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In a decision handed down on 23 June 2010, the Supreme Court, comprising Lords Hope and Walker, Lady Hale and Lords Brown and Kerr, unanimously overturned the judgment of the Court of Appeal that the right to apply under section 85 of the Housing Act 1985 (the Act”) to postpone enforcement of a possession order terminates on the death of the secure tenant and is incapable of being transferred to a successor. The case was previewed here and the judgment reported here.

The issue arose in the following context. The appellant was the brother of the late Alan Austin who was a secure tenant under the Act, in Southwark. In 1986 the Council had brought a claim against the tenant for possession on the basis of unpaid rent. A conditional suspended possession order was made, providing that possession could not be enforced so long as the deceased paid the arrears of rent by 4 March 1997. The deceased tenant did not pay the arrears and thus on 4 March 1997 the order became enforceable. However he remained in the premises, paying rent as well as amounts towards the arrears until his death in 2005. Prior to his death, the deceased suffered from a chronic illness and the appellant maintained that he had moved into his brother’s property and became his full time carer. This fact had yet to be established.

Following the death of the brother, the Council served a notice to quit on the appellant, and then issued County Court proceedings which were tayed pending this appeal. The appellant then applied to be appointed to represent the estate of the deceased (who had been intestate) in the possession proceedings which had been brought in 1986. If permitted, the appellant intended to apply to the County Court under section 85(2) of the Act for postponement of the date for possession in the order that was issued against the deceased. If that application succeeded, it would have the effect of reviving the deceased’s secure tenancy. The appellant would then need to show that he was resident in the premises during the twelve months that ended with the deceased’s death. If that fact could be established, then the deceased’s secure tenancy would vest in the appellant by virtue of section 87 of the Act.

The appellant’s application to be appointed to represent the deceased’s estate in the original possession proceedings was dismissed by the County Court, High Court and the Court of Appeal.

There were two issues before the Court:

1.  The effect of section 82(2) of the Act: namely whether a secure tenancy is terminated immediately upon any term of a conditional possession order being breached or whether the possession order must actually be executed.

2. Whether depending on the effect of section 85(2) of the Act, the former tenant’s statutory right to apply to postpone the date for possession survives death and passes to the estate of the deceased former tenant.

First Issue: section 82(2) of the Act

The effect of section 82(2) had been determined by the Court of Appeal in Thompson v Elmbridge Borough Council [1987] 1 WLR 1425 where it was held with regard to a similar suspended order that the tenancy came to an end when the terms of the order were breached. The same question then came before the House of Lords in Knowsley Housing Trust v White [2009] AC 636. In Knowsley, Lord Neuberger said:

“There is a powerful case for saying that ‘the date on which the tenant is to give up possession in pursuance of the order’ in section 82(2) of the 1985 Act can, and therefore should, mean the date specified in a warrant of possession which is duly executed”.

Nevertheless, the House declined to hold that Thompson was wrongly decided. This was for two main reasons: (1) It was simply too late to take that course. Thompson had been assumed to be correct for 20 years and had been relied on practically in countless cases. (2) Section 299 of Schedule 11 to the Housing and Regeneration Act 2008 (the “2008 Act”) amended and clarified the law so that secure and assured tenancies would only end when the order for possession was executed. However, the amendments were largely prospective and did not cover the situation in Knowsley. Lord Neuberger had held that it would be quite wrong for the House to go back on its previous approval of Thompson where new legislation had been passed by Parliament to amend the law only prospectively. A judicial decision with retrospective effect would be contrary to the will of Parliament.

In Austin, Lord Hope, giving the main judgment of the Court, considered that that interpretation of section 82(2) was far from satisfactory and that there was much that could be said for interpreting it to mean that the tenancy only terminated when the possession order is actually executed. Lord Hope noted that the issue had been dealt with only perfunctorily by Russell LJ in Thompson in one sentence and that no comparison had been made with other parts of the Act which would have highlighted certain inconsistencies.

Lord Hope considered that section 82(2) was capable of interpretation either as held in Thompson or as Lord Neuberger had suggested in Knowsley. Lord Hope considered that the context of the statutory section tended to favour Lord Neuberger’s construction. For instance, section 85 of the Act envisaged that the tenancy would still be in existence during the period when the Court could exercise its powers, for instance to discharge or rescind the possession order if conditions were complied with. Further, Lord Neuberger’s translation avoided the “anomalous and potentially retrospectively reversible status of tolerated trespassers“.

However, given that it was not unarguable that section 82(2) could be interpreted in the manner in which it was in Thompson and Knowsley, the question was whether the Supreme Court should depart from a previous decision of the House of Lords. Lord Hope referred to the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234 which was issued by the House of Lords and which states that former decisions of the House should be treated as normally binding but that it would depart from a previous decision when it appeared right to do so. Lord Hope clarified that that Practice Statement still applied in the Supreme Court: it is part of the established jurisprudence relating to the conduct of appeals in the House of Lords which was transferred to the Supreme Court by section 40 of the Constitutional Reform Act 2005.

The question that came to be considered was therefore whether in the circumstances it was “right” to depart from the previous decision. Lord Hope referred to the observation of Lord Reid in R v Knuller (Publishing, Printing and Promotions) Ltd [1973] AC 435 that “[i]n the general interest of certainty in the law we must be sure that there is some very good reason before we so act… I think that however wrong or anomalous the decision may be it must stand and apply to cases reasonably analogous unless or until it is altered by Parliament“.

Lord Hope held that he was not persuaded that the Supreme Court should depart from the decision of the House in Knowsley. Lord Hope considered that the effect of reversing such a decision which had stood for so long was incalculable in the circumstances. In particular, there was a concern about the effect that a retrospective reversal would have on social landlords who have for so long assumed that those who have failed to comply with the conditions in a suspended possession order were no longer tenants with the right to enforce the implementation of repairing covenants. Lord Hope suggested that is was likely that the consequences of reviving those covenants and the opportunity this would give for claiming damages for breach was one of the factors that led to the decision that the law should be amended by the 2008 Act only prospectively. The 2008 Act provides for the creation of replacement tenancies which are new tenancies which have effect on the same terms and conditions that were applicable to the original tenancies immediately before they ended. To declare that Thompson was no longer good law would therefore cut across this system and undermine the will of Parliament.

Second issue: section 85(2) of the Act

The question was whether a former tenant’s statutory right to apply to postpone the date for possession, and thus revive the secure tenancy, survives death and passes to the estate of the deceased former tenant.

The Court of Appeal considered that is was bound by the decision of Brent London Borough Council v Knightley [1997] 29 HLR 857 that the right to apply for the postponement of the order for possession under section 85(2) is not an interest in land “capable of being inherited” and hence it could not survive the tenant’s death. Lord Hope considered that whether the interest in land was “capable of being inherited” was the wrong question to ask and that the question was infact whether the right is capable of being transmitted. Given that the right to apply under section 85(2) of the Act is a right conferred by statute, the answer to the question could only be determined by construing the statute rather than considering whether the right was capable of being inherited at common law.

Turning to the Act, Section 85(2) states that the powers referred to are exercisable “at any time before the execution of the order“. The possibility that the tenant might in the meantime have died is not referred to. The words of the section are wide and unqualified and there is no suggestion that the power of the court to postpone enforcement of the possession order is not exercisable after the tenant’s death. Lord Hope was also persuaded by various practical examples. For instance, he considered that the Act must have been intended to allow the personal representatives of a deceased tenant to continue an application to postpone possession where the tenant died just one day before the application was due to be heard. The wording of the Act did not compel a reading which would deny the Court jurisdiction in such circumstances. Lord Hope also observed that elsewhere in the Act, it specifically refers to what will happen on the death of a tenant. Further, section 90, which deals with fixed term tenancies, contemplates that a tenancy may continue after the tenant dies.

Lord Hope therefore held that Knightley had been wrongly decided and should be overruled: the fact that a former secure tenant dies does not deprive the Court of its jurisdiction to exercise the power conferred on it by section 85(2)(b) of the Act to postpone the date of possession under a possession order.

Lord Hope concluded as follows:

“I have to say that I regard this solution to his case to be preferable to the solution for which Mr Luba contended under the first issue. It is directed precisely to the situation that arises where a former tenant who has become a tolerated trespasser has died. Above all, it preserves the discretion of the court under section 85(2) to do what is just in all the circumstances. This is a protection for the landlord which would be entirely absent if the first solution were to be adopted.”

Note that Lady Hale also set out “the definitive obituary” (in the words of Lord Walker) of the tolerated trespasser. In relation to this particular case, Lady Hale commented:

“In my view, had it not been for Parliament’s intervention, it would have been the duty of this Court to set matters right”.