Whitehouse v Lee

Rent Act 1977 — Possession order — Protected tenancy — Tenants occupying flat for 45 years — Landlord seeking possession — Section 98(1)(a) of 1977 Act — Provision of suitable alternative accommodation by landlord — Landlord seeking to maximise realisation of investment by selling with vacant possession — Whether reasonable to make possession order — Correct approach to reasonableness The appellant and her husband were protected tenants, under the Rent Act 1977, of a flat in which they had lived since 1963. In 1969, the respondent landlord, together with her brother and sister, had purchased the flat, the garages beneath it and an adjoining house in order to provide financial assistance to their mother. The beneficial ownership of the properties was shared between the siblings. Following the death of their mother in 2001, the siblings wanted to sell the properties with vacant possession in order to use the proceeds to fund their pensions. They purchased another flat approximately a mile away and offered it to the appellant and her husband, who did not like it and did not want to move from the home and locality in which they had lived for 45 years. The respondent brought proceedings against the appellant and her husband, seeking possession on the ground that suitable alternative accommodation was available, within the meaning of section 98(1)(a) of the 1977 Act, and that it was reasonable to make a possession order. At the date of the trial, the appellant’s husband was 79 years old; the appellant was 75. The judge found that most people would consider the alternative flat as an attractive proposition and that it represented suitable alternative accommodation for the appellant and her husband. Having balanced the social and emotional consequences of the move against the reasonableness of the siblings’ wish to maximise their investment by selling the properties with vacant possession, he concluded that it was reasonable to make a possession order. Following the trial, the appellant’s husband died. The appellant appealed. Held: The appeal was allowed. When determining the reasonableness of making a possession order, the relevant question is not whether it is reasonable for the landlords to seek possession, but whether it is reasonable for the court to make an order. That decision cannot be made by purporting to balance the reasonableness of the tenants’ wish to stay in the property against the reasonableness of the landlords’ wish that they should vacate; the competing considerations are founded on entirely different interests and cannot rationally be balanced against each other. The court must instead consider all angles, including, in particular, the effect on the landlords and the tenants, not only if an order is made but also if it is not. The judge had failed to consider the effect on the siblings if an order was not made against the appellant. Although they would not, in the foreseeable future, be able to sell the properties with vacant possession of the flat and so raise the maximum value, they had advanced no case of hardship if they could not so sell. By contrast, the case for the tenants was compelling with regard to the emotional and social aspects of the threatened move in removing them from a special local, village-like community in which they had played, and continued to play, important roles, where they enjoyed local friendship and support, and which could not be replicated in the new flat. In all the circumstances of the case, it was not reasonable to make a possession order. The following cases are referred to in this report. Assicurazioni Generali SpA v Arab Insurance Group (BSC) [2002] EWCA Civ 1642; [2003] 1 WLR 577; [2003] 1 All ER (Comm) 140 Battlespring Ltd v Gates [1983] 2 EGLR 103; [1983] EGD 573; (1983) 268 EG 355; (1984) 11 HLR 6, CA Bracknell Forest Borough Council v Green [2009] EWCA Civ 238; [2009] NPC 45 Brown v Davies [1958] 1 QB 117; [1957] 3 WLR 818; [1957] 3 All ER 401, CA Cresswell v Hodgson [1951] 2 KB 92; (1951) 1 TLR 414; [1951] 1 All ER 710, CA Cumming v Danson [1942] 2 All ER 653 Datec Electronic Holdings Ltd v United Parcels Service Ltd [2007] UKHL 23; [2007] 1 WLR 1325; [2007] 4 All ER 765; [2007] 2 Lloyd’s Rep 114 Shreeve v Hallam [1950] WN 140, CA This was an appeal by the appellant, Patricia Whitehouse, from a decision of HH Judge Mitchell, sitting in Central London County Court, allowing a claim by the respondent, Dr Ali Loi Lee, for possession of a flat under section 98(1)(a) of the Rent Act 1977. Tracey Bloom (instructed by Hodge Jones & Allen) appeared for the appellant; Daniel Dovar (instructed by Blake Lapthorn) represented the respondent. Giving judgment, Rimer LJ said: [1] This is an appeal by Mrs Patricia Whitehouse against an order made against her and her late husband Ronald on 8 July 2008 by HH Judge Mitchell in Central London County Court. The order required Mr and Mrs Whitehouse to give up possession of the flat at 34c Netherhall Gardens, Hampstead, London NW3 (flat 34c), in which they had lived since 1963 as tenants protected (now) by the Rent Act 1977. The respondent, Dr Ali Loi Lee, their landlord, had sought possession on the ground that suitable alternative accommodation was available and that it was reasonable to make an order for possession. Permission to appeal was given by Jacob LJ on the ground that the judge was in error in concluding that it was reasonable to make the order. He stayed the order until after the disposal of the appeal. [2] Mr Whitehouse, who was 79 at the date of the trial, died on 22 November 2008. Mrs Whitehouse, who is 75, has pursued the appeal. Background [3] Mr and Mrs Whitehouse (the tenants) became tenants of flat 34c in 1963, their original landlords being Mr and Mrs Olsen. Their tenancy was a protected tenancy and became a statutory one. [4] Dr Lee, then a young doctor, bought the reversion of flat 34c, the three garages beneath it and an adjoining house (no 34) in 1969. Number 34 has been converted into nine flats. Dr Lee owns the |page:76| properties beneficially with her brother, Mr Tien Lee, and her sister, Ms Ah-Choo Simmons (the siblings). Dr Lee lived in flat 34 from 1969 to 2003 but, now 67, is retired from her career as an anaesthetist and lives in Australia. The siblings also own two flats in Reddington Road, having sold two other flats there. [5] The siblings bought the Netherhall Gardens properties for around £32,500. The purpose was to provide financial assistance for their mother. She died in 2001, following which they decided that they wanted to sell them and use the proceeds to fund their pensions. They want to sell flat 34c with vacant possession. The only basis on which they could recover possession was on the ground that reasonable alternative accommodation was available for the tenants. To that end, they bought flat 11, Cleve House, Cleve Road, West Hampstead (flat 11). The tenants did not like flat 11 and were intransigently opposed to moving there from the home and locality that they had known and loved for 45 years. Flat 34c [6] Netherhall Gardens is a tree-lined avenue. It is parallel to Finchley Road (the A41), but the judge found that traffic noise from that road is not a problem. Part of Netherhall Gardens, lower down from flat 34c, suffers from a great deal of traffic generated by the location of three schools, although obviously there is much less traffic during school holidays. The flat was built some 50 years ago. It is a detached residence built above the garages. It has a kitchen/dining area, a bathroom/toilet, a double bedroom and another study/bedroom. There are two large storage cupboards in the hallway and there is storage space in a loft to which there is ladder access. It is reflecting its age. The metal frame windows give rise to condensation. There is no central heating or lift. Flat 11 [7] Flat 11 is, the judge said, a very well-appointed flat in an attractive five-storey block. It is on the first floor and there is a lift. The entrance to Cleve House is protected by a security door that is electronically operable from the flat. The flat has a kitchen, large sitting room and balcony, two bedrooms, a large airing cupboard and other storage space, including in the basement. There is a garden to the rear, accessible via the side of the block or from the basement, and a roof terrace with extensive views of London. The judge said that “most people would take the view that this was an attractive proposition as a place to live”. However, the tenants had nothing good to say about it. They did not want to leave flat 34c. They wanted to know why they could not live there for as long as they were fit enough to do so. Rent Act 1977 [8] Section 98 provides, so far as material: (1) Subject to this Part of the Act, a court shall not make an order for possession of a dwelling-house which is for the time being let on a protected tenancy or subject to a statutory tenancy unless the court considers it reasonable to make such an order and either (a) the court is satisfied that suitable alternative accommodation is available for the tenant or will be available for him when the order in question takes effect, or… … (4) Part IV of Schedule 15 shall have effect for determining whether, for the purposes of subsection (1)(a) above, suitable alternative accommodation is or will be available for a tenant. [9] Dr Lee’s claim for possession was based on section 98(1)(a). Part IV of Schedule 15 provides, so far as material: 4.(1) … accommodation shall be deemed to be suitable for the purposes of section 98(1)(a) of this Act if it consists of either (a) premises which are to be let as a separate dwelling such that they will then be let on a protected tenancy (other than one under which the landlord might recover possession of the dwelling-house under one of the cases in Part II of the Schedule), or (b) premises to be let as a separate dwelling on terms which will, in the opinion of the court, afford to the tenant security of tenure reasonably equivalent to the security afforded by Part VII of this Act in the case of a protected tenancy or a kind mentioned in paragraph (a) above, and, in the opinion of the court, the accommodation fulfils the relevant conditions as defined in paragraph 5 below. 5.(1) For the purposes of paragraph 4 above, the relevant conditions are that the accommodation is reasonably suitable to the needs of the tenant and his family as regards proximity to place of work, and either (a) similar as regards rental and extent to the accommodation afforded by dwelling-houses provided in the neighbourhood by any local housing authority for persons whose needs as regards extent are, in the opinion of the court, similar to those of the tenant and of his family; or (b) reasonably suitable to the means of the tenant and to the needs of the tenant and his family as regards extent and character; and that if any furniture was provided for use under the protected or statutory tenancy in question, furniture is provided for use in the accommodation which is either similar to that so provided or is reasonably suitable to the needs of the tenant and his family… . Suitable alternative accommodation [10] The judge considered first whether flat 11 represented “suitable alternative accommodation”. He found that it did. Since there is no appeal against that finding, I will summarise what he said only briefly. [11] Flats 34c and 11 are around one mile apart. Apart from their general opposition to the move, the tenants had a concern that they would be unable to afford flat 11. Their combined state pensions, supplemented by income support, came to £196.51 and they also had £60 per month from a charitable trust. Their rent for flat 34c was £175 per week and was paid in full by housing benefit. Dr Lee agreed to assist them by: (i) paying the flat 11 service charge, which covers water and heating costs for October to April inclusive; (ii) keeping the rent within the level of the available housing benefit; (iii) assisting with removal expenses; and (iv) contributing £3,000-4,000 towards necessary changes to their furniture. The judge said that any inability by the tenants to afford flat 11 would go both to its suitability and to the reasonableness of making an order. However, he found that, given Dr Lee’s concessions, no such difficulty would arise. [12] Various points were made concerning the comparative merits of the flats. The kitchen in flat 11 is smaller and would not enable the tenants to entertain guests there in the way they do in flat 34c’s kitchen. Whereas Mrs Whitehouse cooks on gas, there is no gas in flat 11. The balcony at flat 34c is larger and better situated than that at flat 11. The storage at flat 34c is in the hall and in the loft via ladder access; that in flat 11 is in the flat and a basement (and there is no need to climb a ladder). Cleve Road is on a bus route and is busier than leafy Netherhall Gardens, but I read the judge’s finding to have been that the difference between the roads in terms of traffic noise and busyness was insignificant. The Waitrose supermarket at which the tenants shopped was roughly half-way between the flats, but closer to flat 34c. The judge rejected Mr Whitehouse’s point that the second bedroom at flat 11 would not be as well-suited to his inventive engineering work as the bedroom/study in flat 34c. Access to the roof terrace at flat 11 was criticised because the last part of the journey, from the top floor to the roof, required the scaling of steps. So, the judge said, did the tenants’ access to flat 34c (as, he might have added, did their access to the loft). A point was made that it was relevant that Mrs Whitehouse does valuable charitable work in the local community, which could not be done as easily from flat 11. The judge considered that this had to be taken into account when dealing with the “reasonableness” issue. Was it reasonable to make an order for possession? [13] The judge turned to this question. He referred, in [34], to the length of time the tenants had been in flat 34c, a flat they loved and in which they had brought up their children, and to the difficulties they would face in having to move. This was, he said, a substantial factor to be weighed in the balance. However, he said, he had also to balance the fact that the siblings had “a perfectly reasonable case for wishing to realise their assets and assist them with regard to their pensions in their… later life”. The judge said the “reasonableness” issue required him to: |page:77| balance the reasonableness, as regards [the tenants] staying in their accommodation, against the reasonableness of [the siblings] wishing to sell it. [14] The judge accepted that Dr Lee and her family are financially secure: see [35]. A letter of 13 December 2007 from Dr Lee’s solicitor, Rooks Rider, disclaimed that the siblings needed to sell flat 34c to fund their pensions. They simply wanted to realise as much capital as they could to fund them and they accepted that they would “not suffer unduly harshly otherwise…”. The rents from no 34 total around £145,000 pa. Money from it had been applied in refurbishing the flats at no 34 when they became vacant: on average, one was refurbished every 18 months at a cost of between £20,000 and £30,000. The siblings pay £12,000 pa to Ms Amanda Tuvey (Dr Lee’s niece), who acts as a manager. Their case was that they wanted to separate their finances and that looking after the properties was too onerous for people of their age, particularly for Dr Lee in Australia. They did not want to employ a professional agent: Ms Tuvey had had bad experiences with such agents and, if they sold no 34, an agent would not want to manage just flat 34c. [15] The judge’s view, in [37], was that there was no reason why the siblings should not adopt the stance that they had. They had not yet made plans as to precisely what they would do were possession to be ordered, but it was understandable that they would want to incur the expense of doing that only once they had the certainty of possession. Although the siblings had already made a large return on their original investment, it was “not unreasonable [for them to want] to maximise their investment” by selling the properties with vacant possession. In [39] (after referring to Cresswell v Hodgson [1951] 2 KB 92, a case to which I shall return), he said: this is not a case where [Dr Lee] is anxious to make a pecuniary claim [sic: he meant “gain”]. It is a case where she is anxious to maximise the value upon disposal of the asset. … it is a question of a three-way split and also the issue of Capital Gains Tax, which will be attracted to the proceeds of sale, has to be borne in mind. In other words, it is not quite as much as might at first appear. [16] The judge then considered (although not comprehensively) the valuation evidence of Mr Spiro: see [40] and [41]. The plan is to develop flat 34c. Mr Spiro valued flat 34c and the garages, without planning permission, at: (a) £620,000 with vacant possession; and (b) £450,000 with a sitting tenant. The judge did not set it out but the evidence was that: (a) the combined value of nos 34 and 34c, without vacant possession of flat 34c and without planning permission, was something in excess of £4m; and (b) the combined value of nos 34 and 34c, with vacant possession of 34c and planning permission for its development, was around £1.2m to £1.4m more. The appeal was argued on the basis that the potential financial benefit to the siblings of the judge’s order was around £1.2m above the current (approximately) £4m value of the properties. Under the three-way split to which the judge referred, the potential benefit to each sibling was, after tax, perhaps between £300,000 and £400,000 over a current available benefit, after tax, of some £1.1m. [17] There was an issue before the judge concerning the amount that Dr Lee would have to spend on repairs to flat 34c if possession was not ordered. He dealt with the evidence relating to this in [43] to [47] and concluded that it did not assist him on the “reasonableness” issue. Neither counsel argued otherwise before us and I say no more about it. [18] The judge said, in [48], that the most compelling part of the tenants’ case was the emotional and social consequence of a possession order. The tenants (Mrs Whitehouse in particular) had thrown themselves into the Netherhall Neighbourhood Association, which covers three roads. They were co-founders 25 years ago. The aim is to help neighbours keep an eye on properties when the occupiers are away, feed cats and so on. Mrs Whitehouse sits on a head and subcommittee and the importance of it to her was not just doing the work but getting to know the neighbours and meeting them on the road for an impromptu chat. She does not have a job and this is a very important part of her life and, the judge said, of the case. She also works for a local charity. The point made was that although flat 11 may be only one mile away, it is separated by Finchley Road, it is for practical purposes a different area and Mrs Whitehouse would lose the social connections that are and have been for some 25 years a central part of her life. [19] Several witnesses gave evidence as to how unfortunate it would be if the tenants had to move. The judge gave a short summary in [49]. Dr McGrath gave evidence that Mr Whitehouse had suffered from heart failure in 2001 following pneumonia, and she feared the move would cause him considerable mental distress. Professor Whitehouse, the tenants’ son, spoke of his concern for his ageing parents and feared that the move would cause stress to his father. On the other hand, many witnesses said that they were friends of the tenants and would stay in contact with them if they moved. [20] The judge’s conclusion was that, balancing the factors that he had had in mind, it was reasonable to make an order. He said, in [53] and [54]: Uprooting people, even if it is not in these circumstances, is bound to cause distress but the question is, is it reasonable? I have balanced, as carefully as I can, all the matters to which I have referred and, in my judgment, applying the law which I am obliged to apply, I have to conclude that it is reasonable for me to make a possession order. I have indicated that I am well aware of the consequences to the tenants of having to reach that conclusion. It will never be the same as Netherhall Gardens, but it is approximately the same distance from their supermarket and the witnesses have indicated that they would wish to visit the Whitehouses, whom they regard as close friends. I equally accept that it is not the same as Netherhall Gardens. … But just as I am prepared to see the tenants’ side, it seems to me that the landlord also requires consideration. The only way that she could obtain possession was to offer alternative accommodation. That was going to be an expensive option and the landlord needed to know there was going to be some certainty. I have borne that in mind on both the issues of suitable alternative accommodation and the reasonableness of making the order. But I raise it now because it is quite obvious that the process of realising assets is going to take some time. Being elderly the tenants are going to need a great deal of time, given the length of time that they have been occupying the property… I envisage a period of at least three months. (Emphasis supplied.) [21] The emphasised sentences suggested to me that the judge might have been saying that the incurring of the expense of providing the alternative accommodation gave Dr Lee a decisive foot in the “reasonableness” door. If so, that would, I consider, have been an error. Mr Daniel Dovar, in his excellent submissions for Dr Lee, said that the judge was there referring merely to Dr Lee’s pre-litigation attempts (referred to in [53]) to secure the tenants’ agreement concerning alternative accommodation. If so, I do not understand its relevance in the context of what he was saying in [54], which was to explain the reasonableness of Dr Lee’s position. Appeal [22] It occurred to the court in advance of the hearing that the sad fact of Mr Whitehouse’s death last November might be regarded as admissible fresh evidence relevant to the consideration of the correctness of the judge’s order. We asked Ms Tracey Bloom whether she wished to apply to amend the notice of appeal so as to raise it. Mr Dovar’s position was that he had not come armed to consider whether such evidence could be admitted, and that, if it were, he would want to adduce evidence of the serious illness to which he told us Dr Lee’s brother has succumbed since the trial. It appeared, therefore, that if an amendment of the notice of appeal were to be permitted, the appeal would have to be adjourned. Having taken Mrs Whitehouse’s instructions, Ms Bloom did not apply to amend. The debate was therefore directed to the correctness or otherwise of the order the judge made on the evidence before him. [23] The question of whether it is or is not “reasonable” to make an order for possession in a case such as this is one of fact entrusted by the legislation to the trial judge. The determination of that question requires the judge to take account of all the facts, matters and circumstances relevant to it, and then to evaluate all of them in forming an overall factual judgment. The evaluation exercise is akin to, although different in kind from, the exercise of a discretion. It is important that this court |page:78| should recognise the limits of the grounds on which it can properly interfere with the trial judge’s evaluation. It is trite that it is irrelevant that the court forms the view that it might itself have answered the reasonableness question differently. The only circumstances in which it will ordinarily be open to the court to review the judge’s decision on that question will be if it is satisfied that he had acted under an error of principle or that his decision was plainly wrong: see Bracknell Forest Borough Council v Green [2009] EWCA Civ 238*, in [22] to [30], per Mummery LJ. An appellate court’s approach to a challenge to such an “evaluation” is therefore akin to its approach to a challenge to an exercise of discretion. That was recognised in Assicurazioni Generali SpA v Arab Insurance Group (BSC) [2002] EWCA Civ 1642; [2003] 1 WLR 577, per Clarke LJ, in [16], in a passage whose correctness was endorsed by Lord Mance in Datec Electronic Holdings Ltd v United Parcels Service Ltd [2007] UKHL 23; [2007] 1 WLR 1325, in [46]. The constraints on this court’s capacity to review the trial judge’s finding on the issue of “reasonableness” have long been recognised: see, for example, Cresswell, at p96, per Singleton LJ. ————————————————————————— * Editor’s note: Reported at [2009] NPC 45 ————————————————————————— [24] An appropriate starting point for the consideration of the arguments on this appeal is, therefore, to identify the correct judicial approach to the determination of the “reasonableness” question that was before the judge. In Cumming v Danson [1942] 2 All ER 653, at p655E-F, Lord Greene MR said: In considering reasonableness under [the then equivalent statutory provision], it is, in my opinion, perfectly clear that the duty of the judge is to take into account all relevant circumstances as they exist at the date of the hearing, That he must do in what I venture to call a broad, common-sense way as a man of the world, and come to his conclusion giving such weight as he thinks right to the various factors in the situation. Some factors may have little or no weight, others may be decisive, but it is quite wrong for him to exclude from his consideration matters which he ought to take into account. [25] In Shreeve v Hallam [1950] WN 140, Sir Raymond Evershed MR cited that passage with approval and the oratio obliqua of the report credits him with saying: In such matters the judge was not to consider whether it was reasonable for the landlord to claim possession, but whether it was reasonable to make an order. Lord Evershed MR, as he had by then become, made the same point in Brown v Davies [1958] 1 QB 117, at p129: the judge made it quite clear… that he appreciated his duty was to decide whether it was reasonable to make the order and not merely whether it was reasonable for the plaintiff to ask him to make the order. [26] Guidance to the like effect was provided more expansively in Cresswell, where Somervell LJ, at p95, said: I think the words of the section themselves indicate that the county court judge must look at the effect of the order on each party to it. I do not see how it is possible to consider whether it is reasonable to make an order unless you consider its effect on landlord and tenant, firstly, if you make it, and secondly, if you do not. I do not think we should say anything which restricts the circumstances which the county court judge should take into consideration. I think he is entitled to take into consideration that this is a case where the landlord is making a pecuniary gain. That might in other cases be a fact in the landlord’s favour, and it might be thought reasonable that he should be given the chance of making pecuniary gain. (Emphasis supplied.) That guidance was adopted by Watkins LJ in Battlespring Ltd v Gates (1983) 11 HLR 6†, at p9. ————————————————————————— † Editor’s note: Also reported at [1983] 2 EGLR 103 ————————————————————————— [27] Since this case can, in my view, be regarded as a “pecuniary gain” one (although the judge did not so regard it), it is worth noting how the point arose in Cresswell. The landlord had sought possession of a house occupied by a tenant under a controlled tenancy and had offered the tenant at a higher rent another house (one that he had built) as alternative accommodation. The landlord was under pressure from his bank and wanted capital to pay off his overdraft. He wanted to sell the tenanted house with vacant possession at an unrestricted price, whereas the maximum price at which he could sell the house he had built was restricted. The judge found the offered alternative accommodation to be suitable but held that it would not be reasonable to make the order: its making would represent nothing but loss to the tenant and nothing but very substantial gain to the landlord. [28] The landlord’s appeal was dismissed, the court holding that the judge had taken into account the factors that he should have done. The judge had properly considered both sides the positions of both the landlord and the tenant. Singleton LJ said, at p97: It seems to me that if a county court judge, in a case of this kind, found that the landlord was in dire financial straits and landlords sometimes are whereas the tenant was well-to-do, that would be a matter which the county court judge could consider. Equally, if he found that the tenant would be put into grave difficulty by the making of the order whereas the landlord would not be in any difficulty, because he had more means, again I think that is a matter for consideration. Singleton LJ pointed out that because the tenant’s employment gave him a rent allowance that would cover the increased rent at the alternative accommodation, he was in a much better position than most tenants and that “it may well be that many persons might not have come to the conclusion at which the county court judge arrived”. However, as the question of fact was for the judge, and he had not erred in principle or made a mistake in law, his decision must be upheld. Cresswell shows that the judge in the present case was entitled to take into account that Dr Lee wanted possession in order to maximise the realisation of the family’s investment. [29] The decision in Cresswell is itself a good illustration of the limits of an appellate review of a judge’s evaluation of the “reasonableness” issue in a case in which the court is satisfied that the judge has not misdirected himself. However, Ms Bloom submitted that the judge’s judgment in the present case shows that he did misdirect himself as to the determination of that issue. First, as was made clear in Shreeve and Brown, the question is not whether it is reasonable for the landlord to claim possession, but whether it is reasonable to make the order. Second, as Somervell LJ said in Cresswell, it is not possible to assess the reasonableness or otherwise of making the order without first considering “its effect on landlord and tenant, firstly, if you make it, and secondly, if you do not”. Ms Bloom’s submission was that the judge failed to apply the right approach. He nowhere directed himself as to the correct approach. Instead, he directed himself in [34] that all he had to do was to balance the reasonableness of the tenants’ wish to stay in flat 34c against the reasonableness of the siblings’ wish to sell with vacant possession. He found, in [37], that the siblings’ stance was not unreasonable and that it was “not unreasonable [for them to want] to maximise the investment”. He said much the same, in [39], saying that this was not a case in which the siblings were “anxious to make a pecuniary [gain]”. His conclusion was that although it would cause distress to the tenants to move to flat 11, “which will never be the same as Netherhall Gardens”, Dr Lee’s case was also a reasonable one and required consideration. He decided (without explaining why) that the [34] balancing exercise came down in favour of making a possession order. [30] I agree with Ms Bloom that the judge misdirected himself as to the correct approach to the “reasonableness” issue. His self-direction in [34] was wrong, as Mr Dovar recognised. The decision as to whether it was reasonable to make a possession order was not one that could be made merely by a purported balancing of the reasonableness of the tenants’ wish to stay in flat 34c against the reasonableness of the siblings’ wish that they should go. It required him to look at the question from all the angles, in particular, by considering the effect on the parties not only if an order were made but also if it were not. [31] It may be said that for a judge to consider the parties’ respective positions, both if an order is made and if it is not, is merely for him to look at both sides of the same coin; there is perhaps something in that. In my judgment, however, the guidance given so long ago in |page:79| Cresswell was, if I may respectfully say so, thoroughly sound and imposes an important discipline on the evaluation exercise. The limited balancing exercise that the judge sought to perform was, in my view, a near-impossible endeavour. He said, in [6], that he had not found the case an easy one and had sympathies for both sides. I consider, with respect, that his perception of the difficulty of the case was of his own making. He was right to recognise that the tenants had reasonable grounds for not wanting to move. He was also right to recognise that the siblings against an offer to the tenants of what the judge found to be suitable alternative accommodation were acting reasonably in wanting to maximise the realisation of the investment that they had held for 40 years. Who, in their position, would not want to do likewise? For myself, however, I find it impossible to see how those opposing cases of reasonableness can then be rationally balanced against each other for the purpose of an evaluation of whether it was reasonable to make an order for possession. The competing considerations are focused on entirely different interests, and the balancing exercise in which the judge sought to engage involved a weighing of true imponderables. It is no surprise to me that there is not a single sentence in his judgment as to why he concluded that it was reasonable to make the order. There is instead, in my view, much to be said for the view that what ultimately drove him to that conclusion was an unspoken assessment that, despite the tenants’ reasonable opposition, it was reasonable for Dr Lee to ask him to the make the order and therefore he should make it. If so, that was wrong. [32] Quite apart from what I would respectfully regard as having been a mistaken approach to the task before him, the judge’s assessment of the reasonableness of the siblings’ case appears to me to have had a surprising feature. That is his assessment in [39] that “this is not a case where [Dr Lee] is anxious to make a pecuniary [gain]”. I do not understand that remark. Making a pecuniary gain was precisely what Dr Lee wanted to do. Property values between 1969 and 2008 have of course changed somewhat. However, by reference to 1969 values, Dr Lee had bought cheap (subject to the tenants’ occupation of flat 34c) and now wanted to sell dear (with vacant possession). She wanted to do what Mr Cresswell had wanted to do, and the judge’s failure to appreciate this apparently miscoloured his approach to the case. I am not suggesting that Dr Lee’s wish in this respect was unreasonable. I am saying no more than that the judge appears to have misunderstood it. [33] The central criticism of the judge’s judgment is that he did not, however, consider the effect on the parties (or at any rate on the siblings) if no order were made. I have little doubt that the judge was properly aware of the effect on the tenants if no order were made, which can fairly be regarded as being the reverse of the effect on them if an order were made. From their perspective, the refusal of an order would enable them to continue to enjoy the security of tenure that it was the function of the Rent Act 1977 to confer on them and, in particular, to continue to live in their home of 45 years, one that they loved, in which they had brought up their family and in which they had established themselves as valuable, popular and respected members of a local community. The lifestyle that that represented to them was demonstrated by their uncompromising opposition to the move to flat 11. Even though it was but one mile away, it was beyond a relevant border, and the judge accepted that life there would never be the same as life in Netherhall Gardens. [34] However, the critical question, which the judge did not address, was as to the effect on the siblings if no order were made. It would of course mean that they could not, at any rate in the foreseeable future, sell the Netherhall Gardens properties with vacant possession of flat 34c and so realise their maximum value. However, how important was that to them? First, they had conceded that they did not need so to sell in order to raise sufficient pension funds, and they advanced no case of hardship if they could not so sell. Second, the refusal of an order would not mean that they would forever lose the opportunity of realising flat 34c with vacant possession. The tenants were 79 and 75 and would not be there forever. How long they might stay there was an unknown, but the full realisable value of the flat would one day be available either to the siblings or their families. Third, since the siblings did not need to sell with vacant possession, they could, if they chose, sell subject to the tenants’ occupation, albeit thereby realising a smaller return: there was no question of that causing them any hardship. Fourth, to delay their opportunity to achieve a vacant possession value was to do no more than to delay their obtaining of a pecuniary gain, which (contrary to the judge’s assessment) was behind the claim for possession. In assessing this, it was relevant to bear in mind that when they had bought (subject to the tenancy) in 1969, they could not have done so with any certainty that they would ever be entitled to evict the tenants in order to realise the maximum value from their investment. [35] In my judgment, had the judge looked at this case from all the required angles, and taken into account the considerations just mentioned, it is probable that he would have found it an easier one than he did. What is clear, in my view, is that he approached the determination of the reasonableness question on a mistaken basis. It follows, I consider, that his order must be set aside. It further follows that it is then for us either to remit the matter to the county court for a retrial on the “reasonableness” issue, or, if we consider that we are sufficiently equipped to decide that issue ourselves, to make our own evaluation. [36] Neither counsel advocated a remission to the county court, nor would I remit it. In my judgment, we are in a position to decide the “reasonableness” question. Dr Lee’s claim for possession was one that was brought by reference to perfectly reasonable financial considerations, although for reasons just given the siblings’ financial circumstances were not such that a failure to obtain an order would cause financial hardship for them. They did not need to be able to sell with vacant possession. As for the tenants, the judge correctly recognised that the making of an order for possession would cause distress to them and that flat 11 would never be the same as flat 34c. [37] The judge did not engage in a close analysis of the evidence that the tenants adduced (over a three-day trial) to support the measure of the loss that they perceived that they would suffer by being compelled to move to flat 11. Nor, however, did he reject that evidence, which was considerable. I do not consider it necessary, in performing afresh the evaluation exercise, to review the evidence in close detail as though this court were dealing with the matter at first instance. Ms Bloom submitted, with some force, that the judge’s summary of the tenants’ evidence and that of their witnesses did not do full justice to the tenants’ case. However, I have no doubt that the judge was properly sensitive to it. It was his recognition of it that caused him to regard the case as difficult. When, in [53], he said that “I have indicated that I am well aware of the consequences to the tenants of having to [make a possession order]. It [flat 11] will never be the same as Netherhall Gardens”, he was not referring to the relative merits of flats 11 and 34c as residential units (and I in fact read the judge as probably being of the view that, as such units, flat 11 may well have had the edge on flat 34c). He was here recognising that the tenants had what (in [48]) he had described as a compelling case based on “the emotional and social aspects” of the threatened move. That was, in essence, that flat 34c was not just the bricks and mortar in which they lived. It had been, for the greater part of their adult lives, their home in a special local, village-like community in which they had played and continued to play important roles; a community in which they enjoyed, and returned, local friendship and support, with the latter becoming more important to them with the passage of the years (and which would be of particular importance if one of them were to die); a community that would and could not be replicated in flat 11. The tenants were at an age when they could not “start again” in flat 11. [38] This was the factor at the forefront of the tenants’ case on reasonableness; it was a real consideration and the judge recognised it. It is, however, fair to note that, also in [53], he then rather played down the point by saying that Waitrose was roughly equidistant from the two flats and that “the witnesses have indicated that they would visit the Whitehouses, whom they regard as close friends”, although he then drew back from that a little by saying again that “I equally accept that it is not the same as Netherhall Gardens”. These were the words of |page:80| a judge who recognised that his decision was going to be very painful for the tenants and who wanted them to know that he had understood their concern. I add, though, that I do not understand the case to have centred on the location of the supermarket, and I agree with Ms Bloom that there was a good deal of evidence to the effect that the move beyond Finchley Road, into what is, in practice, a different neighbourhood, would result in a material loss to the tenants of their all-important, regular, informal contact with friends and neighbours in the three-road community centred on Netherhall Gardens. This is, it seems to me, a self-evident truth, although it is one that the judge does not appear to have given the acknowledgment that it deserved. [39] Ultimately, though, although I have no doubt that the judge properly recognised the “social and emotional” elements of the tenants’ case, he regarded it as trumped as far as “reasonableness” was concerned by the reasonableness of the siblings’ wish to maximise the realisation of their Netherhall Gardens investments. In my judgment, however, once the siblings’ case in this respect is considered from all the angles from which it should have been assessed, it diminishes considerably; and my assessment is that a consideration on the effect on the parties both if an order is made and if it is not made points unerringly to the conclusion that it was not reasonable to make an order for possession. In my judgment, the judge’s contrary decision was not only arrived at as the result of a misdirection, it was obviously wrong. [40] I would allow the appeal, set aside the judge’s possession order and dismiss Dr Lee’s claim for possession. Aikens LJ said: [41] I agree. Waller LJ said: [42] I also agree. Appeal allowed.