Yoland Ltd v Reddington

Rent Act 1977, section 98(i)(a) — Offer by landlords of alternative accommodation consisting of the part of the let premises which was actually occupied by tenant and his wife — Tenant had with previous landlords’ consent sublet furnished part not occupied by himself and wife — Subtenants were friends and the two families got on very well together — Judge decided that the alternative accommodation offered was suitable, but, in the exercise of his discretion, decided that it was not reasonable to make the order for possession — His main ground was that if the order was made the tenant’s circumstances would be materially altered in as much as he would no longer be surrounded with subtenants of his own choosing — Criticisms of the judge’s exercise of discretion rejected, including a suggestion that the judge had failed to take into account a small profit which the tenant made out of the subletting, the ‘formidable financial advantage’ of £5 per week — Abundant evidence entitling the judge to exercise his discretion in the way he did — Landlords’ appeal dismissed This was an appeal by the landlords, Yoland Ltd, against a decision of Judge Peck at Reading County Court dismissing the landlords’ claim for possession of part of premises at 132 Castle Hill, Reading. The tenant of the premises was Leslie Frank Reddington. J Brock (instructed by Russell-Cooke, Potter & Chapman) appeared on behalf of the appellants; P Rook (instructed by Collins, Dryland & Thorowgood, of Reading) represented the respondent. Mr Rook was not called on. Giving judgment, CUMMING-BRUCE LJ said: This is an appeal against the order made by His Honour Judge Peck on November 25 last year, when he ordered that the plaintiffs’ claim for possession of part premises at 132 Castle Hill, Reading, should be dismissed. The appellants seek an order that the judgment be set aside, that judgment may be entered for the plaintiffs for possession as aforesaid, and costs. The background of the matter I can deal with very briefly. The respondent acquired his tenancy of a house with three storeys some 18 years ago. At first he occupied the whole house with his family. When one of the girls married she brought her spouse to a bit of the house and lived there, but eventually they went somewhere on their own. The other girls have departed from the scene as they have grown older. The respondent obtained permission from his landlord to sublet those parts of the house that he no longer wanted to occupy as his residence himself. The landlord imposed a condition that the subtenants of his choice should not bring children with them. The nature of the premises is relevant. The defendant himself, with his wife, occupies two living-rooms and a kitchen on the ground floor and one bedrom on the first floor. There is only one lavatory and bathroom in the house. They are on the first floor and they are shared with the respondent’s subtenants, who occupy their premises as furnished sublettings. The respondent pays the rates; the electricity and gas are shared with the subtenants. He has been fortunate in finding subtenants who are friends of the family and in particular friends of the children. The judge accepted his evidence that the present set-up is one in which they all get on well together. One bears in mind the importance of that in a situation in which the subtenants are sharing the only bathroom and lavatory and are also given the use of the garden, which they use as required. So that situation, developing over a long period of years, is one in which this gentleman, now aged 72, living on a state pension of £47 and £15 pension from his former employer, enjoys the amenity of living in the house, residing in the rooms that I have stated and sharing the house with his subtenants. The word ‘sharing’ is used by me in an imprecise sense, because the only actual shared part of the house is the bathroom and lavatory and the common access to the rooms in which the subtenants respectively reside. The judge accepted and found that, over the years, the respondent had maintained the property in excellent condition and had done work in it to improve the amenities. The plaintiffs in the county court came on the scene in June 1980, when they bought this house for investment. They are seeking, as practicable, to obtain vacant possession of all the let parts of the premises they bought. This house is only one of a line of houses (I think it is) in the same street. They have been making offers to tenants in order to try to obtain possession, and eventually, when they have obtained possession of the houses, they will realise their investment as best they can. The learned judge had to deal with the question of alternative accommodation. On suitability he held that the alternative accommodation offered was suitable and no issue on suitability arises. So he came to consider the question whether, in all the circumstances, it was reasonable to make an order. That, as Mr Brock naturally accepts, is a matter for the discretion of the learned judge. Mr Brock accurately presented the basis of his appeal as being an appeal in which success would depend on his establishing that the judge either failed to take account of a relevant consideration or took into account an irrelevant consideration, or alternatively, that when the whole picture is looked at it can be seen that the judge’s decision was plain wrong. The first point taken by Mr Brock on what I would call Wednesbury Corporation grounds was that when the judgment of the learned judge is scrutinised he failed to take into account the fact that the respondent was making a small profit out of the subletting of that part of the house which is subject to subletting. Mr Brock relied for that submission, first, upon this passage in the learned judge’s judgment: Mr Brock argued that the case could have been brought under Case 10 on the basis that the tenant is charging excessive rents. I am not concerned with that. These proceedings are not brought under that Case. Mr Brock said that Mr Reddington could afford a re-registered rent for the part of the house he occupied without assistance from sublettings. On its face, the first two sentences of that paragraph which I have quoted are precisely accurate. There was no case under Case 10, and no pleading to that effect, and the judge was not concerned with Case 10. But what is said is that, the judge having stated the passage I have quoted, he does not anywhere else in the judgment expressly dwell upon the financial benefit, such as it is, which the respondent derives from the financial contribution made to his finances by reason of the sublettings. That financial advantage was, in the evidence, described as follows by the respondent: ‘I make about £5 per week out of sublettings.’  That formidable financial advantage may certainly be regarded as a significant financial advantage gained by a couple who otherwise are living on an income of just about £60 a week. I can see no reason at all, in spite of Mr Brock’s delicate advocacy, for supposing that when he came to his decision on how to exercise his discretion the judge was blind to the fact that the respondent was getting this small but (to him) significant financial advantage from the sublettings. The passage in which the judge explains the ground of his decision on reasonableness is to be found in the last paragraph of the judgment: Every case has to be looked at separately. One has to look at the whole of the circumstances. In my judgment the circumstances of the tenant’s possession may be materially altered that is to say, altered if the order for possession be made He would no longer be surrounded by subtenants of his own choosing if the landlord obtained possession. Anything might happen to the property company. If they did not sublet, Mr Reddington would be left in a worse state than before. The remainder of his house would be empty, and possibly uncared for. I do not think it would be reasonable to make an order for possession. In the grounds of appeal it is pleaded, (2)  That the defendant would suffer no financial hardship by the making of an order. (3) That the plaintiff and its successors in title would be bound by statute (a) to maintain parts of the premises not occupied by the defendant, (b) to refrain from harassing the defendant by allowing the parts of the building not occupied by the defendant to fall into disrepair. As Mr Brock has accurately submitted, if the order sought by the plaintiffs were made and the present subtenants left, the respondent would have a bundle of common law and statutory rights which he would have the right to exercise if the landlords failed properly to maintain the premises. Of course that is right, but that is not, to my mind, what the judge had in mind at all in the last paragraph that I have quoted. The judge does not suggest that he is contemplating that upon the grant of possession to the plaintiffs the plaintiffs will proceed to act like the disreputable Mr Rachman. He is not contemplating failure to comply with statutory or common law obligations of maintenance. What he speaks of is something quite different, ‘The remainder of his house would be empty, and possibly uncared for.’  The judge is there comparing the amenity that the respondent presently and for many years has, with his wife, enjoyed in the house as a house with his present chosen subtenants, who are friends, with the situation that he would be in if, after an order for possession, the subtenants were to remove themselves and the premises stay empty. There is another feature which is relevant. If the present subtenants went, Yoland Ltd, or their successors in title, would have a right to sublet unless, which is in issue, as a matter of law, the respondent himself has a right to sublet if his present subtenants depart. As I say, there is an issue about that, because it was argued below that the respondent has no right to sublet if his present subtenants were to leave. Assuming that the appellants were right in the submission they made below about that, it would be perfectly feasible, upon the subtenants’ departure, for the landlords to let those premises. They say that they have no present intention to do such a thing, because their object is the long-term investment interest which is promoted by getting vacant possession of as much of the house as possible as soon as possible. But if there were a change of intention on the part of the landlords, consider the respondent’s position, compare his present situation, sharing the house with his friends and sharing the bathroom and lavatory with them, with his new position sharing with unknown subtenants to whom the landlords would let the premises. I can see no ground, despite Mr Brock’s submissions, for taking the view that the judge failed to weigh properly every relevant consideration or took into account any situation that was irrelevant. I take the view that the judge was right in comparing the present amenity of life enjoyed by the respondent and his wife in the premises with the hypothetical situations in which they would find themselves if the order were made. In my view there was abundant evidence entitling the judge to exercise his discretion in the way that he did in refusing to make the order sought. Two cases have been referred to in argument, but I do not think that this case raises any question of law and, without disrespect to Mr Brock, I will not cite them. I would dismiss the appeal. Agreeing, DUNN LJ said: At the outset of his judgment the judge referred to the financial situation in the house and said in terms that the defendant had a net advantage of about £5 a week. I cannot believe that, when he came to deal with reasonableness, he had forgotten what he said a few minutes earlier. Notwithstanding that the alternative accommodation offered is that which is actually occupied by the defendant and his wife at the present time, I entirely agree that the judge was right in holding that it was not reasonable to make an order. In my view, this was a humane judgment which dealt with the realities of the situation as they exist, and I, too, would dismiss the appeal. SLADE LJ: I agree that this appeal should be dismissed for the reasons given by my Lords. The appeal was dismissed with costs.