Agreement over arrears created new tenancy

LAW REPORT 22 August 1995

Burrows v Brent London Borough Council; Court of Appeal (Lord Justice Butler-Sloss, Lord Justice Otton and Lord Justice Auld) 12 July 1995

Where a landlord, having obtained a final order for possession for non- payment of rent, then permitted the former tenant to remain in the premises on condition the tenant paid a sum equivalent to rent and towards arrears, the effect was to grant the tenant a new tenancy or a licence enjoying the same protection as under the terminated tenancy, and to require the landlord to obtain a further order of possession before the tenant could be evicted for subsequent non-payment of rent.

The Court of Appeal dismissed an appeal by the London Borough of Brent from the decision of Judge Finestein QC, sitting at Willesden County Court on 19 August 1994, who declared the plaintiff, Diane Sarah Elizabeth Burrows, to be a secure tenant of a flat owned by the council, pursuant to an agreement made between them on 5 February 1992, and granted her a mandatory injunction requiring the council to re-admit her to the flat following her purported eviction.

Bryan McGuire (Paul Barber, Brent) for the council; William Geldart (Daniel & Harris, Kilburn) for the plaintiff.

Lord Justice Auld said Brent, like many local authorities, as a matter of policy gave tenants, against whom a final possession order had been made, a last chance to remain if they entered into an agreement to pay a sum equivalent to rent and towards their arrears. The council apparently thought a final order had more impact than a suspended order in persuading the occupants of its housing to pay their rent. If so, that was only a matter of perception, because a council could execute a suspended order, of which a tenant was in breach, by the issue of a warrant, and without further order, just as it could in the case of a final order.

On 29 January 1992, the council obtained a 14-days' final order against the plaintiff for possession of her flat for non-payment of rent and an order for payment of arrears. She was unable to pay the arrears within 14 days but, on 5 February, the council entered into an agreement with her, under which she could continue to live in the flat so long as she paid a sum equivalent to rent and regular payments towards arrears. Had she complied with this agreement, it would have taken her over 14 years to pay off the arrears. But she failed to comply and the council issued a warrant to enforce its possession order.

The judge held that the plaintiff's original tenancy ended as a result of the possession order, but that, without either party having intended it, a new tenancy had been created by operation of law.

Brent appealed, arguing, inter alia, that the agreement was simply to suspend enforcement of the possession order on terms, and involved no intention to create a legal relationship or grant her exclusive occupation.

But his Lordship accepted the plaintiff's argument that the plain intention of the agreement was to permit her to remain in exclusive occupation of the property at a rent, and that it amounted to the grant of either a new lease or a licence to occupy the property. (It was not necessary to decide which, since either entitled her to security of tenure under section 82 of the Housing Act 1985.)

The council's policy thus produced the opposite of what it sought to achieve. Instead of achieving the same result as a suspended order of possession, the effect of obtaining a final order followed by such an agreement was that a former tenant acquired a new tenancy or a licence enjoying the same protection as under the terminated tenancy, requiring a further order of possession before they could be evicted for non-payment of rent.

In contrast, a suspended order remained suspended only for so long as the tenant complied with its terms. The tenant's failure to comply terminated the tenancy and entitled the landlord to execute the order merely by issuing a warrant for possession.

This could not be done in the case of a final order followed by an agreement which amounted to a new tenancy, since the basis for the issue of a warrant for possession ceased to exist following the grant of a new tenancy, and the warrant could only relate to the old, not the new, tenancy. The erroneous use of such a warrant in this case to evict the plaintiff was a breach of covenant for quiet enjoyment, trespass and an unlawful eviction in respect of her new tenancy.

Lord Justice Butler-Sloss and Lord Justice Otton concurred.

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