28 August 2014 | Comment

Housing Law Bulletin - August 2014

We hope that all of our readers have enjoyed the summer break even though the good weather seems to have deserted us for a while.

In a rather jam-packed bulletin we will be looking at a number of recent court decisions, including an important case which may help us deal more quickly with weak disability discrimination cases. We have covered some decisions of the Upper Tribunal concerning whether shared ownership lessees can exercise the right to manage, and on how disturbance compensation should be calculated. There has also been an important case for any social landlords with private lettings arms on whether tenants can use human rights defences where the landlord is not a public sector landlord.

The Welsh Government is consulting on the format of the new occupation agreements which will be in place once the Renting Homes (Wales) Bill 2015 becomes law. They are also consulting on “notifiable events” in their capacity as regulator. Full details are on the WG website.

We would like to welcome Sarah Scriven as a new member of our Housing Management team. Sarah joins us as a paralegal, having studied law at Exeter University and completed the LPC at Cardiff University. Sarah is from Hereford and was working at the Citizens Advice Bureau in Herefordshire in the Money Advice Department before joining the firm. Sarah enjoys watching the rugby and supports Worcester Warriors, even if they only won one game this season.

Sarah’s claim to fame is that she was taught to play guitar by Pete, the lead guitarist of Deep Purple. We’re looking forward to her next performance!


Equality Act defences treated in the same way as Human Rights Act defences

The Court of Appeal has ruled that a judge was right to deal with an Equality Act Defence in the same way as a Human Rights one, by dismissing it at an early stage of proceedings where the judge felt that it was not “seriously arguable.”

In Akerman-Livingstone v Aster Communities [2014] EWCA Civ 1081, L had been temporarily housed by the LA, who had placed him in a flat owned by Aster. He suffered from a duress stress disorder. When offered permanent accommodation, he could not cope with making the decision. The housing authority determined that its duty under the HA 1996 had ended, and asked Aster to evict L so that the flat was available for other homeless applicants. Aster did as directed.

L raised a defence arguing that seeking possession amounted to discrimination by reason of disability. The judge considered that the case was not seriously arguable and dismissed the claim with an immediate possession order rather than allowing the argument to proceed to trial. This is, of course, how courts deal with Human Rights challenges since Pinnock and Powell (what counsel for L described as the “eye of the needle” test!). L appealed.

The Court of Appeal held that when looking at disability discrimination, the same type of “proportionality” exercise applies. The Equality Act prohibits discrimination except where the alleged discriminator can demonstrate that the treatment is “a proportionate means of achieving a legitimate aim”. The court held that this amounted to the same test as the article 8 need for a tenant to show that the proposed eviction went beyond what is “necessary in a democratic society”.

In looking at the required balancing exercise, what the Court also noted was that the interest of a social landlord in obtaining possession (and making properties available for others in need) is a strong one which will outweigh most, but not all, potential discrimination arguments. It was relevant too that, once evicted, L would still be owed the more limited housing duty by the LA to secure accommodation for him for a reasonable period and provide assistance in finding himself a property, and that there were means within the Housing Act 1996 for him to challenge the LA’s decisions on whether its duties were indeed discharged. On that basis, even if the facts were as L argued them to be, the case could not succeed.

We understand that leave to appeal has been granted and await the outcome with interest. If this case is upheld it will hopefully mean that only the strongest disability discrimination arguments will reach a full hearing and that the weak cases will be dismissed earlier and with much reduced cost.


Welsh Government launches consultation on model contracts

The Welsh Government has issued a consultation on the structure and layout of a model contract in readiness for the introduction of the Renting Homes (Wales) Bill 2015. The consultation documents are available here.

The consultation envisages no fewer than four documents, comprising; (1) a key matters document setting out details such as the landlord, the tenant, the property and the rent; (2) the contract itself; (3) a summary of the contract; and (4) an easy read guide. Views are sought, not as to the terms themselves at this stage, but as to the structure and layout, and particularly as to whether the documents are easy to understand and use.

The consultation closes on 14 October.


Home loss and disturbance payments

A case decided by the Upper Tribunal in May demonstrates usefully what will happen where a tenant is entitled to a disturbance payment but the amount cannot be agreed.

The case concerned a tenant who was moved during the course of a regeneration project from a two bed flat to a three bed house. She was entitled to the standard home loss payment of £4,700 which was duly paid, with a debt to the council being deducted from it. This was not an issue.

She was also entitled to a disturbance payment – which is compensation for the “reasonable expenses” of removal. She submitted a substantial claim for over £6,000 including new furniture (on the basis it wouldn’t fit in the new property or was damaged by the removal company), curtains, floor coverings, white goods and sky installation.

The tribunal looked at each element of the claim, and allowed a total of £2,207. It allowed certain amounts for flooring, new curtains and poles, and for beds which did genuinely need to be replaced as a result of the move. It did not allow certain items which were expenses which were incurred because the existing items were old, and where the evidence demonstrated that despite what the claimant said, the items had been moved to her new property undamaged. The tribunal also held that a number of items were unproven, or that the evidence on them was unsound.

The tribunal commented that whilst it would not want applicants to be deterred from making an application for compensation to be determined, it had the power to award costs against applicants where their conduct was unreasonable. It did not do so in this case, although it did not appear to be far away from doing so.

It is a useful demonstration of how to look at whether a compensation claim is reasonable, and of what will happen if a claim cannot be agreed.

Ogunseye v Newham [2014] UKUT 232


Shared ownership lessees will have the Right to Manage

The Commonhold and Leasehold Reform Act 2002 gives long leaseholders the 'right to manage'. In summary, this means that if sufficient leaseholders in a building want to do so, they can force the transfer of the management function from the landlord to a company set up and run by themselves – known as a 'Right to Manage company'.

Leaseholders exercise this right by serving notice on the landlord, and no order is required for this to happen. Neither do leaseholders have to prove mismanagement – they can opt to take over management whether the landlord’s management has been good or bad.

The question which arose for decision by the Upper Tribunal in Corscombe Close Block 8 RTM Ltd v Roseleb Ltd [2013] was whether a shared ownership lease is a “long lease” for this purpose.

We already know that a shared ownership lease will be an assured tenancy. The tribunal decided that it is also a long lease for the purpose of the right to manage, so shared ownership lessees will be able to exercise the Right to Manage.

This will be a concern for social landlords who operate shared ownership leases, particularly so where blocks of flats are partly shared ownership and partly occupied by tenants on assured tenancies – as if management were taken away by a right to manage notice, it may affect the ability to fulfil obligations under the tenancies. If the property is not adequately managed, it may also impact on the value of the landlord’s reversion and any charges registered or to be registered against it.

Landlords will need to make sure that any resident concerns about works done or the amount of service charges are handled carefully to avoid the impetus for lessees to take over management.


Private landlords do not need to prove proportionality when evicting an assured shorthold tenant

It is now settled that, in an eviction of any occupier of a “home”, article 8 requires a proportionality assessment if the occupier asks for one where the landlord is a public sector landlord (including a private entity in receipt of public funds). Whilst it may not be an easy hurdle to cross, the potential is there for the occupier to argue that the eviction is unfair.

What has not previously been clear is whether this also applies where a landlord is a private individual. The question is an important one, as assured shorthold tenancies are used widely in the private sector. The Court of Appeal last week clarified this in the case of McDonald v McDonald [2014] EWCA Civ 1049.

In this case, the tenant, Fiona McDonald, was a vulnerable individual with a mental disorder which made it difficult for her to cope with changes in her environment. Her parents bought a property for her to live in, with funds provided by a mortgage. In breach of the mortgage conditions, they granted Fiona an assured shorthold tenancy. They were unable to keep up with the mortgage payments, and the mortgagee appointed receivers, who served notice to terminate the tenancy.

The proceedings for possession were defended on the basis that (1) the eviction would be disproportionate in light of Fiona’s condition, and (2) that the receivers were not entitled to serve the notice without authority from the landlords.

The court dismissed the second argument, holding that the mortgage conditions gave the receivers the necessary authority.

The court decided that a proportionality argument could not be raised against a private landlord in the same way as it could against a public sector landlord.

In any event, even if it could in this case, the argument would have failed as the lender’s right to recover its security would have outweighed the disadvantage to the tenant.

The case is a very important one for private landlords. Where a social landlord operates a private lettings arm it should also be arguable that the same will apply – provided that landlord can demonstrate that the private lettings part of its business is separate to, and not in any way funded by, its social lettings business.


Vulnerable tenants

Two cases recently have demonstrated the importance of taking care when dealing with vulnerable and/or disabled people. The first is a personal injury case, but one which the court re-opened six years after it settled, when it became clear that the claimant would not have had capacity at the time when the settlement was agreed (Dunhill v Burgin [2014]).

The second case, reported in Inside Housing last month, concerned a tenant of Peabody Housing Trust, S. S had lived in his home with his father from 1981. After his father’s death, he succeeded to the tenancy. Having maintained the tenancy for many years he fell into substantial arrears as a result of a combination of factors. He lost his job, several family members died and his brother (who had helped him manage his affairs) moved out. S had a learning disability and found it very difficult to fill in housing benefit forms, and stopped paying rent. He failed to engage with housing staff. He was also impacted by the bedroom tax. Eventually he was evicted in June 2013.

He managed to appoint solicitors who challenged the eviction. They demonstrated via a psychiatrist’s report that he lacked capacity.

The judge overturned the possession order, and as a result S will be entitled to compensation for the eviction. The judge was very critical of Peabody, who had just re-issued a previously failed referral to the welfare benefits team. He held that they had failed to follow their own procedure for dealing with vulnerable tenants, which required a referral to a family support team for a support plan to be put into place.

What these cases demonstrate is that if capacity is not properly dealt with at the time of the court proceedings, it may mean the case can be re-opened much later, at considerable expense. Policies and procedures need to be followed, and had they been in the Peabody case, it may not have reached court at all.


More woe for landlords who fail to protect deposits

In June, we covered the forthcoming amendments to the law which deal with the Superstrike problem. In the meantime, a case in Birmingham has illustrated the dangers yet again.

The facts were similar to Superstrike but, in this case, the initial tenancy postdated the requirement to properly protect the deposit, and the landlord had duly done all the right things at the outset. However, the fixed term had expired and, at that point, a new periodic tenancy arose in the same way as in Superstrike. The judge held that, at that point, it was deemed that the deposit had been repaid and there was thus a need to re-serve the prescribed information. As the landlord had not done so, they could not seek possession. Their possession claim was struck out with costs ordered against them.

Again the point to take from this is that if a fixed term tenancy is used, ensure that the information is sent whenever that tenancy is renewed or, if it automatically ends, until the Deregulation Bill becomes law. Gardner v McCusker [unreported].


Court of Appeal will not allow challenge to an absolute possession order unless the judge went badly wrong

Croydon LBC v Williams [2014] EWCA Civ 643 - C sought possession against Mr and Mrs W on the basis of ASB, relying on an ASBO made in 2011 and evidence from witnesses. The judge found that the ASB was proved, including loud music, verbal abuse, threats of violence and threats to kill. W conceded that a possession order should be made but asked for it to be suspended. The judge made an absolute order and W sought permission to appeal.

Permission was refused – findings of fact and decisions within the judge’s discretion whether or not to suspend should only be interfered with where the judge had gone “badly wrong” and this was not such a case.

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