Nearly Legal

We know nothing more about this case than is reported by Local Government Lawyer here, but it appears that a judicial review of London Councils decision to cut £10 million from its £24.6 million grant scheme to voluntary sector organisations in the capital was successful on Friday 26 January.

The Judicial Review was brought by two service users of affected voluntary organisations, apparently on the grounds that a proper assessment of gender, disability and race equality impacts was not carried out. The cuts would have affected more than 200 voluntary and community sector organisations in London, with tens of thousands of clients.

No transcript is available yet, hopefully it will be soon and we’ll update when we have it. Pierce Glynn acted for the service user claimants, any more details welcome…

As Dave has explained, the Supreme Court decision in Yemshaw v LB Hounslow brought the definition of violence in Housing Act 1996 into line with other statute and Government guidance, in particular with the accepted family law definition of ‘domestic violence’.

But not for the Daily Mail. For the Mail, the real issue was set out in their headline “Shout at your spouse and risk losing your home: It’s just the same as domestic violence, warns woman judge“. It was a five judge Supreme Court, so that should be “warn 4 men and 1 woman judges”, but it is of course the woman judge that is undermining the very fabric of decent society, so we’ll let that small error pass.

Here are the Mail’s opening salvos:

Men and women who shout at their partners risk being thrown out of their homes under a sweeping ruling by judges yesterday.
Raising your voice at a husband or wife, or a boyfriend or girlfriend, now counts as domestic violence under the landmark Supreme Court judgment.
The decision also means that denying money to a partner or criticising them can count as violence and bring down draconian domestic violence penalties from the courts.

These three sentences, in which the sole accurate bit is that this was a Supreme Court judgment, demonstrate why the Mail is not a paper of record for case reports. One might, perhaps, be tempted put it down to sheer incompetence on the part of the unnamed reporter, but given the general thrust of the article, mere incompetence rather pales into insignificance. The Mail appears to consider that a definition of violence that doesn’t require physical assault means a falling away from the standards of the good old days. Britain is going down the drain. It is politicial correctness gone mad. Etc. etc..

I am tempted to believe that the presence of ‘a woman judge’, ‘a homeless woman’ and ‘a council house’ caused the Mail’s automatic story generator to overload and it mixed the case report up with the ritual ‘A levels aren’t what they used to be and people now go to Oxbridge without being able to spell their name’ story. Hence a story along the lines of ‘standards of domestic abuse used to be so much higher – in the old days I wouldn’t have left my husband unless he gave me a broken cheek bone and a damaged liver’. Either that or the Daily Mail has proudly started the Campaign for Real Domestic Violence -and asks its readers to stand up for being knocked down (or intends to reassure them that they are not committing domestic violence if they merely engage in psychological, sexual, financial or emotional abuse).

Despite all of this, you may be surprised to learn that it is not the Mail on the naughty step (or perhaps the Mail should be considered to always have been on the step). The Mail is of course a cynical, amoral panderer to a certain petit bourgeois weltanshauung, but it is frankly a bit gauche to be surprised by the depths to which Paul Dacre’s organ will stoop.

No, for the person to be put on the step, we must look to the surprising fact that in its article on Yemshaw the Mail managed to find a supportive quote from a ‘Family Law Expert’, who said:

The judiciary are taking the Humpty Dumpty view, and it risks undermining confidence in the legal system

The Mail, ever solicitious of its readers, helpfully explained this meant a “comparison between the ruling and the Humpty Dumpty character in Lewis Carroll’s Through The Looking-Glass, who said words meant whatever he wanted them to mean.”

I suspect that you are wondering what ‘family law expert’ could actually say such a thing, given the functioning definition of domestic violence in family law, via the President of the Family Division’s Practice Direction (Residence and Contact Orders: Domestic Violence) (No 2) [2009] 1 WLR 251, para 2 and not forgetting the definitions in:

[The] Association of Chief Police Officers: Guidance on Investigating Domestic Abuse (2008); the Crown Prosecution Service Policy for Prosecuting Cases of Domestic Violence (2010); the Ministry of Justice, in Domestic Violence: A Guide to Civil Remedies and Criminal Sanctions (February 2003, updated March 2007); and the UK Border Agency, in Victims of Domestic Violence: Requirements for Settlement Applications

Oh and Hounslow’s own leaflet, Domestic Violence: What it is and how you can get help from 2009.

Who, you will be asking yourselves, whilst being someone who holds themselves out as a family law expert, would offer up such a quote? It is almost as if they hadn’t actually read the judgment, but had just been called up by the Mail before the first coffee of the day and given a quote based on nothing but their own prejudices.

The Daily Mail says the quote is by a ‘Jill Kirby’. After some intensive searching for any ‘Jill Kirby’ connected with family law, I am reasonably confident that it is this Jill Kirby,  (just former)Director of the Centre for Policy Studies (a Tory think tank).  I can’t find any other ‘Jill Kirby’ who has anything to do with pronouncements on family law, let alone one with this Jill Kirby’s record on giving voice to her passing thoughts through the newspapers (Telegraph, Sunday Times, Express and so on). If I am wrong, then my profound apologies to this Jill Kirby and will the real ‘Jill Kirby, Family Law Expert’ please step forward…

Jill Kirby, (just former) director of the Centre for Policy Studies, is, or was, a lawyer.

she qualified as a solicitor in 1981 and practised in a leading City law firm as a specialist in commercial litigation and employment law. [source]

So not actually a family lawyer, then. I don’t think either employment or commercial law practice equips one to comment on family law, let alone housing law (as it doesn’t appear to have registered with Ms Kirby that this was a housing law case). If any commercial lawyers beg to differ, then it is statute at 20 paces at dawn.

Does Jill Kirby have any academic qualifications or particular research expertise in family law?

Jill Kirby chairs the Family Policy Group at the Centre for Policy Studies where she writes on family and welfare issues. Her most recent CPS report, The Nationalisation of Childhood, argues that the Government’s agenda for children is creating a direct relationship between children and the state, undermining the responsibility of families.

Jill’s other CPS publications include Broken Hearts – Family decline and the consequences for society (2002), Choosing to be Different (2003) and The Price of Parenthood (2005). [source]

That would appear to be a ‘no’. As far as I can gather, this means that she writes about her opinions on the family and the state for a tory think tank. No discernable ‘family law’ expertise at all, unless there is some kind of qualification that has been omitted from the public CVs, as one does.

There is a reliable general rule that anyone quoted in the Daily Mail may be intelligent, honourable or espouse family values, but at the best only two of the three at any given time. However, the nature and billing of this particular comment has already ruled out two of the three options.

While the comment may have been sincerely meant, it would then have to be profoundly uninformed – from a ‘family law expert’. If it is not sincerely meant, then it is mere wind-baggery, such as would make most ‘experts’ blush with shame. If you are reading this, Ms Kirby, do let us know which was the case.

In the meantime, good luck with your new career. Unless that is, your new career consists of continuing to offer rubbish quotes to the Daily Mail as an ‘expert’. You are on the naughty step for adding a veneer of respectability to the Mail’s bile without respect for anyone who may read it or indeed for yourself. Think of this as an an intervention. I want you to be able to be proud of yourself. I want you to be able to say ‘I think X’ and actually mean it  - both that this is the conclusion you have come to and that you have engaged in some thought along the way. It will feel good, really.

[Update: The excellent  UK Human Rights blog has picked up on this post and drawn it together with its own criticisms of reporting of human rights cases - a thoughtful and interesting post. They include a link to the Press Complaints Commission form. What a good idea, and here it is.]

[Update 2: The real problem with this sort of nonsense is that it all too easily becomes the accepted myth. Exhibit A, Christina Odone in the Telegraph produces a witless column based upon the Mail's story. She obviously wasn't going to bother to actually check its accuracy. Interestingly, Odone describes herself as " a journalist, novelist and broadcaster specialising in the relationship between society, families and faith", so another 'family law expert'. She is also "a Research Fellow at the Centre for Policy Studies". Is this a conspiracy or does the Centre for Policy Studies have a superfluity of such wind bags?]

[Edit: We are getting a lot of new visitors to this post - welcome - but for the benefit of those who haven't read the Yemshaw case, I should make clear that the Supreme Court did not decide on Ms Yemshaw's homeless application. It quashed the Council's decision that she was not homeless because she had not suffered physical violence or threats of physical violence. Ms Yemshaw's application now goes back to the Council to decide whether on the specific facts of her situation she was homeless by reason of domestic violence in the sense set out by the Supreme Court, or not. So there is no specific finding that the treatment Ms Yemshaw described constituted domestic violence. This is, of course, a point that wholly escaped the Daily Mail.]

For those who can’t get enough of “the brilliant Baroness“, there is (on the BBC iplayer) a quite excellent programme about the operation of the Supreme Court. Baroness Hale is interviewed at length and, once again, demonstrates her enormous (but thoroughly charming) intellect. There is a housing-law aspect to it; the BBC were clearly filming during Pinnock (or, perhaps, Frisby). How do I know this? See if you too can spot Andrew Arden QC and Jan Luba QC…

A brief note to point out the Fire Safety (Protection of Tenants) Bill 2010-11, which is currently working through the House of Commons.

This is Private Members Bill which had its first reading on 30 June 2010 (we were a bit slow picking it up, sorry) and is due a second reading on 1 April 2011. This bill will require all landlords to fit at least one mains-powered battery backed smoke alarm in rented residential property which will comply with grade D of British Standard 5839: Part 6 (2004). This must be in place prior to a tenancy agreement being entered into. Failure to do so will be a criminal offence and it will be triable each way. On summary conviction the maximum fine will be 12 month imprisonment or a fine not exceeding level 5 on the standard scale (£5,000). On indictment the maximum penalty is a fine and/or 2 years in prison.

The bill also requires that all tenancy agreements contain provisions requiring the tenant to test the fitted smoke alarms at least once a month and to notify the landlord of any problems and a further provision requiring the landlord to remedy any problems reported by the tenant.

As with gas safety certificates there will be an exception for leases of 7 years or more.

As this is a Private Members bill it is unlikely to become law. It has been proposed by Adrian Sanders, Liberal Democrat MP for Torbay. He is not in any significant position in the coalition government and therefore the prospects for the bill being adopted seem weak unless there was some sudden public interest in improved fire standards in tenanted property.

Yemshaw v Hounslow LBC [2011] UKSC 3

While my NL colleagues are off partying at a secret location for lunch, I’ve managed to steal a few precious minutes from an appallingly tight deadline (Sinead: if you’re reading this, it’ll be there, honest) to write a paean of praise in honour of Baroness Hale’s judgment in this case.  It is quite simply, as NL has put it, Baroness Hale at the top of her game; a brilliant, tightly argued, academic but practical, rich and deep appreciation of homelessness law and its underlying philosophy (cf the “provocative” approach taken by the Daily Mail in their, ahem, “interesting” comment on the case – more of which, possibly, later).  Her judgment in Yemshaw provides the principal justification for the reams of academic literature that now exists about her (rather than written by her).

Background

The background to Yemshaw has been covered by NL (here), which was concerned with the Court of Appeal judgment. The issue for the Supreme Court was the definition of “violence” in s 177(1), Housing Act 1996, for the purposes of the definition of homelessness.   The Court of Appeal considered themselves bound by Danesh v Kensington and Chelsea RLBC [2006] EWCA Civ 1404, despite the fact that the Code of Guidance had defined “violence” more broadly, but, in any event, they rather agreed with the narrow take on “violence” in Danesh.

Outcome

In the Supreme Court, the actual outcome was that violence is to take the same meaning as in the family law context: “‘Domestic violence’ includes physical violence, threatening or intimidating behaviour and any other form of abuse which, directly or indirectly, may give rise to the risk of harm” (Practice Direction (Residence and Contact Orders: Domestic Violence) (No 2) [2009] 1 WLR 251, at [2], emphasis added; Yemshaw, at [28]).  Baroness Hale (with whom Lords Hope and Walker agreed) gave the leading judgment; Lord Rodger gave a concurring judgment, out of deference to the CA; and Lord Brown doubted the result but, in the oddest final paragraph, basically said that he didn’t care enough to dissent (“At the end of the day, however, I do not feel sufficiently strongly as to the proper outcome of the appeal to carry these doubts to the point of dissent. I am content that the views of the majority should prevail and that the appeal should be allowed”: [60]).

Baroness Hale made clear that the question for the local authority (following on from Birmingham CC v Ali – our note here) is essentially about the future, ie the probability of the acts continuing in the future (“This is the limiting factor.  Sections 177 and 198 are concerned with future risk, not with the past”: [34]).  Further:

I accept that these are not easy decisions and will involve officers in some difficult judgments. But these are no more intrinsically difficult than many of the other judgments that they have to make: …. Was this, in reality, simply a case of marriage breakdown in which the appellant was not genuinely in fear of her husband; or was it a classic case of domestic abuse, in which one spouse puts the other in fear through the constant denial of freedom and of money for essentials, through the denigration of her personality, such that she genuinely fears that he may take her children away from her however unrealistic this may appear to an objective outsider? This is not to apply a subjective test (pace the fifth reason given in Danesh). The test is always the view of the objective outsider but applied to the particular facts, circumstances and personalities of the people involved. (at [36])

My suggestion is that, just as the Holmes-Moorhouse paragraphs pop up in practically all local authority skeleton arguments, this paragraph is likely to be in most appellants.  Homelessness decision-making is a difficult job, but it has to be done.

Reasoning

Although Baroness Hale made it look relatively easy, this result was rather more difficult to achieve (as is clear from Lords Rodger and Brown’s judgments). It required deft footwork, using the history of the homelessness legislation,  method of statutory interpretation adopted in Fitzpatrick v Sterling HA [2001] 1 AC 27, combined with “modern” understandings of domestic violence.  The interpretation meant that the phrase “domestic violence” in section 177(1) is left virtually redundant (a historical vestige, in essence – see the quizzical discussion at [9]-[11]) and, it is to be noted the ambit of the phrase “other violence” in section 177(1) (as amended) was unclear and left open (Baroness Hale could see both sides of the argument: [35]; note to self – one for the future).  Anyway, starting from the top …

As Baroness Hale pointed out (at [7]-[8]), the definition of   “violence” is an important question because of its “deeming” or “passporting” effect – that is, a person falling within this definition will not only be found homeless but will also be found not intentionally homeless (and will affect the ambit of the local connection provision).  Its parameters, then, are crucially important.  Baroness Hale traces the rather tawdry history of section 177(1) back to the inane distinction that used to be drawn between violence inside and outside the home; and the proviso that local authorities are entitled, in exercising their decision-making on homelessness and intentionality, in relation to reasonableness, to have regard regard “to the general circumstances prevailing in relation to housing in the district of the local housing authority to whom he has applied for accommodation or for assistance in obtaining accommodation” (now s 177(2)).  As regards the latter, Baroness Hale suggests that “this strongly suggests that regard may be had, not only to the quality of housing available locally, but also to the quantity” (at [5]; on which Ian Loveland’s academic work from the early 1990s is interesting by the way).

The history of the “deeming” provision enabled Baroness Hale to make a number of points about section 177, as original drafted.  She notes, first, that it expressly includes violence against other members of the household; and second, that it was not limited to violence from someone living in the same accommodation but covered violence from an “associated person” (see s 178).  Those changes, though, did not alter the underlying, fundamental purpose.

The development of policy and family law understandings about “domestic violence” were also relevant to the discussion, and Baroness Hale brilliantly interweaves that development with homelessness law.  So, after tracing the development of the family law approach, she notes that “it cannot be a coincidence” that the definition of an associated person in section 178 closely resembles that in the Family Law Act 1996 (at [22]); and

All of this indicates a consciousness in 1996 of the need to align housing, homelessness and family law remedies for victims of domestic violence, so that they could have a genuine choice between whether to stay and whether to go and the local authority or social landlord would not be obliged to continue to provide family sized accommodation to the perpetrator. There was also an explicit acknowledgement in the report which led to the Family Law Act 1996 and by the Home Affairs Committee that “violence” could have a wider meaning than physical contact. (at [23])

This tracing process led Baroness Hale to the Fitzpatrick approach to statutory interpretation.  In essence, some statutes are to be read as “living law”, ie interpreted by reference to their current meaning as opposed to the meaning which they might have had at the date on which they came into force: “The essential question … is whether an updated meaning is consistent with the statutory purpose” (at [27]).  What were the statutory purposes:

In this case the purpose is to ensure that a person is not obliged to remain living in a home where she, her children or other members of her household are at risk of harm.  A further purpose is that the victim of domestic violence has a real choice between remaining in her home and seeking protection from the criminal or civil law and leaving to begin a new life elsewhere. (at [27])

Those purposes would be achieved if the court adopted the family law definition of violence.  Further, that interpretation was not inconsistent with the statutory provisions in Part 7.  Yes the Secretary of State has a power to include other forms of ill-treatment falling short of actual violence within s 177(1), but that had not been done because the SoS already believed that the word bore that wider meaning.  If there was concern that the threshold was being set too low, Baroness Hale observed (and, in doing so, drew on her family law knowledge as well as brilliantly undercut any potential dissent):

The advantage of the definition adopted by the President of the Family Division is that it deals separately with actual physical violence, putting a person in fear of such violence, and other types of harmful behaviour. It has been recognised for a long time now that it is dangerous to ignore what may appear to some to be relatively trivial forms of physical violence. In the domestic context it is common for assaults to escalate from what seems trivial at first. Once over the hurdle of striking the first blow, apologising and making up, some people find it much easier to strike the second, and the third, and go on and on. But of course, that is not every case. Isolated or minor acts of physical violence in the past will not necessarily give rise to a probability of their happening again in the future. (at [34])

It’s just brilliant stuff.  Lord Rodger’s concurring judgment looks like it could have been written 30 years ago by contrast.  Lord Brown – well, read it and see what you think.  it’s not uninteresting in terms of the value judgments he is making (see especially [57] where he draws a distinction between the urgency in actual violence cases as opposed to those “subject to psychological abuse”).

Right, back to that deadline … (oh, and hope the rest of you NLers enjoyed the long, luscious lunch – not that I’m jealous or anything)

This may not be the first such announcement, but it is certainly the biggest to date. Birmingham Citizens Advice has had £600,00 per year of Local Authority funding cut. Unless alternative funding of £50,000 per month is found, it will close its generalist advice centres from 11 February 2011.

The CAB claims that they assisted 56,000 people last year and it is the largest CAB in the country. They estimate that they assisted clients in applying for or appeallng decision on income of about £16 million and to manage about £85 million of debt.

Transition funds will not be accessible in time and Birmingham City Council ‘replacement’ funds – a much smaller pot open to bids from 14 charities, to be allocated in £50,000 blocks over 1 to 3 years – will not be available in any event until August 2011.

The CAB are urgently asking for donations to fund them in the short term while they attempt to secure longer term funds.

My understanding is that the Social Welfare law contract (joint with Shelter) and the ‘preventing homelessness’ advice at the County Court (not the duty scheme as first suggested – that is run by CLP) are not directly affected. However, there are surely intertwined economics of provision even if just in terms of office space, admin support and facilities.

Birmingham Council, a ConDem coalition, appear to be blithely ignoring the DCLG recommendations that Councils should not take the easy option and cut funding to the voluntary sector. One takes it that Grant Shapps and Eric Pickles will be very disappointed in Brum (but take no action at all).

[Update: Birmingham City Council respond that

"We’ve always made it clear to agencies that funding was not guaranteed beyond any single year, up to a maximum of three years. It was never our intention for agencies to become dependent upon this source of funding, or that it form their sole source of income. However, we did pay CAB £150,000 notice payment".

That first sentence has the dubious distinction of making no sense whatsoever. On 'dependency', the CAB point out that the £600,000 was 20% of their funding, but that they can't afford to lose 20% when funding from other sources is also dropping by £1.2 million for 2011. The income was £3 milion in 2009/10.]

Sibthorpe & Morris v LB Southwark [2011] EWCA Civ 25

Champerty and maintenance are two common law doctrines relating to the funding of civil claims. They were, at one time criminal offences, but now survive only as a matter of public policy. Briefly, maintenance is where a third party agrees to fund the suit of another in which he has no legitimate cause or interest whereas champerty is where the third party maintains the suit while also seeking a share of the damages to be awarded. Both of these were commonly used by the wealthy and powerful in the past in order to advance political causes as well as to simply make mischief and were banned as a result.

In this case S and M were both tenants of Southwark. They both complained of disrepair in their properties. Their solicitors, Belshaw and Curtin, had entered into a slightly unusual form of CFA with both of them although it is one that may well become more common in future. Essentially, neither party was able to obtain insurance against Southwark’s costs if they lost (ATE insurance) and so B & C had undertaken to indemnify them against those costs.

Southwark lost both cases and sought to contest the costs (some might say in a fit of pique although I am not, of course, saying that) on the basis that the CFA fell foul of the common law rule against champerty. The Deputy Master who initially dealt with costs agreed with Southwark, HHJ Macduff reversed this decision on appeal and so the case came before the Court of Appeal with the Law Society joining in as an intervenor on behalf of S and M (although they were doing so more on the basis of support for B & C). Lord Neuberger gave the leading judgement, with LJs LLoyd and Gross concurring.

Before the Court of Appeal it was argued for M (and by extension S although his appeal was taken by the Court to simply follow from M’s and so it was not considered in detail) as well as by the Law Society that:
1. the indemnity arrangement was not champertous under any reading of the rule against champerty;
2. even if it was champertous under the original rule, the law had developed since that point and in any event each case should be considered on its merits without over-strict observance of previous cases; and
3. if the indemnity arrangement was champertous it should be deleted from the rest of the CFA which should stand without it and costs should therefore be paid under that agreement.
Southwark basically took the contrary view on each of those points.

The Court considered carefully the comments of the Court of Appeal in R (Factortame Ltd) v Secretary of State for Transport, Local Government and the Regions (No 8) [2002] EWCA Civ 932, [2003] QB 381. It took note of the statement of Lord Phillips that the rule against champerty was a matter of public policy and therefore should remain under review by the Courts as policy is subject to change on the basis of the public interest.

In Factortame it was alleged that a fee sought in Court for the work done by the accountants, Grant Thornton, was champertous because it was expressed as a percentage of the total amount of damages recovered. A distinction was drawn in that case between contingency agreements entered into by a litigator and those entered into by other parties whose work supported the litigation and on that basis Grant Thornton’s fee was recoverable as costs. In this case it was argued that the principle laid down in Factortame was actually that potentially champertous agreements had to be looked at “in the round” and consideration had to be given as to whether the agreement would undermine the “purity of justice”. The Court did not accept that argument and held that Factortame had continued the principle that agreements concluded between parties and those conducting litigation for them would be looked at more closely and were subject to stricter rules. Accordingly there has been no loosening of the rules of champerty in regard to litigators although there may well have been in regard to experts and other third parties.

In fact the Court went further here and made a comment (at para 41) that looks rather like an attack on the current views of the Ministry of Justice on litgation funding:

There is … much to be said for a properly funded legal profession, which has no need to have recourse to conditional fees or contingency fees or the like. It is a matter for the legislature if such arrangements are thought to be necessary for economic or other reasons, and, if they are so necessary, then it is for the legislature to decide on their ambit.

In other words the Courts are not prepared to support a change in funding arrangements toward contingency fees without primary legislation. Given that this comment was made by the Master of the Rolls, who is effectively charged with taking the Jackson review forward it is revealing that he appears to be of a firm view that contingency fees are, at least on the current law, a step to far.

Notwithstanding its refusal to loosen the rules on champerty the Court actually held that the indemnity was not itself champertous and to make it so would constitute an unwarranted extension in the law of champerty. The Court accepted that it was drawing a slightly artificial distinction between a litigator acccepting a contingency fee and thereby having an interest in the success of the litigation (forbidden) and a litigator giving an indemnity and thereby having an interest in the failure of the litigation (allowed). However, it drew comfort from judicial views that the rule against champerty should be curtailed rather than extended and the public policy advantage, in terms of access to justice, that this form of indemnity provided.

There was then a slightly (more) academic discussion which came to the view that champerty was no longer a subspecies of maintenance as previously held and that the two were now separate. This is because maintenance occurs where the party supporting the case has no “justification or excuse” for doing so and this could not be held to apply to a solicitor who had an interest in the success or failure of a case.

Given that the indemnity was not held to be champertous, this was all that needed to be said. However, in brief the Court held that champerty was not to be decided on a case by case basis and refused to rule on whether a champertous clause could be severed from the remainder of a CFA agreement. Finally, the Court refused permission to appeal on the separate ground that, by including the indemnity, the CFA was an insurance contract and therefore void by virtue of s.26 FSMA 2000, as the solicitors were not authorised or exempt for the purposes of s.19 of the FSMA.

This case has huge potential importance, especially when placed in the context of cuts in public funding and the Jackson review of civil litigation costs. It should be remembered that contingency fee arrangements by lawyers have been banned on the basis that they too are champertous and therefore that the rule on champerty is all that stands in the way of their removal. There has been extensive discussion as to whether solicitors should be able to enter into some form of contingency fee with clients, as is common in the USA, and this has been put forward as a possible solution for certain types of case (see BBC Radio 4′s Law in Action, 28 October 2010). Clearly such an idea cannot get off the ground unless the Courts demonstrate a preparedness to relax the rules on champerty or legislation is enacted.

Additionally, B & C’s funding model, while it will not appeal to everyone, is a potential solution for CFAs which insurance companies do not want to take on because they are too small or which will become uneconomic if the Jackson reports recommendations regarding litigants having to pay their own insurance premiums from damages is taken forward.

The summary then is: indemnity against costs=OK, contingency fee=No way!

Following on from David’s sort of disrepair related post below, here is another one – not directly a disrepair matter but bearing on terms of settlement. It is either quite significant or something of a farce of bad drafting, bad decisions and windfall chasing. As will become clear, I lean towards the second option…

RH v North Tyneside Council v Secretary of State for Work and Pensions (HB) [2010] UKUT 462 (AAC)

This was a housing benefit appeal, indeed the second HB appeal related to this matter. The tale is best told chronologically.

RH was a tenant of a landlord (LL) between 24 November 2006 to 18 January 2008 under what appears to have been a sale and rent back agreement (although the arrangement was with a business partner – LL). RH had owned the property before. RH made 3 rent payments then claimed HB in November 2006, when he was already 8 weeks in arrears. He was initially refused HB under regulation 9(1)(h) of the Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006 [which I'm not going into]. This decision was eventually overturned by the first tier tribunal.

However, in the meantime  LL made a claim for possession based on rent arrears. RH apparently counterclaimed over some matters in the terms in which he had sold the property including an accusation that LL had reneged on a buy-back agreement. No further detail is in the judgment.

This litigation was settled by way of a Tomlin Order. Crucially, the details of the Tomlin aren’t given in the judgment – this is all there is:

The formal part of the order records the parties’ agreement (i) that the landlord be given possession of the property, (ii) that the defence and counterclaim by the appellant be dismissed (iii) that on the appellant’s vacating the property, all of the landlord’s claims against the appellant under the tenancy of 8/8/05 be dismissed, and that (iv) the proceedings were stayed on the terms set out except for the purpose of carrying out those terms. The Schedule set out more detailed terms agreed by the party, including an undertaking by the appellant to pay the landlord £1.00 on vacating the premises, in full and final settlement of all claims against the tenant under the tenancy including all arrears of rent.

There is a frustrating lack of detail here, to which I’ll return.

RH left the property on 18/01/2008 (but maintained he didn’t pay the £1 !).

Following the first tier tribunal decision, the local authority came to assess housing benefit for the period since RH’s claim. They took the view that the Tomlin meant that the rent liability was £1 and made that award to RH.

RH appealed to the first tier tribunal. The tribunal held that:

despite the terms of the settlement, someone (be it the appellant or his landlord) was entitled to periodical payments representing the rent which had been determined by the rent officer.  The tribunal judge remitted the appeal to the Authority to calculate the HB to be paid and to decide to whom the arrears would be paid.

There was no appeal of this decision.

So, the HB based on the original rent amount was calculated by the authority. Someone was getting a windfall…

The authority then took the view that, as there had been more than 8 weeks of rent arrears, the HB should be paid to the LL under regulation 76(1)(b) Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006, which stated that payment shall be made directly to the landlord where “the person is in arrears of an amount equivalent to 8 weeks or more of the amount he is liable to pay his landlord as rent, except where it is in the overriding interest of the claimant not to make direct payments to the landlord.”

RH appealed. The first tier tribunal dismissed the appeal. RH went to the upper tribunal, which is this decision. The Secretary of State was joined as a party due to ‘complex procedural questions’.

RH appealed on the basis that:

i) he hadn’t paid the £1 so the Tomlin Order was invalid – this was simply dismissed. He could not rely on his own wrongdoing under ordinary contractual principles.

ii) The LL still owed him money from the house purchase – dismissed as an attempt to reopen matters dealt with in the Tomlin Order

iii) The parties had some agreement that the HB was to be paid to RH – held there was no evidence as to this and in any event, did not affect the application of the regulations.

The key decision of the first tier tribunal on the regulation contained no error in law. Appeal dismissed. LL got the windfall.

Along the way, the Judge S M Lane made a number of observations and findings. Most significantly for our purposes, he disagreed, strongly, with the previous first tribunal decision that ‘someone’ was entitled to the periodic rent:

I consider that the previous tribunal’s decision was wrong in law.  The correct question for the tribunal to ask was whether, at the date of decision, the tenant had any obligation to pay rent under the definition of reg. 12.  He did not.  The liability to pay rent throughout the entire period had been replaced by an undertaking to pay £1.00 in respect of all claims under the tenancy.

He could however do nothing to change that previous decision as it was not part of the present appeal.

This is the upper tribunal, so a court of record.

The reader who pointed me to this case was concerned about the potential wider effects. They took the view that the judgment meant that a Tomlin Order settling, for instance, a disrepair counterclaim to a rent arrears possession claim, or indeed a disrepair claim where a rent arrears counterclaim was made, would mean that the tenant’s rent liability for the relevant period was extinguished.

So where there was an outstanding claim for backdated HB, or an HB appeal, for the relevant period,  the tenant would lose that HB payment. If so, that would indeed be an issue in a number of cases and would make any set-off against arrears potentially problematic for the tenant. On first view, I could see that concern about this decision.

But, after an exchange of emails, and a bit of thought, I don’t agree – or at least not on the basis of the limited detail contained in the judgment. The distinction is between liability for rent and rent paid. I strongly suspect that the terms of the Tomlin as drafted were the cause of the problem.

For instance, the typical phrasing I’d use in a rent arrears set off situation in the Schedule to a Tomlin (shorn of irrrelevant bits) would be:

L to pay T £X by:
i) paying £(amount of current arrears) to T’s rent account
ii) paying £(balance) to T’s solicitors

What this makes clear is that T’s rent liability remains, but that a payment has been made to the rent account as part of the settlement. Just as T’s payments to the rent account wouldn’t extinguish T’s liability for rent for that period (and hence HB entitlement) neither would a payment to the rent account by anyone else, including L.

In RH’s case, the open order dismissed the claim for possession and rent arrears, as well as RH’s counterclaim (rather raising the question of what proceedings were then in existence to be stayed). But the key bit is that the Schedule apparently stated as a standalone term:

‘RH to pay LL £1.00 on vacating the premises, in full and final settlement of all claims against the tenant under the tenancy including all arrears of rent.’

Unless there were any interlinked terms in the Schedule, and from the judgment it does not appear that this was the case, it seems that the contractual valuation of the arrears in the Tomlin was therefore £1 (or possibly less, depending on the other ‘claims under the tenancy’). Thus, given that RH had paid no rent during the relevant period, the rent liability for that time was indeed £1, as Judge Lane would have decided, given the chance.

If that term in the Schedule had instead stated something like  ’In full and final settlement of rent arrears of £(rent under tenancy agreement not paid), RH to vacate property and pay £1′, then, in my view at least, the rent liability would not have been extinguished in the way Judge Lane considered. The rent liability would remain but some other form of consideration would have been accepted in payment of it.

So the lesson, if there is one, is to be careful with drafting a Tomlin order and schedule, and most certainly if your client may potentially get an HB backpayment. Make sure you aren’t accidentally wiping out rent liability, but rather expressly setting off a payment – or at least some form of  consideration – against the full  amount of rent arrears (or as much of it as the claim/counterclaim covers).

Of course, in this particular example of drawing room farce, the HB was paid anyway, by an order Judge Lane clearly made through gritted teeth, and LL did rather better out of the settlement than s/he may have expected. On a properly drafted Tomlin, in my view,  LL would have accepted consideration in satisfaction of the actual arrears, the rent liability would have persisted and RH would have got the HB.

But I could well be wrong. The judgment doesn’t give enough detail of the Tomlin to be sure. Suffice it to say that if a client is refused an HB backpayment on the basis that one of my Tomlins has extinguished their rent liability, that looks like an appeal as far up the line as it takes.

I suspect that – at some stage – many readers of this blog will have pretended to be older than they actually are, usually to obtain alcohol or to get into night-clubs for the purposes of obtaining more alcohol/meeting the opposite (or same) sex with the hope (often unfulfilled) of nookie. Oh the joys of youth. At a certain point though, we tend to start going the other way and suggesting that we are in fact younger than we actually are. With the ever increasing amounts of gray appearing in my hair, this is a feeling with which I can sympathise.

But, on a more serious note, ascertaining the age of persons applying for assistance to a local social services authority is an important issue. As Chief has previously explained, being under 18 (and, hence, a child) opens the door to the grotto of goodies that is the Children Act 1989. Being over 18 leads to the doom and despair of adult social services. In many, if not most cases, it shouldn’t be difficult to find out the age of a person. The difficult cases tend to be those involving unaccompanied asylum seeking “children.”

In R (A) v Croydon the Supreme Court held that whether someone was over or under 18 was a fact capable of objective determination by the court; so, if the authority determined you were 21 and you disagreed, you were entitled to issue proceedings in the Admin Ct to have this point resolved by a Judge, after hearing any relevant evidence. What A left open was who would bear the burden of proof?

In R (CJ) v Cardiff County Council [2011] EWHC 23 (Admin), Mr Justice Ouseley had to resolve this question. The facts aren’t that important – basically, the issue is whether CJ was 15, 21, or some other age at the relevant time – what matters is how the Judge approached the question of burden of proof.

The evidence was finely balanced and neither side had established their primary cases (CJ couldn’t prove he was 15 and Cardiff couldn’t prove he was 21). Given that it was CJ who was seeking to establish that the authority were acting unlawfully by not supporting him under the 1989 Act, the burden fell on him to establish this. That, in turn, meant that the burden of proof as to the age of CJ rested with him.

As Ousley J recognised, this is unlikely to be a major issue in many cases; since in many cases it will be enough to establish that the claimant is in a particular age band (say, 17-19), at which stage he is likely to be given the benefit of the doubt. But, for those borderline cases, it comes back to “he who asserts must prove”.

Fearns (t/a “Autopaint International”) v Anglo-Dutch Paint & Chemical Company Ltd & Ors [2010] EWHC 2366 (Ch)

This case was mentioned in the most recent edition of Legal Action’s Housing law update but it is not a housing case. Bear with Legal Action and us however as the case is useful. What is in there is a full discussion and explanation of the right of set-off and how it works.

The facts of the case are not particularly important but in summary there was a dispute between the two sides which left the Claimant being owed a sum of money in Pounds Sterling by the Defendant’s while the Claimant owed one of the Defendants a significant sum in Euros. However, over the period of the dispute the respective value of the Euro as against Sterling has changed a lot due to a few financial issues. I will not comment on the financial part as I may go off on a rant against the stupid arrogant bas…..(sorry).

Anyway, all of this meant that the date on which set-off could be claimed had a significant impact on how much money went to which party so it was a key argument.

The Law of Set-Off
Set-Off actually refers to two distinct things.
The first of these is where a sum owing by one party to another is offset due to monies owed in the opposite direction so that both parties essentially get what they are due but unnecessary funds transfer is minimised. In this case it is merely a matter of transferring monies which result from liquidated debts and in the transfer the liabilities themselves are extinguished.
However, set-off can also refer to a situation where a party has a claim against another party but is prevented from enforcing it because that other party has a claim against him. In this case the two liabilities remain intact (at least for the time being) and they operate almost as an estoppel against one another.
The first of these types of set-off is known as Legal Set-Off, the second as Equitable Set-Off.

Legal Set-Off
Legal set-off is a procedural device. It allows the Court to try two claims, even if on separate matters, together and produce a judgement which nets the monies owed on the two claims together producing an efficient judgement. Although the two rights exist separately and are independent liabilities they are brought together in one judgement and are extinguished at that stage. It is because of this fact and the fact that such a set off can only be exercised as a component of legal proceedings that this form of set off is described as procedural. This form of set off requires that sums are due and are either liquidated or can be ascertained precisely (without any valuation or estimation) at the time of pleading.

Equitable Set-Off
Equitable set off is totally different. This allows for cross-claims which are so closely connected with the claim that it would be unjust to enforce the one without taking into account the other. What is important about equitable set off is that it does not require the amounts to be ascertainable when it is claimed and it can operate independently of proceedings and can arise as an immediate answer to monies that are due.

It has been suggested that the right of set off applies immediately form the time the set off is available and acts to extinguish liabilities from this date. This is potentially very powerful in a housing context as it would mean that if a tenant was in arrears but was also claiming set off for disrepair any interest calculated on final judgement could only be calculated on the part of the rent arrears which exceeded the quantum of disrepair.

Sadly for tenants this is not the case. In Fearns the High Court has held that absent an agreement between the parties setting a date of set off it is for the Court to set such a date. Further, while it can elect to set the offset of the liability to some earlier (or later) point (under CPR 40.13(2)) the starting point for the date of offset must be the date of the order itself, as that is the point at which the liabilities were finally determined.

Therefore the correct approach in the rent arrears/disrepair scenario described above is for the Court to establish the arrears of rent, to establish the amounts due as compensation for disrepair, calculate the interest due on both sums, AND THEN offset the two sums against one another. If the tenant wishes to argue that the offset should happen at some other date then it is for them to do so and the Court has a discretion to allow it.

Therefore, where a rent arrears/disrepair matter is proceeding the practitioners should consider the value of the arrears claim as against the value of the disrepair claim and then consider whether they wish to disturb the standard position or whether it would be advantageous to try to get the date of set off adjusted to benefit their respective client.

London Borough of Hackney v Findlay [2011] EWCA Civ 8

This was the Court of Appeal hearing of an appeal on the issues raised in Forcelux v Binnie [2009] EWCA Civ 854 [Our report here], specifically the Court’s ability to set aside a possession order under CPR 3.1(2)(m) as opposed to the more restrictive provisions in CPR 39.3.

Briefly, Mr Findlay was the secure tenant of Hackney. There were rent arrears, amounting to some £1,500 all in, primarily because housing benefit was not in payment for some periods. There are disputed accounts of how Hackney approached this. Hackney brought possession proceedings. Mr Findlay asserts that the only notification of the hearing date he received was a letter from Hackney saying that there would be a hearing, but he did not receive the Court’s notification that he should attend. Mr F did not attend the possession hearing.

At the hearing – the first hearing – the DJ took it that Mr F could apply under s.85(2) Housing Act 1985 to vary any order made. On the asserted rent arrears, the DJ made an outright possession order. He noted housing benefit was now in payment and stated that ‘the order has been made on discretionary grounds’, presumably meaning the court considered it reasonable to make an order.

Hackney applied for a warrant, after the date of possession. Mr Findlay had, in the interim been sent a coupe of letters but their significance and whether they constituted a referral to an officer responsible for assisting with HB was disputed. There was also an interview, also of disputed meaning. Hackney’s evidence was that a letter informing Mr F of the date of eviction had been hand delivered.

Mr F was evicted on 6 July 2009, ending his ability to apply to vary the possession order under s.85(2).

On 13 July 2009, Mr F applied for re-entry, amended on 21 July to include an application to set aside or vary the possession order. DJ Armon-Jones heard the application. He considered the application to set aside first, on the basis that if it succeeded, re-entry followed. He held that the application to set aside succeeded on the basis that the DJ at the possession hearing had not been told that HB had been re-instated and had proceeded wrongly on the basis that the court’s powers were restricted to making a possession order or dismissing the claim. The matter had not been dealt with justly, and CPR 3.1(7) was invoked, enabling him to set aside the order under CPR 3.1. DJ Armon-Jones also ordered that Mr F should be at liberty to re-enter and the hearing of the possession claim was adjourned to a later date.

On the basis of the transcript of the possession hearing, now available, it was clear that DJ Armon-Jones was wrong to say that the first instance DJ had not been told HB was re-instated and was well aware of Mr F’s ability to apply under s.85(2). For these reasons, the Court of Appeal found that DJ Armon-Jones’ decision couldn’t stand. We’ll come back to this.

Hackney appealed to the Circuit Judge, by which time the decision in Forcelux had been handed down. HHJ Birtles QC accepted that Hackney had not mis-stated the amount of rent at the first hearing, but rejected Hackney’s grounds of appeal.

He held that Forcelux did not mean that the Court had to apply the requirements of CPR 39.3 to the exercise of discretion under CPR 3.9 (relief from sanctions). It was a matter of the Court’s discretion. He also held that there was no principle that “the power to set aside orders should be exercised far more cautiously in cases where the warrant has been executed, rather than before that state of affairs has been reached”. Accordingly, the DJ was not required to take into account whether Mr F had shown that he acted promptly, or had a good explanation for not attending the first hearing, or that that he [Mr F] had a reasonable prospect of success at trial. The matter was remitted for a further hearing on the possession. In the interim, Hackney agreed to Mr F re-entering  on the basis that he would not rely on the subsequent period of occupation to make a fresh application to stay a warrant under s.85 Housing Act 1985

Hackney appealed to the Court of Appeal on the issues of whether the CJ was correct to hold that the CPR 39.3 factors could be left out of account and whether it was relevant that the warrant had been executed.

At the hearing, or indeed subsequently, Hackney were unable to confirm the position on the arrears ‘due to the complexity of the housing benefit history’, but there had been a back payment of £1,252.32 in January 2010. Hackney maintained Mr F’s previous application for a backdate had been refused and not appealed.

The first issue was a) whether Forcelux had been decided per incuriam and b) how should discretion under CPR 3.1 to set aside a possession order in the absence of a party be exercised.

Hackney submitted that Forcelux was decided per incuriam because it had not considered Roult v Strategic Health Authority [2010] 1 WLR 487, which – briefly – held that the power under CPR 3.1(7) might not be justifiably exercised where the order was a final one and there were no grounds for a proper appeal, as there was no power for a judge to effectively hear an appeal from themselves even on the basis of erroneous information or subsequent events.

The Court of Appeal – in Lady Arden’s sole judgment – held that there was a compelling factor in Forcelux for setting aside the possession order (the ‘windfall argument’) but that that line of cases up to and including Roult relied upon by Hackney did not go to the key question of whether a first hearing of a possession claim was a trial for the purposes of CPR 39.3. Forcelux was not per incuriam.

On the issue of how strongly the factors in CPR 39(3) should weigh in a set aside under CPR 3.1, Hackney argued that, as a matter of policy, the test for setting aside a possession order should be tougher than that in Forcelux, as otherwise local authorities would face substantial difficulties and a loss of certainty if tenants could choose not to come to court but still easily obtain the setting aside of a possession order, even after eviction.

The Court held that there was a clear difference between the facts of Forcelux and those of the present case. In Forcelux the discretion had been framed as wide and unfettered, but on the facts of that case the Court had had to go no further. The presence of CPR 39.3 indicates that in situations where the Defendant does not attend the hearing at which the order is made, a different approach applies to the situation.

In a normal case where a party fails to attend a hearing at which a possession order is made, the discretion vested in the court is not ‘wide and unstructured’. In s.85(2) HA 1985 there is an indication that “Parliament contemplated that save in unusual circumstances the execution of a possession order should bring to an end the tenant’s rights, including the right to apply for an order under that subsection’. Further, the finality of litigation has long been a principle of public policy. A possession order forms ‘” proper basis for execution unless that is the tenant makes an application under s.85(2) in the period allowed by that provision”. As a corollary, challenges to orders should be by way of appeals. Lastly, CPR 39.3 makes clear that:

where a final order is made the defendant should have to produce a good explanation for not attending the hearing, that he acted promptly on learning of the order which he seeks to set aside, and that he should show that he has a real prospect of success in his defence. These requirements support the policy considerations to which I have referred.

So, in the absence of compelling factors such as those in Forcelux, (forfeiture on the the basis of non-payment of small amount of ground rent on a lease in that case), a Court that is asked to set aside a possession order should:

in general apply the requirements of CPR 39.3(5) by analogy. This is in addition to, and not in derogation of, applying CPR 3.9 by analogy, as this court did in Forcelux, as that provision requires the court to have regard to all the circumstances in any event. However, in my judgment, for the reasons given above, in the absence of the unusual and compelling circumstances of a case such as Forcelux, this court should give precedence to the provisions of CPR 39.3(5) above those enumerated in CPR 3.9.

However, for a secure tenancy, s.85(2) shows Parliament’s intention that a tenant should have the right to persuade the court to modify an outright possession order. It follows that:

the requirements of CPR 39.3(5) need not be applied in such a case with the same rigour as in the case of a final order that does not have this characteristic. (It is only fair to Mr Findlay to make the point that DJ Manners expressly had the possibility of a subsequent application by him in mind when she made her order). Accordingly, the court should not decline to exercise its power to set aside a possession order if in consequence the statutory purpose in s 85(2) would be defeated. Moreover, in my judgment the court can have regard to the wider social context in which these cases come before the courts. Accordingly, in deciding whether the tenant has a good reason for non-attendance the court can in my judgment have regard to the provisions of the Rent Arrears Pre-Action Protocol and to best practice among social landlords. It may conclude that, while in the ordinary case a defendant might have had no proper excuse for not attending a court hearing at which the possession order was made, given best practice of social landlords and the provisions of that protocol, a tenant is in fact able to provide an appropriate explanation. [para 24]

Where a possession order has been executed, this is also a relevant circumstance for the court to consider on a set aside application. The weight will depend on the circumstances of the case, but will likely be ‘highly relevant’ if the property has been allocated to another tenant or refurbishment works undertaken.

The second issue was whether the order of HHJ Birtles QC should be set aside.

On the transcript of the first possession hearing, DJ Armon-Jones order on the set aside must itself be set aside. HHJ Birtles QC erred in not ordering that and in not re-exercising the discretion under CPR 3.1 in accordance with the guidance given above. So his order on first appeal must be set aside.

Hackney then submitted, among other points, that it would be possible for the Court of Appeal to make a suspended possession order under s.85(2) to vary the original possession order, despite the execution of the warrant. Mr F submitted that the s.85 powers only applied before execution of a warrant, so once the set aside order had been quashed there was no power for the Court of Appeal to make an order fir suspended possession under s.85.  Although the Court did not make any such order, Lady Arden considered that Mr F was wrong on this, but, [in a frankly bewildering fashion], bases this on her earlier statement that a set aside of a possession order also sets aside execution and revives s.85 powers.

[NL - With all respect, this has to be an error. The set aside of the possession order had itself been set aside. The outright PO stood and with it the warrant. Mr F had an undetermined application to set aside. He might be in occupation but this was on the basis of an agreement not to use that occupation for further s.85 applications. In short, he might be in the property, but the position, given the Court of Appeal’s findings was as if the warrant had been executed. Unless I’m really missing something? Kerry Bretherton – for Hackney – if you read this, illuminate me…]

In any event, the Court of Appeal declined to re-exercise the discretion to decide the set aside application, although this was indeed open to it. There were matters at issue to be decided before Mr F’s application to set aside could be determined – the various factual disputes referred to above amongst them and also Mr F’s application to set aside on the ground of oppression. The matter was to be remitted to a district judge for hearing.

No issues were raised in the appeal on Article 8 and any such issues if relevant would be for the district judge to hear. [That has to be right – I can’t see Article 8 issues involved in the substantive issues in this appeal].

Appeal allowed.

Comment

To be entirely honest, I was tempted to describe this as ‘small storm in teacup, no serious injury’. Forcelux itself described the CPR 39.3 factors as factors ‘to be taken into account’ in the exercise of the CPR 3.1 discretion in such cases. At the time of Forcelux, my assumption was that the effect was only to remove the CPR 39.3 factors from being absolute requirements for a set aside, not to remove them from consideration. (I actually said so in the comments to our post, thank heavens).

However, the terms in which HHJ Birtles QC apparently dealt with the relevance of the CPR 39.3(5) factors suggest that it was wrong to presume that this would be the general view, so taking this case out of teacup territory.

The Court of Appeal here has stated that the 39.3(5) factors will ‘in general’ be applied ‘by analogy’ and then gone on to say this will be in the course of a consideration of all the circumstances and ‘wider social context’ and less rigorously in pre warrant secure tenancy cases. In short – the 39.3 factors are relevant to the 3.1 discretion, even highly so, but not absolute requirements.

Hackney’s full frontal assault on Forcelux – via the per incuriam argument and the ‘it’s not fair on local authorities’ argument  – failed. Forcelux remains good law.

We might also note that Mr F did advance arguments for the reason for his non-attendance and for prospects of success at trial. Delay – on the reported arguments here – is less clear. Whether his arguments are any good is now up to the DJ who hears the remitted case, but I mention this solely to make the point that his application was not devoid of address to the 39.3(5) factors.

So, size of tempest and tableware debates aside, this is a significant decision for anyone looking to set aside a possession order following non-attendance of the Defendant at first hearing, particularly so for secure tenants. It is also useful in clarifying the position on pursuing such an order post eviction. One can and one can seek an order under CPR 3.1 powers. But it may be tricky…

The Landlord and Tenant Act 1985 contains various protections for leaseholders and assured tenants against unreasonable service charges (see, e.g. s.19, 1985 Act). By s.26, 1985 Act, tenancies granted by local authorities, National Park authorities or a new town corporation are excluded from protection unless they are long leases (i.e. granted for a term in excess of 21 years).

At the HLPA meeting yesterday (19.1.11) evening, it was mentioned that Pierce Glynn are involved in judicial review proceedings surrounding this exclusion. It appears that they have a client (a secure tenant? someone in Pt 7 temporary accommodation?) who contends that this exclusion is somehow unlawful. Does anyone know anything more about this? I presume that the tenant is arguing that he has no effective method of challenging his service charges and/or that the exclusion of protection under s.26, 1985 Act violates Art. 14, ECHR?

I won’t speculate any further, but I’d love to know more about this. Comments gratefully received!

The Government Equalities Office has announced that the Public Sector Equality Duty will be in force from 6 April 2011.

The Equalities Office page has links to the following documents:

• Draft regulations on the specific duties;
• Draft order amending Schedule 19, listing the public bodies to which the duty applies;
• A ‘Quick Start’ guide for Public Sector Organisations;
• Equalities and Human Rights Commission Guidance.

More on this when we’ve had a chance to digest it.

The Localism Bill had a second reading in the Commons yesterday. One amendment (Labour) was tabled and defeated. Looks like the significant amendments will be made in Committee. Not – I must say – the best quality debate ever as it appears to have been mostly about scoring party political points than debating the issues involved. For those who are interested, the Hansard report is available here.

For anyone who noticed that access suddenly appeared to be forbidden to the blog on the afternoon of Monday 17 January, my apologies. For once it was nothing to do with me – something (I know not what) had triggered something else on the server. One brief but intense discussion with support later, we appear to be back…

Following on from the news that LEASE (the Leasehold Advisory Service – a quango) had not been granted funding to continue to advise the public on commonhold issues (see our note, here), comes the news that it is to stop offering mediation services in service charge disputes (again, one presumes, for lack of funding). The announcement is here.

Not entirely surprising. Sad though it is to say this, I suspect that the writing is on the wall for LEASE in general. The approach of the Tory-led government to quangos is, in general terms, to abolish them where they perform a service that the private sector could perform. Advise about service charge disputes, collective enfranchisement, etc, does rather sound like something that the private sector already offers via your friendly neighbourhood soliticitor…

Hemphurst Ltd v Durrels House Ltd [2011] UKUT 6 (LC) is, I suspect, going to go on appeal to the Court of Appeal. Certainly, if you practice in the field of leasehold enfranchisement, it’s one you’ll want to know about as it’s pretty important.

In general terms, qualifying tenants of flats have a right to collectively enfranchise the freehold of the building containing their flats (Leasehold Reform, Housing and Urban Development Act 1993). Where there is an intermediate leasehold interest of any flat, the qualifying tenants are obliged to purchase that interest (s.2(1)(a), 1993 Act). Where there is a separate lease of any common parts (or appurtenant property) then, in specified circumstances, the qualifying tenants may (i.e. it is a discretion) acquire that interest. The Act does not say if they have to acquire all the property under the leasehold interest or if they can pick and chose which parts they want.

In the present case, the freeholder had granted a lease to a third party of the roofspace and airspace, with a view to that third party building a flat or flats. The tenants then sought to exercise the right to collective enfranchisement and sought to purchase only part of the property dealt with by the aforementioned lease (basically, the flat that was going to be build didn’t cover all the roof space; the tenants wanted to acquire the part that wouldn’t be built on). The freeholder said this wasn’t possible: the leaseholders had to purchase all the property under the leasehold interest or none of it.

The LVT found for the freeholder, but the Upper Tribunal allowed an appeal by the nominee purchaser. The language of the 1993 Act was unclear on this point and didn’t point to any particular answer. The policy of the 1993 Act was, however, to favour tenants. That being so, there was no reason why they could not acquire only that part of the leasehold interest that they wished.

Comment

Interesting. That conclusion doesn’t emerge clearly from the wording of the 1993 Act. I have some sympathy with a point made by the freeholder about whether it was desirable to let leaseholder pick and chose what parts to acquire, and the danger of establishing a “patchwork quilt” of title in a property. The answer, said the UT, was for the landlord to serve a counternotice under s.21(4), 1993 Act, requiring the tenants to purchase the additional property.

Ok – I see that, but what about where (as is quite common), the landlord either fails to serve a counternotice or serves one that it later found to be invalid?

Clarke v Meadus [2010] EWHC 3117 (Ch)

Normally Dave would be covering this kind of case, knowing more about equity and trust right now than I probably ever will. But Dave is off being very clever to a tight deadline for other people, so I get to indulge my hobbyist’s interest at your expense.

The question in this appeal was whether supervening events could override an express declaration of trust shares in a property, whether in proprietary estoppel or a form of constructive trust. Much of the outcome remains subject to trial, as will be seen, given that this was an appeal of an order striking out C’s claim.

The brief facts were as follows. C and M, mother and daughter, were the title holders of the property (a large property) which had been purchased and built by Mr M, the husband and father of the parties. In 1989 Mr M transferred the property to the joint names of himself and Mrs M.

On Ms C’s evidence, before his death Mr M had expressed a wish that C should come to live at the property with M after his death and then have the property on M’s death.

Mr M died and M took the whole by survivorship. M then apparently asked C and her family to move in with her in the property and, if they did so, she would leave the property to C. C and her family moved in and, initially, let their property.

M was advised, for tax purposes, to “implement arrangements which would have, for inheritance tax purposes at least, the same effect as if the joint tenancy had been severed before Mr Meadus’ death, thus allowing his notional half share to pass pursuant to a variation of the dispositions otherwise taking effect on his death. As part of that variation, Mrs Clarke was to receive his notional half share in the house, garden and woodland thus making herself and Mrs Meadus owners in equal half shares.” This was done. There was no evidence that M considered this to be in satisfaction of any promise she may have made to C that the property would be left to her. So there was an express trust of 50% share between M and C as a result.

According to C, M also executed a will at this time leaving M’s 50% of the property to C. In any event, C and her family sold their property and moved in to the property (after, C says, obtaining a further assurance M would leave the property to her – being a basis for an estoppel claim). C asserts that she paid all for the mortgage payments for a period, and at least 50% the rest of the time.

C asserted that she had expended money and entered into liabilities thereafter, in reliance on M’s promise.

• She had bought an adjacent field in her name on M’s urging, funded by an increase in the mortgage for which C undertook liability for the capital and for paying the increased mortgage interest.
• C had incurred a loss of £57,000 on the sale of her family’s property
• She had lived with M and cared for her without payment, giving up her free time
• She had paid for a sitter/companion for M on occasions
• She had invested the equity of the sale of her property and her husband’s pension in substantial improvements to the property:
  “i. The erection of a new barn/garage, new fencing, hard-standing and car-parking. It is to be noted, however, that she and her husband have had enjoyment of this new building in connection with their business.
  ii. Significant items of refurbishment – including replacing two bathrooms, installing double glazing and replacing barge boards.
  Mrs Clarke accepts that the DADT [the trust arrangement] obliged her to meet half the cost of these items (which go beyond maintenance) but says that there was no obligation on her to carry them out or to permit Mrs Meadus to do so.”
• She had discharged obligations on the lending on the property, over half of which had accrued before she occupied the property.
• She had entered agreements which prevented her from moving from the property unless M wished to sell

In 2006 M changed her will to leave her 50% share of the property to C’s sister. C brought a claim in proprietary estoppel or alternatively constructive trust, in reliance on the assertions set out above.

At first instance, C’s claim was struck out.

The Master held on constructive trust:
“where there is an express declaration of trust, that is an end of the matter with respect of the court determining the parties’ respective interests, unless one party applies for rectification or rescission of the deed”. The claim in constructive trust could therefore not succeed, whether or not it was characterised as ‘some form of remedial trust’ in the alternative.

On proprietary estoppel, the Master first considered that the relief sought was “an immediate right given by proprietary estoppel to an order that Bonavista is held by the claimant and the first defendant upon trust, subject only to a right to Mrs Meadus to occupy the property for so long as she may wish”.Such an order would go further than would be permissible to give effect to any proprietary estoppel.

The Master then turned to questions of reliance. He recorded the submission that (i) an examination of the various items of alleged reliance and (ii) the case of detriment based on such reliance, led to the conclusion that there was no case which should be allowed to go forward. By way of example, the move from Kent was, it had been submitted, a benefit and not a detriment at all. Although on Mrs Clarke’s case she had made a loss by selling the Kent property, the value of the equity in Bonavista that she was declared to be entitled to pursuant to the DADT in fact gave a valuable increase in equity overall.

The Master next referred to the question of payment for improvements and maintenance, noting that such expenditure was for the benefit of Mrs Clarke’s half share as much as Mrs Meadus’ share, and pointing out that the sharing of the cost was dealt with by the DADT. In that context, Mr Sinnatt had taken the Master to the example of the erection of the new barn/garage which I have mentioned already. As to that, Mrs Meadus’ defence relies on the manner in which Mrs Clarke and her husband had expanded their business (an ammunition business) despite the misgivings and concerns of Mrs Meadus making use of the new barn/garage to the exclusion of Mrs Meadus. But even here, the parties are at odds, since the Reply suggests that Mrs Clarke and her husband have stored Mr Meadus’ guns belonging now to Mrs Meadus, and the guns of some of Mrs Meadus’ friends.

In short, what was termed detrimental reliance was a benefit, ‘at least in part’. While this was not conclusive, the Master went on to say “it does seem to me to underline the importance of trying to see whether there is in fact made out here a sufficient case of detriment supporting proprietary estoppel that is worthy of going forward to be dealt with at a trial in the sense of has it been established by Mrs Meadus that there is no real prospect of success in relation to the proprietary estoppel claim? I have come to the conclusion that it really does not do so.”

No reasons were given for reaching this conclusion. The Master did also come to the view that “Mrs Clarke had no prospect of showing at trial that any equity to which Mrs Clarke might be entitled as the result of any detrimental reliance on the promises and representations alleged, had not already been satisfied by the beneficial half-share”.

The Claim was struck out. C appealed.

The appeal hearing was also a consideration of an application to amend the particulars of claim to include a pleading that:

“Immediately prior to the sale of her home in Kent the Claimant sought and obtained from the First Defendant express reassurance that the First Defendant fully understood the nature of the transactions she had entered into in September 1996 viz.; the transferring of a half share in Bonavista to the Claimant and the First Defendant remained committed to her promise to the Claimant to leave the other half of Bonavista to the Claimant in her Will. The First Defendant confirmed to the Claimant at that time that she wanted the Claimant to sell her home and commit her and her family fully to Bonavista on the faith of her promise that Bonavista would be the Claimant’s when the First Defendant was dead. If the First Defendant had refused to make such a commitment or had intimated any change of heart the Claimant could and would have moved the family and the business back to Kent.”

Held:
1. While the relief sought might go too far in seeking a declaration of 100% beneficial interest, this did not in itself mean that there was no valid claim. It was for the court to mould the appropriate remedy. The claim was in any event also for ‘such shares as the court may decide’ and always subject to M’s right to reside. The prayer also requested ‘further or other relief’.
2. The terms of the express trust are capable of being overidden by proprietary estoppel, should C make out her claim. The Master was wrong to strike out the claim in proprietary estoppel. Reliance and detriment were asserted and it was matter for detailed evidence, not the summary consideration of the Master, whether they were established.
3. If C established her allegations, this was a clear ‘bargain’ case:

Mrs Clarke’s expectations were based on an express promise by Mrs Meadus, repeated on several occasions. The closeness of the facts to a “bargain” are a factor in the ultimate resolution of the case: see Robert Walker LJ in Jennings v Rice [2002] EWCA Civ 159, [2003] 1 P & CR 8 at [41] ff especially at [45]. Of course, this reasoning does not apply to what one might call an extravagant case where the promise does not, on any view, justify a claim based on detrimental reliance.

It is no doubt the case that a change of position induced by a representation or promise is not enough because that change may actually be highly beneficial to the claimant. That is one factor which leads to the conclusion that the time when the prejudice to a claimant is to be judged is when the person making the representation or promise departs from his promise or indicates that he will break his promise or act otherwise than in accordance with his representation in the future.

The whole period of 10 years from the time when the promises were allegedly made and act upon must be considered in assessing reliance and detriment. While any subsequent benefit resulting to C should be taken into account, deciding the unconscionability of M resiling on her promise had to be based on the whole course. In this case it was clear that there had been reliance and detriment remained to be considered at trial, as it was arguable. Gillett v Holt [2001] Ch 210, per Robert Walker LJ:

The overwhelming weight of authority shows that detriment is required. But the authorities also show that it is not a narrow or technical concept. The detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances.

3. While estoppel is always backward looking, from the point the promise has been resiled from, this is not to say that estoppel can’t be given effect at a time before the promise falls due. It is not right to suggest that the claimant has no rights in a property until the promise has been resiled from – as per Jennings v Rice, an equity is established once the elements of a proprietary estoppel are established.

4. The arrangements of the express trust in this case did not displace or satisfy any previous promise by M to leave the property to C if, as on C’s case the agreement was consistent with an affirmation of the promise, albeit that at the point of the agreement C’s rights in the property might not have fully accrued (her house had not yet been sold, etc,)

5. On constructive trust, the claim appeared to be cast as a remedial constructive trust. This was out of favour in English law, although Lord Scott in Thorner v Major [2009] UKHL 19 might suggest otherwise. It would be wrong to strike out the claim in constructive trust when the proprietary estoppel claim was to go ahead as they were both routes to the same end – an equitable interest in the rest of the property. “[T]he authorities, in particular Stack v Dowden, do not in my view preclude a remedial constructive trust once Mrs Clarke has jumped the hurdle of establishing the availability of such a remedy as a matter of English law.”

6. The enquiry into unconscionability is not suitable for summary judgment or strike out save in the most exceptional cases

Appeal allowed and application to amend Claim successful.

(Brief) comment
It is fascinating to see the resurgence of proprietary estoppel over the last few years, from the point it almost disappeared into constructive trust. Here the ‘remedial’ constructive trust claim is allowed to proceed almost as an afterthought (apparently with very limited prospects of success), as being very weak in comparison to the estoppel claim.

But remedy is always the difference between the two. The Court’s suggestion that getting 100% of the beneficial interest would be somewhat unlikely for C would be a marker of that. The assessment of the remedy sufficient to satisfy the equity arising from the unconscionable conduct is, we are firmly reminded, for the Court, not either of the parties.

Also useful to note is the lack of hesitation in finding that an estoppel claim can override an express declaration of trust shares. While I grant that few of us will be pleading storing the client’s mother’s friends’ guns as detrimental reliance (even if, thinking of my borough, the facts may be made out), the principles here may well be of use where there has been some sort of agreement on the eventual ownership of a property but an express trust in the meantime – or as part of that agreement for the future. And there is that point that effect can be given to an estoppel at or after the point of resiling from promise, not at the point the promise would have crystallised or fallen due – perhaps an obvious one, but a useful reminder.

Let us hope we get to hear the outcome of the trial, should matters get that far.

Hopefully Dave will be along in the next few days with some more intelligent comments…

GMAC RFC Ltd v Jones Lambeth County Court 15/11/2010

With thanks to the Legal Action Recent Developments in Housing Law – report in the January 2011 edition.

This was a case on the operation of the Mortgage Repossessions (Protection of Tenants etc) Act 2010, s.1(4), providing for the tenant of a mortgagor to apply for a two month stay of the execution of a warrant of possession by the mortgagor.

Ms Jones had a mortgage from GMAC (everyone’s favourite sub-prime lender). ON the basis of arrears of mortgage payments GMAC obtained a possession order. In June 2009, after the possession order, Ms Jones granted a 12 month fixed term AST to Mr Elegishu, without getting GMAC’s consent to the tenancy. After the end of the fixed term, Mr E remained in occupation paying rent of £900 per month.

In October 2010 GMAC sent notices to the property, addressed to Ms Jones and ‘any other other Occupier’, as did another mortgagee also entitled to possession.

Mr E’s solicitors requested that no further action be taken for two months. The other mortgagee agreed. GMAC didn’t. Mr E applied to be joined as second Defendant and for an order that the execution of the warrant be postponed for two months under s.1(4) of the Mortgage Repossessions Act.

GMAC strongly opposed the application, arguing that:
i) the tenancy was not valid
ii) possession had already been postponed, as the order had been obtained a considerable time ago and not executed
iii) the tenant was in default, as he had not paid rent to Ms J after learning of the possession orders, instead setting it aside
iv) there was little evidence as to the steps the tenant had taken to find alternative accommodation.

The DJ (DJ Zimmels for anyone who shares my obsession with Lambeth County Court) held:

• The tenancy agreement was valid and not binding on the mortgagee
• The two months period started at the date of the hearing
• Except for the recent setting aside of rent, the tenant was not in default. It was reasonable for him to set aside rent in the circumstances as the tenant was at risk of losing his home and may have a claim against his landlord

Two months relief ordered – warrant not to be executed till 15 January 2011. GMAC to pay Mr E’s costs of the application.

Comment – It is surprising to see GMAC opposing a two month delay where they had failed to seek a warrant for over 18 months after the possession order themselves (and indeed opposing it on the basis of their own delay). One can only presume that they wished to establish something of a precedent for the County Court dealing with tenant’s applications under the Act. If so, it backfired.

My word, what a fountain of press releases you have been lately. Quite takes me back to the heady days of John Healey. But it is this press release I want to talk about, the ‘Neighbours from Hell’ one.

You announce that you:

will introduce a new additional mandatory ground for possession, so those tenants with a track record of anti-social behaviour can be evicted from their council or housing association property much more quickly.

Ministers believe this will lead to a faster and fairer courts process – being found guilty of housing related anti-social behaviour in one court will provide automatic grounds for eviction in the county court, removing the need to prove the incidents of anti-social behaviour for a second time.

I’ve been trying to make sense of this, being a housing lawyer who will have to deal with whatever the legislative outcome is. It sounds as if it makes sense. There are words and sentences, arranged in a sense making order. There are impressive sounding phrases like ‘more quickly’ and ‘faster and fairer’ (haven’t we heard that somewhere before? Ah yes, the late Govt’s line on ‘summary justice’). But when I try to match it up against what actually happens now, let alone what the current legal position is, things go together as well as pairing lime green crocs with a nice navy pinstripe worsted suit (and that combo should never be seen in town after 1 May, really).

Not that I’m knocking the seriousness of the issue. I, and probably every housing solicitor, get many, many people approaching me desperate for something to be done about their nuisance neighbour/kids/gangs in the area or wanting a transfer because they  just can’t take it any more. Of course, we also get people accused of causing nuisance/perpetrating ASB, so we have a perspective from both sides to some extent. But I would in no way seek to minimize the seriousness of the problem and the blight it can have on people’s lives. All the more important for anything you propose to actually be worthwhile and effective rather than sitting at the glib sound bite end of things.

So. let’s try to break this down a bit…

Being found guilty of housing related anti-social behaviour in one court will mean that it won’t have to be ‘proved again’ in the county court on a possession claim.

Well, that would actually be true now. If someone had a finding of ‘housing related’ anti-social behaviour against them in the County Court, Magistrates or Crown Court, it then wouldn’t have to be ‘proved again’ in any other proceedings based on the same incidents. So, for instance, a criminal conviction would be incontestable as a fact in civil possession proceedings. In short, there is no need for something to be ‘proved again’ on a possession claim at all.

That bit may be nonsense, but never mind, let us move on:

There is to be a new mandatory ground for eviction for council and housing association tenants such that being found guilty of housing related anti-social behaviour in one court will provide automatic grounds for eviction in the county court.

Now the devil here is in the detail. Any kind of ‘housing related ASB’? That covers a lot of ground, from the minor but annoying to the very serious indeed. And ‘found guilty’ – does this mean a conviction in the Magistrates or Crown Court? Or the Magistrates making an ASBO or ASBI?

Then there is that word ‘Mandatory’. I realise you are a very busy housing minister – all these initiatives to come up with and residential property market tendencies to powerlessly bemoan – so you probably haven’t had time to read the blog lately. (You do subscribe to the twitter feed, but detail is everything). You may have had a bit of a briefing on a case called Pinnock, though. Suffice it to say that ‘mandatory’ is a bit more of tricky concept than it was in the recent past. Whether ‘proportionate’ under Article 8 is akin to the current test of ‘reasonable to make a possession order’ is an open question – none of us know yet, – but you either aren’t going to get ‘mandatory’ possession proceedings or you may well be looking at a declaration of incompatibility.

But annoying legal issues aside, what of practicality?

My view is entirely based on anecdotal experience, but that seems fair enough, as your press release refers to no statistical or survey evidence whatsoever for assuming that non-mandatory possession proceedings are what is getting in the way of dealing with the problem.

Your evidential justifications in the press release – the dreadful experiences of Ms Tomlinson and Ms Stenhouse – do not indicate that drawn-out possession proceedings were a problem. Possession was gained in one case and proceedings were underway in the other. In the Guardian story, the example – given by your press office – is of Ms Glover in Birmingham, again a dreadful story, in which there is no mention of possession proceedings having been brought against the perpetrator at all.

My experience is that the real problem people have is in getting their (Council/RSL) landlords (and/or police) to take any substantive action against the perpetrators at all, at least beyond a letter or two, visit and suggestion of ‘mediation’. Obviously social landlords (and police forces) vary greatly in this regard, but I gather from others and from Ombudsmen’s’ reports that a landlord’s failure to take action and implement their existing and quite extensive powers is very common, let alone acting in any joined up way with the police.

How far Councils and police will support and staff anti-social behaviour action teams in the current funding situation is, to say the least, a bit of a question. I note that you do nothing more in this regard than ‘want’ landlords and/or police to use their powers. (I want an iPad and world peace, while we’re at it).  No dedicated funding. You can, of course, blame the councils when nothing actually changes as a result of this initiative, but that would just be cynical.

There we are. Unless existing powers are actually used (and the dedicated joined-up ASB teams funded), the fact that there may be a kind of mandatory possession proceeding – although see above – is going to make no practical difference to the situation at all, as there will be as few ‘housing related ASB’ prosecutions as there are now, or even fewer.

Oh yes, there is some money – “£300,000 of Government funding to a new central team to help tenants and landlords” tackle ASB. Yep. That is about 8 mid level civil servants for a year.

And housing associations can extend ‘probationary’ tenancies – typically Assured Shortholds – to be for a period of 18 months. I have to admit I wasn’t aware that they couldn’t (or that they didn’t realise that they could).

And also:

ownership of the Respect Standard setting out best practice on preventing and tackling ASB is being transferred from DCLG to the housing sector. The Chartered Institute of Housing, working closely with the Social Landlords Crime and Nuisance Group and other key partners will lead on an early review of the Standard’s content, name and any ‘sign-up’ arrangements.

How is that going to work for local authorities, out of interest?

That is it. Of course, I could be completely wrong about all of this, as there is no detail at all in the press release or attached to it. We will, I suppose, have to see what is put forward for consultation.

In the meantime, you appear to have presented us all with a chocolate teapot.

Yours etc.

NL