Edlington Properties Ltd v JH Fenner and Co Ltd
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[2005]
EWHC 2158 (QB)
LANDLORD AND TENANT; Rent
QUEEN’S BENCH DIVISION
BEAN
J
21,
22 SEPTEMBER, 20 OCTOBER 2005
Landlord and tenant – Rent – Claim for rent –
Set-off – Landlord and tenant agreeing for construction of building and lease
to tenant – Tenant claiming damages from landlord for defective construction of
leased property – Landlord assigning reversion to assignee landlord – Assignee
landlord claiming rent from tenant for period after assignment – Whether tenant
able to set off damages claim against claim for rent – Landlord and Tenant
(Covenants) Act 1995, ss 3(3), 23(1).
The owner of certain freehold property entered into
an agreement with the defendant under which the owner agreed to construct a
factory on the site and the defendant agreed to take a lease of the property
once the factory was built. The factory
was built and the lease granted but the defendant considered that the owner had
been in breach of its building obligations in the agreement and issued
proceedings against it claiming damages.
The freehold reversion had been assigned to the claimant in July 2003
and the claimant brought proceedings against the defendant for rent and
insurance rent for a period subsequent to the assignment. The defendant considered that it had a right
to set off its damages claim against the original freehold owner against the
claimant’s claim for rent and the question of whether set-off was available was
directed to be included in a trial of preliminary issues. The court considered authority and the effect
of the Landlord and Tenant (Covenants) Act 1995 which applied to the
lease. Section 3a of the 1995 Act provided, inter alia, that
where the assignment was by the landlord then as from the assignment the assignee
became bound by the landlord covenants, and s 23(1)b of the 1995 Act provided that where as a
result of an assignment a person became bound by or entitled to the benefit of
a covenant ‘he shall not … have any liability or rights under the covenant in relation
to any time falling before the assignment’.
________________________________________
a Section 3, so far as material, provides: ‘(1)
The benefit and burden of all landlord and tenant covenants of a tenancy—(a)
shall be annexed and incident to the whole, and to each and every part, of the
premises demised by the tenancy and of the reversion in them, and (b) shall in
accordance with this section pass on an assignment of the whole or any part of
those premises or of the reversion in them … (3) Where the assignment is by the
landlord under the tenancy, then as from the assignment the assignee—(a)
becomes bound by the landlord covenants of the tenancy …’
b Section 23, so far as material, provides: ‘(1)
Where as a result of an assignment a person becomes, by virtue of this Act,
bound by or entitled to the benefit of a covenant, he shall not by virtue of
this Act have any liability or rights under the covenant in relation to any
time falling before the assignment …’
________________________________________
Held – Where a freehold owner of land agreed
with a future tenant to construct a building and then to grant a long lease of
it to the tenant, and after the lease had begun, assigned the reversion, a
claim by the tenant against the original freeholder for damages for defective
construction of the building could not be set
98
off against the rent due to the assignee for periods
after the assignment of the reversion. A
reversion, with its accompanying right to sue for future rent, was not a chose
in action and thus not affected by equitable set-off and damages for defective
construction could not create an incumbrance on the land for which set-off
could be claimed. It had been no purpose
of the 1995 Act to change the law by making successors in title of the landlord
or the tenant liable for the default of their predecessors, nor to treat the
benefit of all landlord covenants or tenant covenants from which an assignee
would benefit as free-standing choses in action rather than as incidents in the
estate. The combined effect of ss 3 and
23(1) of the 1995 Act was to make the benefit and burden of covenants pass with
the estate for the future, but to leave past rights and obligations with the
assignor. The 1995 Act did not enable
every tenant to set off against rent due to an assignee of the reversion a
claim for damages against the assignor.
Accordingly, the preliminary issue would be decided in favour of the
claimant (see [18], [22], [23], [27], [29], below).
Reeves v Pope [1914] 2 KB 284, dicta of
Millett LJ in Mortgage Corp Ltd v Ubah (1996) 73 P & CR 500
and Muscat v Smith [2003] EWCA Civ 962, [2003] 1 WLR 2583 applied.
Notes
For set-off in particular cases: landlord and tenant, see
42 Halsbury’s Laws (4th edn reissue) paras 465–467, for assignment of
choses in action: set-off and cross-claims, see 6 Halsbury’s Laws (4th
edn) (2003 reissue) para 64, for authorised deductions from rent, see 27(1) Halsbury’s
Laws (4th edn reissue) para 234, and for the transmission of the benefit
and burden of covenants in leases beginning on or after 1 January 1996, see
Supp to 27(1) Halsbury’s Laws (4th edn reissue) para 466A–466C.
For the Landlord and Tenant (Covenants) Act 1995, ss
3, 23, see 23 Halsbury’s Statutes (4th edn) (2004 reissue) 1168,
1203.
Cases referred to in judgment
British Anzani (Felixstowe)
Ltd v International Marine Management (UK) Ltd [1979] 2 All
ER 1063, [1980] QB 137, [1979] 3 WLR 451.
Connaught Restaurants
Ltd v Indoor Leisure Ltd [1994] 4 All ER 834, [1994] 1 WLR 501, CA.
Duncliffe v Caerfelin
Properties Ltd [1989] 2 EGLR 38.
Federal Commerce and
Navigation Ltd v Molena Alpha Inc, The Nanfri, The Befri, The Lorfri [1978]
3 All ER 1066, [1978] 1 QB 927, [1978] 3 WLR 309, CA.
Government of
Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199, [1886–90]
All ER Rep Ext 1590, PC.
Green v Rheinberg
(1911) 104 LT 149, CA.
Hanak v Green [1958]
2 All ER 141, [1958] 2 QB 9, [1958] 2 WLR 755, CA.
Liverpool City
Council v Irwin [1976] 2 All ER 39, [1977] AC 239, [1976] 2 WLR 562, HL.
Lotteryking Ltd v AMEC
Properties Ltd [1995] 2 EGLR 13.
Mortgage Corp Ltd v
Ubah (1996) 73 P & CR 500, CA.
Muscat v Smith [2003]
EWCA Civ 962, [2003] 1 WLR 2583.
Reeves v Pope [1914]
2 KB 284, CA.
Roxburghe v Cox
(1881) 17 Ch D 520, CA.
99
Preliminary issues
Edlington Properties Ltd (Edlington), the assignee of the
reversion of a lease granted by the Welsh Development Agency (the WDA) to JH
Fenner and Co Ltd (Fenner) and assigned to Edlington on 15 July 2003, issued a
claim on 16 November 2004 against Fenner for rent due on 29 September 2004 and
insurance rent for the year beginning 24 June 2004 due under the terms of a
lease. Fenner had issued proceedings
against the WDA claiming damages for breach of its building obligations in
constructing the premises the subject of the lease and sought to set off its
damages claim against Edlington’s claim for rent and insurance rent. On 16 August 2005 Master Yoxall ordered the
trial as preliminary issues of the questions set out at [7], below. The facts are set out in the judgment.
Timothy Fancourt QC
and Edward Peters (instructed by Mishcon de Reya) for Edlington.
Christopher Lundie
(instructed by Rollits, Hull) for Fenner.
Cur adv
vult
20 October 2005.
The following judgment was delivered.
BEAN J.
[1] The principal question raised by this
trial of preliminary issues may be stated as follows. L, the freehold owner of a site, agrees with
T to construct a building on the site and to grant a long lease of the premises
to T. After the lease begins L assigns
the reversion to A. Can a claim by T
against L for damages for defective construction of the building be set off
against the rent due to A for periods after the assignment of the reversion?
THE FACTS
[2] Maerdy Colliery, known in its heyday as
‘Little Moscow’, closed in 1990. The
Welsh Development Agency (WDA) came into possession of the site and on 8
February 1996 concluded a written agreement with the defendant, JH Fenner and
Co Ltd (Fenner). The agreement obliged
the WDA to construct a factory on the site and Fenner to take a lease of the
premises once the factory was built. The
obligation to grant the lease accrued when the WDA’s architect certified
practical completion of the factory.
[3] Fenner contends that the WDA was in breach
of its building obligations in the agreement by constructing a factory that was
seriously defective and inadequate for Fenner’s purposes. Fenner has issued proceedings in the
Technology and Construction Court against the WDA claiming more than £52m in
damages.
[4] The reversion was assigned by the WDA to
Bradbury Corp Ltd on 19 October 1998, and then further assigned by Bradbury to
the claimant, Edlington Properties Ltd (Edlington) on 15 July 2003. It is common ground that the interposing of
Bradbury between the WDA and Edlington makes no difference to the point of
law. Edlington can be treated as ‘A’ for
the purposes of the question posed in [1], above.
[5] The rack rent payable under the lease is
now £581,192 per year plus VAT. The
present claim, issued on 16 November 2004, is for the quarter’s rent due on 29
September 2004 and insurance premiums due under the terms of the lease for the
year beginning 24 June 2004. There are
separate issues concerning the
100
insurance premiums but it is admitted that the rack
rent would be payable subject to the defendant’s claim of set-off.
[6] It is no part of my task to assess the
strength and weaknesses of Fenner’s claim for damages against the WDA, which is
due to be tried in October 2006. The
parties are agreed that for present purposes it should be assumed to be valid
at least to the extent of the full amount of Edlington’s claim.
[7] At a case management conference on 16
August 2005 Master Yoxall ordered that five questions be tried as preliminary
issues. As amended by consent they are
as follows: (a) whether Fenner has a right to set off its damages claim against
the WDA against Edlington’s claim for ground rent and insurance rent made in
these proceedings; (b) if Fenner does have such a right to set-off, whether
that right of set-off is excluded by cl 16.2 of the agreement for lease and/or
cl 6.1.1 of the lease; (c) whether on a proper construction of cl 1.16 of the
lease the sum of £108,804·04 or £40,537·50 is due from Fenner to Edlington in
respect of insurance rent; (d) whether a particular implied term relating to
insurance rent is to be implied into the lease; (e) whether Edlington breached
cl 8.8 of the lease or alternatively the implied term? Issues (b)–(e) involve consideration of the
terms of the lease and the agreement for lease.
Issue (a)—the one identified in the first paragraph of this judgment—is
a pure point of law.
(A) CAN FENNER’S CLAIM AGAINST THE WDA BE SET OFF
AGAINST RENT DUE TO EDLINGTON?
[8] It is important to distinguish between
three factual situations: (i) L claims rent.
T counterclaims for damages for breach of L’s covenant to repair or for
defective construction of the premises in question. (ii) L is owed rent for a particular
period. At the end of that period, with
the rent still owing, he assigns the reversion to A. A claims from T the rent for the
pre-assignment period. T seeks to set
off against that claim his claim for damages against L for breach of a
repairing covenant or for defective construction of the building. (iii) L assigns the reversion to A. A claims from T rent for a subsequent
period. T seeks to set off against that
claim his claim for damages against L for defective construction of the
building. (This is the present case,
omitting from the story, as it is agreed one can, the intermediate assignee,
Bradbury.)
[9] It is now well established that a claim
for set-off is available in case (i), even where T’s damages claim is for
breach of a term of the agreement for the lease rather than of the lease
itself. This was the basis of what was
later to be described by Millett LJ as the ‘celebrated’ judgment of Forbes J in
British Anzani (Felixstowe) Ltd v International Marine
Management (UK) Ltd [1979] 2 All ER 1063 at 1076–1077, [1980]
QB 137 at 156. Forbes J said:
‘It would in my view be
manifestly unjust to allow the landlord to recover the rent without taking into
account the damages which it is alleged the tenant has suffered through failure
by the landlord to perform his part of the agreement. Not only is there in my view an adequate
connection between the transactions giving rise to claim and cross-claim, there
is also the fact that the breach by the landlord is said to render the premises
unfit at least in part for the purpose for which they were let. For both these reasons, it seems to me that
the defendants’ cross-claim can be said to impeach the title to the plaintiffs’
legal demand.’
[10] Case (ii) was considered by the Court of
Appeal in Muscat v Smith [2003] EWCA Civ 962, [2003] 1 WLR 2583, on
which both Mr Timothy Fancourt QC for
101
Edlington and Mr Christopher Lundie for Fenner
relied. Mr Smith had for over 40 years
been the statutory tenant of a terraced house owned originally by his brother
and from the early 1990s by a Mr Walker.
It was in a poor state of repair and in 1995 became subject to a
statutory disrepair notice served by the local authority. Remedial work was begun on the property
causing inconvenience to the tenant who began withholding rent. In October 1999, with the repair work
remaining incomplete, the property was sold to the current landlord, Mr Muscat,
at a price that reflected 128 weeks’ rent arrears. The outstanding arrears were also separately
assigned by deed. On the landlord’s
claim for possession and the tenant’s counterclaim for an equitable set-off
against rent arrears in respect of breaches of covenant to repair by the
landlord’s predecessor in title, the county court judge found the landlord
liable to the tenant for damages for disrepair since his purchase of the
property, but held that in respect of breaches by the landlord’s predecessor in
title the tenant had no right of set-off.
He made an order for outright possession, stayed pending appeal. The Court of Appeal allowed Mr Smith’s appeal
and remitted the case to the county court for trial.
[11] Before considering the judgments in
detail it is necessary to set out, so far as material, ss 141 and 142 of the
Law of Property Act 1925.
‘141. Rent
and benefit of lessee’s covenants to run with the reversion.—(1)
Rent reserved by a lease … shall be annexed and incident to and shall go with
the reversionary estate in the land … without prejudice to any liability
affecting a covenantor or his estate.
(2) Any such rent …
shall be capable of being recovered … by the person from time to time entitled,
subject to the term, to the income … of the land leased.
142. Obligation
of lessor’s covenants to run with reversion.—(1) The obligation under a
condition or of a covenant entered into by a lessor with reference to the
subject-matter of the lease shall … be annexed and incident to and shall go
with [the] reversionary estate … and may be taken advantage of and enforced by
the person in whom the term is from time to time vested …’
It should be noted that s 30(4) of the Landlord and Tenant
(Covenants) Act 1995 provides that these two sections are not to apply to
tenancies granted after the 1995 Act came into force (on 1 January 1996). This change did not affect Muscat v Smith
since the lease had been granted long before 1996. The 1995 Act does apply to this case and I
shall return to it later in the judgment.
[12] In Muscat v Smith Sedley
and Buxton LJJ gave substantive judgments.
Ward LJ agreed with both, adding that the following rule, derived from
Roxburghe v Cox (1881) 17 Ch D 520, determined the outcome of the
appeal:
‘The assignee of a chose
in action cannot acquire a better right than the assignor had, and the assignee
takes the chose in action subject to all the equities affecting it in the hands
of the assignor which are in existence before notice is received by the debtor.’ (See [2003] 1 WLR 2853 at [56].)
[13] There are some differences of emphasis
between Sedley and Buxton LJJ. But since
Sedley LJ said that he was ‘adopting with gratitude the fuller account of the
law contained in the judgment of Buxton LJ’ (see [31]) and Ward LJ refers to
‘Buxton LJ’s illuminating judgment on the nature of equitable set-off’, it
seems to me that Buxton LJ’s judgment is to be treated as authoritative.
102
[14] Buxton LJ said:
‘[34] The appeal was
argued before us on the basis that Mr Smith was entitled to set off his claim
against Mr Walker in defence of the claim made on him by Mr Muscat by the
operation of the general rules of equitable set-off, quite simply because Mr
Smith’s claim against Mr Walker can be said to be “so closely connected with
[Mr Muscat’s] demands that it would be manifestly unjust to allow [Mr Muscat]
to enforce payment without taking into account the cross-claim”: a formulation
that adapts to the present facts the observations of Lord Denning MR in [Federal
Commerce and Navigation Ltd v Molena Alpha Inc, The Nanfri, The Befri,
The Lorfri [1978] 3 All ER 1066 at 1078, [1978] 1 QB 927 at 975]. However, that argument must fail because, for
reasons that I develop in more detail below, it is not and never has been the
law that A when sued by B can set off as against B a debt or liability owed to
A by C, however much the relationship between the three parties falls within
the verbal terms quoted above.
[35] However, in the
present case Mr Muscat’s right against Mr Smith comes to him by assignment by
Mr Walker of the rights under the reversion that were originally held by Mr
Walker, and which were the basis and context of Mr Smith’s claim. It is that assignment, and the rules of
equity that are applied to it, rather than the more general law of set-off,
that supports Mr Smith’s defence against a claim made by Mr Muscat as
assignee.’
[15] After referring to Hanak v Green
[1958] 2 All ER 141, [1958] 2 QB 9 and the historical distinction between
common law and equitable set-off, the former being confined to liquidated
cross-claims, Buxton LJ ([2003] 1 WLR 2853)
continued:
‘[40] This institution
is called “equitable” set-off because, but only because, it permits the setting
off in an action at law of unliquidated claims that, before 1873, could only be
pursued at law by a separate action, and could only affect the proceedings at
law by way of an equitable injunction.
The institution does not otherwise appeal to any specifically equitable
doctrine, and in particular does not permit of any deduction from or reduction
of the claim other than by the assertion of a counterclaim that is sufficiently
connected with or related to the original claim.
[41] In the present case
the tenant wished to assert that the value of his claim against Mr Walker can
be set off against the claim brought against him by Mr Muscat. These two claims are, no doubt, connected
with each other, not least because they arise under the same lease; and it may
appear inequitable, in the general sense of that word, for Mr Muscat to be able
to claim in respect of arrears that arose while Mr Walker was landlord, but for
Mr Smith not to be able to assert, as against Mr Muscat, breaches of covenant
on Mr Walker’s part. That anomaly, if it
is one, is caused by the fact that, as Garland J pointed out in [Duncliffe v
Caerfelin Properties Ltd [1989] 2 EGLR 38], section 141(2) and (3)
of the 1925 Act makes specific provision to enable the assignee of the
reversion to sue for accrued arrears of rent, whilst there is no statutory
provision enabling the tenant to complain as against the assignee in respect of
accrued breaches of covenant committed by the latter’s predecessor in
title. But that is all that the 1925 Act
does. It says nothing as to set-off.
103
[42] Mr Smith therefore
has to assert his set-off by appealing to general principle, reaching well
outside the law of landlord and tenant.
There is no case supporting, or coming anywhere near to supporting, a
general principle making set-off available where the defendant has a claim
against someone other than the plaintiff; and such a rule would be contrary to
elementary principles of the law of contract; contrary to the essential nature
of set-off; and contrary to assumptions made in cases of high authority, including
many that bind this court …
[45] … The dearth of
specific statements supporting the proposition that a cross-claim must be a
claim against the original claimant is attributable to the fact that that
proposition has always been taken for granted.
All of the recent cases discussing whether the cross-claim was
sufficiently closely connected with the claim to be set off against it in the
same litigation presuppose that the claims, whatever they are, lie between the
same parties. That stands out from, for
instance, the various discussions cited in the judgment of Forbes J in [British
Anzani (Felixstowe) Ltd v International Marine Management (UK)
Ltd [1979] 2 All ER 1063 at 1075–1076, [1980] QB 137 at 154]. Counsel for Mr Smith sought to suggest that a
wider rule could be found in the dictum of Lord Denning MR in [Federal
Commerce and Navigation Ltd v Molena Alpha Inc, The Nanfri, The Befri,
The Lorfri [1978] 3 All ER 1066 at 1078, [1978] 1 QB 927 at 974]:
“We have no longer to ask ourselves: what would the courts
of common law or courts of equity have done before the [Supreme Court of
Judicature Act 1873]? We have to ask
ourselves: what should we do now so as to ensure fair dealing between the
parties?”
But that observation
went only to a more liberal attitude to the question of whether a cross-claim
sufficiently impeached the claim to create a set-off: the issue discussed in
the passage with which this dictum culminates, and to which reference has
already been made in paragraph 44 above.
It certainly cannot be relied on to convert the rule of set-off into
some more general equitable doctrine, and much less into a form of palm-tree
justice.
[46] The general
principles of set-off therefore do not assist Mr Smith. However, the unfairness that appears from Mr Muscat
being able to sue for rent arrears dating back to the time of Mr Walker,
without being liable for the breaches of covenant committed by Mr Walker, is
underlined by Mr Muscat’s title to sue being itself derived from Mr Walker by
assignment. It is the particular rules
that apply after assignment that determine this appeal.’
[16] Buxton LJ turned to consideration of the
effect of the equitable assignment. He
noted that three nineteenth century authorities which in his view remained good
law, had held that ‘the assignee of a chose in action … takes subject to all
rights of set-off and other defences which were available against the assignor’
(see [48]). He concluded that ‘this
jurisprudence compels the recognition of a set-off against Mr Muscat’s claim of
the unliquidated damages owed to Mr Smith by Mr Muscat’s assignor, Mr Walker’.
[17] This passage appears to assist the
defendant in the present case. But
Buxton LJ went on to say:
‘[51] In [Lotteryking
Ltd v AMEC Properties Ltd [1995] 2 EGLR 13] Lightman J held that the
set-off operated because the assignee had succeeded to the
104
reversion and to its
annexed covenants. The reversion itself
is not, however, a chose in action, and Mr Muscat’s claim for past rent is not
asserted simply under a covenant that he succeeded to when he succeeded to the
reversion. Rather, the claim for
previously accrued arrears that he asserts against Mr Smith is specifically
transferred to him by his assignor by the operation of section 141 of the 1925
Act, as described in paragraph 41 above.’
[18] In the opening paragraph of his judgment
(at [33]) Buxton LJ had indicated that the decision had to proceed on a
‘comparatively narrow ground’, which was a ‘somewhat less direct route than
that which was urged on us by the tenant’.
The ratio of his judgment, as I read it, is that the landlord’s right to
sue for previously accrued arrears of rent was a chose in action and thus
affected by equitable set-off, but that the reversion itself, with its
accompanying right to sue for future rent, was not. The distinction between rent for periods
before and after the assignment is emphasised by the words ‘dating back to the
time of Mr Walker’ (at [46]) and the italicised words ‘previously accrued’ (at
[51]).
[19] Mr Lundie relied on Green v Rheinberg
(1911) 104 LT 149. The landlord
granted a four-year lease with the rent payable quarterly. Soon afterwards he agreed to accept, and the
tenant paid, a lump sum in satisfaction of the whole four years’ rent. The landlord then mortgaged the premises to
the plaintiff, who knew nothing of the advance payment. The plaintiff’s claim for rent failed at
first instance and on appeal. But I do
not regard this case as having anything to do with set-off. It is perhaps an obvious proposition that once
T has paid rent to L he cannot be called on to pay it again to someone else.
[20] Mr Lundie also relied on the decision of
Lightman J in Lotteryking Ltd v AMEC Properties Ltd. The landlord had granted a 25-year lease of
two units. The two tenants alleged that
the landlord had made collateral agreements with them to rectify certain
defects within six months. The tenants
were to have a reduced rent in one case and a rent-free period in the other
until defects were remedied. The tenants
sought injunctions to prohibit a proposed sale of the freeholds. The matter came to court with considerable
speed, judgment being given nine days after the issue of proceedings. Lightman J dismissed the tenants’
applications. He held that the
collateral contracts to carry out repairs were obligations assumed by the
landlord which ran with the reversion under s 142 of the 1925 Act, and that the
tenants would not be prejudiced by the sale, since their right to set off their
damages claims for breach of those contracts against rent due under the lease
would be exercisable against the landlord’s successor in title. The judge also held that in any event the
tenants had no legal or equitable right to an injunction restraining sale of the
land, as opposed to personal rights of action against the landlord. The second ground of the decision is, I
think, less controversial than the first.
[21] The first ground of the decision in
Lotteryking Ltd v AMEC Properties Ltd was approved by Sedley LJ in
Muscat v Smith ([2003] 1 WLR 2583 at [17]–[18]); and of course any
judgment of Lightman J is entitled to great respect. But Buxton LJ, at para [51] of Muscat v
Smith, impliedly disapproves it: and it seems to me to be incompatible
with his reasoning. If Buxton LJ had
considered that a landlord’s repairing obligation was a covenant running with
the reversion under s 142, and that a claim for damages for breach of that
covenant could be set off against any rent due to the assignee, he would have
said so, and the judgment would have been far shorter and simpler.
105
[22] Mr Fancourt QC relied on Reeves v Pope
[1914] 2 KB 284. The landlord agreed
with the tenant to build a hotel by a certain date, and the tenant agreed to
take a 28-year lease as soon as the building was ready. The landlord was late in completing the
hotel. On completion the tenant accepted
the lease without prejudice to his damages claim. The landlord then mortgaged its interest to
the claimant. The tenant sought to set
its damages claim off against the rent due to the mortgagee for periods since
the date of the mortgage. The Court of
Appeal, affirming Bankes J, held that the set-off failed. Lord Reading CJ said (at 287):
‘It is perfectly plain
that we are not dealing here with the right to set off against the assignment
of a chose in action, in which event quite different principles apply … in this
case the claim is not an interest in land, but if established is merely a right
to damages against the mortgagor for breach of an agreement made in respect of,
or in connection with, the land.’
Buckley LJ was even more emphatic, saying that the
tenant’s argument that the right to future rent which had been transferred was
a chose in action was ‘wholly misconceived’ and that the mortgagees were not
assignees of the rent (see 289). Of the
tenant’s claim to damages he said (at 290): ‘Those damages were not any
incumbrance on the land, and the right to them was no estate or interest in any
way in the land.’ Mr Lundie submitted
that a distinction can be drawn between a claim for damages for delay in
construction and one for defective construction: even if the former cannot
create an ‘incumbrance on the land’, the latter can. To meet that possible argument Mr Fancourt
cited his next authority, to which I now turn.
[23] Mortgage Corp Ltd v Ubah (1996)
73 P & CR 500, not cited in Muscat v Smith, strongly supports
Edlington’s case. The tenant, at the
landlord’s request, had carried out improvements to the premises to the value
of some £13,000 which it was argued could be set off against rent. The Mortgage Corporation obtained a
possession order against the landlord and then sought possession against the
tenant. Before Judge Green the Mortgage
Corporation argued firstly, that the landlord and tenant had shared a kitchen,
that the tenant was therefore occupying under a restricted contract within s 21
of the Rent Act 1977, and that this remained the case even though the reversion
had passed to a corporation; secondly, that the value of the tenant
improvements could not be set off against the rent due to the mortgagee. Judge Green found for the mortgagee on both
points. On appeal only the kitchen point
was argued, and the Court of Appeal upheld the judge’s decision. But Waite LJ said (at 507) that he ‘would
have regarded the claim to an equitable interest as quite hopeless’; and
Millett LJ, with the enthusiasm of an inquisitor rooting out heresy, devoted
the whole of his judgment to the set-off issue which had not been argued on
appeal. He concluded that:
‘the money judgment
below is entirely in respect of rent due to the respondents after the date they
had notified the appellant that they had taken possession. The appellant has no right of set-off capable
of binding successors in title such as the respondents.’
This judgment is obiter, but it comes from a source of the
greatest distinction.
[24] All the authorities to which I have
referred dealt with leases to which the 1995 Act did not apply. That Act was passed principally to enable a
person bound by covenants of a tenancy to be released from the covenants on
assignment of the lease or reversion. It
also abolished the distinction between covenants that
106
‘touched and concerned’ the land and those that did
not, so that all covenants except those expressed to be personal both bound and
benefited successors in title. I accept
Mr Fancourt’s submissions that it was no purpose of the 1995 Act to change the
law by making successors in title of the landlord or the tenant liable for the
default of their predecessors, nor to treat the benefit of all landlord or
tenant covenants from which an assignee will benefit as free-standing choses in
action rather than as incidents of the estate.
[25] The combined effect of ss 3 and 23(1) of
the 1995 Act is to make the benefit and burden of covenants pass with the
estate for the future, but to leave past rights and obligations with the
assignor. Section 3(3) provides that the
assignee of the reversion becomes bound by the landlord covenants of the
tenancy as from the assignment. Section
23(1) leaves the benefit of tenant covenants in so far as they antedate the
assignment with the assignor, thus changing the position as it was under s 141
of the 1925 Act. As Mr Fancourt points
out, this takes away the basis on which Mr Muscat was able to sue Mr Smith for
pre-assignment rent arrears. But it does
not detract from the authority of the case on the subject of equitable
set-off. The 1995 Act moves in the
direction of creating a clean break on assignment. It does not enable every tenant to set off
against rent due to an assignee of the reversion a claim for damages against
the assignor.
[26] Mr Fancourt had a fallback submission on
the 1995 Act, which is that the obligations of the WDA under the agreement for
lease are in any event not ‘landlord covenants of the tenancy’ for the purposes
of s 3(1)(a) and (3)(a) of the 1995 Act, since the obligations of the WDA fell
to be completed before the lease was granted.
In view of the conclusion I have reached about the effect of ss 3 and 23
of the 1995 Act it is unnecessary to decide this interesting point.
[27] I therefore conclude that Reeves v
Pope, the judgment of Millett LJ in Mortgage Corp Ltd v Ubah
and that of Buxton LJ in Muscat v Smith indicate that the question set
out at the start of this judgment should be answered ‘No’.
[28] I should say that if the matter were free
from authority I would decide it the other way.
As a matter of policy, as opposed to legal principle, it is difficult to
see why any distinction should be drawn between set-off against pre-assignment
and post-assignment rent. Moreover,
although in the present case there is no suggestion of this, I can envisage
cases in which a landlord will assign the reversion in order to evade what
would otherwise be a possible set-off against its claim for rent. If the original landlord then becomes
insolvent the tenant is left with a worthless damages claim for defective
construction of the building but an obligation to pay rent which takes no
account of that claim. In another case
it may have to be decided whether an artificial transaction by the landlord
makes any difference. The observation in
the opinion of the Judicial Committee of the Privy Council delivered by Lord
Hobhouse of Woodborough in Government of Newfoundland v Newfoundland
Railway Co (1888) 13 App Cas 199 at 212 that—
‘It would be a
lamentable thing if it were found to be the law that a party to a contract may
assign a portion of it, perhaps a beneficial portion, so that the assignee
shall take the benefit, wholly discharged of any counter-claim by the other
party in respect of the rest of the contract, which may be burdensome’
—suggests that it may do so. But that does not arise in the present case.
107
[29] If I am right in my conclusion that issue
(a) should be decided in Edlington’s favour, issue (b) becomes academic, but I
will deal with it briefly in any event.
(B) WOULD SET-OFF BE EXCLUDED BY THE TERMS OF THE
AGREEMENT FOR THE LEASE OR OF THE LEASE ITSELF?
[30] Clauses 16.1 and 16.2 of the agreement
for lease provide:
‘16.1. Non-Merger
etc. All the provisions of this
Agreement shall (to the extent that they remain to be observed and performed)
continue in full force and effect notwithstanding completion of the Lease and
the conditions of this Agreement shall take precedence until so fully observed
and performed.
16.2. Save as provided
in the Building Contract, this Agreement and in any document supplemental
thereto or made in furtherance thereof, no defect in the Works or the Premises
at the date on which the Lease is granted shall in any way lessen or affect the
obligations of the Landlord or Tenant under the Lease.’
Clause 6.1.1 of the lease contains a covenant by the
tenant ‘To pay the said yearly rent and the said additional rents hereby
reserved and made payable at the times and in the manner aforesaid without
deduction or abatement’.
[31] In Connaught Restaurants Ltd v Indoor
Leisure Ltd [1994] 4 All ER 834, [1994] 1 WLR 501 flooding from the
landlords’ retained portion of a building had disrupted the tenants’ business
causing them loss and damage. The
landlords brought proceedings for possession and arrears of rent; the tenants
counterclaimed damages and equitable set-off in defence. A covenant in the lease provided for rent to
be paid ‘without any deduction’. The Court
of Appeal held that clear words were needed to exclude a tenant’s equitable
right of set-off; that the meaning of the term ‘deduction’ was dependent on its
context, and where the context afforded no guidance as to its intended meaning
it could not be described as a clear word.
The court held that in the absence of any context suggesting the
contrary the expression ‘without any deduction’ was insufficient to exclude the
tenants’ equitable right of set-off.
Waite LJ said ([1994] 4 All ER 834 at 838, [1994] 1 WLR 501 at 505):
‘it was open to the
parties to exclude this equitable right of set-off by express words or by
implication from the language of the contract as embodied in the
underlease. There is however a starting
presumption that neither party intends to abandon any remedies for breach
arising by operation of law and clear language must be used if this presumption
is to be rebutted …’
[32] This decision, in my view, clearly
demonstrates that cl 6.1.1 of the lease does not exclude set-off. The present case is not one of abatement, and
the words ‘without deduction’ do not appear to have any context in this case
different from that of the Connaught case.
[33] I also accept Mr Lundie’s submission that
cl 16.2 of the agreement for lease is likewise ineffective to exclude
set-off. If the parties had intended to
exclude set-off against rent the most logical place for such a provision would
have been in the lease itself, using the words ‘without deduction or set-off’. Even within the agreement for lease there is
another clause (5.1.4.3, relating to reimbursement of the value of tenants’
works in the event of termination) requiring the landlord to make payment to
the tenant of the amount of the
108
agreed assessment ‘without deduction or
set-off’. Moreover, the existence of a
cross-claim does not ‘lessen or affect the obligations of the tenant under the
lease’: the tenant is still liable for the rent, but if set-off is established
payment of the rent will not be ordered without taking account of the cross-claim. Accordingly, if I had not already found for
Edlington on issue (a), I would have found against them on issue (b).
(C) WHETHER ON A PROPER CONSTRUCTION OF CLAUSE 1.16
OF THE LEASE THE SUM DUE IN RESPECT OF INSURANCE RENT FOR THE YEAR BEGINNING 24
JUNE 2004 WAS £108,804·04 OR £40,537·50?
[34] Clause 1.16 of the lease defines the
insurance rent as:
‘the sum or sums equal
to the amount which the Landlord may expend in effecting and maintaining the
insurance of the demised premises in accordance with its obligations herein
against loss damage or destruction by the insured risks in their full value and
also for insuring two years rent of the demised premises; provided that in the
event that the Tenant shall demonstrate that it can obtain a bona fide quotation
from a reputable insurer, for not less than the same risks insured for by the
Landlord during the previous period of twelve months, at a premium which is
less than that quoted by the Landlord’s insurers for the same risks for the
following period of twelve months, then the Insurance Rent for such following
twelve months shall be reduced by the difference between such quotations.’
[35] The lease placed the obligation to insure
the premises on the landlord. The first
insurance policy covering the premises was taken out on 15 July 2003 for the
period ending 23 June 2004. From 2004
onwards the annual renewal date was 24 June.
Clause 8.8 provided:
‘Landlord’s insurance
covenants.
The Landlord covenants
with the Tenant in relation to the policy of insurance effected by the Landlord
pursuant to its obligations contained in this Lease to produce to the Tenant
upon request particulars of any policy of insurance effected under this Lease
sufficient to enable the Tenant to know the full extent of the property covered
the risks and sums insured and any exception exclusions conditions or
limitations to which the policy is subject and to provide evidence of payment
of each year’s premium.’
[36] On 23 July 2003 Edlington invoiced Fenner
for the premium for the period 15 July 2003 to 23 June 2004. Two days later Fenner wrote to Edlington’s
agent asking for ‘a copy of the policy details and schedule relating to the All
Risks Property Insurance’. On 4 August
2003 Edlington’s agent replied ‘please find enclosed as requested a copy of the
insurance policy and schedule’. It is
now accepted that this letter was received and copied to two or three people
within Fenner’s organisation and that it indicated what risks were insured.
[37] There was then a pause until 2 June 2004
(22 days before the renewal date) when Fenner wrote to Edlington’s agent asking
for ‘a copy of the policy details and schedule as requested last July’. Evidently the writer of the letter had
mislaid or was unaware of the August 2003 communication. By a further letter of 7 June Fenner asked
for the identity of the insurance company and details of the cover
provided. Edlington’s agent did not
reply giving this information until 28 June.
On 19 August 2004 Fenner wrote to Edlington’s agent enclosing what was
described as ‘a bona fide quotation for the property insurance’ at a premium of
£34,500.
109
[38] The scheme of cll 1.16 and 8.8 of the
lease is clear. The landlord has the
obligation to insure and must do so by the due date for renewal so that the
insurance is ‘maintained’. If the tenant furnishes a satisfactory alternative
quotation in advance of 24 June, and the landlord decides nevertheless (as it
is entitled to do) to make its own arrangements, the tenant’s liability for
insurance rent for the year beginning 24 June is reduced by the difference
between the quotations.
[39] There is an issue between the parties as
to whether the alternative quotation covered ‘the same risks insured for by the
Landlord during the previous period of twelve months’. But it is not necessary to decide that issue,
since even if the alternative quotation did meet that requirement, it was
provided too late. The insurance rent
for the year beginning 24 June 2004 is therefore the higher of the two sums set
out in issue (c).
(D) IS THE TERM SET OUT IN PARAGRAPH 14 OF THE
DEFENCE AND COUNTERCLAIM TO BE IMPLIED INTO THE LEASE?
[40] Paragraph 14 of the defence and
counterclaim pleads that it is necessary to imply into the lease, ‘for reasons
of business efficacy and or because the same are obvious requirements of the
procedure envisaged by Clause 1.16 of the Lease’, the following implied term:
‘A reasonable period of
time prior to making a demand for payment of the Insurance Rent in accordance
with Clause 5.2.2 of the Lease the Landlord must:-
1. Provide the Tenant
with a quotation which the Landlord has received from its insurers for the next
12 month period in respect of which the demand is to be made and
2. Comply with any
reasonable requests made by the Tenant for details of the insurance obtained by
the Landlord for the previous 12 month period so as to enable the Tenant to
obtain an alternative quotation within the terms of Clause 1.16 of the Lease
prior to the demand being made.’
[41] It is trite law that a term cannot be
implied into a contract merely because it is reasonable: it must be
necessary. In other words, it must
be shown (per Lord Wilberforce in Liverpool City Council v
Irwin [1976] 2 All ER 39 at 43, [1977] AC 239 at 253) that ‘without it the
contract will not work’. It is similarly
trite law that a term cannot be implied if it is inconsistent with an express
term. It is plain from reading cl 1.16
of the lease that the tenant cannot obtain an alternative quotation unless it
is given information as to the risks which have to be covered and the amount
for which the property has to be insured.
Clause 8.8 provides that this information must be furnished on request,
together with ‘any exceptions exclusions conditions or limitations to which the
policy is subject’. Further, the
landlord must on request ‘provide evidence of payment of each year’s
premium’. But neither clause requires
the landlord to provide the tenant in advance of the renewal date with the
quotation from the landlord’s insurers for the forthcoming year. Such an arrangement might be considered
sensible and reasonable, but it is not necessary. Clause 8.8 contains the express provisions
necessary to make the contract work. I
do consider—indeed I do not think Mr Fancourt disputed—that the requirement in
cl 8.8 for particulars of the insurance policy to be produced to the tenant on
request means that they are to be produced within a reasonable time of the
request. But subject to that, no
implication of a term is necessary.
110
(E) WAS THERE A BREACH OF CLAUSE 8.8 OF THE LEASE?
[42] Counsel were agreed, on reflection, that
I should not decide this question at the trial of the other preliminary
issues. It would require further
evidence as to whether Edlington (through their agents) took an unreasonable
length of time to reply to the letter of 2 June 2004. In any event, even if the answer to the
question is ‘Yes’, it does not take the matter much further unless Fenner can
be shown to have sustained loss by reason of the breach. If the parties cannot resolve their
differences on this issue it may benefit from being reformulated prior to
trial.
Order accordingly.
Aaron
Turpin Barrister.
111
[2006] 1 All ER 112
R (on the application of Calgin) v Enfield London Borough
Council
[2005]
EWHC 1716 (Admin)
HOUSING
QUEEN’S BENCH DIVISION (ADMINISTRATIVE COURT)
ELIAS
J
22
JUNE, 29 JULY 2005
Housing – Homeless person – Duty of housing
authority to provide accommodation – Duty so far as reasonably practicable to
secure that accommodation is available in district – Scope of duty – Housing
Act 1996, s 208.
The defendant London local housing authority owed a
duty to the claimant and his family under the Housing Act 1996 to house
them. It offered them accommodation in
Birmingham. That offer was in accordance
with the authority’s policy, which set out the duty imposed by s 208a of the Housing Act 1996, that so far as
reasonably practicable, an authority, in discharging its housing functions,
should secure that accommodation was available in the authority’s district, but
stated that because of the demand for homeless households, coupled with the
acute shortage of affordable housing in the area, it was not reasonably
practicable in many instances to provide accommodation locally. The policy then set out the cost comparison
of various types of accommodation which showed that savings from placing
families in Luton or Birmingham could be significant. The claimant requested a review of the
suitability of the property in Birmingham and the review panel held that the
property was suitable and consistent with the authority’s policy. The claimant applied for judicial review of
the authority’s decisions and policy. He
contended, inter alia, (i) that in forming the view that there were
insufficient properties in the borough, the authority had failed properly to
give effect to the concept of reasonable practicability in s 208 of the 1996
Act, to which cost was relevant only if accommodation within the borough would
be disproportionately expensive; and (ii) that the authority had not properly
had regard to its s 208 duty in considering his application.
________________________________________
a
Section 208, so far as material, is set out at [14], below
________________________________________
Held – The availability of resources was
relevant to the discharge by a local housing authority of its duty under s 208
of the 1996 Act. There was a minimum
standard below which the authority could not fall, and lack of resources would
not justify going below that standard, but it was a matter of judgment for the
authority to decide, on a proper evidential basis, that the provision of local
accommodation was not reasonably practicable. The duty was to find
accommodation within the borough if reasonably practicable even if there were suitable
accommodation outside, but it was legitimate to have some regard to the fact
that the property had to be suitable when determining how much scope could
properly be given to the concept of reasonable practicability in the context of
the legislative scheme. The council had
to keep under general review the question of reasonable practicability so that,
if and when the situation changed sufficiently, a household could be brought
back into the borough. The defendant
authority had used out-of-area accommodation for a relatively small proportion
112
of those seeking accommodation and that decision was
not Wednesbury unreasonable. The
shortage of suitable accommodation in the authority’s district, coupled with
the savings which it had calculated could be secured for the overall budget
justified the adoption of the out-of-area policy. Given the financial restraints on the
authority, it had been entitled to conclude that it would not be reasonably
practicable to house those persons within the area. In considering the claimant’s application the
authority had properly had regard to its duty under s 208. Accordingly, the claim for judicial review
would fail (see [31]–[35], [37], [40], [53], [65], [66], below).
Jordan v Norfolk CC [1994] 4 All ER 218, R
v Lambeth London BC, ex p Ekpo-Wedderman [1998] 3 FCR 532 and R (Sacupima)
v Newham London BC [2001] 1 WLR 563 considered.
Notes
For out-of-area placements, see 22 Halsbury’s Laws
(4th edn reissue) para 267.
For the Housing Act 1996, s 208, see 21 Halsbury’s
Statutes (4th edn) (2005 reissue) 1116.
Cases referred to in judgment
Associated Provincial
Picture Houses Ltd v Wednesbury Corp [1947] 2 All ER 680, [1948] 1 KB 223,
CA.
Jordan v Norfolk CC [1994]
4 All ER 218, [1994] 1 WLR 1353.
Mohamed v Hammersmith
and Fulham London BC [2001] UKHL 57, [2002] 1 All ER 176, [2002] 1 AC 547,
[2001] 3 WLR 1339.
Puhlhofer v
Hillingdon London BC [1986] 1 All ER 467, [1986] AC 484, [1986] 2 WLR 259,
HL.
R v Lambeth London
BC, ex p Ekpo-Wedderman [1998] 3 FCR 532.
R (Sacupima)
v Newham London BC [2001] 1 WLR 563, CA; rvsg (2001) 33 HLR 1.
R (Yumsak)
v Enfield London BC [2002] EWHC 280 (Admin), [2003] HLR 1.
Cases referred to in skeleton arguments
Begum (Runa)
v Tower Hamlets LBC [2003] UKHL 5, [2003] 1 All ER 731, [2003] 2 AC 430,
[2003] 2 WLR 388.
Edwards v National
Coal Board [1949] 1 All ER 743, [1949] 1 KB 704, CA.
Hall v Wandsworth
London BC, Carter v Wandsworth London BC [2004] EWCA Civ 1740, [2005] 2 All
ER 192.
R v East Sussex CC,
ex p Tandy [1998] 2 All ER 769, [1998] AC 714, [1998] 2 WLR 884, HL.
R (on the
application of Saadat) v Rent Service [2001] EWCA Civ 1559, [2002]
HLR 613.
Application for judicial review
The claimant, Tekin Calgin, applied for judicial review of
the decisions made by the defendant, Enfield London Borough Council that the
accommodation provided by it to the claimant in Smethwick, Birmingham was
suitable, which decision it maintained on review, as being consistent with the
council’s out-of-area placements policy, and of the policy itself. The facts are set out in the judgment.
Stephen Knafler (instructed
by Fisher Meredith) for the claimant.
Wayne Beglan (instructed
by Asmat Hussain) for the council.
Cur adv
vult
113
29 July 2005.
The following judgment was delivered.
ELIAS J.
[1] This is an application for judicial review
in which the claimant challenges the legality of the council’s out-of-area
policy for housing the homeless, and also the particular decision to offer
accommodation in Birmingham for the claimant and his family who were found to be
homeless and in priority need.
THE FACTUAL BACKGROUND
[2] The claimant entered the United Kingdom
from Turkey on 12 September 2003 and applied for asylum on 17 September
2003. The claimant had fled from Turkey
as a result of detention and torture by Turkish authorities. The claimant was granted asylum and
indefinite leave to remain on the 29 April 2004.
[3] The claimant lived with his wife, Sibel
Calgin, and their 11-month-old baby, together with his two brothers and their
respective families in a three-bedroom house in Edmonton, Middlesex.
[4] On 13 July 2004, the claimant applied to
the council’s homeless persons unit for housing assistance on the basis that he
and his family were statutorily homeless due to overcrowding. The council failed to process that
application and he asked for assistance again on 11 August 2004.
[5] On 12 August 2004 the council offered the
claimant temporary accommodation in Birmingham, pending inquiries. This offer
was made pursuant to s 188 of the Housing Act 1996. The claimant says that he was told that he
had to go there or not be accommodated at all.
In the event he declined this accommodation.
[6] On 16 September 2004 the council accepted
that a duty was owed to the claimant and his family under s 184 of the 1996
Act. An offer of accommodation was made
pursuant to s 193 of the Act in Smethwick, Birmingham. The claimant visited the council’s homeless
persons unit on 23 September 2004 with his sister-in-law who acted as an
interpreter. The claimant says that he
was not asked any questions regarding the suitability or location of the
accommodation offered. The claimant was
told that he would be taken on the following day, 24 September, to Birmingham.
[7] The claimant was taken to the property in
Smethwick which is a two-bedroom house.
He claimed that it appeared to be in poor condition, dirty and in
disrepair and was unsuitable for him and his family. However, notwithstanding these objections,
the claimant no doubt prudently accepted this offer of accommodation in order
to protect his position.
[8] On 11 October 2004 the claimant requested
that the council carry out a review of the suitability of this accommodation
pursuant to s 202 of the 1996 Act. He
claimed to have a strong local connection with the council’s area on account of
both of his residence there and the family and community connections. He contended that he and his wife were
vulnerable, spoke no English, had no relatives in Birmingham and would be
isolated there. It was further alleged
that the council’s policy or practice of accommodating families outside London
was incompatible with s 208 of the 1996 Act.
[9] The council completed their statutory
review decision on 22 December 2004.
(This was in fact outside of the time limit specified in the legislation. Originally the claimant contended that as a
consequence the re-determination was a nullity, but in the event that argument
was not pursued.) Essentially, the review panel upheld the original decision;
it held that the property was suitable
114
and moreover was consistent with the council’s
out-of-area placements policy which I summarise below. I set out the panel’s reasoning in more
detail at [54], below.
[10] On 12 January 2005 the claimant issued an
appeal under s 204 of the 1996 Act in Edmonton County Court. By order dated 28 January 2005, after an oral
hearing, and with the consent of both parties, Judge Riddell ordered that the
appeal be stayed to permit the claimant to issue an application for permission
to apply for judicial review of the council’s decisions and policy. The judge and both parties took the view that
the Administrative Court was the appropriate forum because of the contention
that the council’s policy on out-of-area placements was unlawful. It is common ground that the effect of the
order is that all issues before the judge now have to be decided by me.
THE RELEVANT LEGISLATION
[11] The council provided the claimant with
accommodation pursuant to the s 193 of the 1996 Act. This states, so far as is material:
‘(1) This section applies
where the local housing authority are satisfied that an applicant is homeless,
eligible for assistance and has a priority need, and are not satisfied that he
became homeless intentionally.
(2) Unless the authority
refer the application to another local housing authority (see section 198),
they shall secure that accommodation is available for occupation by the
applicant.
(3) The authority are
subject to the duty under this section until it ceases by virtue of any of the
following provisions of this section.’
[12] The manner in which this duty is
implemented is regulated by ss 206(1) and 208(1) which concern the suitability
of accommodation and out of area placements respectively. Section 206(1) is as follows:
‘A local housing
authority may discharge their housing functions under this Part only in the
following ways—(a) by securing that suitable accommodation provided by them is
available, (b) by securing that he obtains suitable accommodation from some
other person, or (c) by giving him such advice and assistance as will secure
that suitable accommodation is available from some other person.’
Section 208(1) provides:
‘So far as reasonably
practicable a local housing authority shall in discharging their housing
functions under this Part secure that accommodation is available for the
occupation of the applicant in their district.’
Section 202 provides for the right to request a review of
various decisions of the local housing authority in relation to a wide variety
of issues, including the suitability of accommodation. Under s 204 a party who is dissatisfied with
the decision on review can appeal to the county court on a point of law. The statutory review does not, however,
extend to complaints that the authority has offered accommodation outside the
borough in breach of s 208.
[13] These provisions are interrelated. It is settled law that the location of
accommodation is relevant to its suitability, for the purposes of s 206: see
R (Sacupima) v Newham London BC [2001] 1 WLR 563. The duty to secure accommodation in the
housing authority’s district, so far as reasonably
115
practicable, is a free-standing duty. As Latham LJ observed (at 575–576) in giving
the judgment of the court in Sacupima’s case, the provision is
for the protection of other housing authorities as much as applicants:
‘There is a clear and
sensible purpose to be served by the section, namely to ensure so far as
possible that authorities do not simply decant homeless persons into other
areas for which other authorities are responsible. There are significant consequences on a host
authority, for example, by way of social service provision, which are obviously
detrimental to the host authority, and as to which Parliament could properly
consider that they require protection.’
THE GROUNDS OF APPEAL
[14] The original grounds were very
extensive. However, not all those
grounds have now been pursued before me, and to some extent the focus of the
case shifted during the course of argument.
Some of the matters pursued were not specifically identified in the
original grounds. However, I think that
the grounds can now fairly be summarised as falling into three broad
categories. The first concerns the
legality of the out-of-area policy itself and the criteria adopted for
implementing it. The second ground
maintains that the policy is ultra vires because it does not reflect, and
indeed it is said flies in the face of, the council’s housing strategy. Both the policy and the housing strategy are
in turn said to be ultra vires the Homelessness Act 2002. The final ground concerns the legality of the
particular decision to house this family out of the area in Smethwick. It was said that it was carried out in a
procedurally unfair manner, and that the authority erred and acted irrationally
in any event in concluding that the property was unsuitable.
[15] I will deal with these issues in
turn. Some of them raise certain
subsidiary questions. In resolving the
issues before me I bear firmly in mind the observations of Lord Brightman in
Puhlhofer v Hillingdon London BC [1986] 1 All ER 467 at 474, [1986] AC 484
at 518 (with whose judgment Lords Keith of Kinkel, Roskill, Brandon of Oakbrook
and Mackay of Clashfern concurred):
‘The plight of the
homeless is a desperate one, and the plight of the applicants in the present
case commands the deepest sympathy. But
it is not, in my opinion, appropriate that the remedy of judicial review, which
is a discretionary remedy, should be made use of to monitor the activities of
local authorities under the Act save in the exceptional case … Where the
existence or non-existence of a fact is left to the judgment and discretion of
a public body and that fact involves a broad spectrum ranging from the obvious
to the debatable to the just conceivable, it is the duty of the court to leave
the decision of that fact to the public body to whom Parliament has entrusted
the decision-making power save in a case where it is obvious that the public
body, consciously or unconsciously, are acting perversely.’
THE LEGALITY OF THE OUT-OF-AREA POLICY
[16] It is contended that the out-of-area
placement policy is ultra vires. In
particular, it reflects a misunderstanding of the concept of reasonable
practicability in s 208 of the 1996 Act and it allows considerations of cost
improperly to determine whether a placement will be made in the district or
not. Cost was an irrelevant
consideration to the decision which had to be reached.
116
[17] There are two related issues. First, it is said that even if the
out-of-area policy is itself lawful, nevertheless the criteria selected to
apply that policy are unlawful and fail to give sufficient emphasis to the duty
under s 208. Second, it is contended
that even if the decision to house out of the district was initially lawful,
the duty under s 208 is a continuing one and the authority should periodically
have reviewed whether it was possible to move the claimant and his family back
from Birmingham to Enfield.
THE OUT-OF-AREA POLICY
[18] When the case was initially advanced it
was based on the false premise that the authority would not house anyone within
the borough unless the circumstances were exceptional. It is plain that this is not what the policy
requires.
[19] The current policy was adopted by the
council on 31 March 2004. It is an extension
of an earlier out-of-borough policy. It
begins by recognising and indeed setting out in terms the duty imposed by s 208
but states that—
‘the demand for homeless
households is such that coupled with the acute shortage of affordable housing
in Enfield, it is not reasonably practicable in many instances to provide
accommodation locally.’
[20] It points out that there is an imbalance
between the supply of affordable housing and the demand from homeless families
such that the number of temporary accommodation had risen to over 2,900. It was also anticipated that a government
amnesty to 15,000 asylum seekers, and new rules limiting the type of
accommodation which could be used to house households with children or pregnant
women could exacerbate the problem. The
policy sets out the cost comparison of various types of accommodation which
show that the savings resulting from placing families in Luton or Birmingham
could be significant.
[21] Finally the policy sets out the criteria
which are adopted for out of area placements.
They are as follows:
‘Availability of
suitable accommodation in the Enfield area.
Size and location of
accommodation available outside London and the availability of support networks
in the area.
Comparative cost of a
unit in Enfield to that available outside London.
Medical needs of the
household. Is any member of the
household receiving specialist treatment in London that would be difficult to
access outside London?
Schools/colleges—Are any
of the children of the household at key stages, in terms of examinations, or
are they receiving special needs teaching?
Social needs—Is there
any exceptional reason why the household has to remain in the area to enable
family/friends to provide support?
Employment—are there any
particular issues?
Proximity to schools,
public transport, primary care services, local services in the area in which
the accommodation is located.
Any special
circumstances which might exclude them from this policy.’
[22] Mr Knafler has submitted that there is
insufficient evidence to justify the claim that there is a shortage of relevant
accommodation. This argument is closely
related to a more fundamental contention that the defendant council has allowed
cost to weigh too heavily in the adoption of the policy. Plainly the volume of available accommodation
will be related to the price which the council
117
is willing to pay for it. However, in so far as it is suggested that
there is no evidence of shortage of accommodation at a cost which the council
considers to be reasonable, I reject it.
It is common knowledge that London borough councils are very hard
pressed to meet the needs of their homeless.
Moreover the council provided a witness statement from the Assistant
Director of Housing Needs and Sheltered Housing, Sue Samek, who speaks from 20
years’ experience with housing the homeless.
She describes the shortage of accommodation in Enfield as ‘chronic and
severe’, and notes that the number of homeless applicants is increasing. The problem is particularly acute, in her
experience, for two and three-bedroom houses. She says that the purpose of
providing such accommodation out of the borough is not merely to make cost
savings but also to provide accommodation of a higher quality than could be
obtained within Enfield. It is however,
only one of a number of strategies designed to deal with the housing shortage.
[23] She points out that, contrary to the
initial understanding of the claimant, there are relatively few persons housed
out of the borough. Currently it is just
over 1% ie 35 out of 3,000 households housed in Enfield. The saving resulting from placing persons out
of the borough has been estimated to be a little in excess of £100,000.
[24] Furthermore, the council’s Homelessness
Strategy (the strategy) made by the council in pursuance of an obligation
imposed by the 2002 Act, is littered with references to the shortage of
accommodation in the borough to meet the demand (see especially s 10).
[25] Accordingly there is plenty of evidence
to show that the authority genuinely faces considerable difficulties in finding
appropriate accommodation to meet its needs within the borough, at least at
what it perceives to be a reasonable cost.
[26] The principal issue advanced by Mr
Knafler with respect to this policy, however, was that in forming the view that
there were insufficient properties in the borough, the council had failed
properly to give effect to the concept of reasonable practicability in s 208 of
the 1996 Act. His initial stance was
that cost was wholly irrelevant to the concept, but this position was modified
in the course of argument. He recognised
that there could be situations where the need for the accommodation was
unpredictable and the cost of obtaining suitable accommodation within the
borough could be so disproportionate that it would be justifiable for the
council to find accommodation elsewhere.
But he contended that such a situation would be likely to arise only
where the accommodation was required for a short period of time, the
application was an emergency one and made during a period of unpredictably
heavy demand, and the only alternative to accommodation outside the district
would be disproportionately expensive.
He submitted that these exceptional criteria were not met here, either
so as to justify the adoption of the out of area policy, or to warrant sending
the claimant to Smethwick.
[27] Mr Beglan, counsel for the council,
submitted that this was far too restrictive a concept of reasonable
practicability. He says that cost can
plainly be a proper and material factor for the council to take into
account. He also stresses that this is
not the only reason for the out-of-area policy; it also assists in ensuring a
range of suitable accommodation of differing sizes.
[28] I was referred to a number of authorities
on the meaning of ‘reasonably practicable’.
However, many of them were in the field of health and safety, and I do
not find them relevant to the proper construction of s 208. The meaning of that concept must be
determined in the light of the particular statutory context.
118
But Mr Knafler is surely right to concede that cost
cannot be an irrelevant or improper consideration. As Nicholls V-C, as he was, pointed out in an
admittedly very different statutory context when considering the meaning of
‘reasonably practicable’: in Jordan v Norfolk CC [1994] 4 All ER 218 at
222, [1994] 1 WLR 1353 at 1357:
‘there is very little
nowadays which is not physically feasible if enough money is spent. Hence in this context the phrase is apt to
include financial considerations.’
[29] Furthermore, it must surely be assumed
that Parliament would have been well aware of the intensive pressures on
housing stock and, whilst favouring in-borough accommodation, would not have
sought to impose undue or unnecessarily onerous financial burdens on local
authorities who are taking a practical approach to the problem of matching the
need for a range of suitable accommodation with a limited budget. As Ms Samek points out in her witness
statement, it is not merely a matter of cost, although that is a highly
material factor. The quality and the
range of accommodation may be improved by going out of the borough.
[30] It is also well established that cost is
a material matter when determining whether accommodation is suitable within the
meaning of s 206 of the 1996 Act: see the comments of Dyson J in R (Sacupima)
v Newham London BC (2001) 33 HLR 1 at 11–12 (paras 20–24) and the cases
cited therein. The judge referred in
particular to some observations of Laws J, as he then was, in R v Lambeth
London BC, ex p Ekpo-Wedderman [1998] 3 FCR 532 at 549 when he said:
‘… I do not believe that
a local housing authority, considering (as it is right that it should) whether
to meet a particular and perhaps unusual need by acquiring property on the open
market, is obliged to disregard the cost of doing so.’
In a practical world the question of available resources
must be as relevant to the discharge of the duty under s 208 as it is to the
duty under s 206.
[31] Moreover, it seems to me relevant to note
that the accommodation offered must be suitable, having regard to the interests
of the applicants, otherwise it can be challenged on that basis alone. In practice that is going to limit severely
the ability of the authority to offer appropriate housing out of the
district. I recognise of course that the
duty is still to find accommodation within the borough if reasonably
practicable, even if there is suitable accommodation outside. But in my judgment it is legitimate to have
some regard to the fact that the property must be suitable when determining how
much scope can properly be given to the concept of reasonable practicability in
this particular statutory context.
[32] As Puhlhofer’s case makes
plain, it is for the council at the first stage to determine whether it is
reasonably practicable to obtain accommodation within its area. The court can interfere only if the decision
is unlawful, on what would traditionally be called Wednesbury criteria
(see Associated Provincial Picture Houses Ltd v Wednesbury Corp [1947] 2
All ER 680, [1948] 1 KB 223). That is
the position with regard to suitable accommodation and I see no reason to adopt
a different approach here. There is a
minimum standard below which the council cannot fall, and lack of resources
will not justify going below that standard, but ‘it is a matter of judgment for
the local authority to decide what accommodation on the spectrum of suitable
accommodation to select’ per Dyson J in Sacupima’s case
119
(2001) 33 HLR 1 at 11 (para 18). Similarly here; there will be a discretion
given to the authority but there must be a proper evidential basis for
determining that the provision of local accommodation is not reasonably
practicable. And it is important that an
authority bears in mind that the requirement is not simply what is reasonable
but what is reasonably practicable, which is a higher test.
[33] In my judgment it cannot be said that the
decision to use this out of district accommodation for the relatively small
proportion of those seeking accommodation, is Wednesbury unreasonable,
even recognising that the test is one of reasonable practicability. The shortage of suitable accommodation in
Enfield, coupled with the savings which it has been calculated can be secured
for the budget overall—some of which at least may be used for other aspects of
the budget—justify the adoption of this policy.
Given the financial constraints on the council, it was entitled to
conclude that it would not be reasonably practicable to house these persons
within the borough of Enfield.
[34] I turn to consider the two related
issues. Mr Knafler submitted that the
criteria which are applied in giving effect to the policy are unlawful. He criticised the fact that the first factor
merely makes the existence of appropriate accommodation in the borough one of a
number of factors to consider whereas it ought to be a particularly important
factor given the requirement under s 208.
I think that there is some force in this submission. I recognise that the policy itself is made
available to staff, and Ms Samek says that they will be well acquainted with
it. The policy does identify the s 208
duty at the beginning and no doubt most officers are well acquainted with it. But I imagine that some officers at least
simply focus on the criteria themselves.
In my view it ought to be made plain in the section dealing with the
criteria that one of the objectives is to ensure that so far as is reasonably
practicable accommodation should be provided in the borough. Alternatively, the criteria could specify
that normally suitable accommodation which is available in the area should be
used, unless it is not reasonably practicable to do so. And in my opinion it may not be reasonably
practicable even where cost effective accommodation is available. It seems to me, for example, that an
authority may be justified in withholding accommodation from someone with no or
very limited links with the area in the confident expectation that someone with
much closer links, and for whom out of borough accommodation would not be
suitable, will within a very short time be seeking accommodation also. The housing authority must anticipate likely
demand, and I did not understand Mr Knafler to dispute this.
[35] Notwithstanding that I think that the
criteria should be clarified in the way I have indicated, I do not think it
appropriate to give relief specifically on this matter for a number of
reasons. Relief on this narrow basis was
not sought in the grounds; the amendment is one of clarification rather than to
correct a manifest error, since the policy read as a whole does identify the
significance of s 208; and in any event the crucial question for this claimant
is whether the authority properly had regard to its s 208 duty when considering
his application. For reasons I set out
below, I consider that it did.
[36] Mr Knafler has submitted that even if the
decision was properly taken at the time, it is incumbent on the authority to
review the situation periodically to see if circumstances have changed so that
effect can be given to the statutory preference for accommodation within the
borough. He combined this with a much
wider argument that the council should continually be seeking to ‘marry’
accommodation to the needs of the applicants.
He makes the point that short-term accommodation, such as will typically
be involved where someone is
120
housed pursuant to s 188 of the 1996 Act pending a
determination of their application for permanent housing, may justify an out of
area placement in circumstances where a longer period, albeit still nominally
‘temporary’, would not. In principle
that is no doubt right. In determining
the question of suitability a housing authority can properly have regard to the
period of the anticipated stay: see the observations of Dyson J, as he was, at
first instance in R (Sacupima) v Newham London BC (2001)
33 HLR 1 at 12 (para 25).
[37] As Ms Samek points out, however, it would
be wholly impractical for the council to have continually to reassess whether
the accommodation being provided was the best fit for the clients. I am satisfied that this is not what the
statute requires and is inconsistent with the Sacupima decision. The obligation is to provide suitable
accommodation; once that is done there cannot be regular reappraisal to find
more suitable accommodation. However,
given that the question of suitability may be related to the period during
which accommodation is used, that must be subject to the point that sometimes
property will become unsuitable if the actual period of occupation turns out to
be longer than had been anticipated.
[38] Similarly, the s 208 duty is to provide
accommodation within the borough if that is reasonably practicable, and plainly
over time the availability of property and the demand may vary. In my view the council ought to be alive to
the need to keep that category of household under review. However, Ms Samek contends in her witness
statement that the council does have regard to an applicant’s circumstances
even after a placement has been made.
She gave an example of a situation which had recently arisen where
properties became free within the borough and a policy was drawn up to bring
back into the borough those housed outside who were most in need of
accommodation in Enfield. In the
circumstances I am not prepared to conclude that the council has failed to take
steps to keep the position under review.
Nonetheless I think that the council would be wise to consider putting
in place a more formal system for ensuring that those out of the borough,
particularly if they are seeking to come back within it, do have their
situation periodically reconsidered to see if it has become reasonably
practicable to move them back into suitable accommodation in Enfield.
THE LEGALITY OF THE POLICY UNDER THE HOMELESSNESS ACT
2002
[39] The 2002 Act, s 1(1) and (3) required the
council to complete a homelessness review and formulate and publish a
homelessness strategy based on the results of that review by 31 July 2003. Section 1(5) requires the council to take
their homelessness strategy into account in the exercise of their functions.
[40] Section 2 of the 2002 Act provides that
in the course of their ‘homelessness review’ a local housing authority is
required to review (inter alia) levels and the likely future levels of
homelessness in their district and the resources available to them for
preventing homelessness, providing support for the homeless and the potentially
homeless, and securing that accommodation is or will be available to homeless persons
in the district.
[41] Section 3 then sets out what the strategy
document should include. Essentially it
should identify a strategy for dealing with the problems highlighted in the
review relating to prevention of homelessness, support for the homeless, and
securing that sufficient accommodation is and will in the future be available
for homeless people in their district.
Subsection (2) is of some materiality in this case. It provides that:
121
‘A homelessness strategy
may include specific objectives to be pursued, and specific action planned to
be taken, in the course of the exercise of—(a) the functions of the authority
as a local housing authority; or (b) the functions of the social services
authority for the district.’
[42] Authorities must keep the strategy under
review and modify it from time to time (at least at five-yearly
intervals). Authorities must publish and
make available both their review and their strategy. Before adopting or modifying a strategy the
authority must consult such public or local authorities, voluntary
organisations or other persons as they consider appropriate: s 3(8).
[43] It is accepted that the purpose of all
this is to require housing authorities to adopt a strategic, multi-agency
approach to tackling homelessness. The
strategy should be formulated with the assistance of social services
authorities and other bodies (including registered social landlords, voluntary
organisations and so on) and which is published in one comprehensive document.
[44] The argument, as I understand it, is that
the strategy makes no reference to the out of area policy, that the out of area
policy was not adopted following the consultation procedures required for
modifying the strategy under the 2002 Act, and that as a consequence both the
strategy and the policy are defective.
(Indeed, it is said that they are ultra vires the 2002 Act, but I do not
think that the language of ultra vires is appropriate in a case where it is
said that a document has been prepared without compliance with the procedure
specified in the Act.)
[45] The policy in its current form was
adopted in the spring of 2004 some months after the current strategy had been
adopted by the full council on the 23 October 2003. There is, however, the opportunity to amend
the strategy to take account of the policy and Mr Knafler submits that it
should have been amended to give effect to the 2002 Act.
[46] I do not think that is right, for a
number of reasons. First, s 3(2), which
I have set out above, does not require that specific objectives or plans should
be included within the strategy. It is a
matter of discretion whether they are included or not. In any event, the out of area policy did not
introduce the notion of placements out of the borough for the first time. Such placements were already being made when
the strategy was adopted. There is some,
albeit limited, reference to that fact, as well as to the need further to
promote out of borough placements, both in the review and in the strategy
document. In the review it is expressly
stated (at p 85) under a heading ‘Use of temporary accommodation outside of
Enfield’ that some 27 households were then being housed in Birmingham and
Luton. It is stated that they are for
persons who have no local connection with the borough. Recommendation 22 of a service improvement
plan adopted as part of the review in terms states that one of the aims should
be to ‘pursue the identification of cheaper temporary accommodation outside of
London’.
[47] Similarly, in the strategy, there is a reference
to the London Housing Statement of 2002 which identified as one of its
proposals for action that approaches should be made by certain local government
organisations in London to seek to procure temporary accommodation in areas
bordering the Greater London boundary.
Moreover one of the specific ‘action plans’ designed to increase the
pool of permanent accommodation is ‘to increase the take up of Out of London
housing options by homeless households’ (p 69).
[48] In my judgment there can be no doubt that
the out-of-area policy adopted by the council is entirely consistent with the
strategy document. It does not
122
amount to a modification of the strategy at all. Furthermore, it cannot be the case that every
variation of each specific policy relating to the homeless and directed to
implementing the strategy has to be made the subject of a formal amendment to
the strategy document. The time and cost
would take valuable resources away from front line services. I accept that in theory the adoption of a
major new homelessness policy could involve such a shift from the strategy that
a reasonable authority would need to reflect it in a modified strategy and go
through the consultation mechanism laid down in the Act. It may be that when this judicial review was
first initiated the claimant thought that there was indeed such a fundamental
change. As I have said, it appears that
they were under the impression that the authority were placing very many more
families outside the borough than is the case.
In fact only a small number are being housed in that way, and indeed the
number has not significantly risen since the strategy document was
formulated. I recognise that the
criteria have altered since the review document in that persons may be housed
out of the borough even if they do have some local connection with the
borough. In my judgment that is nowhere
near the kind of change in approach which would require a formal amendment to
the strategy document. This is detail,
not strategy.
[49] Accordingly in my view it was not
necessary to modify the homelessness strategy so as to make specific reference
to the out of area policy, and likewise that policy could properly be adopted
without the need for the housing authority to go through the consultation exercise
applicable to the modification of the strategy.
It is not unlawful as a consequence of the impact of the 2002 Act.
THE PARTICULAR APPLICATION: THE SUITABILITY OF THE
ACCOMMODATION OFFERED
[50] The claimant contends that he was not
able to make proper representations to the authority and that the authority
erred in law in concluding that the property offered was suitable.
[51] I can consider the procedural aspect
briefly. In my judgment there is nothing
in this challenge. It seems to me,
looking at the application form and the notes in the file relating in
particular to the period in August and September last year, that all the
relevant information was considered. In
addition, the notes suggest that the claimant did make some points about his
being involved in a training course and being in debt. In any event, whether there were procedural
defects then or not, there was the statutory review on 22 December. It is plain that any defect in the procedure
which might have occurred at the first stage was put right by the opportunity
given to the claimant, through his solicitor, to put any points he wished about
the suitability of the property, including why he was unwilling to live outside
Enfield.
[52] Was the decision on suitability a lawful
one? It is necessary to set out the key
paragraphs of the review panel’s decision in which the panel gives its reasons:
‘The panel noted that
when you applied to this authority as homeless your household met the criteria
for an out of area placement. The panel
reached this conclusion having considered, amongst other factors, your
employment status and the educational, medical, and social needs of you
household, as well as the availability of suitable accommodation in the Enfield
area and the comparative cost of accommodation outside London.
Under current council
policy, which was agreed by members at a full council meeting, exemptions to
the out of borough placement policy will only normally be made on educational
grounds when a child is at a key stage of his education, in terms of
examinations, or is receiving special n needs
123
teaching. The panel concluded that the criteria did not
apply to your son, who is not of school age.
The panel noted no one n
your household suffers from a significant health problem, that requires
treatment that is only available from a specialist in the London area.
The panel also noted
that you have been in continuous receipt of welfare benefits since being
granted indefinite leave to remain in the United Kingdom by the Immigration and
Nationality Department on 29 April 2004 and as such concluded that there is no
reason for you to be accommodated in Enfield on the basis of having employment
in the London area.
Whilst acknowledging
that you wish to remain in this area because of the existence of a substantial
Turkish community and the fact that members of your family reside here, the
panel concluded that there is no exceptional reason why you needed to remain in
the Enfield area. The panel also observed
that Birmingham contains a diverse mix of ethnic communities, including an
established Turkish community.
In addition, the panel
also considered that the property is located in an inner-city district of
Birmingham and is well served by public transport, shops and other facilities
The panel had regard to
s 208(1) of the Housing Act 1996 which states that “So far as reasonably
practicable a local housing authority shall in discharging their housing
functions under this Part secure that accommodation is available for the
occupation of the applicant in their district”.
However, the panel noted that on the date that you approached this
authority there was no cost-effective alternative temporary accommodation in,
or close to the borough, and that there was no special reason why you should
have been placed in the Birmingham area.
The panel noted that the
policy of this council to acquire accommodation outside the borough has led to
a saving on the homelessness budget. The
accommodation in Birmingham is cheaper than the equivalent accommodation within
Enfield. By placing you in a two-bedroom
house in Birmingham this authority will make an approximate saving of £2920.00
per annum on the cost of your temporary accommodation.’
[53] Strictly the panel undertaking the
statutory review had to look only at the issue of suitability. That was specifically what they were
requested to do. In fact, however,
submissions were also made about the legality of the out of area policy and the
alleged lack of concrete evidence demonstrating that there was insufficient
accommodation in Enfield. Although these
matters went beyond the statutory remit of the panel, the panel did also deal
with them in its reasons, as is clear from the extract set out above.
[54] Mr Knafler submits that this was not a
legitimate exercise of discretion and that the housing authority failed to
balance the factors fairly. I reject
that. The review panel in the passage
set out above have in some detail identified the factors in the claimant’s
favour and those against, and concluded that the property was suitable. As I have said, the court will not readily
interfere with the approach of a housing authority to the question of
suitability, although in an appropriate case it plainly will: see eg R (Yumsak)
v Enfield London BC [2002] EWHC 280 (Admin), [2003] HLR 1. But the facts of that case were far removed
from this. Here in my view the authority
took into account relevant matters, they had regard not only to the physical
features of the property (which it is not
124
disputed is of the appropriate size) but also the
needs of the family. They recognised
that there were certain adverse consequences for the family having to move to
Smethwick, but decided that it was appropriate for them to be placed outside
the borough. I can understand the disappointment
of the family but I see no basis for saying that this conclusion was
unreasonable in a Wednesbury sense.
[55] There was one final point raised by the
claimant with regard to this decision.
It was established by the House of Lords in Mohamed v Hammersmith and
Fulham London BC [2001] UKHL 57, [2002] 1 All ER 176, [2002] 1 AC 547 that
in exercising its statutory reviewing function the review body must have regard
to information available to it at the date of the review. It should not simply test the decision of the
officer in the light of the information he or she had available when the
original decision was made. Lord Slynn
of Hadley (at [25]), with whose speech Lords Steyn, Hoffmann, Hutton and
Hobhouse of Woodborough agreed, observed:
‘I find nothing in the
statutory language which requires the review to be confined to the date of the
initial application or determination.
The natural meaning of the language in s 184(2) of the 1996 Act in
requiring the local housing authority to inquire whether the applicant “has” a
local connection is that they should consider that at the date of the review
decision. It is to be remembered that
the process is an administrative one at this stage and there can be no justification
for the final administrative decision of the reviewing officer to be limited to
the circumstances existing at the date of the initial decision.’
That case concerned the question whether or not there was
a local connection, but the same approach must be adopted to the issue of
suitability.
[56] The claimant submits that the panel
infringed this principle. He says that
it is plain that when reaching its decision the panel merely focused on the
question whether the property was suitable at the date of the original
application for housing.
[57] There is no doubt that in so far as the
placement out of the borough is concerned, the review panel did focus on the
justification for placing the claimant in Smethwick as at the date of the
original decision. They do not appear to
have considered the state of the housing market in Enfield or the housing
demand as at the date they were making their decision. Mr Beglan submits that there was no material
change in the interim. That may well be
so, given the relatively short period between the two dates although there was
no specific evidence about that.
[58] As to the other factors, however, it
seems to me that the panel did look at the needs of the family with respect to
such matters as education, health and employment at the date they reached their
decision. At any rate, nothing had
changed in relation to these matters since the original decision and the
claimant was not contending that they had.
[59] It seems to me, therefore, that on the
issue of suitability the panel did have regard to the up-to-date position. The
conclusion was that the accommodation in Birmingham was suitable both in
physical layout and having regard to the particular needs of the family. To the extent that the locality was relevant
to the issue of suitability, because of the effect on the family of living in
Birmingham, it was taken into consideration.
A property in Enfield may have been more suitable but that it not the
issue. The question was whether the
property offered in Birmingham was suitable: the panel concluded that it was,
and in my judgment, as I have indicated, they were entitled to reach that
decision.
125
[60] The failure to look again as of the date
of the panel’s decision at the s 208 question, namely whether out-of -borough
property was justified because it was not reasonably practicable to provide
accommodation within the borough, did not invalidate the decision on
suitability. They are distinct, albeit
related, obligations. As I have said, it
is not, in any event, something, which the panel was statutorily required to
consider. For reasons I have already
given, I consider that the council does have to keep under general review the
question of reasonable practicability so that if and when the situation changes
sufficiently, a household may be brought back into the borough. It may have been desirable for the panel to
have received up-to-date information about the availability of properties in
the borough. But this was relatively
soon after the original decision—some two months or so—and the panel may well
have made a reasonable assumption that the position would not have changed in
any material respect in the mean time.
But whether they took that view or not, in my judgment the failure to
look afresh at the s 208 question in the review hearing was not an error of law
since the panel were not obliged to do so.
CONCLUSIONS
[61] In my judgment the housing authority did
not err in law either in adopting the out of borough policy which it has, or in
its assessment of the suitability of the accommodation offered to the
claimant. Accordingly, this application
for judicial review fails.
Application dismissed.
Dilys
Tausz Barrister.
126
[2006] 1 All ER 127
London Diocesan Fund and another v Phithwa and others
(Avonridge Property Co Ltd, Pt 20 defendant)
[2005]
UKHL 70
LANDLORD AND TENANT; Other
HOUSE OF LORDS
LORD
NICHOLLS OF BIRKENHEAD, LORD HOFFMANN, LORD SCOTT OF FOSCOTE, LORD WALKER OF
GESTINGTHORPE AND BARONESS HALE OF RICHMOND
27
OCTOBER, 1 DECEMBER 2005
Landlord and tenant – Covenant – Agreement excluding,
modifying or frustrating operation of statutory provisions – Landlord’s
covenant in sublease for quiet enjoyment and payment of rent reserved by head
lease – Landlord’s covenant in sublease excluding liability after landlord
disposing of its interest – Landlord assigning reversion – Assignee defaulting
on rent reserved by head lease – Whether landlord’s covenant void – Whether
agreement excluding, modifying or frustrating operation of statutory provisions
– Landlord and Tenant (Covenants) Act 1995, ss 3, 6, 7, 8, 25.
A company acquired a leasehold interest in a number
of small shop units for a term of 99 years at an annual rent of £16,700 subject
to review. It granted subleases of most
of the shops for substantially the same term as its own lease (the headlease)
for a peppercorn rent in return for substantial premiums of the order of
£75,000 for each sublease. Each sublease
contained in cl 6 a landlord’s covenant for quiet enjoyment and for payment of
the rent reserved by the headlease. The
words of the covenant read: ‘The Landlord covenants with the Tenant as follows
(but not, in the case of [the company] only, so as to be liable after the
Landlord has disposed of its interest in the Property).’ Shortly thereafter the company assigned the
headlease to P, who disappeared, leaving unpaid rent due under the
headlease. The head lessor commenced
forfeiture proceedings. The subtenants
were granted relief on terms that they pay the rent arrears under the headlease
and take new leases of their individual units.
The new leases were for the same term as their former subleases and at a
rent equal to an apportioned part of the rental payable under the forfeited
headlease. The subtenants brought
proceedings against the company, claiming damages for breach of the landlord’s
covenant in cl 6 of their leases. They
relied on the provisions of the Landlord and Tenant (Covenants) Act 1995. Section 5a of the 1995 Act provided for a tenant to be
released from covenants on the assignment of a tenancy, ss 6b and 7c provided that a landlord, and former landlord,
could be released from covenants on the assignment of the reversion, and s 8d set out the procedure for seeking release
________________________________________
a Section 5, so far as material, provides: ‘(1)
This section applies where a tenant assigns premises demised to him under a
tenancy. (2) … he—(a) is released from
the tenant covenants of the tenancy, and (b) ceases to be entitled to the
benefit of the landlord covenants of the tenancy, as from the assignment …’
b Section 6, so far as material provides: ‘(1)
This section applies where a landlord assigns the reversion in premises of
which he is the landlord under a tenancy.
(2) … he may apply to be released from the landlord covenants of the
tenancy in accordance with section 8 …’
c Section 7, so far as material, provides: ‘(1)
This section applies where—(a) a landlord assigns the reversion in premises of
which he is the landlord under a tenancy, and (b) immediately before the
assignment a former landlord of the premises remains bound by a landlord
covenant of the tenancy …’
d Section 8, so far as material, provides: ‘(1)
For the purpose of section 6 or 7 an application for the release of a covenant
… is made by serving on the tenant … a notice …’
________________________________________
127
from a covenant under ss 6 or 7. Where a landlord made an application for
release from a landlord covenant by serving an appropriate notice on the tenant
the covenant was released to the requested extent if the tenant consented, or
failed to object, or if he objected but the court decided that it was
reasonable for the covenant to be released.
Section 25(1)e provided that any
agreement relating to a tenancy was void to the extent that (a) it would have
effect to ‘exclude, modify, or otherwise frustrate the operation of any
provision’ of the 1995 Act. The
subtenants contended that cl 6 sought to relieve the company, on a transfer of
its interest, of the need to seek release from the lessor’s covenants by means
of the notice procedure set out in s 8 of the 1995 Act and was rendered void by
s 25(1)(a). The judge gave judgment for
the subtenants. The Court of Appeal
dismissed the company’s appeal and it appealed to the House of Lords. The subtenants contended (i) that the limited
release provisions in ss 6–8 of the 1995 Act were intended to be the sole means
whereby an original landlord could obtain a release from the landlord covenants
when he assigned the reversion; and (ii) that the limitation of the company’s
liability by cl 6 was precluded by s 3(1)f of the 1995 Act, under which the benefit and
burden of all landlord and tenant covenants of a tenancy was annexed to the
premises demised by the tenancy and the reversion in them and passed on an
assignment of those premises or the reversion.
________________________________________
e Section 25, so far as material, is set out at
[14], below
f Section 3, so far as material, provides: ‘(1)
The benefit and burden of all landlord and tenant covenants of a tenancy—(a)
shall be annexed and incident to the whole, and to each and every part, of the
premises demised by the tenancy and of the reversion in them, and (b) shall in
accordance with this section pass on an assignment of the whole or any part of
those premises or of the reversion in them …’
________________________________________
Held – (Lord Walker of Gestingthorpe
dissenting) An agreement between landlord and tenant to limit liability under
their covenants from the outset did not impinge upon the operation of any provision
of the 1995 Act and thus did not fall within s 25 of the 1995 Act. The object of the relieving provisions in ss
5–8 of the 1995 Act was that on lawful assignment of a tenancy or reversion,
and irrespective of the terms of the tenancy, the tenant or the landlord should
have an exit route from his future liabilities and the mischief at which the
1995 Act was aimed was the absence in practice of any such exit route. The Act
was not intended to close any other exit route available to the parties, in particular
that by agreement their liability could be curtailed from the outset or later
released or waived. Nothing in s 3 of
the 1995 Act precluded the parties from limiting the liability of the original
covenantor to the period while it held the reversion, and such a limitation was
not rendered void by s 25 as it did not affect the transmission of the benefit
and burden of the covenant in accordance with s 3. Accordingly, the appeal would be allowed (see
[16]–[19], [27]–[30], [37], [41], below).
Notes
For the passing of covenants on assignment of tenancy:
abolition of privity doctrine and for the release of landlord and tenant from
covenants on assignment of interest, see Supp to 27(1) Halsbury’s Laws
(4th edn reissue) paras 466A, 466B.
For the Landlord and Tenant (Covenants) Act 1995, ss
3, 6, 7, 8, 25, see 23 Halsbury’s Statutes (4th edn) (2004 reissue),
1168, 1174, 1176, 1178, 1205.
128
Cases referred to in opinions
BHP Great Britain
Petroleum Ltd v Chesterfield Properties Ltd [2001] 2 All ER 914, [2002] Ch
12, [2001] 3 WLR 277; rvsd in part [2001] EWCA Civ 1797, [2002] 1 All ER
821, [2002] Ch 194, [2002] 2 WLR 672.
Spencer’s Case
(1583) 5 Co Rep 16a, 77 ER 72.
Cases referred to in list of authorities
Ashworth Frazer Ltd v
Gloucester City Council [2001] UKHL 59, [2002] 1 All ER 377, [2001] 1 WLR
2180.
Cadogan v McGirk
[1996] 4 All ER 643, CA.
City of London Corp v
Fell [1993] 4 All ER 968, [1994] 1 AC 458, [1993] 3 WLR 1164, HL.
Fothergill v Monarch
Airlines Ltd [1980] 2 All ER 696, [1981] AC 251, [1980] 3 WLR 209, HL.
Pyx Granite Co Ltd v
Ministry of Housing and Local Government [1959] 3 All ER 1, [1960] AC 260,
[1959] 3 WLR 346, HL.
R v Secretary of
State for the Environment, Transport and the Regions, ex p Spath Holme Ltd
[2001] 1 All ER 195, [2001] 2 AC 349, [2001] 2 WLR 15, HL.
Appeal
The claimants, the London Diocesan Fund and the Parochial
Church Council of the Parish of Holy Trinity, Wealdstone, the freehold owners
of certain property in Headstone Drive, Wealdstone, Middlesex had granted a
99-year lease of the property which became vested in Avonridge Property Co
Ltd. Avonridge granted to subleases of
parts of the property to subtenants including Amit Mashru, Dilipkumar Raithata,
Citicore Investments Ltd and Purshottam Walji (the subtenants). Avonridge then transferred all its interest
to Dhirajlal Phithwa. Mr Phithwa
defaulted on the rent due to the claimants and they began a forfeiture
action. The subtenants applied for
relief against forfeiture and commenced Pt 20 proceedings against Mr Phithwa and
Avonridge. On 11 December 2003 Judge Copley, sitting in the Willesden County
Court, gave judgment for the subtenants.
On 14 October 2004 the Court of Appeal (Pill, Jonathan Parker and Hooper
LJJ) dismissed Avonridge’s appeal ([2004] EWCA Civ 1306, [2005] 1 WLR
236). Avonridge appealed to the House of
Lords with permission of the Appeal Committee given on 24 January 2005. The facts are set out in the judgment of Lord
Nicholls of Birkenhead.
Mark Warwick (instructed
by Philippsohn Crawfords Berwald) for Avonridge.
Nathan Wells
(instructed by Gattas Denfield) for the London Diocesan Fund.
Their Lordships took time for consideration.
1 December 2005.
The following opinions were delivered.
LORD NICHOLLS OF BIRKENHEAD.
[1] This appeal raises a question on the
effect of the Landlord and Tenant (Covenants) Act 1995. A sublease invariably contains a covenant by
the lessor to pay the rent due under the head lease. Before the enactment of the 1995 Act a lessor
could, by the use of appropriate wording, limit his liability under such a
covenant in whatever way he and the subtenant might agree. In particular, the lessor’s liability could
be restricted to the period while the reversion to the
129
sublease remained vested in him. This was legally possible, if seldom met in
practice. When the lessor’s liability
was confined in this way, and the lessor assigned the reversion, his successor
would be liable under this covenant by virtue of privity of estate but the
lessor’s own liability by virtue of privity of contract would be at an
end. The issue on this appeal is whether
the 1995 Act precludes a lessor from now limiting his liability in this
way. The Court of Appeal held it does
(see [2004] EWCA Civ 1306, [2005] 1 WLR 236).
[2] The context is as follows. In February 2002 Avonridge Property Co Ltd
(Avonridge) acquired by assignment a lease of seven small shop units at
Wealdstone, Middlesex. The lease was for
a term of 99 years expiring in 2067, at an annual rent of £16,700 subject to
review. Avonridge granted subleases of
six of these shops for substantially the same term as its own lease, or
headlease as the lease then became. The
rent payable under each sublease was a peppercorn. The sublessees paid Avonridge substantial
premiums for their subleases, of the order of £75,000 for each sublease.
[3] Each sublease contained, in cl 6, a
landlord’s covenant for quiet enjoyment and for payment of the rent reserved by
the head lease. The words of covenant
read as follows (commas have been added to assist reading): ‘The Landlord
covenants with the Tenant as follows (but not, in the case of Avonridge
Property Company Limited only, so as to be liable after the Landlord has
disposed of its interest in the Property) …’
[4] On 2 April 2002 Avonridge assigned the
headlease to a Mr Dhirajlal Phithwa. Mr
Phithwa was, to use the old legal phrase, a man of straw. He disappeared, leaving unpaid the rent due
under the headlease. The head lessor,
the London Diocesan Fund and the Parochial Church Council of Holy Trinity,
Wealdstone, commenced forfeiture proceedings.
The subtenants were granted relief, on unexceptional terms: they had to
pay the rent arrears under the headlease with interest and costs, and take new
leases of their individual units. The
new leases were for the same term as their former subleases and at a rent equal
to an apportioned part of the rental payable under the forfeited
headlease. This meant that for the
future, under the new leases, the former subtenants had to pay an annual rent
of £2,376 or, in one instance, £2,441.
This is to be contrasted with the nominal rent payable under the
subleases they had bought from Avonridge.
[5] The subtenants brought proceedings against
Avonridge, claiming damages for breach of the landlord’s covenant in cl 6 of
their leases. Judge Copley sitting in
Willesden County Court gave judgment for the subtenants, for damages to be
assessed. He held that the 1995 Act
rendered void the words in cl 6 limiting Avonridge’s liability to the time it
was the landlord. The Court of Appeal,
comprising Pill, Jonathan Parker and Hooper LJJ, dismissed Avonridge’s
appeal. Avonridge has now appealed to
your Lordships’ House.
A TRAP FOR THE UNWARY?
[6] It must be said at once that Avonridge’s
case is not overburdened with merit.
Indeed, on their face the transactions have the appearance of a
scam. The sublessees’ security, and the
value of their subleases, depended on the strength of the sublessor’s covenant
to pay the headlease rental. But
Avonridge could end its liability to pay this rent at any time. There was, it seems, no restriction on
assignment of the headlease. If
Avonridge assigned the headlease its liability as tenant of that lease would
end automatically, by virtue of s 5 of the 1995 Act. Its
130
liability as landlord under the subleases would also
end automatically, by virtue of the limited terms of the landlord’s covenant in
cl 6 of the subleases.
[7] An assignee of the headlease from
Avonridge would of course become liable to the head lessor in respect of the
tenant’s covenants in the head lease. An
assignee would also become liable to the sublessees in respect of the
landlord’s covenant in cl 6 of the subleases.
In each instance this liability would arise by virtue of privity of
estate. But no one of financial
substance would take an assignment of the headlease and thereby incur liability
to pay rent of £16,700 p a to the head lessor, save on payment of a substantial
‘reverse’ premium. No one would do so,
because the property for which this rent was payable was let on correspondingly
long subleases yielding no rental income.
[8] Thus the overall position was that
Avonridge received premiums from the subtenants totalling altogether £458,500
in exchange for subleases which from their inception were essentially
valueless. They were valueless because
by its own act of assignment to a worthless assignee Avonridge could at any
time put the subleases in jeopardy of forfeiture. Avonridge could do this without incurring any
liability either to the head lessor or to the subtenants. From the outset it was in Avonridge’s
financial interest to take this course as soon as possible. Avonridge lost no time in doing so.
[9] How these unfortunate sublessees came to
acquire and pay for these subleases is not a matter before your Lordships. Nor is the question whether any of the
circumstances surrounding these transactions may afford the sublessees redress,
whether against Avonridge or others.
Your Lordships’ House is concerned only with the rights and obligations
of the parties under the terms of the subleases they entered into. But the potential use of the provisions of
the 1995 Act in the manner illustrated by the facts of this case is a matter to
be taken into account when interpreting the statutory provisions.
THE 1995 ACT
[10] The 1995 Act gave effect, with
amendments, to the recommendations of the Law Commission in its report
Landlord and Tenant Law—Privity of Contract and Estate (Law Com no 174)
(1988). One of the principal mischiefs
the Act was intended to remedy was that, as the law stood, the original tenant
of a lease remained liable for performance of the tenant’s covenants throughout
the entire duration of the lease. A
tenant might part with his lease and many years later find himself liable for
substantial amounts of unpaid rent, perhaps much increased under rent review
provisions, and for the cost of making good extensive dilapidations.
[11] This was considered unfair. This potential liability was not widely
understood by tenants, and it could lead to hardship. Section 5 of the Act remedied this defect in
the law. Section 5 provides that where a
tenant assigns the whole of the premises demised to him under a tenancy, he is
released from the tenant covenants of the tenancy. A tenant covenant is a covenant falling to be
complied with by the tenant of premises demised by the tenancy. Tenancy includes a subtenancy (see s 28(1)).
[12] Section 6 contains a corresponding
provision for the benefit of landlords in respect of landlord covenants, but
this provision is not so far-reaching in its effect. Unlike the automatic release of tenant
covenants brought about by assignment of the whole of the demised premises,
assignment of the reversion in the whole of the demised premises does not automatically
relieve the landlord from his liability under the landlord covenants. The Law
Commission considered
131
the new provision regarding landlord covenants could
not mirror precisely the position regarding tenant covenants. Tenants rarely, if ever, have a right to give
or withhold consent to dispositions by their landlord. Moreover, there was less need for radical
change with landlord covenants because landlords undertake far fewer
obligations than tenants, and landlords may not be troubled by the prospect of
continuing responsibility (see para 4.16 of its report).
[13] So ss 6–8 of the 1995 Act provide a
landlord with a means which may result in his being released from the landlord
covenants but will not necessarily do so.
If the landlord assigns the whole of the premises of which he is
landlord he may apply to be released from the landlord covenants of the
tenancy. A landlord covenant is a
covenant falling to be complied with by the landlord of the premises demised by
a tenancy. An application for release is
made by the landlord serving an appropriate notice on the tenant requesting a
release of the landlord covenant wholly or in part. Where the landlord makes such an application
the covenant is released to the requested extent if the tenant consents, or if
he fails to object, or if he does object but the court decides it is reasonable
for the covenant to be released (see s 8).
[14] These statutory provisions might readily
be stultified if the parties to a lease could exclude their operation. In particular, the provision for automatic
release of tenant covenants on assignment of a lease would be a weak instrument
if it were open to a landlord to provide that the original tenant’s contractual
liability should continue for the whole term notwithstanding s 5. So the 1995 Act, in s 25, enacts a
comprehensive anti-avoidance provision. Subsection (1) relevantly provides:
‘Any agreement relating
to a tenancy is void to the extent that—(a) it would apart from this section
have effect to exclude, modify or otherwise frustrate the operation of any
provision of this Act, or (b) it provides for—(i) the termination or surrender
of the tenancy, or (ii) the imposition on the tenant of any penalty, disability
or liability, in the event of the operation of any provision of this Act …’
The words in parenthesis in Avonridge’s covenant in cl 6
of each sublease are an ‘agreement relating to a tenancy’ within the meaning of
this section (see s 25(4)). But does
this agreement ‘frustrate the operation’ of any provision of the Act? That is the key question.
[15] The subtenants submit it does. The limited release provisions in ss 6–8 were
intended to be the sole means whereby an original landlord could obtain a
release from the landlord covenants when he assigned the reversion. The parenthetical words in cl 6 would
frustrate that statutory purpose if they were allowed to have effect according
to their tenor.
[16] I am unable to agree. Where I part company with this submission is
its statement of the statutory purpose.
Sections 5–8 are relieving provisions.
They are intended to benefit tenants, or landlords, as the case may
be. That is their purpose. That is how they are meant to operate. These sections introduced a means, which
cannot be ousted, whereby in certain circumstances, without the agreement of
the other party, a tenant or landlord can be released from a liability he has
assumed. The object of the legislation
was that on lawful assignment of a tenancy or reversion, and irrespective of
the terms of the tenancy, the tenant or the landlord should have an exit route
from his future liabilities. This route
should be available in accordance with the statutory provisions.
132
[17] Thus the mischief at which the statute
was aimed was the absence in practice of any such exit route. Consistently with this the legislation was
not intended to close any other exit route already open to the parties:
in particular, that by agreement their liability could be curtailed from the
outset or later released or waived. The
possibility that by agreement the parties may limit their liability in this way
was not, it seems, perceived as having unfair consequences in practice, even
though landlords normally have greater bargaining power than tenants. So there was no call for legislation to
exclude the parties’ capacity to make such an agreement, ending their liability
in circumstances other than those provided in the Act.
[18] Section 25 is of course to be interpreted
generously, so as to ensure the operation of the Act is not frustrated, either
directly or indirectly. But there is
nothing in the language or scheme of the Act to suggest the statute was
intended to exclude the parties’ ability to limit liability under their
covenants from the outset in whatever way they may agree. An agreed limitation of this nature does not
impinge upon the operation of the statutory provisions.
[19] This is so whether the agreed limitation
is included in the lease itself or is in a separate document by way of waiver
or agreement to release. The legal
effect is the same in each case. Whatever
its form, an agreed limitation of liability does not impinge upon the operation
of the statutory provisions because, as already noted, the statutory provisions
are intended to operate to relieve tenants and landlords from a liability which
would otherwise exist. They are not
intended to impose a liability which otherwise would be absent. They are not intended to enlarge the
liability either of a tenant or landlord.
The Act does not compel a landlord to enter into a covenant with his
tenant to pay the rent under a headlease.
The Act does not compel this, even though it may be eminently reasonable
that a landlord should do so. Nor do the
statutory restrictions on the circumstances where a landlord can end his
liability without his tenant’s consent carry any implication that a tenant may
not agree to end his landlord’s liability in other circumstances. Such an
implication would be inconsistent with the underlying scheme of these
provisions.
[20] This appraisal accords with the thrust of
the Law Commission’s report. The
commission expressly recognised, in para 2.17, that the parties to a lease were
able to limit their obligations so that their obligations ended on disposal of
their interests:
‘A lease can, as a
matter of bargain, limit the obligations of one or both of the parties, so that
they come to an end if the parties transfer their interest in the
property. However, this is rarely done.’
A similar view is expressed in para 3.3: the continuing
liability of the original parties to leases is a ‘matter of contract’. The parties ‘are free to vary the normal
rule’. This is ‘sometimes done, but not
frequently’. Nowhere in its report does
the commission suggest the parties’ freedom to vary the normal rule has given
rise to problems and should be curtailed.
Had such a fundamental incursion into basic law been intended that would
surely have found clear expression in the Act.
[21] Nor do the events in this case exemplify
a loophole in the Act Parliament cannot have intended. The risks involved were not obscure or
concealed. They were evident on the face
of the subleases. The sublessees were to
pay up-front a capitalised rent for the whole term of the subleases. But cl 6 enabled Avonridge to shake off all
its landlord obligations at will. Any
competent conveyancer would, or should, have warned the sublessees of the
risks, clearly and forcefully.
133
THE CHESTERFIELD CASE AND SECTION 3
[22] Attention was drawn to the decisions of
Lightman J and the Court of Appeal, comprising Judge and Jonathan Parker LJJ
and Bodey J, in BHP Great Britain Petroleum Ltd v Chesterfield Properties
Ltd [2001] 2 All ER 914, [2002] Ch 12, [2001] 3 WLR 277; [2001] EWCA Civ
1797, [2002] 1 All ER 821, [2002] Ch 194.
By an agreement for a lease the landlord agreed to carry out certain
building works. The landlord’s
obligations were expressed to be personal obligations of the landlord,
Chesterfield Properties Ltd (Chesterfield).
In the agreement the tenant acknowledged it would have no claim against
Chesterfield’s successors arising out of the landlord’s obligations to remedy
building works defects. Some time after
the lease was granted Chesterfield assigned the reversion to an associated
company. Chesterfield served a s 8
notice on the tenant, applying to be released from all ‘the landlord’s
obligations under the tenancy’. The
tenant did not serve a counter-notice.
In answer to a claim brought by the tenant against Chesterfield in
respect of building works defects Chesterfield asserted it had been released
from its obligations by s 8.
[23] Both courts rightly held that service of
the s 8 notice did not release Chesterfield from its obligation to make good
defects. That was a personal obligation
and, as such, not a landlord covenant within the meaning of s 28(1) of the 1995
Act. It was not an obligation falling to
be complied with by the person for the time being entitled to the reversion
(see [2002] 1 All ER 821 at [59], [2002] Ch 194).
[24] This decision does not assist the
sublessees in the present appeal. Unlike
Chesterfield’s liability under the lease agreement, Avonridge’s liability under
cl 6 was expressly limited to the period for which it held the reversion.
[25] Reference was also made to s 3 of the
1995 Act. I must explain as briefly as
possible why this section is irrelevant in the present case. One purpose of the 1995 Act was to abolish
the long-established distinction between covenants which ‘touch and concern the
land’ or, in its more modern formulation, covenants having ‘reference to the
subject-matter of the lease’, and those which do not. The former expression derives from
Spencer’s Case (1583) 5 Co Rep 16a, 77 ER 72 and the latter from ss 141 and
142 of the Law of Property Act 1925.
Generations of conveyancers and law students have been familiar with these
phrases and with writers’ lists of covenants held by courts to be on one or
other side of the line: see, for instance, Megarry and Wade The Law of Real
Property (6th edn, 2000) pp 955–956.
The significance of the distinction was that only covenants satisfying
this ancient test ‘ran’ with the land so that the benefit or burden passed to
assignees by virtue of privity of estate.
[26] The distinction has long been criticised
as illogical and not easily drawn in practice.
Section 3 of the 1995 Act, read with s 30(4), abolished this distinction
for post-1995 tenancies. In place the
1995 Act established a new, self-contained statutory code regulating the
transmission of the benefit and burden of landlord and tenant covenants. Under s 3(1) the benefit and burden of all
landlord and tenant covenants of a tenancy is annexed to the premises demised
by the tenancy and the reversion in them and passes on an assignment of those
premises or the reversion. The parties
to a lease, however, still remain free to agree that the benefit or burden of a
covenant shall not pass on assignment of the tenancy or reversion. Where a covenant is expressed to be ‘personal
to any person’ s 3 does not make the covenant enforceable by or, as the case
may be, against any other person (see s 3(6)).
134
[27] The covenant in cl 6 does not fall within
this ‘personal’ category. It was
intended to endure throughout the term of the sublease and be binding on
Avonridge’s assigns. So s 3(1) applied
to this covenant. But that leads nowhere
in the present case, because in cl 6 Avonridge’s liability under this covenant
is expressly limited to the period while it holds the reversion. Nothing in s 3 precludes the parties from
limiting the liability of the original covenantor in this way. Nor is such a limitation rendered void by s
25. This limitation on the duration of
the original covenantor’s liability does not affect the transmission of the
benefit and burden of the covenant in accordance with s 3.
[28] For these reasons I would allow this
appeal and set aside para 11(d) of Judge Copley’s order of 17 December 2003.
LORD HOFFMANN.
[29] My Lords, I have had the advantage of
reading in draft the speech of my noble and learned friend Lord Nicholls of
Birkenhead. For the reasons he gives,
with which I agree, I would allow this appeal.
LORD SCOTT OF FOSCOTE.
[30] My Lords, I have had the advantage of
reading in draft the opinion prepared by my noble and learned friend Lord
Nicholls of Birkenhead and for the reasons he has given, with which I am in
full agreement, I too would allow this appeal and make the order he has
proposed.
LORD WALKER OF GESTINGTHORPE.
[31] My Lords, I have the misfortune to differ
from my noble and learned friends as to the disposal of this appeal. I shall express my dissent as briefly as
possible.
[32] Mr Mark Warwick (for the appellant
ex-landlord) did not seek to argue that its conduct had been meritorious. In a period of less than two months it
acquired the headlease of seven shop units, granted six underleases at premiums
which gave it a profit of the order of £200,000, and then sold the headlease
(for £50,000) to Mr Phithwa. Mr Phithwa
himself made a profit of over £20,000 (by granting a seventh underlease at a
premium) and then disappeared without ever paying any rent under the
headlease. The unfortunate subtenants
have had to pay a heavy price to avoid forfeiture (unless and except so far as
they may have been able to pass on that burden to their solicitors).
[33] My noble and learned friends rightly
attach great importance to the general legislative purpose of the Landlord and
Tenant (Covenants) Act 1995. It was to
provide for the release from liability of ex-landlords and ex-tenants, not for
the imposition of such liability on them.
But s 25 of the Act contains a provision against ‘contracting-out’
expressed in wide terms. It applies (by
s 25(4)) to an agreement relating to a tenancy whether or not the agreement is
contained in the instrument creating the tenancy, or antedates it. It seems to me clear that if each of the six
subleases had contained a covenant by the tenant to release the landlord from
liability after it (the landlord) had disposed of its interest in the demised
premises, even though the landlord had not complied with the procedure set out
in s 8 of the Act, that covenant would have been struck down by s 25. The landlord would have been using his
bargaining power ‘to exclude, modify or otherwise frustrate’ the operation of
the Act.
[34] I cannot see why a different result
should follow just because the contracting-out provision is contained, not in a
separate covenant, but in a rather
135
clumsy parenthesis at the beginning of cl 6, which
(as is common ground) contains ‘landlord covenants’ within the meaning of the
Act. I cannot reconcile this with Mr
Warwick’s repeated submission that his case depended on principle, and not on
some narrow semantic point.
[35] I am driven to the conclusion that
although the general legislative purpose of the Act was to effect the release
from liability of landlords and tenants on their assignment of their interests,
subject to and in accordance with the provisions of the Act, s 25 is expressed
in terms wide enough to interfere with the freedom of contract which was
available to the parties in negotiating a tenancy before the coming into force
of the Act. By restricting the parties’
freedom of contract, the Act (in a case such as the present) does operate to
make it more difficult for a landlord to escape liability on landlord covenants
(within the meaning of the Act). I would
accept the submission of Mr Wells, for the respondents, that that can be done
only by the procedure laid down in s 8 of the Act. To that limited extent the Act does operate,
as it seems to me, to shut off what my noble and learned friend Lord Nicholls
of Birkenhead has described (at [17], above) as ‘any other exit route’
previously open to the parties.
[36] The Law Commission considered this topic
very carefully, but there is no indication either in the 1986 working paper (no
99) or in the 1988 Report on Privity of Contract and Estate (Law Com no
174) that the Law Commission addressed this particular point. In my opinion it has to be answered by
construing the language of the Act itself.
For my part I would have dismissed this appeal.
BARONESS HALE OF RICHMOND.
[37] My Lords, I entirely agree with the
reasons given by my noble and learned friend, Lord Nicholls of Birkenhead, for
allowing this appeal. I add only a few
words because much was made, in the arguments before us and in the courts below,
of the recommendations of the Law Commission in their report on Privity of
Contract and Estate (Law Com no 174) (1988). As the parties both know, I was a member of
the Law Commission, not only at the time of that Report but also when the
preceding Working Paper, Privity of Contract and Estate, Duration of
Liability of Parties to Leases (Working Paper no 95) (1986) was published,
and thus was party to the commission’s deliberations and recommendations.
[38] Both parties to this case sought to draw
support from the Law Commission’s work.
However, it should be borne in mind when reading the commission’s
publications that the commission contemplated that their recommendations would
apply to existing as well as to new leases.
Thus the report recommended (Law Com no 174 at para 4.59):
‘The introduction of our
proposed scheme would not have any immediate effect on the rights and
liabilities of those who were then landlords and tenants, nor those of people
who were previously in that position but no longer had any interest in the
property in question. Only when the interest of the current landlord or the
current tenant changes hands should the proposed rules change the position.’
Hence there was no equivalent in the draft Bill annexed to
the Law Commission’s Report to s 1(1) of the Landlord and Tenant (Covenants)
Act 1995, which limits ss 3–16 of the Act to new tenancies. The limitation of the commission’s scheme to
new tenancies was the result of negotiations with the property industry after
the commission’s report.
136
[39] Given that the commission contemplated
that both existing and new tenancies should be covered by their
recommendations, they clearly could not have contemplated any change in the
existing freedom of the original parties to contract out of any continuing
liability once they had parted with their interest in the property. This is confirmed by the reference to that
freedom in both the Working Paper (no 95 at para 3.3) and in the report (Law
Com no 174, also at para 3.3). The
mischief at which the commission’s recommendations were aimed was the
continuation of a liability long after the parties had parted with their
interests in the property to which it related.
If there was already no continuing liability, because of the express
terms of the lease which were apparent to all, there was no mischief.
[40] It would, of course, have been open to
Parliament, when passing the 1995 Act, to limit the initial landlord’s freedom
to contract out of any continuing liability.
But there is nothing in the 1995 Act which effects such a fundamental
change of principle. Given the concerns
of the property industry which led to the modifications of the Law Commission’s
recommendations, it would have been surprising if there were. The provisions with which we are concerned,
principally ss 6 and 8 of the 1995 Act, are closely modelled on those in cll 4
and 6 of the Bill annexed to the Law Commission’s report (allowing for the
stylistic changes which often seem to take place when a new draftsman takes
over another’s draft). I cannot find in
them, or in s 3, which is concerned to identify those covenants which fall
within the doctrine of privity of estate and are thus capable of running
with the tenancy and the reversion, anything to suggest such a radical change
in policy.
[41] For those reasons, in addition to those
given by Lord Nicholls, I too would allow this appeal.
Appeal allowed.
Celia
Fox Barrister.
137
[2006] 1 All ER 138
R (on the application of Jones and others) v Ceredigion
County Council
[2005]
EWCA Civ 986
ADMINISTRATION OF JUSTICE; Courts
COURT OF APPEAL, CIVIL DIVISION
WALLER,
MAURICE KAY LJJ AND SIR CHRISTOPHER STAUGHTON
18, 28 JULY 2005
Court of Appeal – Jurisdiction – Appeal from
decision of judge to which leapfrog certificate relates – No appeal to Court of
Appeal lying from decision of judge to which leapfrog certificate relates where
House of Lords granting permission to appeal – Leapfrog certificate given in
respect of two issues – House of Lords granting permission in respect of one
issue – Party not pursuing appeal in House of Lords – Whether Court of Appeal
having jurisdiction in respect of appeal on other issue – Administration of
Justice Act 1969, s 13(2)(a).
The claimants sought judicial review of a decision of
the defendant local education authority, raising three issues. The judge found in their favour on issue (i)
and issue (ii) and considered that he did not need to decide issue (iii). He quashed the authority’s decision. He also ordered that a ‘leapfrog’ certificate
should be granted under the Administration of Justice Act 1969, under which any
of the parties to the proceedings could apply to the House of Lords seeking
permission to appeal to the House, and he granted permission to appeal to the
Court of Appeal if permission to appeal to the House was not granted. The House of Lords granted permission on
issue (ii) but not on issue (i). The
authority decided not to pursue the appeal in the House of Lords on issue (ii)
alone and withdrew its petition, however it wished to pursue an appeal in the
Court of Appeal on issue (i). The
claimants contended that in s 13(2)(a)a of the 1969 Act, which provided that where the
House of Lords granted leave for an appeal to be brought directly to it no
appeal from the decision of the judge to which the ‘leapfrog’ certificate
related lay to the Court of Appeal, the ‘decision of the judge’ referred to the
order made by the judge that the authority’s decision be quashed, and that as
the House of Lords had granted leave to appeal from that order, the Court of
Appeal had no jurisdiction to entertain the authority’s appeal. The authority submitted, inter alia, that to
avoid injustice the word ‘decision’ should be construed as referring to a
decision on a particular issue.
________________________________________
aSection 13, so far as
material, is set out at [42], below
________________________________________
Held – (Waller LJ dissenting) (1) The Court of
Appeal would entertain the appeal for the following reasons. (i) (Per Maurice Kay LJ) The words ‘decision
of the judge to which the certificate relates’ in s 13(2)(a) of the 1969 Act
were to be construed as limited to a decision or part of a decision in respect
of which the House of Lords had granted leave to appeal. That broad construction furthered the
ultimate purpose of s 13(2)(a) which was to ensure that there was no further
litigation in the Court of Appeal of a matter for which leave had been granted
for an appeal to the House of Lords. It
could be left to the Court of Appeal, by means of the procedural weapons at its
disposal, to ensure that untimely or pointless appeals were not further pursued
(see [44], [45], [47], [48], below).
138
(ii) (Per Sir Christopher Staughton) Section 13(2) of
the 1969 Act was to be construed in the circumstances of today, when it was by
no means uncommon for leave to appeal to the House of Lords to be granted in
part and refused in part, so as to allow for the possibility of a partial grant
of leave (see [56], [57], [60], below).
(2) The judge had granted contingent permission to
appeal to the Court of Appeal on both issues and the authority therefore
already had permission to pursue its appeal to the Court of Appeal on issue (i)
(see [40], [49], [61], below).
Notes
For civil appeals to the House of Lords direct from the
High Court, see 10 Halsbury’s Laws (4th edn reissue) para 361,
and 37 Halsbury’s Laws (4th edn reissue) para 1557.
For the Administration of Justice Act 1969, s 13, see
11 Halsbury’s Statutes (4th edn) (2000 reissue) 886.
Cases referred to in judgments
Harkness v Bell’s
Asbestos and Engineering Ltd [1966] 3 All ER 843, [1967] 2 QB 729, [1967] 2
WLR 29, CA.
Lake v Lake
[1955] 2 All ER 538, [1955] P 336, [1955] 3 WLR 145, CA.
Pritchard (decd),
Re [1963] 1 All ER 873, [1963] Ch 502, [1963] 2 WLR 685, CA.
R v Emmett [1997]
4 All ER 737, [1998] AC 773, [1997] 3 WLR 1119, HL.
R (on the
application of Zenovics) v Secretary of State for the Home Dept
[2002] EWCA Civ 273, [2002] All ER (D) 77 (Mar).
Cases referred to in skeleton arguments
A-G for Northern
Ireland v Gallagher [1961] 3 All ER 299, [1963] AC 349, [1961] 3 WLR 619,
HL.
Baker v R [1975]
3 All ER 55, [1975] AC 774, [1975] 3 WLR 113, PC.
Barnfather v
Islington Education Authority [2003] EWHC 418 (Admin), [2003] 1 WLR 2318.
Brownlee’s Application,
Re [1985] NI 339.
Cie Noga
D’Importation Et D’Exportation SA v Australia & New Zealand Banking Group
Ltd (No 3) [2002] EWCA Civ 1142, [2003] 1 WLR 307.
Dube v Secretary of
State for the Home Dept [2003] EWCA Civ 114, [2003] All ER (D) 163 (Feb).
George v Devon CC
[1988] 3 All ER 1002, [1989] AC 573, [1988] 3 WLR 1386, HL.
Grobbelaar v News
Group Newspapers Ltd [2002] UKHL 40, [2002] 4 All ER 732, [2002] 1 WLR
3024.
Hetherington (decd),
Re, Gibbs v McDonnell [1989] 2 All ER 129, [1990] Ch 1, [1989] 2 WLR 1094.
Onslow v IRC
(1890) 25 QBD 465, [1886–90] All ER Rep Ext 1212, CA.
R v Bedfordshire CC,
ex p DE (1 July 1996, unreported), QBD.
R v Berry (No
2) [1991] 2 All ER 789, [1991] 1 WLR 125, CA.
R v Dyfed CC, ex p S [1995]
FCR 113, CA.
R v East Sussex CC,
ex p D (15 March 1991, unreported), DC.
R v Essex CC, ex p C
[1994] 1 FCR 343; affd [1994] 1 FCR 773, CA.
R v Kent CC, ex p C
[1998] ELR 108.
R v Mandair
[1994] 2 All ER 715, [1995] 1 AC 208, [1994] 2 WLR 700, HL.
R v Rochdale MBC, ex
p S [1993] 1 FCR 306.
R v Warner (1663)
1 Keb 66, 83 ER 814.
139
R (on the
application of J) v Vale of Glamorgan CC [2001] EWCA Civ 593, [2001]
ELR 758.
R (on the
application of Marsh) v Lincoln District Magistrates’ Court [2003]
EWHC 956 (Admin), [2003] All ER (D) 28 (May).
Rootkin v Kent CC
[1981] 2 All ER 227, [1981] 1 WLR 1186, CA.
Surrey CC v Ministry
of Education [1953] 1 All ER 705, [1953] 1 WLR 516.
Appeal
The claimants, Mathew Eifon Jones, Byron Rees and Aled
James (by their litigation friends), brought proceedings for judicial review
against the defendant local education authority, Ceredigion County Council,
raising three issues. Collins J gave
judgment in favour of the claimants on 17 June 2004 ([2004] EWHC 1376 (Admin),
[2004] LGR 881 on two issues, indicating that he need not decide the third, and
by order dated 29 June 2004 (i) quashed the relevant decision of the authority;
(ii) granted a certificate pursuant to s 12 of the Administration of Justice
Act 1969 under which any of the parties to the proceedings could apply to the
House of Lords seeking permission to appeal to the House; and (iii) giving
permission to the authority to appeal to the Court of Appeal in the event that
leave to appeal to the House of Lords was not granted. On 24 November 2004 the Appeal Committee of
the House of Lords refused permission to appeal on issue (i), gave permission
on issue (ii), and refused permission on issue (iii) because it had not been
requested. The authority withdrew its
petition of appeal on issue (ii) and sought to pursue an appeal in the Court of
Appeal on issue (i). The Court of Appeal
heard argument on whether it had jurisdiction to entertain the appeal and
whether the authority was entitled to rely on the permission to appeal given by
Collins J, and it adjourned hearing argument on the merits of the appeal. The facts are set out in the judgment of
Waller LJ.
Nigel Giffin QC
and Jane McCafferty (instructed by Bronwen Morgan, Ceredigion)
for the appellant.
Andrew Nicol QC
and Nicholas Bowen (instructed by Russell Jones & Walker) for
the respondents.
Cur adv
vult
28 July 2005.
The following judgments were delivered.
WALLER LJ.
INTRODUCTION
[1] The appellant local education authority
seeks to appeal from the judgment of Collins J given on 17 June 2004 ([2004]
EWHC 1376 (Admin), [2004] LGR 881).
Collins J gave judgment for the respondents on their claim for judicial
review of the appellant’s decision that it was not under a duty, under s 509(1)
of the Education Act 1996, to provide the respondents with free school transport
to the school which they currently attend.
[2] The respondents identified four issues
potentially for the court to decide. (1)
Does the Court of Appeal have jurisdiction to entertain this appeal at
all? (2) If it does, is the appellant
entitled to rely on the permission to appeal given by Collins J? (3) If it cannot, ought the court to grant
permission to appeal? (4) If the court
does have jurisdiction and the appellant is either entitled to rely on the
140
permission to appeal granted by Collins J or is
granted permission to appeal by the court itself, did Collins J err in giving
an affirmative answer to the issue:
‘[I]s a local education
authority always bound to conclude that it is necessary to provide free
transport to a pupil under s 509(1) of the 1996 Act, if that pupil’s parents
would otherwise have a defence under s 444(4) of the 1996 Act to a prosecution
under s 444, in the event of the pupil failing to attend regularly at school?’
(referred to in the court below and in this judgment as
the ‘linkage issue’).
[3] We heard argument on the question whether
the Court of Appeal had jurisdiction to entertain the appeal at all before
hearing any further arguments. Having
heard argument on that issue we decided to reserve our judgment in order to
give the arguments further consideration.
At that stage both counsel were of the view that if we were to decide
that the Court of Appeal had jurisdiction we should also decide whether the
appellant already had permission to appeal pursuant to the order of Collins
J. Counsel were content that we should
resolve that issue by reference to the points made in their skeleton argument
without further oral submission. In the
result, at the conclusion of the hearing on 18 July 2005, we adjourned issues
(3) and (4) on the basis that it would be wrong for this court to get involved
in the merits of issue (4) if it were to decide that it had no jurisdiction to
entertain any appeal at all.
[4] The jurisdiction issue arises in this
way. The appellant obtained a so-called
‘leapfrog’ certificate from Collins J allowing it to apply direct to the House
of Lords for permission to appeal his decision to that tribunal by reference to
two issues decided by the judge. The
judge granted permission to appeal to the Court of Appeal if the House
of Lords did not grant permission. The
House of Lords granted permission to appeal to that tribunal by reference to
one issue, and subject to a condition that the appellant would pay the costs of
the respondents. The appellant withdrew
that appeal. The question is whether, by
virtue of s 13(2)(a) of the Administration of Justice Act 1969, whereby if
leave to appeal to the House of Lords is granted, ‘no appeal from the decision
of the judge to which the certificate relates shall lie to the Court of
Appeal’, the appellant is now precluded from bringing an appeal to the Court of
Appeal by reference to the issue on which the House of Lords refused leave.
THE FACTUAL BACKGROUND
[5] An agreed statement of facts and issues is
set out in Collins J’s judgment ([2004] LGR 881 at [2]). It is unnecessary to set out the same in
full. It is sufficient to summarise the
position as in the appellant’s skeleton argument. The respondents live in the appellant’s area,
the appellant is therefore the public authority responsible for any relevant
school transport obligations which may exist.
[6] There are three relevant schools: (i)
Ysgol Preseli (Preseli), a predominantly Welsh medium secondary school,
situated in the area of, and maintained by, Pembrokeshire County Council. The respondents attend that school, which is
approximately eight miles from their homes, under a preference expressed by
their parents under s 86 of the School Standards and Framework Act 1998. (ii)
Cardigan Secondary School (Cardigan), a predominantly English medium secondary
school, maintained by the appellant.
This school is less than three miles from the respondents’ homes. (iii)
Dyffryn Teifi School (Dyffryn
141
Teifi), a predominantly Welsh medium secondary
school, maintained by the appellant, which is approximately eighteen miles from
the respondents’ homes.
[7] The respondents could take up places at
Cardigan, without the need for any transport, or at Dyffryn Teifi, where they
could use the appellant’s free bus service.
Pembrokeshire County Council run a school bus service to Preseli. Spare seats on this service may be occupied
by children from Ceredigion if the appellant funds the cost. The appellant’s ‘Home to School Transport
Appeals Panel’ declined to provide the funding.
Before Collins J the respondents successfully contended that as a matter
of law the appellant was obliged to pay for their free transport to Preseli.
THE THREE ISSUES BEFORE COLLINS J
[8] Three issues were raised before Collins J,
as appears from the agreed statement of facts and issues.
(1) Issue 1: Is a local education authority
always bound to conclude that it is necessary to provide free transport to a
pupil under s 509(1) of the 1996 Act, if that pupil’s parents would otherwise
have a defence under s 444(4) of the 1996 Act to a prosecution under s 444 in
the event of the pupil failing to attend regularly at school?
(2) Issue 2: On the proper construction of s
444(4)(b)(iii) of the 1996 Act, is it possible for a local education authority
to have made suitable arrangements for a child to become a registered pupil at
a school, if that school would not be educationally suitable for the child
concerned?
(3) Issue 3: If the answer to issue 2 is ‘No’
then is the test of the school’s suitability for the purposes of s
444(4)(b)(iii): (i) whether it is suitable in the ordinary sense of the word;
or (ii) whether it is suitable in the specific sense provided for by s 7 of the
1996 Act, namely that it is efficient full-time education suitable to the
child’s age, ability and aptitude and to any special educational needs he may
have.
THE CONCLUSIONS OF COLLINS J
[9] In his judgment handed down on 17 June
2004, Collins J concluded as follows.
(1) Issue 1: Collins J answered this
(in favour of the respondents) in the affirmative, holding that it was always
necessary to provide transport under s 509 if otherwise the sanction against
truancy in s 444 would be unenforceable.
(2) Issue 2: Collins J answered this
question (also in favour of the respondents) in the negative, holding that the
arrangements to provide transport to a school which was not suitable for that
child would not be ‘suitable arrangements’ under s 444(4)(b)(iii).
(3) Issue 3: Collins J indicated that he was
against the appellant on this issue as well but considered that he did not need
to decide the issue.
[10] For the respondents to succeed in
quashing the refusal of the appellant to supply transport, Collins J had to
answer both the question on issue 1 and issue 2 in favour of the
respondents, which he did and that led to the quashing of that refusal.
[11] When the judgment was handed down the
appellant sought a leapfrog certificate under s 12(3)(a) of the 1969 Act. Collins J indicated that he was minded to
grant a certificate in relation to both issue 1 and issue 2 on the basis that
the relevant conditions laid down in s 12(1) and (3) of the 1969 Act were
met. But Collins J expressed the view
that he was not sure that the House of Lords would
142
want to take the matter on rather than have the
matter considered again by the Court of Appeal.
He made observations to that effect in the presence of Mr Bowen who
represented the respondents, who at that stage was not able to say whether his
clients would be likely to consent to the leapfrog procedure. Ultimately the respondents, by letter dated
24 June 2004, consented to the leapfrog procedure, that being a requirement as
will be seen under s 12.
[12] By order dated 29 June 2004 Collins J
ordered as follows:
‘1. The refusal on 24
September 2003 of the Defendant [appellant], through its Appeal Panel, to make
arrangements for the provision of transport to Preseli School for the Claimants
[respondents] pursuant to section 509(1) of the Education Act 1996 be quashed.
2. A certificate be
granted pursuant to section 12 of the Administration of Justice Act 1969.
3. In the event that
leave to appeal to the House of Lords is not granted, the Defendant do have
permission to appeal to the Court of Appeal.’
PROCEEDINGS IN THE HOUSE OF LORDS
[13] The appellant made clear that it was not
going to pursue issue 3. The appellant
however presented a petition to an Appeal Committee of the House of Lords (the
Appeal Committee) pursuant to s 13(1) of the 1969 Act on 28 July 2004. By letter dated 1 November 2004 the Judicial
Office of the House of Lords stated that: ‘The Appeal Committee has considered
this petition and decided to invite the Respondents to lodge objections.’ The letter further indicated that: ‘If no
objections are to be made, the Judicial Office must be informed as soon as
possible, and it is then likely that leave will be given …’
[14] The respondents, despite their consent to
the leapfrog procedure, put in objections to the grant of leave to appeal to
the House of Lords on both issues. On
the first issue (the linkage issue) they suggested that the arguments raised
‘should be subject to full analysis by the Court of Appeal’, setting out
various bases on which they said that should be so. On the second issue, the respondents
suggested they had conceded the leapfrog as they wished to be pragmatic and if
possible save public funds, particularly as the judge had indicated that he was
minded to grant the certificate, and in any event grant permission to appeal to
the Court of Appeal. But (on
reconsideration of the judgment) they urged their Lordships to indicate that it
was a matter with which the Court of Appeal rather than the House of Lords
could deal. The objections further made
clear that if the Appeal Committee were minded to grant leave, then leave
should only be granted on condition that the appellant paid the respondents’
costs of the appeal, or agreed to make no application for costs.
[15] On 24 November 2004 the Appeal Committee
decided as follows.
(1) Issue 1: ‘Permission to appeal on issue 1
is refused because the petition does not raise an arguable point of law of
general public importance which ought to be considered by the House at this
time, bearing in mind that the question at issue has been regarded as settled
for very many years.’
(2) Issue 2: ‘Permission for leave to appeal
on issue 2 has been given on the terms that the petitioners do pay the
respondents [sic] costs … in any event.’
(3) Issue 3: ‘Permission is refused to appeal
on issue 3 because the petitioners do not ask for it.’
[16] The appellant felt somewhat aggrieved
that permission to appeal had been granted subject to conditions without having
been given an opportunity to
143
make observations in relation to those
conditions. Reliance in that context was
placed on para 4.6(b) of the House of Lords Practice Directions applicable
to Civil Appeals (the Blue Book) by Mr Giffin QC in his letter to the
registrar of the House of Lords dated 15 December 2004. There is some doubt as to whether para
4.6(b), which is a paragraph which relates to general applications for
permission to appeal as opposed to the leapfrog procedure, applies to the
leapfrog procedure. Mr Giffin was in any
event invited to make observations. In
those observations drafted by Mr Giffin it was pointed out that the legislation
dealing with leapfrog appeals did not expressly contemplate the grant of leave
to appeal to the House of Lords on only one issue. It identified as the possible consequences of
the terms proposed by the Appeal Committee the following: (a) as permission has
been granted on issue 2, on one construction of s 13 of the 1969 Act, the
appellant would not now be able to appeal to the Court of Appeal on issue 1,
despite permission having been granted by Collins J, or (b) in the alternative,
on the true construction of s 13 of the 1969 Act, as the appellant had been
refused permission on issue 1, it could still exercise the permission granted
by the judge on this issue to appeal to the Court of Appeal.
[17] It pointed out how, on the basis of
construction, (a) the appellant might be left without an ability to appeal
issue 1. In the alternative, if (b) were
the correct construction, that might produce the undesirable outcome of two
concurrent appeals being pursued, one to the Court of Appeal on issue 1 and one
to the House of Lords on issue 2.
[18] The Appeal Committee having considered
the appellant’s observations ultimately confirmed its decision of 24 November
2004 by letter dated 11 January 2005.
The Appeal Committee did not indicate any view as to the effect of s 13
of the 1969 Act in those circumstances.
[19] The appellant did not wish to pursue the
appeal on issue 2 alone in the House of Lords and that petition of appeal has
been withdrawn. The reason for the
withdrawal matters not.
[20] The appellant in the result wished to
pursue an appeal in the Court of Appeal against the decision of Collins J by
reference to the first issue alone. They
suggest that Collins J has given permission to appeal his decision to the Court
of Appeal by reference to that issue, and that they should thus be free to do
so.
THE STATUTORY SCHEME FOR LEAPFROG APPEALS
[21] The leapfrog provisions are contained in
Pt II of the 1969 Act. Section 12
governs the grant of a certificate by the judge in any civil proceedings in the
High Court, which are proceedings which are before a single judge of that court
(see s 12(2)). Section 12(1) provides as
follows:
‘Where on the
application of any of the parties to any proceedings to which this section
applies the judge is satisfied—(a) that the relevant conditions are fulfilled
in relation to his decision in those proceedings, and (b) that a sufficient
case for an appeal to the House of Lords under this Part of this Act has been
made out to justify an application for leave to bring such an appeal, and (c)
that all the parties to the proceedings consent to the grant of a certificate
under this section, the judge, subject to the following provisions of this Part
of this Act, may grant a certificate to that effect.’
[22] Section 12(3) identifies the ‘relevant
conditions’ in relation to ‘a decision’ of the trial judge, and provides as
follows:
144
‘Subject to any Order in
Council made under the following provisions of this section, for the purposes
of this section the relevant conditions, in relation to a decision of the judge
in any proceedings, are that a point of law of general public importance is
involved in that decision and that that point of law either—(a) relates wholly
or mainly to the construction of an enactment or of a statutory instrument, and
has been fully argued in the proceedings and fully considered in the judgment
of the judge in the proceedings, or (b) is one in respect of which the judge is
bound by a decision of the Court of Appeal or of the House of Lords in previous
proceedings, and was fully considered in the judgments given by the Court of
Appeal or the House of Lords (as the case may be) in those previous
proceedings.’
[23] Section 13(1) of the 1969 Act provides
that in any proceedings where the judge grants a certificate under s 12, any of
the parties to the proceedings may make an application to the House of Lords
seeking permission for leave to appeal to that House.
[24] Section 13(2) is the key subsection so
far as the jurisdiction is concerned. It
provides as follows:
‘Subject to the
following provisions of this section, if on such an application it appears to
the House of Lords to be expedient to do so, the House may grant leave for an
appeal to be brought directly to the House; and where leave is granted under
this section—(a) no appeal from the decision of the judge to which the
certificate relates shall lie to the Court of Appeal, but (b) an appeal shall
lie from that decision to the House of Lords.’
[25] Section 13(5) sets out the circumstances
under which an appeal to the Court of Appeal lies from a decision of the judge
in respect of which a certificate has been granted and provides as follows:
‘Without prejudice to
subsection (2) of this section, no appeal shall lie to the Court of Appeal from
a decision of the judge in respect of which a certificate is granted under
section 12 of this Act until—(a) the time within which an application can be
made under this section has expired, and (b) where such an application is made,
that application has been determined in accordance with the preceding
provisions of this section.’
[26] Section 15 deals with cases excluded from
s 12 and provides as follows:
‘(1) No certificate
shall be granted under section 12 of this Act in respect of a decision of the
judge in any proceedings where by virtue of any enactment, apart from the
provisions of this Part of this Act, no appeal would lie from that decision to
the Court of Appeal, with or without the leave of the judge or of the Court of
Appeal.
(2) No certificate shall
be granted under section 12 of this Act in respect of a decision of the judge
where—… (b) by virtue of any enactment, apart from the provisions of this Part
of this Act, no appeal would (with or without the leave of the Court of Appeal
or of the House of Lords) lie from any decision of the Court of Appeal on an
appeal from the decision of the judge.
(3) Where by virtue of
any enactment, apart from the provisions of this Part of this Act, no appeal
would lie to the Court of Appeal from the decision of the judge except with the
leave of the judge or of the Court of Appeal, no certificate shall be granted
under section 12 of this Act in respect of that
145
decision unless it
appears to the judge that apart from the provisions of this Part of this Act it
would be a proper case for granting such leave.
(4) No certificate shall
be granted under section 12 of this Act where the decision of the judge, or any
order made by him in pursuance of that decision, is made in the exercise of
jurisdiction to punish for contempt of court.’
THE APPELLANT’S SUBMISSIONS ON THE JURISDICTION POINT
[27] Mr Giffin’s submissions developed during
the course of oral argument from those contained in his written
submissions. He accepted that the Court
of Appeal’s jurisdiction in circumstances where the House of Lords has granted
leave on any issue turns on the proper construction of s 13(2)(a) of the 1969
Act. He accepted that, on the face of
it, it could be said that (1) leave had been granted under s 13; (2) that the
decision to which the certificate in this case related under s 12 was to the
quashing of the refusal to provide free transport as recorded in the order of
the court of 29 June 2004 (quoted in [12], above); and (3) thus that prima
facie no appeal lies to the Court of Appeal from that decision.
[28] However, he argued that the 1969 Act does
not expressly contemplate the circumstances where the House of Lords has
granted permission to appeal on one issue but refused on another. He suggested that the design and purpose of
the statutory mechanism once a leapfrog certificate had been granted was that
an appellant should have his appeal heard, either by the House of Lords (if the
appellant applied to the House of Lords and was granted permission), or by the
Court of Appeal (if the appellant did not seek permission to appeal to the
House of Lords or was refused permission).
If, Mr Giffin submitted, by the process of hiving-off an issue under a
leapfrog certificate the appellant is deprived of any appeal at all on a
particular issue, then the appellant is worse off than he would have been had
no certificate been granted, or indeed if the House of Lords had refused
permission altogether, which, he suggested, would be an anomaly.
[29] He further submitted that there should be
a ‘strong presumption that except by specific provision the legislature will
not exclude a right of appeal as of right or with leave where such a right is
ordinarily available’ (see Lord Steyn in R v Emmett [1997] 4 All ER 737
at 742, [1998] AC 773 at 781–782).
[30] So, he submitted, that to avoid the
anomaly and the injustice the word ‘decision’ should not be construed as
referring to the ‘judgment or order’ of the court but should be construed as
referring to a decision on a particular issue.
He pointed out that in s 15(4) of the 1969 Act a distinction is drawn
between ‘decision’ and ‘order’, and he suggested that assisted his
argument. This argument became further
refined in the course of submissions. Mr
Giffin would, I think, accept that the House of Lords must have power to grant
permission subject to terms as to the arguments that it was prepared to
hear. His argument could not go so far
as to suggest that in all circumstances in which the House of Lords identified
grounds or reasons on which it was not prepared to hear argument, there would
then be a decision which an appellant, who has utilised the leapfrog system,
could take to the Court of Appeal based on those arguments.
[31] His argument, as refined, came, I think,
to this. If it had been appreciated by
the appellant that far from the respondents consenting to the leapfrog system,
they intended to suggest that at least one or other of the issues should be
argued in the Court of Appeal, consideration could have been given to seeking
declarations from Collins J. In the
circumstances of this case, Mr Giffin suggested it would have been natural and
appropriate to reflect by declarations that there
146
were in reality two decisions leading to a third
decision to quash. For the respondents
to succeed before Collins J they needed to succeed on issue 1. If they succeeded on issue 1, the response of
the appellant was to raise issue 2. Only
if the respondents were successful on both issues would the decision to refuse
free transport have been quashed. So, Mr
Giffin argued, it would have been perfectly appropriate for Collins J to have
granted a declaration reflecting the effect of his decision on issue 1 and a
declaration reflecting his finding on issue 2, resulting in a final order
resulting in the quashing of the decision as set out in para 1 of the present
order.
[32] Mr Giffin submitted that the House of
Lords should be taken to have treated Collins J as having made declarations on
issue 1 and issue 2. The House of Lords
should be taken to have recognised that the certificate related to two
decisions and on that basis Mr Giffin submitted that s 13(2)(a) of the 1969 Act
should be applied so as to hold that: (1) leave had only been granted under s
13 by reference to that part of the certificate which related to issue 2; and
(2) thus the prohibition on appealing to the Court of Appeal only related to
that decision of Collins J in so far as the certificate related to that
decision.
RESPONDENTS’ SUBMISSIONS
[33] Mr Nicol QC suggested that the starting
point for consideration of the jurisdiction issue was in fact s 16(1) of the
Supreme Court Act 1981. By that section
it is provided that:
‘Subject as otherwise
provided by this or any other Act (and in particular to the provision in
section 13(2)(a) of the Administration of Justice Act 1969 excluding appeals to
the Court of Appeal in cases where leave to appeal from the High Court directly
to the House of Lords is granted under Part II of that Act) … the Court of
Appeal shall have jurisdiction to hear and determine appeals from any judgment
or order of the High Court.’
[34] He submitted that the only ‘judgment or
order’ made by Collins J in the present case is that set out at [12], above, ie
the order at page 18 of the appeal bundle.
He submitted that there is a well-known principle that an appeal is
against orders and not reasons and referred us to Civil Procedure (2005)
vol 1, p 1452 (para 52.0.13) (the White Book).
He submitted that the matter can be tested by supposing that Collins J
had decided the linkage issue in favour of the respondents, but the second
issue before him in favour of the appellant.
On that basis, Collins J would have ordered that the application for
judicial review would be dismissed. Mr
Nicol submitted that the appellant then would have been unable to appeal the
judge’s decision on the linkage issue, since it would have had no complaint on
the judge’s order (see Lake v Lake [1955] 2 All ER 538, [1955] P 336).
[35] Strictly, of course, he would accept that
s 16(1) of the 1981 Act does not preclude an appeal by the appellant in this
case because the appellant is seeking to challenge the order made by Collins J
even as defined by Mr Nicol. But he
submitted that s 16(1) provided the background to the way in which ss 12 and 13
of the 1969 Act should be construed. He
submitted that it is clear that in those sections the ‘decision’ means the
‘judgment’ or ‘order’. He submitted the
distinction drawn in s 15(4) between ‘decision’ and ‘order’ was understandable
in the context of that subsection, dealing as it does with contempt, and was
not a pointer to the word ‘decision’ meaning anything other than the ‘judgment
or order’ in ss 12 and 13. Indeed, he
submitted that the contrast in s 12(3) of the
147
1969 Act between use of the word ‘judgment’ in paras
(a) and (b) where that word clearly meant ‘reasoned judgment’ rather than
‘final decision’, and the use of the word ‘decision’ elsewhere, demonstrated
that ‘decision’ was equivalent to ‘judgment or order’ as used in s 16(1) of the
1981 Act.
[36] He did accept however, that the position
might have been different if Collins J had granted declarations in relation to
issue 1 and issue 2 and granted certificates separately for each. But, he submitted, Collins J was never asked to
make declarations or certify separately and the court is not in a position to
treat the order made by Collins J as if he had made declarations, and/or as if
he had certified separately.
DISCUSSION AND CONCLUSION
[37] It seems to me that the policy lying
behind the leapfrog provisions was to cut out one layer of appeals. Any construction that left part of an appeal
in the Court of Appeal and part in the House of Lords would not fulfil that
purpose. Mr Giffin would have to accept
that on his construction he could have continued to pursue his appeal to the
House of Lords on issue 2 and at the same time pursued an appeal on issue 1 in
the Court of Appeal, both being concerned in the end with the question whether
the decision of the appellant should be quashed. That, as it seems to me, would be a strange
result.
[38] It might well have been permissible for
the judge to grant declarations in this instance, but it is most unlikely that
he would in fact have granted a certificate on each at all if there had been
the contest as to whether one or other of the issues should go to the Court of
Appeal before going to the House of Lords.
But the real point is that he did not grant declarations and it
does not seem to me open to this court to construe his order as if he had, or
to construe his certification as in effect two certificates. In addition it is not possible to construe
the way the House of Lords dealt with permission as having treated Collins J as
having given ‘decisions’ on each issue and as having certified separately for
each. Finally it is certainly not open
to this court to construe the words ‘decision’ as including simply ‘grounds’ or
‘reasons’.
[39] In the circumstances, although I feel
some sympathy with the appellant in this case, that sympathy flows from the
respondents’ attitude varying as between when they consented to the leapfrog
procedure and when they got to the House of Lords. Even that said, having obtained a certificate
and having pursued an application for permission to appeal to the House of
Lords so as to miss out one layer of appeal, it seems to me that the appellant
was always at risk that the House of Lords might decide to allow argument by
reference to one ground alone. Section
13(2)(a) of the 1969 Act as it seems to me was intended to preclude an appeal
taking place at two levels at the same time, and in making their application to
the House of Lords the appellant was placing its fate in the hands of the House
of Lords. It is only consistent with an
interpretation that precludes appeals taking place at two levels to hold that a
refusal by the House of Lords to hear argument on one aspect will lead to a
loss of a right to appeal that aspect.
In my view this is not to construe the provisions as taking away a right
of appeal, it is to construe the provisions so as to provide the opportunity to
miss out one layer of appeal. Once an
appellant has elected to go for one layer, he will be bound by the decision of
that layer as to what arguments can be run.
[40] I would accordingly dismiss the appeal on
the basis that the Court of Appeal has no jurisdiction, and on that basis the
point whether permission to appeal to the Court of Appeal was granted does not
arise. But having regard to
148
the views expressed by Maurice Kay LJ and Sir
Christopher Staughton, I should say that if I had been of their view I would
also agree with Maurice Kay LJ on his construction of the judge’s order and
hold for the reasons he gives that the judge had granted permission to appeal.
MAURICE KAY LJ.
[41] As the facts, the statutory provisions
and the rival submissions have been set out with such clarity by Waller LJ, I
can be brief in giving the reasons why I respectfully disagree with his
conclusion. I say at once that I am
unattracted by the suggestion that we should view the case as if Collins J had
made separate declarations in relation to issue 1 and issue 2. I agree that that would be an artificial
basis upon which to decide the important question which now arises. It should not turn on anything as
adventitious as that.
[42] The crucial provision is s 13(2) of the
Administration of Justice Act 1969 and in particular the words: ‘and where leave is granted under this
section—(a) no appeal from the decision of the judge to which the certificate
relates shall lie to the Court of Appeal …’
[43] I am unpersuaded that, in this context,
the word ‘decision’ can only mean ‘judgment or order’ in the sense in which
those words are used in s 16(1) of the Supreme Court Act 1981.
[44] It seems unlikely that in 1969 Parliament
contemplated the possibility that a certificate under s 12(1) might relate to
two issues or grounds in respect of which the House of Lords might grant leave
for one but refuse it for the other. We
are told that the researches of counsel have failed to unearth a previous
example of such a mixed outcome.
However, whether as a result of changing practice or increasing
complexity, it seems to me that such a situation is likely to recur. For the moment, I shall assume that Collins J
granted permission to appeal to the Court of Appeal in respect of both
issues. On such an assumption he must
have considered that in respect of each there was a real prospect of success or
some other compelling reason justifying the grant of permission. It would seem to me to be surprising if, in
such circumstances, a partial grant of leave by the House of Lords were to
exclude all possibility of the further pursuit of another ground of appeal
which had been considered to have a real prospect of success. To take an example, the House of Lords may
grant leave in relation to a ground which plainly involves a matter of general
public importance and which calls for an authoritative decision at that level
at the earliest opportunity. The second
ground may be highly meritorious but case specific and not of general public
importance. I would consider it
regrettable if the matter could not proceed first by way of the determination
of the matter of general public importance in the House of Lords and,
thereafter, and if still relevant, by way of the determination of the second
ground in the Court of Appeal. I am
untroubled by the theoretical possibility that the two appeals might be
proceeding in two places at the same time.
It would be perfectly possible, for example, for the Court of Appeal to
stay the appeal on the second ground pending the resolution of the appeal on
the first ground in the House of Lords.
[45] These considerations dispose me to adopt
a broad construction of s 13(2) if that is at all possible. Whilst I accept that the context is not
directly in point, I draw some support from the statement of Lord Steyn in R
v Emmett [1997] 4 All ER 737 at 742, [1998] AC 773 at 781–782, that—
149
‘[t]here is a strong
presumption that except by specific provision the legislature will not exclude
a right of appeal as of right or with leave where such a right is ordinarily
available.’
[46] Mr Giffin QC also seeks to derive further
support for this approach from R (on the application of Zenovics)
v Secretary of State for the Home Dept [2002] EWCA Civ 273, [2002] All ER (D)
77 (Mar). Again, the situation is not
wholly analogous, not least because one of the considerations in Zenovics’s
case was that the narrower construction would have implications relating to the
international obligations of the United Kingdom under the Convention Relating
to the Status of Refugees (Geneva, 28 July 1951; TS 39 (1953); Cmnd 9171). Nevertheless, it does illustrate a reluctance
on the part of the courts to acquiesce in the loss of a right of appeal which
would have been the result of a stricter, less purposive construction.
[47] In my judgment, the conclusion to which
Waller LJ has come with, it seems, a measure of reluctance, is not one which is
forced upon us by the statutory language.
The 1969 Act contains no definition of ‘decision’. Nor does the Act expressly import the words
‘order or judgment’ from ss 3 and 4 of the Appellate Jurisdiction Act
1876. Moreover, I find some significance
in the fact that s 15(4) of the 1969 Act uses the words ‘decision’ and ‘order’
differentially. The context is a narrow
and exclusionary one (contempt of court) but the language at least justifies
the observation that the assimilation of ‘decision’ with ‘judgment or order’
was probably not in the minds of the draftsman or Parliament.
[48] In the present case, it is common ground
that if the appellant local authority were to succeed on issue 1 or issue 2,
the quashing order made by Collins J would have to be set aside. Thus, at no stage could it have been said
that the pursuit of an appeal on issue 1 would have been wholly academic. If the appeal to the House of Lords on issue
2 had been pursued and had been successful, I can conceive of no circumstances
in which any stay on the appeal to the Court of Appeal on issue 1 would have
been lifted. It seems to me that the
ultimate purpose of s 13(2)(a) of the 1969 Act is to ensure that there is no
further litigation in the Court of Appeal of a matter for which leave has been
granted for an appeal to the House of Lords.
Consequently, I would construe the words ‘decision of the judge to which
the certificate relates’ as limited to a decision or part of a decision in
respect of which the House of Lords has granted leave for an appeal. I would be content to leave it to the Court
of Appeal, by means of the procedural weapons at its disposal, to ensure that
untimely or pointless appeals to it are not further pursued. Accordingly, I would allow the present appeal
of the appellant authority on the first of the four issues identified by Waller
LJ.
[49] The next question is whether the
assumption that Collins J granted permission to appeal on the ground in respect
of which the House of Lords later refused leave as well as on the ground in
respect of which it granted leave is correct.
Mr Nicol QC took us to the transcript of the discussion which followed
the judgment of Collins J. He submits
that it is susceptible to the interpretation that Collins J was granting
contingent permission to appeal to the Court of Appeal only in relation to the
second issue and not in relation to the first.
Perhaps it is susceptible to that interpretation. However in my judgment, when that discussion
is considered by itself and, even more so, when it is considered in conjunction
with the order and all the surrounding circumstances, the better
150
view is that Collins J did indeed grant contingent
permission in relation to both issues. I
would therefore hold that the appellant local authority has permission to
pursue its appeal to this court on the ‘linkage issue’. In my judgment, it is now appropriate for
that appeal to be heard. Nothing I have
said in the context of considering the jurisdiction issue should be taken as
indicating any view as to the merit of this appeal.
SIR CHRISTOPHER STAUGHTON.
[50] It is said that the County Council has no
right to appeal to this court following the proceedings under the
Administration of Justice Act 1969. The
relevant provisions for this purpose are as follows:
‘13. Leave to
appeal to House of Lords.—(1) Where in any proceedings the judge grants a certificate
under section 12 of this Act, then, at any time within one month from the date
on which that certificate is granted or such extended time as in any particular
case the House of Lords may allow, any of the parties to the proceedings may
make an application to the House of Lords under this section.
(2) Subject to the
following provisions of this section, if on such an application it appears to
the House of Lords to be expedient to do so, the House may grant leave for an
appeal to be brought directly to the House; and where leave is granted under
this section—(a) no appeal from the decision of the judge to which the
certificate relates shall lie to the Court of Appeal, but (b) an appeal shall
lie from that decision to the House of Lords.
(3) Applications under
this section shall be determined without a hearing.
[51] What happened on the application was that
their Lordships granted leave for an appeal to be brought directly to the House
on the second issue, as follows:
‘Issue 2—On the
proper construction of section 444(4)(b)(iii) of the Education Act 1996, is it
possible for a local education authority to have made suitable arrangements for
a child to become a registered pupil at a school, if that school would not be
educationally suitable for the child concerned—Permission for leave to appeal
on issue 2 has been given on the terms that the petitioners do pay the
respondents costs before this House in any event.’
[52] Leave was refused for the other two
issues:
‘Issue 1—Is a
local education authority always bound to conclude that it is necessary to
provide free transport to a pupil under Section 509(1) of the Education Act
1996 if that pupil’s parents would otherwise have a defence under Section
444(4) of the 1996 Act to a prosecution under Section 444, in the event of the
pupil failing to attend regularly at school—Permission to appeal on issue 1 is
refused because the petition does not raise an arguable point of law of general
public importance which ought to be considered by the House at this time,
bearing in mind that the question at issue has been regarded as settled for
very many years …
151
Issue 3—The test
of the school’s suitability for the purpose of Section
444(4)(b)(iii)—Permission is refused to appeal on issue 3 because the
petitioners do not ask for it.’
[53] In the event the Council did not proceed
with issue 2 in the House of Lords, and abandoned it. It may be that the Council took the view that
Collins J correctly decided that issue.
[54] The Council thereupon sought to pursue an
appeal on issue 1 to this court. The
judge’s order at first instance provided: ‘3. In the event that leave to appeal
to the House of Lords is not granted, the Defendant do have permission to
appeal to the Court of Appeal.’
[55] The argument for the respondents is that
‘the decision of the judge’ in s 13(2)(a) of the 1969 Act, and ‘the decision’
in s 13(2)(b) can only refer to one, undivided, decision, which must be the
order of the judge that the refusal to make arrangements for the provision of
transport be quashed. The contrary
argument is that the judge decided two issues in reaching his conclusion, that
is to say the first and second issues as set out above; if either of them is
reversed, the Council should succeed.
The Council has abandoned its attempt to reverse the judge’s conclusion
on issue 2, but seeks to achieve a different result on the first issue.
[56] I agree that s 13(2) of the 1969 Act,
considered on its own with no other guidance, appears to provide that where
any leave is granted under the section, then an appeal lies from the
decision to the House of Lords, and no appeal lies to the Court of Appeal. But another possible reading is that an
appeal shall lie on some issues to the House of Lords and shall lie on another
issue or issues to the Court of Appeal, if so ordered. It may be that in 1969 it was not usual for
leave to appeal to the House of Lords—or for that matter to the Court of
Appeal—to be granted in part and refused in part. But it is by no means uncommon today. The 1969 Act is to be construed in the
circumstances of today, so as to allow for the possibility of a partial grant
of leave. I would readily apply that
interpretation.
[57] It is plain, if I may say so, that the
latter interpretation was adopted by the House of Lords. Otherwise they would have been depriving the
Council of a right to appeal to the Court of Appeal, for which the judge had
granted leave in the event that leave to appeal to the House of Lords was
not granted; and they would have done so without a hearing.
[58] A second argument on behalf of the
respondents is that the judgment of Collins J made only one order, that the
refusal to make arrangements for the provision of transport be quashed. It is said that the order could not be
severed so that in part it was to be considered by the House of Lords and the
remainder by the Court of Appeal. It was
said for the Council that such a process could be achieved if the judge had
made two declarations, one about the first issue and the other about the
second. In point of form the judge did
not do that. But in fact he stated quite
plainly what he had decided on each of those two issues.
[59] I would not attach any importance to the
difference between a formal declaration on the one hand, and a mere statement
of the judge’s conclusion on the other, at any rate in this context. Each of the two issues was essential to the
success of the respondents, as the judge clearly showed. The authority on which I would rely is what
Lord Denning MR said in Harkness v Bell’s Asbestos and Engineering Ltd
[1966] 3 All ER 843 at 845–846, [1967] 2 QB 729 at 736:
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‘It can at last be
asserted that “it is not possible … for an honest litigant in Her Majesty’s
Supreme Court to be defeated by any mere technicality, any slip, any mistaken
step in his litigation.” [See Re
Pritchard (decd) [1963] 1 All ER 873 at 879, [1963] Ch 502 at 518
per Lord Denning MR.]’
Even a council can be an honest litigant.
[60] I would hold that the Council is not
prevented from bringing this appeal in this court, by the provisions in the
1969 Act.
[61] So far as permission to appeal is
concerned, for the reasons given by Maurice Kay LJ, I agree that the judge
granted permission.
KUJUA STYLE TAMU ZA KUMKUNA MSICHANA AKAKUPENDA DAIMA ASIKUSALITI BONYEZA HAPA CHINI
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