District Judge Neil Hickman looks at the effects of bringing a secure tenancy to an end

The case of Harlow District Council v Hall [2006] EWCA Civ 156, [2006] All ER (D) 393 (Feb), deals with two important points of principle in relation to secure tenancies. If it is taken as seriously as it should be, and would be if it concerned an articulate section of the public, it will force a significant change to the everyday practice of the county courts.


The reasoning of a strong Chancery Court of Appeal (Chancellor Sir Andrew Morritt, Lord Justice Chadwick and Sir Paul Kennedy) is equally applicable to assured tenancies. It is to be hoped that, unlike all too many housing cases, Hall finds its way into mainstream law reports.


Mr Hall was a secure tenant. He got into arrears with his rent, and on 12 January 2005 District Judge Philip Pelly made what no doubt was described at the time as a 'suspended order'. The precise wording of the order is important, as will appear. It was that Mr Hall 'give the claimant possession of [the property] on or before 9 February 2005... This order is not to be enforced so long as the defendant pays the claimant the rent arrears... and costs totalling £1,919 by the payments set out below in addition to the current rent'.


On 10 February, Mr Hall was declared bankrupt on his own petition, and on 28 May he applied for the possession order to be discharged on the grounds that his liability for rent was provable in the bankruptcy and the possession order was precluded as 'a remedy against his property'. Neither District Judge Wilhemina Shanks nor Judge Patrick O'Brien on appeal was sympathetic to the application. Judge O'Brien set out the position with great clarity: 'This plainly is not a case where the local authority are seeking to exercise a remedy against the property, far less the person, of the bankrupt. The situation is that his right to be in possession... has been ended... He has been given the opportunity to cling on to occupation... so long as he pays ... at the rate of the current rent plus £10 per week. I accept the submission that he has a choice as to whether he pays the extra money or leaves and finds other accommodation. It is not enforcing a remedy. The remedy has already been granted.'


The appeal court took the same view. The Chancellor observed at paragraph 17 of his judgment that this was entirely consistent with the purpose of section 285 of the Insolvency Act 1986, namely preserving the estate of the bankrupt for the benefit of his unsecured creditors.


Both the Chancellor and Lord Justice Chadwick pointed out that their conclusions were consistent with Ezekiel v Orakpo [1977] QB 260, where the appeal court held that forfeiture for non-payment of rent was not to be treated as 'a remedy against the property of the debtor in respect of a debt' for the purposes of what is now section 285.


Hall decisively rejects an argument that has been advanced in some quarters that the bankruptcy of the tenant in some sense removes the rent arrears and with them the possession order. As the Chancellor crushingly pointed out at paragraph 11: 'The fact that those debts become provable in the bankruptcy of Mr Hall does not have the effect, as counsel submitted in his oral argument, of "paying them off".'


Both judges were clear that the result would have been the same if Mr Hall's bankruptcy had occurred before the date for giving up possession rather than, as was the case, the day after. Could the court have granted a possession order if the bankruptcy had preceded the possession hearing? The answer must be yes. Ground 1 in schedule 2 of the Housing Act 1985, relating to secure tenancies, reads: 'Rent lawfully due from the tenant has not been paid.' That continues to be the case despite the making of a bankruptcy order. Similarly, with an assured tenancy, ground 11 in schedule 2 of the Housing Act 1988 would remain available: 'Whether or not any rent is in arrears on the date on which proceedings for possession are begun, the tenant has persistently delayed paying rent which has become lawfully due.'


However, there is another aspect to Hall, which potentially affects virtually every case in the rent possession list. As the Chancellor makes clear, it was assumed in the county court that the order was a 'suspended possession order' such that the tenancy would not terminate unless and until Mr Hall broke the conditions of the suspension. Unfortunately, the appeal court clarifies that the standard form of wording used in Hall and now in general use in the county court does not have that effect. There turns out to be a dramatic difference in effect between the wording in Hall and the wording that the landlord recover possession but that the order 'shall not be enforced for 28 days in any event and for so long thereafter as the defendant punctually pays [current rent plus £x per week]', considered in Thompson v Elmbridge BC [1987] 1 WLR 1525 and Greenwich LBC v Regan (1996) 28 HLR 469.


The Hall order actually terminated the tenancy on 9 February. The termination was not suspended at all.


Bringing a secure tenancy to an end has a drastic effect, even if the former tenant is allowed to stay in possession on terms. He is no longer a tenant, but a 'tolerated trespasser' (see Burrows v Brent LBC [1996] 1 WLR 1448). He cannot enforce the landlord's repairing obligations (Dunn v Bradford MDC [2002] EWCA Civ 1137, The Times, 5 September, 2002). On divorce, his spouse cannot seek a transfer of tenancy, for there is nothing to transfer (Thompson). On his death, members of his family cannot succeed to it for the same reason (Hawkins v Newham LBC [2005] EWCA Civ 451, The Times, 3 May, 2005).


Norwich CC v Famuyiwa [2004] EWCA Civ 1770, The Times, 24 January, 2005, prompted suggestions that the courts should avoid making 'suspended' orders and should make 'postponed' orders (in the Regan form) instead. Because the standard form of order on the court's computers is that used in Hall, those suggestions have been universally ignored. However, unless the consequences of that form of order are actually intended, its use needs to be avoided, however administratively inconvenient that may be for the Courts Service.


District Judge Neil Hickman sits at Milton Keynes County Court