Alexander v Mohamadzadeh

Rent Act 1977, Schedule 15, Case 9 — Landlord’s appeal from county court judge’s order in possession action — Material date for determining landlord’s reasonable requirements for occupation as residence for herself — Greater hardship — Whether Court of Appeal should make an order for possession or remit case to the county court for a rehearing — In appellant’s action for possession against the respondent, a statutory tenant, the county court judge gave judgment for payment of rent arrears and made a suspended order for possession — Appellant claimed that she was entitled to an absolute order on the ground that she required the dwelling for her own occupation — There were three issues before the Court of Appeal, namely (1) Whether judge was wrong in deciding that appellant had failed to establish that she reasonably required the flat in question for her own occupation, (2) Whether he was wrong in deciding that the respondent tenant had established greater hardship, and (3) Whether in these circumstances the Court of Appeal should make an order for possession in favour of the appellant — Held, on the first issue, that the judge had been wrong in considering the appellant’s requirements at the date of the commencement of proceedings: the appropriate time was the date of hearing — He was also wrong in determining the issue of greater hardship in favour of the tenant: there was no evidence to justify this decision — The remaining question was what the court should now do — It was open to the court, on allowing the appeal, itself to make an order for possession and the court could receive evidence of any change of circumstances since the date of the hearing below — However, the court did not have sufficient material to decide whether, in the light of all the circumstances, the appellant reasonably required the subject flat for her own occupation, or to decide the overall question of reasonableness under section 98(1) — Despite the expense and strain involved, there was no alternative to a further hearing — Appeal allowed and case remitted for a rehearing This was an appeal by Mrs Arpenick Alexander from orders made by Judge Hordern at West London County Court in proceedings brought by Mrs Alexander against her tenant, the respondent, Mrs Mohamadzadeh, for possession of a flat at 35A Russell Road, West Kensington, London W14. Jonathan Ferris (instructed by Freeborough Slack & Co) appeared on behalf of the appellant; Peter Jennings (instructed by Winston & Co) represented the respondent. Giving the judgment of the court at the invitation of Oliver LJ, BALCOMBE LJ said: This is the judgment of the court. The appellant, Mrs Alexander, is an Iranian of Armenian extraction. She left Iran in 1950 and lived in India until 1972, when she came to the United Kingdom, where she has since lived. Her husband died in 1982. She has two adult sons, both in Australia, and an adult daughter in Iran. In 1979 Mrs Alexander, who was then living in a bed-sitting-room at 35 Kensington Church Street, London W8, bought a leasehold interest in a flat known as 35A Russell Road, West Kensington, London W14, for the sum of £23,500, of which £16,200 was raised on mortgage and there was also a bank loan. She occupied the flat herself for only a short time and then allowed her son and others to occupy it, she herself returning to 35 Kensington Church Street, where she still lives. In November 1980 came the first of a series of ‘holiday lettings’ of the flat to the respondent Mrs Mohamadzadeh. Mrs Mohamadzadeh is also an Iranian, who arrived in this country in 1978. She was then married and has two daughters. The elder daughter is now herself married and has her own home in London. The younger daughter, Shirin, is now 18 years old, lives with her mother, and is in full-time employment. Mrs Mohamadzadeh’s marriage was dissolved in January 1980. Between her arrival in this country and her occupation of the flat at 35A Russell Road, Mrs Mohamadzadeh lived first in a flat at 11 Campden Hill Road, London W8, of which she was the tenant, although the rent was paid by a Mr Ali Goker, with whom she was then living. After separating from Mr Ali Goker, Mrs Mohamadzadeh stayed with friends, and then found the flat at 35A Russell Road, of which the rent was initially paid by a Mr Nathan Yemin. Mrs Mohamadzadeh is now in receipt of supplementary benefit. There were in all five ‘holiday lettings’ of the flat at 35A Russell Road by Mrs Alexander to Mrs Mohamadzadeh, each at a rent of £390 per month. When a sixth agreement in similar terms was proffered by Mrs Alexander to Mrs Mohamadzadeh in May 1983, the latter refused to sign it and the two ladies, who had become friends, fell out. Mrs Alexander served notice to quit on June 20 1983 expressed to expire on July 23 1983, and on July 26 1983 she commenced proceedings for possession of the flat in the West London County Court. The pleadings in their final form raised a large number of issues, and the hearing occupied several days spread over a considerable period. Eventually, on September 7 1984, His Honour Judge Hordern gave judgment for Mrs Alexander in the sum of £2,762.42 for arrears of rent, and made an order for possession in her favour suspended so long as the current rent, with monthly instalments off the arrears, was duly paid. From that order Mrs Alexander has appealed: she claims she is entitled to an absolute order for possession of the flat on the grounds that she reasonably requires it Before us it was common ground that the contractual relationship between Mrs Alexander and Mrs Mohamadzadeh ended in May 1983 and that thereafter Mrs Mohamadzadeh became a statutory tenant of the flat under section 2 of the Rent Act 1977. Before us there were three issues: (1)  Was the learned county court judge wrong in his finding that Mrs Alexander had failed to establish that she reasonably required the flat for her own occupation? (2)  Was the judge wrong in his finding that Mrs Mohamadzadeh had established that greater hardship would be caused to her if an order for possession were made than if it were withheld? (3)  If we were of the view that the judgment should be set aside on these grounds, should this court make an order for possession in favour of Mrs Alexander, or should we remit the case to the county court for a rehearing? The first issue Section 98 of the Rent Act 1977 is, so far as relevant, in the following terms: (1) . . . a court shall not make an order for possession of a dwelling-house which is for the time being . . . subject to a statutory tenancy unless the court considers it reasonable to make such an order and . . . (b)    the circumstances are as specified in any of the cases in Part 1 of Schedule 15 to this Act . . . (3)  Part III of Schedule 15 shall have effect in relation to Case 9 in that Schedule. Part I of Schedule 15 is headed by the rubric ‘Cases in which Court may order Possession’ and Case 9 is, again so far as material, in the following terms: When the dwelling-house is reasonably required by the landlord for occupation as a residence for – (a)    himself, or (b)    any son or daughter of his over 18 years of age, or (c)    his father or mother, or (d)    if the dwelling-house is let on or subject to a regulated tenancy, the father or mother of his wife or husband. . . The short point on this issue is: at what date does the court have to be satisfied that the dwelling-house is reasonably required by the landlord for occupation as a residence for himself or any of the other persons specified in Case 9: at the date of the hearing or at the date when proceedings are first issued? 162 In the present case the point arises because the learned judge, having visited both the flat at Russell Road and the single room occupied by Mrs Alexander at 35 Kensington Church Street, held that the former was infinitely preferable to the latter and said: In all these circumstances I would normally have little hesitation in holding that Mrs Alexander reasonably requires her room in Russell Road for her occupation. However, the learned judge then continued: But there are other considerations which seem to me to point very powerfully in the other direction. After acquiring Russell Road Mrs Alexander, no doubt for financial reasons — though there is nothing to show me that she is better off now than then — chose to move back to Kensington Church Street, and to put others into Russell Road, as I think, for rent. Then there was the letting to Mrs Mohamadzadeh. Mrs Alexander says that she has continually asked when Mrs Mohamadzadeh was going to move from her flat in Russell Road. That may be so; it is disputed. If it is true, it throws light on the situation in May 1983. If it is right, then at that time Mrs Alexander wanted the flat and was no longer on good terms with the tenant, but was willing to proffer another 6-monthly agreement. The conjunction of events, refusal to execute the last agreement, followed by a notice to quit, refusal of rent and issue of proceedings, show fairly clearly to me that Mrs Alexander wanted the flat not as a residence for herself but merely to prevent a person who had statutory rights from continuing to occupy the flat. In those circumstances, while I acknowledge that Mrs Alexander occupies inferior accommodation, she seems to me to fail to show that she required Russell Road as a residence for herself. Although during the course of the proceedings she has persuaded herself that the thing nearest to her heart is to obtain possession of her flat and move back, I do not think at the time of issuing proceedings she required Russell Road for herself in a sense contemplated by the legislation. Mr Ferris, who appeared for Mrs Alexander before us as he did below, submits that that passage makes it clear that the judge was considering the question as at the wrong time: even if Mrs Alexander did not require the Russell Road flat for her own occupation at the date she started the proceedings, that is irrelevant if she did reasonably require it at the date of the hearing. Looking at the matter apart from authority, we would have no hesitation in saying that the relevant time for considering the question whether the landlord reasonably requires the house for occupation as a residence for himself or the other persons specified in Case 9 must be at the date of the hearing: any other answer would produce startling results. Thus a landlord might establish that at the date when proceedings were started he reasonably required occupation of the house but that because of a change in his personal circumstances that requirement had disappeared by the date of the hearing. It would be remarkable if — subject to the greater hardship point under Part III of Schedule 15 — the court had none the less to make an order for possession in favour of the landlord. Mr Jennings, who appeared for Mrs Mohamadzadeh before us and below, meets that argument by submitting that in these circumstances the court would not consider it reasonable to make such an order under section 98(1), and that might be a valid answer if that were the only problem raised by this construction of the Case. The converse position also presents difficulties. A landlord has a child approaching the age of 18 years or, in the case of a regulated tenancy, is about to marry and reasonably requires the house as a residence for his future mother-in-law. Mr Jennings’ argument, as he accepts, means that the landlord cannot start proceedings for possession until, in the one case, the child has attained the age of 18 years or, in the other, the marriage has taken place. It is difficult to think of any valid reason why he should not be able to start his proceedings in anticipation of the requisite event having taken place before the hearing. However, the matter is not free from authority. In Harcourt v Lowe (1919) 35 TLR 255 Lush J, considering the same provision in the Increase of Rent and Mortgage Interest (War Restrictions) Act 1915 said (at p 256): In my opinion, the only time which it is necessary to consider in order to apply the provisions of the subsection is the time when the Court is asked to make the order. In Aitken v Shaw 1933 SLT (Sh Ct) 21 the sheriff dealt with the same point in the following terms: Is the dwelling-house at White’s Place reasonably required by the pursuer?  I have not found this an easy question to answer. My difficulty has been to determine whether the pursuer required the house reasonably, in the sense that she had a genuine present need our emphasis for the house for her own occupation. In Smith v McGoldrick (1976) 242 Estates Gazette 1047, a decision of this court, Cairns LJ said: This was a case relating to a tenancy protected under the Rent Acts. Those Acts provide that where there is such a tenancy an order for possession can be made only in certain cases, and subject, as I have already indicated, to the overriding considerations in relation to the relevant case here of greater hardship and of reasonableness. It is quite clear that those questions have to be considered as at the date of the hearing, not at any earlier date. Finally, in Kidder v Birch (1982) 265 Estates Gazette 773, this court held that it was perfectly proper for a landlord to seek possession under Case 9 when the need for accommodation was not presently established, even at the date of the hearing, but was in the ascertainable and not distant future. O’Connor LJ (with whom Templeman and Cumming-Bruce LJJ agreed) said, in the course of his judgment: In considering the issue of greater hardship, the court is required to look at the date when the order is going to take effect. Mr Jennings remained undaunted by the weight of authority apparently against him. He made two further submissions: first, that the landlord’s right to recover possession from a statutory tenant is a cause of action and, like any other cause of action, must subsist at the date when the action is commenced. The fallacy in this submission is, in our judgment, the equation of the fulfilment of the statutory conditions in Case 9 with a cause of action. The landlord’s rights flow from his ownership of the property: the Rent Act 1977 is relevant only in that it restricts the exercise of those rights of property. In other words, the landlord’s cause of action for possession arises once the contractual tenancy is determined, whether by notice to quit for failure or otherwise, even though he will not be able to succeed in his action for possession unless he can overcome the restrictions put on those rights by the Rent Act 1977 by bringing himself within the provisions of Part VII (and in particular section 98) of that Act. Mr Jennings’ other submission was based on the decision of this court in Bird v Hildage [1947] 2 All ER 7. There a landlord of rent-controlled property claimed possession from the statutory tenant on the ground that he was in arrear with his rent. Cohen LJ, giving the judgment of the court, said (at p11): Section 3 and Sched 1 of the Rent and Mortgage Interest Restrictions (Amendment) Act 1933 lay down the circumstances in which the court may make an order or give a judgment for recovery of possession, and we think that, in reaching a conclusion whether any rent is lawfully due and has not been paid, the court must look at the date of commencement of the proceedings by which the landlord is seeking to recover possession. The rights of the parties crystallised at that date, and nothing happening thereafter could, in our opinion, deprive the court of jurisdiction to make an order for recovery of possession, if the court thought it reasonable so to do . . . Before the court can have jurisdiction the landlord must prove two things, namely, (1) that some rent was lawfully due from the tenant at the date of institution of the proceedings, and (2) that such rent was unpaid. Arrears of rent as a ground for possession is now covered by Case 1 in Schedule 15 to the 1977 Act, and we accept that the decision in Bird v Hildage (supra) is still applicable in such a case. From this, Mr Jennings argues that a similar test must be applied to all other cases. We do not accept this argument. Where a landlord seeks possession from a statutory tenant on the ground that rent has not been paid, it is wholly reasonable that he should have to establish that some rent was due and unpaid at the date he instituted his proceedings; it would be wholly unreasonable for him to be able to start proceedings for possession at a time when no rent was due and unpaid in the hope that some rent might become due and unpaid by the time of the hearing; indeed it is hard to envisage any landlord wishing to start proceedings in those circumstances. However, no such considerations apply to the case where a landlord seeks possession on the ground that he requires the premises for his own occupation; indeed, for the reasons given earlier in this judgment, the opposite is the case. So the submission depends solely on the argument that consistency requires that the same test should be applied in all the cases. In our judgment there is no such requirement for consistency. A similar argument was advanced before the House of Lords in Betty’s Cafés Ltd v Phillips Furnishing Stores Ltd [1959] AC 20. Section 30(1) of the Landlord and Tenant Act 1954 specifies a number of grounds on which a landlord of business premises may oppose an application by a tenant for a new tenancy. Three of these grounds, under paras (a), (b) and (c), relate to the tenant’s failure to163 comply with his obligations under the tenancy. Para (f) relates to the landlord’s intention to demolish or reconstruct the premises. The question in that case was whether an intention to reconstruct formed only during the course of the hearing was sufficient. The House of Lords held that it was. It was argued that because some of the grounds (in particular those under paras (a) – (c)) must relate to facts in existence at the time when the landlord served his notice of intention to resist the tenant’s application for a new tenancy, a similar test must be applied to the landlord’s intention to reconstruct under para (f). The House rejected this argument. Viscount Simonds said (at p 35): But it has been urged (and for that reason I have set out grounds (a) to (d) and (g)) that, whatever might be said if ground (f) stood alone, a different construction is imposed by a consideration of the other grounds of opposition. From this argument I entirely dissent. In the first place I see no reason why different grounds of opposition should not relate to different periods of time. But, in any case, the argument, if bona fides is assumed, is an unreal one. It is not to be supposed that a landlord will base his opposition under ground (a), that is, the state of repair of the holding resulting from the tenant’s failure to comply with his obligations, if in fact the state of repair at that date gives him nothing to complain of. He will state that he will rely on ground (a) if and only if at the date of notice it gives him solid support. Lord Morton of Henryton was to the like effect. We derive considerable support from these speeches in rejecting Mr Jennings’ argument, similar to that advanced by the appellants in Betty’s Café s and there rejected, that because the time of the institution of proceedings is appropriate to Case 1, it must also be applied to Case 9, where it is inappropriate. Accordingly, in our judgment the appropriate time for considering whether the landlord has made out his claim for possession under Case 9 is at the date of the hearing, and the learned judge was wrong in considering Mrs Alexander’s requirements (or lack of them) at the date when she issued the proceedings in this case as conclusive to debar her from success. Of course, it would have been open to the judge to have held that Mrs Alexander’s motives for starting proceedings threw light upon her reasonable requirements as at the date of the hearing, but that was not what he held; indeed he found that she had persuaded herself during the course of the proceedings that the thing nearest to her heart was to obtain possession of her flat and move back. In our judgment, therefore, Mrs Alexander succeeds on the first of the three issues argued before us. The second issue — greater hardship Para 1 of Part III of Schedule 15 to the Rent Act 1977 provides that a court shall not make an order for possession of a dwelling-house by reason only that the circumstances of the case fall within Case 9 if the court is satisfied that, having regard to all the circumstances of the case, including the question whether other accommodation is available for the landlord or the tenant, greater hardship would be caused by granting the order than by refusing to grant it. The burden is upon the tenant to prove that greater hardship would be caused by granting the order than by refusing to grant it — see Sims v Wilson [1946] 2 All ER 261, CA; Piper v Harvey [1958] 1 QB 439, CA. The learned county court judge accepted that the burden of establishing greater hardship was on the tenant, Mrs Mohamadzadeh, and held that she had satisfied that burden because she had established that there would be a very real risk of her and Shirin being made homeless. In our judgment there was no proper evidence which enabled the judge to reach that conclusion. In his own words: There is no evidence of other accommodation available for Mrs Mohamadzadeh, although she has not looked for any. It is right that there is no real evidence as to what difficulties Mrs Mohamadzadeh would face in finding other accommodation . . . . However, he then went on to make the finding he did because of Mrs Mohamadzadeh’s limited spoken English and the fact that she was on supplementary benefit. In Piper v Harvey (supra) a similar question arose. The tenant there gave no evidence of any attempts to find other accommodation, and the court then found that he had not satisfied the burden that was on him to prove the case of greater hardship. In our judgment a similar position has arisen in this case. Accordingly Mrs Alexander also succeeds on the second of the three issues argued before us. The third issue: What should this court do now? Since the court below refused to grant Mrs Alexander the order for possession which she claimed, and since in our judgment it was wrong in so doing, it would be open to this court, on allowing the appeal, itself to make an order for possession. For that purpose this court is entitled to receive evidence of any change in circumstances since the date of the hearing below — see King v Taylor [1955] 1 QB 150, CA. Accordingly, we have been informed that, pursuant to an application by Mrs Mohamadzadeh, the rent of the Russell Road flat has now been registered and has been determined by the rent officer at £260 per month with effect from January 31 1985, a reduction of £130 per month on the contractual rent, while Mrs Alexander’s outgoings (in particular the repayment of the mortgage and the bank loan) have not been similarly reduced. So far as the second issue, greater hardship, is concerned, we can see no difficulty in this court substituting its views for those of the learned judge, since we have already said that there was no evidence to justify his finding on that issue. But on the first issue we find greater difficulty: can we be satisfied in all the circumstances that Mrs Alexander reasonably requires the Russell Road flat for her own occupation?  Mr Ferris reminded us of the judge’s finding that he would normally have had little hesitation in holding that Mrs Alexander reasonably required her room (presumably flat) in Russell Road for her own occupation, and his further finding that she had during the course of the proceedings persuaded herself that the thing nearest to her heart was to obtain possession of her flat and move back. However, much of the evidence before the court below related to Mrs Alexander’s financial position, and whether in any event she could afford to live in the flat. In the event, the judge made no express finding on this issue, although in the passage from his judgment cited above he does make the point that after acquiring Russell Road Mrs Alexander chose to move back to Kensington Church Street for financial reasons, and there was nothing to show him that she was better off at the date of the hearing than then. In our judgment, Mrs Alexander’s financial ability to live in this flat is an issue which has to be considered, both on the question whether she reasonably requires Russell Road for her own occupation and in relation to the overall question of reasonableness under section 98(1). This court does not have sufficient material, even with the additional information mentioned above, to enable it to answer these questions and, reluctant as we are to put the parties to the expense and strain of a further hearing, we can see no sensible alternative. Accordingly, this appeal is allowed and the case will be remitted to the county court for a rehearing on the merits. The appeal was allowed with costs, the order as to costs not to be enforced without leave of the court.