Case No: B2/2002/0578-9
Neutral Citation [2002] EWCA Civ 1850
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SWINDON COUNTY COURT
(Miss Recorder Ralphs and HHJ Wade)
Royal Courts of Justice
Strand, 
London, WC2A 2LL

Thursday 19 December 2002
Before :

LORD JUSTICE SCHIEMANN
LORD JUSTICE JONATHAN PARKER
and 
MR JUSTICE PUMFREY

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Between :

	SWINDON BOROUGH COUNCIL
(formerly THAMESDOWN BOROUGH COUNCIL)	Respondent	
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	BRIAN MARK THOMAS ASTON	Appellant	

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(Transcript of the Handed Down Judgment of
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
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William Okoya (instructed by Stephen Taylor (Borough Solicitor)) for the Respondent
Robert Latham  (instructed by Wood Awdry & Ford) for the Appellant
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Judgment
As Approved by the Court

Crown Copyright ©

Mr Justice Pumfrey : 
Introduction
1.	This is an appeal from the judgment of Miss Recorder Ralphs delivered on 25 February 2002 refusing to rescind a possession order (‘the 1991 order’) made against the appellant (‘Mr Aston’) as long ago as 13 December 1991. The grounds of this application before the judge were that Mr Aston had complied with the terms of suspension of the 1991 order, albeit late, and had paid off all the sums due under the order.
2.	There is a further application for permission to appeal against HHJ Wade’s judgment of 23 November 2001 dismissing an appeal from DJ Simons who had on 22 June 2001 made a further possession order against the appellant pursuant to a Notice to Quit served by the respondent council. Peter Gibson LJ gave permission to appeal from the order of Miss Recorder Ralphs on paper, and left the question whether it was necessary to appeal against the order of HHJ Wade, and, if so, whether permission to do so should be granted, to the hearing of the appeal.
The facts
3.	On 26 January 1987, Mr Aston went into occupation of 16 Odstock Road, Penhill, Swindon. He was a secure tenant of Thamesdown Borough Council (‘Thamesdown’), the respondent’s predecessor in title. On 13 December 1991, Thamesdown obtained the 1991 possession order against Mr Aston on the ground of unpaid arrears of rent (claim number 91 10430). The possession order was suspended on condition that Mr Aston paid the arrears by instalments of £2 per week in addition to the current rent. The terms of suspension were in standard form:
‘It is ordered that the judgment for possession shall not be enforced for 28 days in any event, and for so long thereafter as the defendant punctually pays to the plaintiff the arrears of rent … by instalments of £2-00 per week in addition to the current rent
And that the judgment for £43-00 costs…shall not be enforced for so long as the defendant punctually pays the costs by instalments of £2-00 per week
And also that the judgment shall cease to be enforceable when the (arrears of rent, … and ) costs referred to above are satisfied’
4.	By 27 January 1991, the arrears had increased to £454.15, and his rent statement shows that Mr Aston, who was in receipt of housing benefit for most of the period until 1995, tended to pay irregular round sums towards his rent. Thamesdown sought a warrant of possession in August 1992, but in September 1992 it formed the view (wrongly) that Mr Aston had complied with the conditions of suspension, and withdrew its application, telling the court in correspondence that matters between it and Mr Aston would continue to be governed by the 1991 order.
5.	In January 1994, Thamesdown obtained a further warrant to evict Mr Aston, but agreed with him to suspend the warrant (which was executable on 25 January 1994) on terms that Mr Aston paid his current rent plus £2.20 per week, and the warrant was suspended by order of 14 January 1994. By this time, Mr Aston had made the first of a number of applications to revoke the possession order, which was dismissed on 18 February 1994. Mr Aston made a similar application in January 1995, on the basis that the arrears of rent had accrued by reason of Thamesdown’s maladministration of the Housing Benefit system. This application was also dismissed on 8 March 1995. In 1995, there were further breaches of the terms of the suspended possession order and of the suspended warrant, but on 8 January 1996 Mr Aston paid off all his arrears of rent, his rent account going into credit. This was in consequence of a one-off substantial payment of Housing Benefit, suggesting that Mr Aston had not received his full entitlement over some period. The payment was of £273 odd, and Mr Aston had last owed that amount to the respondent about one year previously. He seems also by that time to have paid the arrears of costs.
6.	In 1997 Thamesdown ceased to exist, and the respondent, a unitary authority, took over its functions. Mr Aston was at this time provided with a ‘Swindon’ tenancy agreement, in accordance with the terms of which his rent was increased.
7.	So far as the evidence before us is concerned, there was no further trouble concerning Mr Aston until 1998, when his neighbours complained to the council about the state of his garden. From January 1996 until this date, Mr Aston had frequently been in arrears of rent, but had paid off all arrears on at least five occasions. The rent had increased from £39.31 in 1996 to £40.93 in June 1998, and the increases had been demanded and sooner or later paid.
8.	Mr Brotheridge, a housing assistant employed by the respondent, had already suggested to Mr Aston that he should do something about the mess in his garden, but Mr Aston did nothing. Particular complaint was made of the presence of household appliances, including washing machines, in the garden together with two cars. Mr Aston claimed to have a washing machine repairing business, and the respondent told him that to conduct the business from home he needed the permission of the Acting Chief Housing Officer and also needed planning consent. To park cars on his hard standing, he would need to have a dropped kerb installed, and the respondent also offered him the use of another off-site garage for storage purposes. The respondent was not satisfied with Mr Aston’s failure to put matters in order, and on 12 April 2000 he was given a final warning:
‘Further to [our letter of 1.11.99] it has been noted that there has been a moderate improvement but your garden is still in an unacceptable condition. Neighbours also claim that the garden probably harbour[s] mice which are causing a nuisance. The rotting car, piles of rubbish and appliances must be removed. You have made assurances to Dave Brotheridge regarding a skip and your proposed aim to clear. The time for promises must come to an end and the clearance must take place. The situation cannot continue.
You are therefore advised that you must make immediate arrangements to clear out your garden. Your are clearly in breach of your tenancy agreement 1d which states “The tenant must keep the garden in a reasonable and tidy condition.” You must also refrain from persistently parking on the verge, which is in breach of tenancy condition 1kii.
Your response will be closely monitored and you will need to take urgent action to avoid legal action against your tenancy.’
9.	After this letter, the respondent must have considered the history of Mr Aston’s tenancy, and on 1 November 2000 he was given a simple Notice to Quit, and also a ‘without prejudice’ Notice of Seeking Possession pursuant to section 83 of the Housing Act 1985. The former would be appropriate if Mr Aston were not a secure tenant entitled to the protection of sections 82 – 85 of the Housing Act 1985. The latter is, of course, a prerequisite to proceedings to bring a secure tenancy to an end. The particulars of claim in the action for possession (SN 005455), which were dated 21 December 2001, alleged that Mr Aston had ceased to be a secure tenant by virtue of his non-compliance with the 1991 order, and also upon Grounds 1 and 2 of Schedule 2 to the Housing Act 1985, in respect of which the court may order possession if it considers it reasonable (section 84(2)(a) of the Act). By his defence, Mr Aston contends that the 1991 order was no longer enforceable, and denies the breaches alleged. Directions were given on 12 February 2001 for a preliminary issue whether there was a subsisting tenancy at the date of the notice to quit.
10.	At the trial of the preliminary issue, District Judge Simons concluded that the tenancy determined on the breach of the conditions attached to the 1991 order, and that thereafter the applicant remained in the property as a ‘tolerated trespasser’. Nothing done by the respondent created a new tenancy or revived the previous tenancy. Mr Aston appealed this decision and the appeal was heard by HHJ Wade on 23 November 2002, when it was dismissed. Mr Aston also sought to apply to set the 1991 order aside at this hearing, having also made an application on 7August to set the 1991 order aside and for the tenancy to be reinstated. Finally on 20 December 2001, Mr Aston applied to rescind the 1991 order pursuant to section 85(4) of the Housing Act 1985. The application to rescind was heard by Miss Recorder Ralphs who dismissed it.
11.	Miss Recorder Ralphs’ order sets out four ‘findings’ as follows:
‘a.	That the application under section 85(4) of the Housing Act 1985 must fail and be dismissed;
b.	That the order of 13 December 1991 is unenforceable;
c.	That had the application of the 7 August 2001 in proceedings number SN005455 been listed before District Judge Simons he would pursuant to a proper exercise of his duty under Article 8 [sc. of the European Convention on Human Rights] have had to determine the factual issues in relation to nuisance in order to decide whether or not the making of a possession order was necessary and proportionate;
d.	Those issues not having been raised need to be remitted to the District Judge for the determination of the issues and whether it is necessary and proportionate to interfere with the Defendant’s right to his home.’
12.	The operative part of the order rejected the application to rescind and remitted the case to the District Judge to determine whether there was a nuisance as alleged and whether it was ‘necessary and proportionate to evict the defendant’.
The statutory provisions
13.	Secure tenancies are governed by the Housing Act 1985. Section 82 of the 1985 Act provides that a secure periodic tenancy of a dwelling-house can only be brought to an end by the landlord by obtaining an order for possession. By section 82(2)
(2) Where the landlord obtains an order for the possession of the dwelling-house, the tenancy ends on the date on which the tenant is to give up possession in pursuance of the order.
14.	The court has a discretion whether to make a possession order and on what terms. By section 85
‘(1) Where proceedings are brought for possession of a dwelling-house let under a secure tenancy on any of the grounds set out in Part I or Part III of Schedule 2 (grounds 1 to 8 and 12 to 16: cases in which the court must be satisfied that it is reasonable to make a possession order) the court may adjourn the proceedings for such period or periods as it thinks fit.
(2) on the making of an order for possession of such a dwelling-house on any of those grounds, or at any time before the execution of the order, the court may—
(a) stay or suspend the execution of the order, or
(b) postpone the date of possession,
for such period or periods as the court thinks fit.
…
(4) If the conditions are complied with, the court may, if it thinks fit, discharge or rescind the order for possession.’
15.	Sections 102 and 103 provide for variation of the terms of a secure tenancy: and section 103(2) requires a notice of either four weeks or the rental period (whichever is the longer) from the date of service.
16.	When the 1991 order was obtained against Mr Aston, he remained a secure tenant until the landlord became entitled to possession in accordance with the terms of the order. Thus, if he failed to comply with the conditions of suspension, as he did, his secure tenancy came to an end. The landlord nevertheless allowed him to remain in possession. Mr Aston then became a ‘tolerated trespasser’. During the period during which  the former tenant is a tolerated trespasser, the contractual tenancy is no longer in existence, but may be revived by the court after an application by either landlord or tenant under section 85 of the Act. The concept of a ‘tolerated trespasser’ prevents any indulgence granted by the landlord and accepted by the tenant’s payment of rent from giving rise to a new secure tenancy. In Burrows v Brent LBC [1996] 1 WLR 1448 at 1455, Lord Browne-Wilkinson identified the relevant principles in this way, basing himself on the analysis provided by Millett LJ in Greenwich LBC v Regan (1996) 28 HLR 469:
‘What then is the correct legal analysis? I start from the proposition that where a former tenant is by agreement allowed to remain in possession of the demised property after the termination of the tenancy, the question in each case is quo animo the parties have so acted: depending upon the circumstances, their conduct may give rise to a new tenancy, a licence or some other arrangement. In the present case…the parties plainly did not intend to create a new tenancy or licence but only to defer the execution of the order so long as [the tenant] complied with the agreed conditions. It cannot be right to impute to the parties an intention to create a legal relationship such as a secure tenancy or licence unless the legal structures within which they made their agreement force that conclusion.
A secure tenancy protected by Part IV of the Act of 1985 is not like an ordinary tenancy. It can only be terminated by an order of the court ordering possession to be given on a particular date or in a particular event. But even determination by order of the court is not final. Until the possession order is executed, the court can by variation of its order change the date on which possession is to be given and thereby revive a secure tenancy which has already been terminated. During the period between the date specified by the order for the giving of possession and the date on which the order is executed there is a period of limbo: the old tenancy has gone but may yet be revived by a further order of the court varying the date for possession. If the parties reach an agreement as to the continued occupation of the premises by the tenant during that limbo period, what intention is to be imputed to them?
In my judgment little guidance is to be obtained from the cases where a tenant holds over after the termination of an ordinary tenancy where there is no possibility that the expired tenancy can revive. The position in relation to secure tenancies is sui generis. In my judgement, the agreement can and should take effect in the way the parties intend, i.e. it is an agreement by the landlords that, upon the tenant complying with the agreed conditions, the landlords will forbear from executing the order, i.e. from taking the step which would finally put an end to the tenant’s right to apply to the court for an order reviving the tenancy. There is no need to impute to the parties an intention to create a new tenancy or licence: the retention of possession and the payment of rent relate to occupation under the old tenancy which is in limbo but which may be revived in these circumstances. I think it is fair to characterise the former tenant as a trespasser whom the landlord has agreed not to evict—a “tolerated trespasser”—pending either the revival of the old tenancy or the breach of the agreed conditions.’
17.	In Greenwich LBC v Regan, Millett LJ summarised the position as follows:
‘1. The tenancy continues until the date on which the tenant is ordered to give up possession. If the order is suspended on terms, the tenancy continues until there is a breach of those terms and then determines. The Local Authority is free to treat the tenant as a trespasser and to request the court to issue a warrant of execution. The tenant, on the other hand, is entitled to apply to the court to vary the terms of the order by postponing the date of possession. If it does so, the tenancy is reinstated and treated as if it had not determined.
2. The Local Authority may waive the breach, in which case the tenancy continues as if there had been no breach. This is so whether the Local Authority agrees in advance not to treat the particular failure to comply with the terms of the order as bringing the tenancy to an end, or agrees to waive the breach after it has occurred. In either case the tenancy is treated as if it had not determined.
3. The Local Authority may agree a consensual variation in the terms of the order. It will be a question of fact in every case whether the agreement which the parties had entered into should be characterised as an agreement which creates a new tenancy, or merely as one which provides for a variation in the terms on which the order has been suspended, waiving any past breaches and treating the tenancy as if it has not been terminated.
4. A significant factor will be whether the parties have agreed upon a variation in the terms of the tenancy itself (e.g. the amount of the current rent or the identity of the tenant) or have merely agreed upon a variation in the rate at which the arrears are to be discharged, which is not of course a term of the tenancy itself. In the latter case, it will normally be more natural to refer the agreement to the tenant’s right to apply to the court  under section 85 for a variation in the conditions of the order and a postponement of the date for possession.’
18.	These passages suggest that the court will be extremely reluctant to infer the creation of a new secure tenancy during the limbo period. Once a breach of the conditions attached to the possession order is shown, continuing occupation and receipt of rent is referable to the tenant’s right to apply to postpone the date of possession and so revive the tenancy. 
19.	Before the arrears were paid off, it seems to me clear that there had been no agreement between Mr Aston and the respondent that the respondent should waive his breaches of the conditions attached to the suspended possession order and so revive the tenancy. The respondent indeed obtained its second warrant in 1994 and that warrant was suspended on terms, but not set aside. What is said is that the position is different when the 1991 order had ceased to be enforceable. Thereafter, Mr Aston’s continued occupation, and the receipt of rent, were referable only to a continuing tenancy.
20.	This raises a short point of construction. What is the effect of the final paragraph of the order, ‘that the judgment shall cease to be enforceable when the (arrears of rent, … and ) costs referred to above are satisfied’? In my view, this means what it says. If the arrears of rent and the costs are paid, the order ceases to be enforceable by warrant of possession. The provision is of course the counterpart of the suspensory conditions, since they cease to operate once the arrears are paid. But it has two further effects. It permits the arrears to be paid off early, so that (for example) payment at the prescribed rate for two weeks followed by a payment of all the balance brings the order to an end; and it seems to me to be clear as a matter of words that it operates when all the arrears are in fact paid off. In the latter case, if the local authority has not obtained possession, it appears to me that the position is that the order has ceased to be enforceable, but (because of his earlier breach) the tenant has become a trespasser. If a further warrant of possession against the tolerated trespasser is sought, it might be thought that his only hope is to try to revive the tenancy by an application under section 85(4). But it seems to me that an application under section 85(4) is precluded, since the conditions attached to the 1991 order were not complied with. In Marshall v Bradford Metropolitan Council [2001] EWCA Civ 594, [2002] HLR 22 (page 428),  Chadwick LJ, with whom Schiemann LJ and Sir Christopher Staughton agreed, decided that the reference to ‘conditions’ in section 85(4) was a reference to the conditions (as varied from time to time under section 85(3)) upon which the order for possession was suspended. Thus, as Miss Recorder Ralphs correctly held, Mr Aston could not apply to have the order rescinded under section 85(4). So far as section 85(2) was concerned,  an application to postpone the date of possession was not possible since the order had ceased to be enforceable.
21.	It follows that after this point in time, the tenant’s continuing occupation, and the receipt of rent, is no longer referable only to the possibility of an application under section 85(2) postponing the date on which possession is to be given, or the possibility of an application under section 85(4). 
22.	Every case must depend upon its own facts. When Mr Aston’s arrears of rent were cleared on 8 January 1996, he was a ‘tolerated trespasser’ and up to that date the local authority could have applied for a warrant on the grounds that he was not complying either with the terms upon which the warrant to evict or the original 1991 order were suspended. But thereafter he continued in occupation and to pay rent weekly as demanded, and to have paid the various increased sums in respect of rent. The respondent local authority relied upon the terms of his ‘tenancy agreement’ to coerce him into keeping the garden of the premises in a proper state and in respect of his conduct of his washing-machine repairing business. He was provided with a new tenancy agreement. Viewed objectively, the conduct of both landlord and tenant was only sensibly referable to the existence of a new tenancy.
23.	DJ Simons found that there had been breach of the conditions attached to the 1991 order in 1992. Breach in 1994 was admitted. He held that the respondent’s housing department was probably unaware of ‘the niceties of the situation or the necessity of distinguishing money payment, his rent, mesne profits or what you will’. He also noted the correspondence relating to the permitted use of the premises. He rejected the contention that there was any agreement to grant a secure tenancy, and held that the council was not estopped from contending that there was no tenancy. He found there was no breach of Mr Aston’s rights under the convention, and found that accordingly he was only a tolerated trespasser. Mr Aston appealed to HHJ Wade only on the human rights issues, and this appeal was rejected.
24.	Miss Recorder Ralphs had to consider the application under section 85(4). She held that he had complied with the condition of the order rendering the order unenforceable  (above paragraph 11) but that it was necessary either to show waiver by the council of the tenant’s breach or an agreement. She set out a passage in the judgment of Millett LJ in the Greenwich case (above) summarising the position which is reproduced as a matter of substance in the speech of Lord Browne-Wilkinson quoted above, and held that there had been no waiver of the breaches by the council. In this, she was quite correct. But she held that there was no agreement capable of being viewed as an agreement to create a new tenancy, and accordingly proceeded to consider the arguments addressed to her on Article 8 of the ECHR.
25.	I consider that the correct approach is as follows. By January 1996, Mr Aston did not have an accrued right to apply to have his tenancy revived under section 85(4). He was a ‘tolerated trespasser’ when he finally paid off the arrears. But he continued to pay rent weekly after 8 January 1996. He went into arrears for one week (11 March 1996) and stayed in credit until 8 April 1996. He went into arrears with a slightly increased rent and cleared his arrears on the 20 May 1996. He went thereafter quite seriously into arrears in 1996/7, but had cleared all his arrears by 16 June 1997. During this period there were two increases in the rent that were ultimately paid and can only be viewed as a variation in the terms of a tenancy. I think that it is not possible to view the relationship between the parties during the period after the 1991 order became unenforceable as being other than that of landlord and tenant. That this is so is confirmed by the manner in which the respondent dealt with the complaints made against him and by the provision of the new tenancy agreement.
26.	I would accordingly hold that Mr Aston has been the secure tenant of the respondent and its predecessor in title upon the standard terms from time to time from 1 April 1996. To the extent that it is necessary, I would grant the necessary permission for a second appeal from the decision of HHJ Wade, who did not deal with this point. I do not consider it necessary to consider the arguments addressed to us under the ECHR. I would accordingly allow the appeal from the judgment in the possession action and remit the matter to the District Judge to consider the respondent’s application for possession under sections 83 and 84 of the Act of 1985 on the footing that Mr Aston is a secure tenant. 
Lord Justice Jonathan Parker:
27.	I agree.
Lord Justice Schiemann:
28.	I agree.
Order: Appeal Allowed; Respondents do pay Appellant’s costs in this court and in the lower court, save for costs in relation to skeleton argument on 15th April 2002.
(Order does not form part of the approved judgment)