Future battleground

This autumn has seen two major judgments concerned with potential defences to summary or mandatory grounds for possession, where either under common law or statute a court must make an order for possession if the basic formal grounds are made out.

These judgments will have an immediate impact on all public landlords (local authorities and, while the Court of Appeal decision in L&Q v Weaver remains unreversed, most RSLs/PRHPS). They may also prove to have significance for private sector landlords in the future.

The European Court of Human Rights decision in Kay v UK 17821/91 [1993] ECHR 61 in September looked set to be a source of ongoing confusion.

The case arose from Kay v Lambeth [2006] 2 AC 465, which was the source of the gateway A (incompatibility of statute with article 8) or gateway B (public law defence on judicial review grounds) options for tenants or occupiers faced with an otherwise uncontestable claim for possession by a public body. The House of Lords in the majority had held that there was no article 8 defence of lack of proportionality in the eviction.

Since that decision, the House of Lords in Doherty v Birmingham CC [2009] 1 AC 367 proposed a slightly modified form of judicial review for the gateway B defence, which could take personal circumstances into account in deciding whether the public body's decision to event was one a reasonable person would consider justified.

However, in a series of cases, the ECtHR had made clear its view: 'Any person at risk of an interference of this magnitude [losing their home] should in principle be able to have the proportionality of the measure determined by an independent tribunal in the light of the relevant principles under article 8 of the Convention, notwithstanding that, under domestic law, his right of occupation has come to an end.'

The ECtHR had also made clear that it did not consider judicial review grounds to be sufficient to meet this principle. The stage was set for the Kay v UK decision to set out the ECtHR's view on Doherty and the 'broadened' gateway B. Instead, the ECtHR found that, at the time of the original possession hearing, Mr Kay's article 8 rights were violated because there was no procedural possibility for a consideration of the proportionality of the decision to evict.

This finding was no surprise and wholly in accord with the previous ECtHR decisions. However, the ECtHR, having noted the subsequent history of 'gateway B' in the Court of Appeal and the House of Lords, offered no opinion on its current extent, merely observing that the court welcomed 'the increasing tendency of the domestic courts to develop and expand conventional judicial review grounds in the light of article 8'. Whether this meant that post-Doherty gateway B was sufficient or not was wholly unclear. Being arguable either way, it was expected that there would indeed be more argument to come.

Demoted tenancies and beyond

At the time the Kay decision was released, the Supreme Court was considering its judgment in Pinnock v Manchester City Council [2010] UKSC 45. When this was handed down on 3 November, it proved to be something of a bombshell.

Pinnock concerned demoted tenancies '“ formerly secure tenancies made demoted by court order following a hearing and on the grounds of anti-social behaviour. A demoted tenancy could be terminated by a decision of the local authority which, if the correct procedure had been followed, the court had to approve under statute. Mr Pinnock had attempted to raise a gateway B and human rights defence at the court on the termination of his demoted tenancy. The Court of Appeal had held that the statutory regime left no possibility for the court to hear such a defence and a judicial review of the decision to end the tenancy was the only option.

The Supreme Court decision went far beyond the specific scope of demoted tenancies. In a sole judgment by Lord Neuberger, the court held that, for possession claims brought by a public body against someone's home, the tenant/occupier was indeed entitled to raise a defence of proportionality under article 8 and to have it determined by the court. Traditional judicial review grounds were not adequate as they did not permit the court to make its own assessment of sensitive factual issues. The court set out six general points:

1. It is only when someone's 'home' is at stake that article 8 comes into play.

2. Generally, article 8 only needed to be considered when raised by the occupier.

3. When an article 8 point is raised the court should initially consider it summarily, and, if the court is satisfied that '“ as will no doubt often be the case '“ even if the facts were established it would still be proportionate to make a possession order, then it should dismiss the article 8 point.

4. If domestic law justifies an outright order for possession, article 8 may justify granting an extended period of possession, suspending possession conditionally, or even refusing an order altogether.

5. Some statutory and procedural provisions may need to be revisited, such as HA 1980, section 89 or parts of CPR 55, but the instant case was not the appropriate one to resolve them.

6. Proportionality is more likely to be a relevant consideration where there are issues relating to vulnerability because of mental illness, physical or learning disabilities, poor health or frailty, and the local authority may have to explain why they are not securing alternative accommodation.

For demoted tenancies, while the initial demotion court hearing would go some way to providing an assessment of proportionality, it was proceedings as a whole which must be considered. Therefore, although probably exceptionally likely to succeed, the tenant must be able to raise a proportionality defence at the possession hearing and have it determined.

The relevant statute, section 143D(2) of the Housing Act 1996, was to be interpreted such that it was compliant with Convention rights, by reading it as if it contained the word 'lawfully'. Thus the court's examination of the procedure could extend beyond the merely formal into the proportionality of the decision.

In practice, there are some clear and immediate results, some probable but less clear and a sure sign of a future battleground. The Supreme Court did not give guidance on what a review of proportionality would look like, leaving it to the 'good sense of the county court judges'. This sounds like fertile territory for appeals until some form of common view is reached.

It is certain that all possession proceedings brought by local authorities (andRSLs/PRPSHs) on the following bases will now potentially face a proportionality defence by the occupier:

• Decisions to terminate introductory or demoted tenancies.
• Possession on the basis of loss of security of tenure and notice to quit (failed successions that don't fall under Austin v Southwark, notice by one joint tenant, non-occupation where the tenant succeeds in arguing the property is their home, etc.).
• Possession of the basis of no security of tenure (deceased or ex-tenant's relative, trespassers, potentially temporary accommodation under the Housing Act 1996 part VII).

It is probable that there will be a defence to mandatory proceedings brought by RSLs/PHRSHs, although there may well be arguments around the statutory possibility, such as:

• Section 21 and accelerated possession claims against assured shorthold tenants (such as so-called 'starter' tenancies).
• Ground 8 rent arrears claims.

The battleground for the future has to be applicability to the private sector. The Supreme Court expressly avoided this issue, despite the ECtHR decision in Zehentner and an admissibility decision in Belchikova. The issue would then be the private sector landlord's automatic right to possession.

Tenancy deposits '“ delay without penalty

In the long-awaited judgment in Tiensia v Vision Enterprises Ltd (t/a Universal Estates) [2010] EWCA Civ 1224, the Court of Appeal made a key decision on the operation of the tenancy deposit scheme and the penalty provisions set out in section 214 of the Housing Act 2004. The Court of Appeal, Seldey LJ dissenting, held that there was no penalty of three times deposit payable to the tenant if the landlord failed to protect the deposit within 14 days. The landlord could indeed escape the penalty if the deposit was protected and prescribed information provided before the hearing of the tenant's claim under section 214, not the date of issue of the claim.

If the tenant had provided pre-action warning of the claim to the landlord and the deposit had not been protected before the claim was issued, the tenant should be awarded costs but nothing further if the landlord protected the deposit pre-trial.

While the position remains undetermined if the tenancy has ended before the landlord protects the deposit or provides the prescribed information, this has otherwise left the tenant with just a complex and time-consuming method of enforcing the landlord's obligation as it would be a rare landlord who failed to comply before trial.

As a counterclaim on a rent arrears possession claim, section 214 is now practically useless.

Changes ahead

While only limited parts of the Equality Act 2010 are in force, the statutory guidance being not yet out of draft and remaining parts being tinkered with or withheld by the new government, it is likely that public bodies' duties under the Act will be of some significance for both landlords and tenants' advisers.

The intended changes to the local housing allowance '“ imposing both an absolute cap in weekly amount, and a broader limit of being within the bottom third of market rental value in the locality '“ are likely to have an immediate effect from their introduction. In addition, it is proposed to raise the age limit below which only a room in a shared house will be funded from 25 to 35, and to reduce housing benefit by ten per cent after each consecutive period of 12 months in receipt of jobseekers allowance. Estimates of the scale of the effects vary widely, but it is inevitable that there will be an increase in private sector possession claims and in homelessness applications.