Unauthorised tenants: A turn of the tide?

Use of the word “and” as opposed to “or” in the Mortgage Repossession (Protections of Tenants) Act 2010 turns out to be significant. Matt Champ of LPC Law looks at two legal cases of unauthorised tenants

In October 2010 the Mortgage Repossession (Protections of Tenants) Act 2010 (“the Act”) came into force. The overarching purpose of the Act was to give protection to people that had tenancy agreements with the mortgagor without the knowledge or permission of the mortgagee.

In certain circumstances the Act allows the courts to postpone possession proceedings for a period of up to two months so as to enable the unauthorised tenant the opportunity to find alternative suitable accommodation.

To date, interpretation of s.1(4) of The Act has proved the most contentious area of the legislation. The section specifies the criteria that must be met in order for relief to be given, stating that:

1 (4)The court may, on the application of the tenant (“the applicant”), stay or suspend execution of the order for a period not exceeding two months if —

(a) The court did not exercise its powers under subsection (2) when making the order or, if it did, the applicant was not the tenant when it exercised those powers,

(b)The applicant has asked the mortgagee to give an undertaking in writing not to enforce the order for two months beginning with the date the undertaking is given, and [emphasis added]

(c) The mortgagee has not given such an undertaking.

Bank of Scotland v Ashraf

The first case of note examining s.1(4) was in October 2010 at Romford County Court in the matter of Bank of Scotland v Ashraf. Specifically, His Honour Judge Platt considered whether the criteria under s.1(4) should be read conjunctively or disjunctively.

The distinction between the two proposed interpretations is significant. If s.1(4) is to be read disjunctively, the court would have the power to stay or suspend execution of a possession order even if the applicant/unauthorised tenant had failed to request in writing an undertaking from the claimant not to enforce per s.1(4)(b).

The only requirement that would need to be satisfied would be that the court had not, at the initial possession hearing, afforded up to two months “grace” to the same applicant/unauthorised tenant pursuant to s.1(2) of the Act.

If s.1(4) is to be read conjunctively however, in order for the court to stay or suspend for up to two months, it would have to be the case that the applicant/unauthorised tenant had firstly not previously benefited from the court’s power under s.1(2) and also that the applicant/unauthorised tenant had unsuccessfully requested in writing that the claimant would refrain from enforcing the possession order for two months.

His Honour Judge Platt decided that section 1(4)(a) could in fact be read separately from the other criteria needed and relief could be given even if the tenant had not made a written request to the mortgagee.

Critics of the (non reported and only persuasive) judgment have in particular highlighted the fact that the paragraphs (a) – (c) of s.1(4) are not linked with an “or” but an “and”. On that basis alone, it is surely right that pursuant to the legislation, an unauthorised tenant is obliged to satisfy all the requirements of s.1(4)(a) – (c), not merely one of the three.

Bromley County Court

In March 2012 the question of how to correctly apply s.1(4) was again considered at Bromley County Court. The hearing had been listed for the court to consider an application by an unauthorised tenant to have a pending warrant of execution postponed.

At the March 2012 hearing the unauthorised tenant claimed to have only discovered these proceedings by accident the day before and that he could not secure alternative property at such short notice.

Before the District Judge, it transpired that the property in question had been the subject of possession proceedings for some time and there were at least two previous tenants that had been in the same position.

The judge expressed disquiet that the property had repeatedly been let without the consent of the claimant/mortgagee. As the hearing progressed, the court was satisfied that appropriate notice of the hearing had been given to the applicant.

For the claimant, it was submitted that - contrary to Ashraf - the tenant had not made a written request to the mortgagee and so no relief under the Act was available. The judge agreed, stating that there was a criteria that had to be satisfied before any relief under the Act was available, and in this case, the tenant had admitted that he had not done what was required under statute.

The judge further noted that even if she could exercise her discretion she would not as she was concerned the defendant/mortgagor/landlord would again tenant the property without authorisation from the mortgagee.

Appeal

The unauthorised tenant made an application to appeal which was heard before a Circuit Judge at Bromley County Court in April 2012. The unauthorised tenant’s appellant notice repeated his claim of not knowing about the proceedings but further stated that he was his disabled mother’s carer (who was said to also live with him) and so should be allowed relief under the Human Rights Act 1998.

The unauthorised tenant/applicant did not attend his appeal. The Circuit Judge chose to proceed, however, noting that the applicant had been correctly served with notice of the appeal.

On behalf of the claimant, the following was submitted to the Circuit Judge:

1) The previous judge had decided that as the tenant had not made a written request to the mortgagee, which was clearly a prerequisite under the Act, there was no discretion available to her to assist the tenant. There was no irregularity in law or procedure and so the decision was a correct one. There was no basis for the court to allow the appeal pursuant to CPR 52.3.

2) The unauthorised tenant’s mother was not mentioned at the previous hearing despite the judge asking if there was anything that the tenant wanted to add prior to the lower court’s judgment. In accordance with Daniels v Walker and Barclays Bank v Ellis & Another [2001] 1 WLR 1382 the applicant should not in such circumstances be permitted to raise the Human Rights Act 1998 as a form of a “last ditch” defence.

3) Even if the court was prepared to consider a human rights defence, despite there being no grounds to do so, Article 8 could be derogated from on a number of bases, including when the claimed breach had arisen ‘in accordance with the law’ which would include the decision of the previous judge.

4) The previous judge had been correct in stating that she did not have a discretion because the criteria needed under s1(4) of the Act had not been complied with.

Her Honour noted the following in her judgment:

1) There was nothing substantive pleaded concerning the Human Rights Act 1998, and as such, she would consider the point no further.

2) From her reading of the Act it appeared that all of the s1(4) criteria must be met before there is any question of whether a discretion exists or not. If (a) – (c) of the criteria are not met then the unauthorised tenant’s application can be taken no further.

3) There was an element of dishonesty on the part of the tenant as noted by the previous judge on the court file.

4) There appeared to be no procedural irregularity or anything that was done incorrectly by the previous judge. The tenant admitted he had not done what was required under the Act and so the lower judge did not have the power to grant the relief the tenant sought.

Conclusion

The decision of the Circuit Judge at the April 2012 appeal in Bromley is significant. Under Ashraf judges could offer relief to any tenant who had not previously been granted relief under the Act regardless of whether the wording s1(4) (b) – (c) had in fact been satisfied . The decision of the Circuit Judge at Bromley states that all of the criteria under s1(4) must be met otherwise no relief can be given.

The Bromley decision could mean that the days of tenants simply attending hearings and requesting a stay of two months without any prior notification to the mortgagee could be at an end.

Such a scenario will obviously result in fewer costs being incurred by litigating parties and fewer bailiff appointments having to be unjustifiably cancelled. For mortgagees intending to legitimately enforce; this latest decision on appeal is thus to be welcomed.