Law Report: Agreement over arrears was not new tenancy

LAW REPORT v 8 November 1996
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Burrows v Brent London Borough Council; House of Lords (Lord Browne- Wilkinson, Lord Keith of Kinkel, Lord Griffiths, Lord Jauncey of Tullichettle, Lord Steyn) 31 October 1996

Where a landlord, having obtained a final order for possession for non- payment of rent, then agreed to allow the former tenant to remain in the premises on condition the tenant paid a sum equivalent to rent and towards arrears, the effect was not to grant the tenant a new tenancy or licence enjoying the same protection as under the terminated tenancy, but rather to treat the tenant as a "tolerated trespasser" until either the old tenancy was revived or the agreed conditions were breached.

The House of Lords allowed an appeal by Brent London Borough Council against the decision of the Court of Appeal (Law Report, 22 August 1995; (1995) 94 LGR 525) affirming that 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, and ordered the council to re-admit her to that flat.

On 29 January 1992, the council obtained a 14 days' final order against Miss Burrows 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 made an agreement under which she could stay 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 two years later the council issued a possession warrant which was executed on 8 June 1994.

The Court of Appeal held that 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 under Part IV of the Housing Act 1985 as under the terminated tenancy, requiring a further order of possession before they could be evicted for non-payment of rent.

The council argued that she was merely a tolerated trespasser. Although under section 82(2) of the Act the original tenancy ended on 12 February 1992, the court had power under section 85(2) to postpone the date of possession. Section 85(3)(a) envisaged a situation where, although the old tenancy had ended and the tenant remained, the court could, until the original order was executed, vary the possession date thereby reviving the previously defunct tenancy.

Ashley Underwood QC and Bryan McGuire (Paul Barber) for Brent; David Neuberger QC and William Geldart (Daniel & Harris) for Miss Burrows.

Lord Browne-Wilkinson said that, where a former tenant was by agreement allowed to remain in possession after the termination of the tenancy, the question in each case was quo animo the parties had so acted.

The present parties plainly did not intend to create a new tenancy or licence, but only to defer the execution of the order so long as Miss Burrows complied with the agreed conditions.

A secure tenancy under Part IV of the Housing Act could only be terminated by a court order, but even that was not final. During the period between the date specified by the order for the giving of possession and the date on which the order was executed there was a period of limbo; the old tenancy had gone but might yet be revived by a further court order varying the date for possession.

If the parties reached an agreement for the tenant's continued occupation during that limbo period, their agreement could and should take effect as intended, i.e. that upon the tenant complying with the conditions the landlord would forbear from executing the order.

There was no need to impute to the parties an intention to create a new tenancy or licence. The retention of possession and payment of rent related to occupation under the old tenancy which was in limbo but which might be revived. In such circumstances it was fair to characterise the tenant as a tolerated trespasser, pending either revival of the old tenancy or breach of the agreed conditions.

Paul Magrath, Barrister