’s evidence in whole, apparently particularly impressed by her returning from a lunch adjournment to voluntarily correct what she had said immediately before the break. She was ‘persuasive, plausible and truthful’.

On the other hand

“As to the Defendant’s evidence, I found him to be a thoroughly unimpressive witness. he was evasive in his answers. he often pretended not to understand even the most basic questions and was extremely reluctant to make any concession on any point. Even when confronted with incontrovertible evidence such as the extent of his property portfolio, his convictions, the notice by the Health and Safety Executive in respect of his failings as a landlord and his expulsion from the Midland Landlord Accreditation Scheme he would repeatedly claim he did not know or had forgotten and only agreed after intensive and thorough cross examination. Obtaining a straight and honest answer by the Defendant was, sadly, as difficult as pulling teeth”“His evidence was unconvincing, implausible and untruthful. I have no hesitation in reaching the view that the Defendant not only gave a false account of events but did so quite deliberately with the clear intention of deceiving the Court.”

“Further, it is clear he sought to challenge the truthful account of the Claimant, who remains by any account vulnerable, by a vicious and sustained attack on her character”.

So, the Claimant’s claim upheld in full, including the outside wall and paving – under section 11(1A) L&TA 1985.

On damages, a diminution of rent approach was used, as per Shine v English Churches, for a period of 10.5 years. The award was 80% of rent.

Total damages, £39,093.60, plus the 10% Simmons v Castle uplift, giving a total of £43,002.96.

Costs to the Claimant at the standard rate.

1957 was an important year. Russell Endean became the first man to be out “handled the ball” in a Test Cricket match. Anthony Eden resigned and Harold Macmillan became PM. The Cat in the Hat was first published. And it was the last time that anyone updated the rent levels in the statutory covenants relating to fitness for human habitation.

Which brings me to s.8, Landlord and Tenant Act 1985. Section 8 is, I suspect, a provision that most of you skip over on your way to s.11, 1985 Act. But it deserves your attention. From the Housing of the Working Classes Act 1885 onwards, there had been an implied covenant that rented property would be “fit for human habitation”. The covenant was, in practice, limited to “working class” properties, usually by way of a rental limit.

The most recent form of that covenant is in s.8. Under that provision, there is an implied covenant that a property will be fit for human habitation when let and that the landlord will ensure it remains so during the tenancy. It only applies, however, to leases of less than three years where the rent is less then £80 p.a. (London; £52.p.a elsewhere). For leases granted before 1957, the rent limits are even lower.

Remarkably, these rent limits were not increased after 1957 and the effect of inflation since then has been to deprive this provision of any meaning. This sad state of affairs has been remarked upon by the Law Commission in 1996, which produced a draft Bill to modernise repairing covenants in residential leases. That report recommended removing the rent caps in s.8.

As we know, Parliament did nothing. The Court of Appeal has been very critical of this inaction. In Issa v Hackney London Borough Council (1997) 29 H.L.R. 640, the court noted that the failure to update s.8 left tenants

 …wholly without remedy in the civil courts against their landlords, however grievously their health may have suffered because they are living in damp, unfit conditions…

Likewise, in Habinteg Housing Association v James (1994) 27 HLR 299:

We are told that the Law Commission has been considering such a problem. It is to be hoped that they will recommend a solution. What is more, it is hoped that if they do, Parliament will carry it out. Judges and lawyers are sometimes reproached when the law does not produce the right result. There are occasions when the reproach should be directed elsewhere.

By the standards of the Court of Appeal, that’s pretty stern stuff.

Which brings us to Karen Buck MP and the Homes (Fitness for Human Habitation) Bill which she has introduced via the Private Members Bill system.* Her Bill repeals the current s.8, LTA 1985 and replaces it with a slightly modified version of the clause drafted by the Law Commission in 1996. In general terms, all leases of less than 7 years would be subject to a covenant that they must be fit for human habitation when let and that the landlord must keep them in such a condition for the duration of the tenancy. The obligation could be enforced by a tenant bringing a damages claim/injunction claim as with the current s.11.

Mindful of the need to strike a fair balance, the Bill protects landlords against unmeritorious claims by exempting damage caused by the tenant himself or by natural disaster and makes clear that it does not apply to property owned by the tenant (e.g. it won’t require a landlord to replace a freezer which belongs to the tenant).

It also updates s.10, 1985 Act by providing that the presence of a Category 1 Hazard (HA 2004) is also to be treated as a factor for assessing fitness for these purposes.

There is more about the Bill on the Red Brick blog (here), including explaining why the present law (s.11, LTA 1985, HA 2004, EPA 1990) doesn’t really protect tenants as well as a modernised s.8 would do.

The second reading of the Bill will be in October. Given that the Law Commission and Court of Appeal have implored Parliament to remedy this problem, and that Wales seems about to do so in the Renting Homes (Wales) Bill, it is to be hoped that it makes progress.

• J and NL had a hand in drafting the Bill. S and Chief helped catch our errors.

I’ve heard about a few costs decisions by trial judges recently which might be considered, to put it politely, interesting, or brave, in the Yes Minister sense. So it was with some interest that I read the Court of Appeal decision in Begum v Birmingham City Council [2015] EWCA Civ 386.

Mr Majid and Mrs Begum were secure tenants. In 2003-4 Mrs B bought the property under the Right to Buy. The s.125 notice did not disclose any significant defects to the property under s.125(4A) Housing Act 1985, obliging the Council to disclose “all structural defects which are known to it and which affect the property”. Subsequently cracking appeared in the rear extension of the house. The rear wall had pulled away from the wall of number 93, leaving a large gap. Mr Majid and Mrs Begum made a claim on their insurers. The insurers refused to pay on the ground that the damage was attributable to pre-existing defects.

After a pre-action letter, proceedings were begun against the Council in April 2010 for negligence and misrepresentation. These were initially in Mr Majid’s name only. In September 2011, Mrs B was substituted as Claimant. In May 2012, the claim was amended to also plead breach of statutory duty under section 125 (4A) of the 1985 Act. The Council denied liability throughout.

The original 2 day trial in May 2012 was adjourned because of, variously, the need to translate documents from English into Bengali, a gross under-estimate of the likely length of trial, the Council’s late disclosure and the claimant’s late amendment to plead breach of statutory duty.

In May 2013, in the Technology and Construction Court, after a five day trial, the Judge found two causes of damage:

i) lack of wall ties between the right-hand corner of the rear wall of the back addition and the adjoining property, number 93; and
ii) inadequate foundations, which progressively caused damage in the form of cracking in and displacement of the associated drains.

The Judge found that the Council was aware of the first issue at the time of the s.125 notice from its maintenance records, but was unaware of the second cause. After further expert evidence, cause 1 was found to be 90% responsible for damage to the property. The Judge found that the claimant would have insisted on the council rectifying the defect prior to purchase had it been disclosed in the s.125 notice. Damages of £74,876 were awarded in respect of the costs of rectification, general and special damages.

This might look like a significant win for Mrs B. But then the arguments turned to costs at a subsequent hearing.

In the costs judgment the judge made no order for costs in respect of the period before issue of proceedings. In respect of the period from issue to 14th May 2012 (which the judge called “period 1”), he ordered the claimant to pay the defendant’s costs subject to one proviso. The proviso was that the Council should pay the claimant’s cost of obtaining expert evidence during that period. This produced the curious consequence that each party was required to pay the costs of the other side’s expert during period 1. In respect of the period 14th May 2012 to 4th June 2013 (which the judge called “period 2”), he ordered the defendant to pay 40% of the claimant’s costs. In respect of the period 5th June 2013 to 18th December 2013 (which the judge called “period 3”), he ordered the defendant to pay 80% of the claimant’s costs.

The judge gave the following reasons for reaching those decisions on costs:

i) During period 1 the action was bound to fail because the claimant’s only pleaded claim was for negligence and misrepresentation.

ii) During period 2 the claimant was pursuing three causes of action only one of which succeeded, namely her claim for breach of statutory duty.

iii) If the claimant’s case had been properly pleaded, all issues would have been dealt with in the hearing during May 2013. Therefore the claimant’s inadequate pleading caused matters to be dealt with in two hearings rather than one hearing. On the other hand all the evidence at both hearings needed to be deployed in any event. In order to reflect the inefficient way in which the litigation proceeded the claimant should recover 80%, rather than 100%, of her costs during period 3.

Mrs B (perhaps understandably) appealed to the Court of Appeal – as this costs award would wipe out her damages.

The Court of Appeal was not particularly impressed, even given the notorious reluctance of the appellate courts to interfere with first instance discretion on costs awards.

For Mrs B, the argument was:

that the judge fell into error in his approach towards costs. The claimant’s case from the beginning to the end of the litigation was that Birmingham City Council was aware of serious structural defects in 95 Church Road which it ought to have disclosed, but failed to disclose, to Mr Majid and Mrs Begum. The claimant succeeded on that case. The fact that the claimant originally applied the wrong legal label to the claim was immaterial. Little time was spent at trial debating whether the claimant had a cause of action in negligence and/or misrepresentation. Therefore the claimant ought to have recovered all her costs up to 4th June 2014, less only a small discount for the issues of negligence and misrepresentation on which she failed. Mr Cottle [Counsel for Mrs B] accepts the judge’s decision on costs in period 3 and the reasoning on which that decision was based.

On the other hand, Counsel for the Council “has manfully striven to uphold the judge’s order. He points out, quite correctly, that the Court of Appeal does not interfere with decisions on costs unless the judge has made an error of law or an error of principle. He submits that the judge made no such error in this case.”

The Court of Appeal was perhaps less impressed with the authorities on costs

Both counsel have helpfully taken us through the history of the litigation, for which I am most grateful. Counsel have also furnished the court with a bulging authorities bundle, containing some thirty previous decisions on costs, for which I am not quite so grateful.

The starting point was that Mrs B had been successful and should have her costs. The initial error on Mr M being named as claimant and then substituted was a mere technical error that had not affected the costs of litigation.

So on what basis should there be a departure from the usual rule here?

“As the judge correctly noted, two factors require a departure from that starting point. First, although the claimant has succeeded on her claim for breach of statutory duty, she has failed in law on her claims for negligence and misrepresentation. Secondly, by reason of the claimant’s deficient pleading there were two trials rather than one.”

On the second point, there was no argument from either party with the award of 80% of costs for the third period (after June 2013) as fair – a 20% deduction arising from the need to have two hearings rather than one due to inefficient conduct of litigation by the Claimant around the trial hearings..

On the first and most significant point:

The claimant’s case is and always has been that the Council was at fault in failing to refer back to its own records and to alert the claimant to serious structural defects before selling the property to her. The claimant’s pleaded claims for negligence, misrepresentation and breach of statutory duty were different labels which the pleader applied to the same underlying facts. The factual and expert evidence which both parties assembled was directed to those facts. Both parties would have prepared and adduced substantially the same evidence, even if the claimant had only ever pleaded her claim as one for breach of statutory duty.

This case is very different from Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137, on which the Council relies. In Beoco the claimant’s late re-amendment substantially altered the case which the defendant had to meet. Also, the defendant was prejudiced by lack of opportunity to make a payment into court. In the present litigation the case which the defendant had to meet was essentially the same both before and after the claimant’s re-amendment. The claimant continued to assert, and the defendant continued to deny, the same basic facts and the same disputed propositions of expert evidence. There is no suggestion that the defendant lost an opportunity to settle. The defendant at all times disputed the factual basis of the claimant’s claim.

I accept that at trial a modest amount of time was spent debating the legal issues. The claimant effectively abandoned her case on misrepresentation at that stage, but not her claim in negligence, which was the subject of some argument.

The result – Claimant awarded 85% of her costs from pre-issue to June 2013 and 80% thereafter. And presumably the costs of the appeal.

Comment

This is hopefully a useful corrective to some of the wilder first instance costs decisions I have heard of lately. Micro decisions on merit and motivation at each stage, or on the losing party’s ‘justifiable’ motivations in mounting a failed case, or alternatively, ignoring which party’s responsibility it was that a matter went to trial, regardless of the history of the matter.

It is also useful as an indicator that the court of appeal (or appellate court) can and maybe will intervene in costs decisions, so often regarded as an unchallengeable exercise of discretion by the first instance judge. Given the often devastating consequence of such decisions, even for a winning party as here, this is to be welcomed.

NJ Rickard Ltd -v- Holloway (CA 03/11/2015) (Lawtel note of extempore judgment only so far)

Sometimes winning isn’t enough… A cautionary tale, in all sorts of ways.

This was a Court of Appeal hearing on an appeal on costs. The original case was the landlord’s claim for rent arrears of some £6,000 and interest. The landlord also claimed for physical damage to the property by the tenant amounting to some £20,000 and consequential loss of rent. The tenant agreed some £6,000 in rent arrears, but denied the property damage. The tenant counterclaimed for failure to repair the property and breach of quiet enjoyment. The tenant also challenged the landlord’s identity as landlord and the interest rate claimed.

The landlord had made an offer, supposedly under Part 36, for a ‘drop hands’ settlement, with each party bearing their own costs.

At first instance trial, the Judge found for landlord for rent arrears and interest amounting to £16,000 but dismissed the claims for physical damage and loss of rent. On the tenant’s counterclaim/defence, the Judge found there was breach of quiet enjoyment, but only attracting nominal damages, and there was a breach of repairing obligations, with notice. On these, damages of £7,000 were awarded. The tenant’s challenges to the landlord’s identity and interest failed. Finding that the tenant’s counterclaim was effectively a defence, the Judge found that the landlord had won.

The first instance Judge then went on to find that the landlord’s offer was a part 36 offer and awarded costs to the landlord on the standard basis until the expiry of the offer period and indemnity rate with 8% interest thereafter.

The tenant appealed. The issues were:
(i) whether the offer had been valid under Pt 36 when it had not strictly complied with r.36.2(2)(c);
(ii) whether the judge had been wrong to make the costs order;
(iii) the appropriate cost order under r.44.2 if Pt 36 did not apply.

The landlord’s offer was expressed to be an offer under Part 36, however, it did not comply with r.36.2(2)(c), which was a mandatory requirement that the offer specify a period within which the defendant would be liable for the claimant’s costs. Instead the offer (for each party to bear their own costs) had just specified a 21 day period for acceptance. Accordingly, it could not be a Part 36 offer and the automatic costs consequences did not apply.

The Judge should therefore have considered the general rule 44.2 under which the presumption was that the loser paid the winners costs.

However, while ‘issue-based costs orders were not to be encouraged and an appellate court would be slow to interfere with costs orders made by judges who were best placed to have a feel for the case’, this was an unusual case. The trial judge had started from the wrong position.

If a party had taken much time by unsuccessfully taking many points, the court could give less weight to the fact that they had in the end been the successful party. There had been may points beside the amount of equitable set-off against the rent arrears. The landlord had claimed for substantial damages on the property damage and consequential rent loss issue and failed, for example. The tenant had won his claim for disrepair, even if the damages were small, and had won on points, like notice, that had taken substantial time.

The judge had therefore inadequately considered the parties’ conduct and relative successes – CPR 44.2(4) & (5).

The landlord’s offer had been realistic and the tenant should have considered it more, however, the tenant had repeatedly requested mediation and received no response. Silence towards an offer of alternative dispute resolution was itself unreasonable and no dispute was too intractable for mediation. PGF II SA v OMFS Co 1 Ltd [2013] EWCA Civ 1288.

Overall, the tenant had won more issues than the landlord, even if the landlord had won overall on amounts. A fair and balanced approach was no order as to costs.

The Court of Appeal noted landlord’s costs of £85,000 and tenant’s costs of £100,000 and added that these circumstances made a very strong case that there should be some form of limitation on costs recoverable in these cases.

Comment

The headline points? You can’t make a Part 36 offer for ‘drop hands’, no order as to costs (and you can’t make a Part 36 offer including a specified costs figure either, but that is another story).

Do not, ever, remain silent in the face of a proposal for ADR. There may well be good reasons for not wanting to go the ADR route, but, you know – explain them.

And do not run every point you think you can find, no matter how iffy. They will take up time and if you lose those points, as you probably will, the harder you have fought them, the less likely you are to get costs for them. Likewise, do not barricade yourself into an unattractive position and stay there. Do not over-plead, do not add in heads of claim (or defence/counterclaim) that can’t be adequately supported in evidence. And explain to clients why this is the sensible course of action unless they actively want to end up owing far more in costs than they will ever recover from the other side.

This was an unusual case, but some of the issues raised by the Court of Appeal here are floating around more generally. Not just proportionality, whatever that might mean, but responsible, practical litigation. By both parties. Just beware what that might mean if imposed from above…

A semi-guest note on a pest infestation nuisance county court case involving leaseholders. Interesting on both liability and quantum.

Ojo & Ojo v London Borough of Hackney. County Court at Clerkenwell & Shoreditch 4 November 2015

The Claimants were secure tenants of the Defendant from 1983 and became leaseholders in 1995. They lived in a two storey maisonette in a block of 50 flats. They had experienced an infestation of mice since 2007. The experts for each party agreed that the mice had gained access to the premises via vertical ducts which passed through the kitchen and bathroom, and which contained various drains and pipes from more than one property. The ducts were retained by the Defendant as freeholder.

From 2007, the Defendant had carried out block treatment works, putting down poison. The mice continued to be a persistent problem for the Claimants until early 2014, when the Claimants had installed a new kitchen and had sealed up holes. Between early 2014 and the date of trial (1 October 2015), the First Claimant had not observed any mice. The Second Claimant had seen a mouse and they could be heard in the service duct.

The Claimants brought proceedings for damages for nuisance and an order requiring the Defendant to abate the nuisance. They submitted that the Defendant had failed to take reasonable steps to abate the nuisance and prevent mice from entering their maisonette. The Defendant denied creating the nuisance and said that it took reasonable steps to abate it. It also said that the Claimants had failed to carry out works to their maisonette and that the condition of the maisonette caused or contributed to the infestation.

DJ Manners found that the presence of mice in the premises for such a long period of time and at the level described amounted to a nuisance. The Defendant did not create the nuisance, but its block treatment programme had not been an adequate response. The experts were agreed that the duct should have been proofed against mice. She noted that the Claimants were leaseholders, rather than tenants, and they had the ability to mouse proof their home by filling in holes from the inside. She also found that the general cleanliness and repair to the maisonette had not been of a high standard and that grease on the walls and kitchen floor would have encouraged the mice. Overall, the Defendant was liable in nuisance.

She declined the invitation to assess damages by attributing an artificial rental value to the premises. She awarded an overall amount of £2,500 per annum, reduced by 50% to reflect the fact that the Claimants failed to carry out any internal proofing until 2013/2014. She did not make an order specifying works, given that the problems appeared to have been sorted out.

Liz Davies, counsel for the Claimants

Giles Peaker, Anthony Gold, solicitor for the Claimants

I don’t think it is unfair to say that disrepair is not always viewed with great enthuiasm by practioners of housing law. So, I am going to plead with you all to stick with this post of mine even though on reflection it is far longer than I would have liked. It concerns a very important recent case (Moorjani v Durban Estate Limited [2015] EWCA Civ 1252 – not yet on bailii) that clarifies the principles to be applied by the court when awarding damages to tenants and leaseholders who have succeeded in a claim for disrepair.

The big four

Before commenting on this case, it is perhaps helpful to recall how we got here in the first place. There are four big Court of Appeal cases which, for me at least, are not easy to reconcile. They are Hewitt v Rowlands (1924) 93 KB 1080, Calabar Properties v Stitcher [1984] 1 WLR 287 , Wallace v Manchester City Council (1998) 30 HLR 1111 and Earle v Charalambous [2007] HLR 8.

Hewitt established the not so controversial proposition that a court should, when assessing damages for disrepair, award the tenant the difference in value to the tenant of the property in the condition it was in and the condition it should have been in had the landlord complied with his repairing obligaitons. How do you do that?

Well, in Calabar Griffiths LJ said that the award of damages was

“so far as money can, to restore the tenant to the position he would have been in had there been no breach. This object will not be achieved by applying one set of rules to all cases regardless of the particular circumstances of the case. The facts of each case must be looked at carefully to see what damage the tenant has suffered and how he may be fairly compensated by a monetary award.”

In Calalabar, the long leaseholder, was, in principle, entitled to the cost of alternative accommodation if she moved out, the cost of carrying out any repairs herself and “some award for all the unpleasantness of living in the flat as it deteriorated until it became uninhabitable.” This last award, for general damages, was not limited to an award based on the diminution of the rent, as in cases where the rent was very low (e.g. long leaseholders with pepper corn rents) the award of damages would not reflect the actual loss suffered. In such cases, Hewitt (a statutory tenant) also being one, the court could make a global award to reflect the actual loss suffered.

Next in Wallace, the Court of Appeal told us that the award of general damages (i.e. the third head in Calabar) depended on whether the tenant remained living in the property or not. If he did, he was entitled to compensation for “the loss of comfort and convenience which results from living in a property which was not in the state of repair” and if he did not “he may recover for the diminution of the price or recoverable rent occasioned by the landlord’s failure to perform his covenant to repair.” In circumstances where the tenant remained, the sum payable was for “the discomfort and inconvenience suffered by the tenant” and could “be ascertained in a number of different ways”. Judges could make a “global award” for discomfort; a notional reduction of the rent or both. Wallace is also now cited for authority that there is a so-called “Wallace tariff” for awards of disrepair. This is not entirely accurate as the tariff was submitted by counsel and the Court of Appeal didn’t actually decide that one existed. I’ve always thought that the existence of a tarrif was wholly inconsistent with what they actually decided, but it is often applied by the county courts.

Before moving onto Earle, it is probably also worth mentioning at this stage that in another case, English Churches Group v Shine [2004] HLR 42, the Court of Appeal held that it would be rare that the award for a tenant’s discomfort while they remained in premises would ever be in excess of the rent.

We then get to Earle. Earle was another long leasehold case. In that case, the long leaseholder had lived in his flat until eventually the ceiling collapsed and he moved out. He was therefore entitled to damages for both when he was living there and for when he was not. The Court of Appeal decided that there was a distinction between periodic tenancies and leasehold premises on the basis that the latter was an asset. This meant that a leaseholder was not limited to recovering damages for discomfort and incovenience; his loss actually arose from the interference with the lessee’s enjoyment of that asset, of which discomfort and inconvenience were merely a symptom. This should guide the award of damages for both when the lessee was living in the flat and in alterantive accommodation. Moreover, the appropriate starting point to assessing damages for both periods (living in and away from the flat) was “a notional judgment of the resulting reduction in rental value is likely to be the most appropriate starting point for assessment of damages.” The Wallace tariff was not to apply in leasehold cases (and I would at this point query, again, whether it is appropriate otherwise).

After these cases we were left with the following propositions. The starting point is always to put the tenant back in the position he would have been had there not been disrepair. However, there is a distinction between long leasehold and periodic tenancies as long leaseholders are entitled to compensation for interference with the right to enjoy their asset; losses for discomfort and inconvenience are a symptom of this interefrence and are an addition to the principle loss. In these types of cases, the starting point is always what the diminution in the rental value would be, irrespective of whether the leaseholder was actually living in the accommodation. Damages are therefore still available for times when the property is not occupied and it is not fatal to the claim that no actual inconvenience had been suffered. Damages would, however, be greater for periods in which the leaseholder actually lived in the premises though, because he could also rely additionally on damages for discomfort and incovenience.

In periodic tenancies, however, judges still appeared to have free reign to make a global award simply for the loss suffered from discomfort and incovenience, which were often modest (although it should not be forgotten that tenants were still entitled to a notional reduction in the rent for periods in which they were forced out of the property as per Wallace). To confuse me further, this basis for assessing damages in Wallace was based in part on Calabar, which was doubted as being correctly decided in Earle, and was itself a long leasehold case.

Moorjani

So we come to Moorjani. Mr Moorjani – the appellant leaseholder – was the owner of a long leasehold  flat in central London. The respondent was the freeholder – and his landlord – of the building in which his flat was located. After purchasing the flat the appellant decided to refurbish it before moving in. During this time he lived with his sister. The lease required the lessor to maintain and repair the common parts of the building. to keep the flats insured against loss and damage and to use any money received from any insurers to repair, rebuild and otherwise reinstate the building or flat with all convenient speed. In 2005, before the appellant had completed refurbishing the flat and while he was living with his sister, there was a leak from the flat above the appellant’s which caused serious damage to his flat. In April 2006, the lessor’s insurers instructed contractors to carry out the works of repair. The works were, however, of poor quality and failed to do all that was required. The deficiencies were, however, essentially decorative and did not cause the flat to become inhabitable. In February 2007, the appellant instructed his own contractors to make good the remaining defects in the flat. The respondent lessor agreed to pay for the cost of these works save for repairs to some doors, the master bedroom and electrical repairs. In 2008, the appellant moved into the flat. Between 2005 and 2011, the respondent also failed to maintain and keep in repair the common parts of the building so that they became dilapidated, shabby and dingy.

In 2011, the appellant issued a claim for damages from the respondent. He contended that he was entitled to special damages in respect of the costs of the repairs to the doors, master bedroom and electrics. He also sought general damages arising from the respondent’s failure to keep the common parts in repair between 2005 and 2011 and the failure to repair the damage to the flat caused by the leak for the period between April 2006 and February 2007 (i.e. from when the contractors were instructed to when he completed the works of repair to the flat).

HHJ May QC, sitting in the Central London county court, refused to award the appellant general damages for the period in which he did not live in the flat and dismissed his claim for special damages. She did, however, award him damages arising from the poor decorative state of the common parts for the period in which he was living in the flat. The sum equated to 1 to 2% notional reduction of the rental value of the flat, i.e. £1500 over three years. The appellant was granted permission to appeal to the Court of Appeal.

The Court of Appeal allowed the appeal in part. The Judge had been wrong to dismiss the appellant’s claim for special damages; he had proved that the doors and master bedroom had been damaged by the leak in 2005. It was not appropriate to interfere with the Judge’s decision to award a 1 to 2% notional reduction of the rental value in respect of the common parts. In awarding damages, she had applied the correct principles and as a county court judge had considerable experience of assessing damages in cases of this type, which the Court of Appeal did not.

The Judge had, however, been wrong to refuse to award general damages for the periods in which the appellant had not been living in the property. Damages for breach of a repairing covenant of a lease are for the impairment to the rights of amenity afforded to the lessee by the lease, i.e. the right to the enjoyment of occupation of a specific property for a specified period arising from the payment of a premium. The quality of enjoyment is underpinned by the lessor’s promise to perform its repairing obligations under the lease. Discomfort, inconvenience and distress are only symptoms of an interference of that right. It is therefore not a fatal obstacle to a claim for damages arising from that impairment if the lessee has decided not to make use of the property. That does not mean that the use of the property is irrelevant to the quantification of damages. A lessee who decides to live in alternative accommodation, whether in mitigation or not, should not in principle be entitled to 100% notional reduction in the rent. It ought not, however, wholly cancel out the loss occasioned by the impairment of the lessee’s right to enjoy his leasehold interest irrespective of where he lives. If the lessee does decide to live elsewhere he will, subject to an obligation to mitigate, be entitled to the cost of renting alternative premises. In certain cases, a lessee may be entitled to damages in excess of the current rental value, e.g. where a lessee or a member of their family has suffered from ill health. In other cases, however, the circumstances of the lessee may result in the award of damages being reduced.

It followed that the Judge had been wrong to dismiss the appellant’s claims for general damages for the periods in which he had not lived in the flat. The Court of Appeal decided that had the appellant occupied the flat between 2005 and 2008 it would have awarded a 5% notional reduction in the rent for the common parts. However, as he had been living elsewhere this was reduced to 2.5%. Likewise, in respect of the flat, the Court of Appeal decided that had the appellant been living in the property between 2006 and 2007 it would have awarded a 15% notional reduction in the rent, but reduced the figure to 7.5%.

What about for periodic tenants?

That is all consistent with Earle. The quesiton is whether it has any bearing on periodic tenancies. Have we moved on from Wallace? The answer is probably yes. In Moorjani, Briggs LJ says that for his part he would not confine the principle in Earle (i.e. that a lessee can recover damages for the interference with the lessee’s enjoyment of that asset) to long leaseholders so as to exclude periodic, secure or statutory tenancies. He went on,

“[31]… In each case, the lessee or tenant enjoys a recognisable species of property right, in return for payment, either in the form of a premium, a rack rent or a fair rent. If in any of those cases the amenity or value of that bundle of rights to the lessee or tenant is impaired by the lessor’s or landlord’s breach of covenant, then that is a loss of which discomfort, incovenience or distress (or the breakdown in health of a loved one) are all symptoms.”

Accordingly, the approach of the Court of Appeal in Earle and Moorjani are likely to apply to periodic tenancies (even if Briggs LJ’s remarks are only obiter). Thus, even if the tenant cannot show that he has suffered any discomfort or incovenience he is still entitled to an award, which according to the Court of Appeal can be as high as 15% of the rent, for the interference with his right to enjoy the use of the property in circumstances where the landlord has not performed his repairing obligations.

This must mean that landlords will no longer be able to hide behind the “oh its only a bit of (insert minor disrepair here)” and argue that the tenant hasn’t actually suffered any loss. In fact the tenant has suffered loss: the loss of the right to enjoy the premises free from disrepair and that may amount to as much of 15% of the rent. A new arrow for the bows of tenant lawyers.

Importantly, it should also put to bed the argument, which has not yet been had, that there is a maximum award for general damages in cases concerning breach of contract.

Perhaps illustrating the need for the Court of Appeal to deliver the judgment in Moorjani (see preceding post), the December 2015 issue of Legal Action has Beatrice Prevatt’s excellent annual  ‘housing repairs update’.  We have covered many of the cases noted in the update already, but there are some county court cases unreported elsewhere, remarkably this time including some Councils taking cases to trial. As ever, our thanks to Beatrice Prevatt and Legal Action.

Kwegan and Kwegan v Industrial Dwellings Society, Clerkenwell and Shoreditch County Court,19 March 2015; and Central London County Court, 21 September 2015

K & K claimed for disrepair under s.11 LTA 1985 and express repairing obligation in their tenancy agreement. The agreement contained a section headed ‘Services’.

“IDS shall provide the following services in connection with the Premises for which the Tenant shall pay a Service Charge – landlord’s lighting, cleaning of communal areas, electric gates, door entry system, refuse disposal, depreciation of entry gates and courtyard service.”

The Agreement also provided under landlord’s obligations:

“Repair of Common Parts – To take reasonable care to keep the common entrances, halls, stairways, lifts, passageways, rubbish chutes and any other common parts, including their electric lighting, in reasonable repair and fit for use by the Tenant and other occupiers of and visitors to the Premises …”

The main items in the claim were:

• An inoperative entry-phone system and electric gates, which allowed entry into a courtyard, giving access to the Kwegans’ house and those of their two neighbours;
• A defective heating and hot water system;
• Water penetration into their living room from the shower on the floor above.

The landlords counterclaimed for damage to doors and kitchen cabinets, and for unauthorised electrical works.

At first instance, the District Judge dismissed the disrepair claim. She found that the gates belonged to the freeholder and that IDS had no rights over the gates and entry-phone and no right to do anything in relation to them. There was no duty on IDS to repair or to reinstate the gates.

On the heating and hot water, the DJ found that IDS had not acted unreasonably in carrying out repairs for a number of years before finally replacing the boiler.

In relation to the water leak from the shower, she found that although the shower had been leaking into the living room for five years, IDS had acted reasonably in attempting to locate the source of the leak and that it was a particularly difficult problem to solve.

The DJ allowed the counterclaim in part, namely in relation to a damaged door and a damaged kitchen unit.

The claimants were ordered to pay the defendant’s costs.

K & K then appealed on two grounds:

The DJ was wrong to find no obligation on IDS to repair the electric gates and entry-phone

The time taken to fix the leaking shower could not be reasonable.

Permission was granted on the first ground only.

The appeal was allowed on the basis that the electric gates and entry-phone system were an integral part of the common entrance and therefore fell within the defendant’s express repairing obligations. This was regardless of the landlord’s rights against the freeholder to carry out any such works.

Given that she found they were covered by an express rather than an implied term, she did not have to go on to consider whether the landlord had used all reasonable endeavours to obtain rights from the freeholder that would have allowed it to carry out repairs (LTA 1985 s11(3A)).

The question of quantum was remitted to the District Judge for consideration.

It appears that the landlord is seeking permission from the Court of Appeal for a second appeal.

Comment

This is an interesting counterpoint to Kumarasamy (now to be heard by the Supreme Court in May 2016) on landlord’s obligations for parts of the building not owned by the landlord. But given the express terms of the agreement, rather than a reliance on s.11(1A) LTA 1985, I suspect the landlord might be on a hiding to nothing. Nonetheless, one to keep an eye open for.

DR v Southwark LBC, Central London County Court, 18 July 2015

We reported this one at first instance. The council was found liable for saturated plaster, even though the cause of the saturation was probably condensation damp.

At first instance, the District Judge awarded damages of 20 per cent of the rent for a three year period (approximately £3,000) – a three year limitation being imposed due to a finding that a claim for personal injury hd been made, though without an award of damages in that regard.

The council appealed to the circuit judge, on liability and on quantum.

The CJ upheld the finding on liability but reduced the award of damages to £1 a day or £365 a year.

Comment

I have seen the appeal judgment and it is not, to be honest, a great judgment – the reasoning is unclear and in particular the basis for the reduction in damages is wholly lacking a rationale. In view of Moorjani in the Court of Appeal, this level of quantum surely simply can’t stand. On the plus side, the finding on liability – through saturated plaster being s.11 disrepair in and of itself – stands.

Uddin v Islington LBC, Clerkenwell and Shoreditch County Court, 6 May 2014

This case went to the Court of Appeal – our report here. But the CoA apparently left the first instance judgment on quantum undisturbed. This is the first instance judgment.

The claimants were tenants of  a four-bedroom maisonette, on the basement and ground floor of a converted house. They claimed damages for rising dampness that affected their home from October 2004 until mid- September 2009, when remedial works were eventually carried out.

HHJ Mitchell found the council liable for breach of its repairing obligations during this period. The damp was visible in defective plaster work and black mould growth in the bedroom, which felt cold and smelt. On the basis that it was the basement that was affected, he awarded 30 per cent of the rent minus a six-week period by reason of a failure to provide access, totalling £8,801.53, and special damages of £4,022.86.

There was a further award for a six week period of breach of covenant of quiet enjoyment on the basis that the Council had carried out works unreasonably, despite no specific claim in this regard having been pleaded. The CJ ‘took judicial notice’ of the fact that it is possible to limit the effect of the dust by sealing the room where work was carried out and using industrial vacuum machines to remove the dust from the air as the works were carried out. If these could not have been used, the council should have provided temporary housing. Merely using ineffective dust sheets was not sufficient.

He was satisfied that, for five weeks, the tenants suffered serious inconvenience because the council failed to prevent the dust in the premises impacting on them. The premises were virtually uninhabitable, with the tenants having to bathe and use the lavatory at the homes of family and neighbours.For an additional week, there were workmen in the house when the work should have been completed previously.

The CJ awarded an amount equal to the rent for five weeks and 25 per cent of the rent for the additional week, totalling £702.03.

There was also the Simmons v Castle 10 per cent uplift on all the general damages of £965.36.

Interest at 2 per cent on both general and special damages from issue, totalling £956.

Thomson v LB Southwark, Lambeth County Court, 30 September 2015

The tenant of a flat in a lock complained of water penetration from the flat above, and from the outside from 2009, ill fitting and draughty windows an intermittently blocked kitchen sink and defective works to the bathroom.

Subsequently, the building and her property started to suffer from subsidence, resulting in cracking, falling plaster and uneven floors.

In August 2015, the claimant’s expert noted a significant deterioration of the condition of both the property and the building in comparison to his first inspection in June 2013.

At trial, the DDJ awarded general damages amounting to 20 per cent reduction in rent for the period from 1 January 2009 to 23 June 2013, amounting to £4,659.59. For the period from 30 June 2013 to 30 September 2015, the court awarded a 40 per cent reduction in rent, amounting to £5,521.25, giving a total of £10,180.84. Applying the uplift of 10 per cent, the award for general damages was £11,198.92.

McLoughlin v Tower Hamlets LBC, Clerkenwell and Shoreditch County Court, 15 January 2015

The tenant of a two-bedroom cottage complained of rotting windows, a defective boiler and damp to the kitchen and bedrooms from 2007. In addition, the tenant suffered a gas leak in 2013, reportedly caused by the damp corroding a copper pipe.

At trial the District Judge made an award of damages as follows:

• a 30 per cent reduction in rent for the damp and defective windows, making a total award of £16,359, including the 10 per cent uplift;

• a £1,000 one-off payment for the gas leak;

• £750 in respect of special damages, which was two-thirds of the replacement cost, even though the tenant had no receipts, as the claim was not inflated.

The claimant beat her Part 36 offer and was awarded costs on an indemnity basis.

Gabriel v Investinc Ltd, Clerkenwell and Shoreditch County Court, 23 July 2015

The tenant claimed in respect of water penetration into his flat, apparently through the roof. The cause of water penetration through the roof was not agreed by the two experts.

The landlord counterclaimed for some rent arrears, which were admitted, and for deep-cleaning and repairing the property at the end of the tenant’s tenancy.

At trial, the District Judge dismissed the landlord’s argument that the fact that the cause of water penetration was not agreed meant disrepair was not proven and found that a roof that allowed water to penetrate through it was a roof in disrepair.

She also found that the roof was not part of the premises let to the tenant but remained in the control of the landlord, so that it was immediately liable for the disrepair (BT plc v Sun Life Assurance Society plc [1996] Ch 69).

However the effects of the disrepair were found not to be severe.Photographs only showed slight damage and the alleged smell of damp was not commented on by the tenant pre action.

General damages awarded of 22 per cent of rent, which amounted to £2,800 a year, apparently including the 10 per cent uplift added because of the date of the tenant’s CFA was post April 2013 (Simmons v Castle). Interest was added to the award of damages.

The counterclaim in relation to deep cleaning and tenant damage was dismissed on the basis that the cleaning required at the end of the tenant’s nine-year tenancy was no more than would reasonably be expected.

Comment

The period of the claim, and so the total damages, isn’t clear, and neither is whether the rent arrears counterclaim was beaten. For the sake of the Claimant’s solicitors, on a CFA, one must hope so. In any event, it must have been squeaky bum time.

Espute v Lambeth LBC 

The tenant of a three-bedroom maisonette complained of mould growth present in the entrance hallway, kitchen, and lounge ceiling, heavy mould growth on the stairway to the upper floors, and some mould in each of the three bedrooms.

A surveyor’s report found that the growth was caused in part by water leakage and in part by condensation aggravated by the poor design of the property, principally a solid concrete ceiling above the stairwell.

A global settlement of £13,000 was agreed in April 2015 for the leaks and damp for six years prior to issuing.

The settlement amount was the equivalent of a rent rebate of 40 per cent.