London Borough of Lambeth & Hyde Southbank Ltd v O'Kane [2005] EWCA Civ 1010

Case No B2/200511002-1004[2005] EWCA Civ 1010
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
HHJ Welchman sitting: in the Bow County Court
HHJ Mackay sitting: in the"St.Helens County Court.
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 28/07/2005
Before
LORD JUSTICE AULD LADY JUSTICE ARDENSIR MARTIN NOURSE
Between
The Mayor&Burgesses of the London Borough ofRespondentLambeth and Hyde Southbank LtdRespondentO'KaneAppellantHelena Housing LtdRespondentPinder and othersAppellant
Jan Luba QC, and Adam Fullwood (instructed by Messrs Stephen sons)for Corns, O'Donnell and PinderRobert Latham (instructed by Messrs Ole Hansen&partners)for O'Kane Edward Bartley Jones QC and Andrew Vinson(instructed by Helena Housing Ltd Legal; Dept) for Helena Housing LtdToby Watkin (instructed by Lambeth Legal Services)for London Borough of Lambeth and Hyde Southbank Ltd.Hearing Hearing dates: 1"6th and 17th May 2005
Judgment
[1]These appeals have been ordered to be heard together. The first appeal is Lambeth LBC v 0 'Kane, in which HH Judge Welchman sitting in the Lambeth County Court made an order for possession on 25th October 2004. The other appeals are respectively Helena Housing Ltd ("Helena") v Corns, Helena v 0 'Donnell and Helena v Pinder, in which HH Judge Mackay sitting in the St Helens' COUlity Court dismissed the appellants' applications, and made orders suspending warrants for possession on terms that the appellants paid the current charge plus an amount to reduce the arrears. I will refer to the respondents as Lambeth and Helena respectively. At the outset of their tenancies, the appellants in the Helena cases were secure tenants. This means that their relationship with their landlord was governed partly by contract and partly by statute. I refer to the relevant statutory provisions in paragraphs 3 to 5 below.[2]The common feature of all these appeals is that, before the making of the orders which have led to these appeals, the county court had suspended possession orders, or warrants for possession, on terms that defendants paid a current charge and a sum in reduction of the arrears of rent, and that after the dates of such suspensions those terms were breached. Each tenant thereupon became a "tolerated trespasser": see Thompson v Elmbridge BC [1987] 1 WLR 1425. By that expression, I mean, as I said .in Newham LBC v Hawkins [2005] EWCA Civ 451, a secure tenant against whom an·immediate or· suspended possession order has been made and who (in the case of a suspended possession order) had breached the terms of a suspended possession order but who (in extreme cases) remained in possession with the approval of the former landlord. The concept of the "tolerated trespasser" has given rise to much debate: see in particular Bright, The Concept of the Tolerated Trespasser: An Analysis [2003] 119 LQR 495. Among the points which Mrs Bright makes is that it is not accurate to describe the situation where a former tenant remains in occupation with the agreement of the former landlord "as (merely) 'tolerated' occupation; it is consensual, and the local authority would, it is submitted, be restrained from executing the possession order in breach of this occupancy agreement." (at 501)

The secure tenancy regime

[3]Secure tenancies are governed by Part IV of the Housing Act 1985 ("the 1985 Act"). For the present purposes, the material provisions are to be found in sections 82 and 85 of the 1985 Act.[4]Section 82 of the 1985 Act (as amended by the Anti-Social Behaviour Act 2003) provides in the material part as follows; - "(1) A secure tenancy which is either(a) a weekly or other periodic tenancy, or(b) a tenancy for a term certain but subject to termination by the landlord, cannot be brought to an end by the landlord except by obtaining an order mentioned in subsection (lA). (1A) These are the orders- (a) an order of the court for the possession of the dwelling house; (b) an order under subsection (3);(c) a demotion order under section 82A. (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."[5]Section 85 of the 1985 Act provides in the material part as follows:- "(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. (3) On such an adjournment, stay, suspension or postponement the court (a) shall impose conditions with respect to the payment by the tenant of arrears of rent (if any) and rent or payments in respect of occupation after the termination of the tenancy (mesne profits), unless it considers that to do so would cause exceptional hardship to· the tenant or would otherwise be unreasonable, and (b) may impose such other conditions as it thinks fit. (4) If the conditions are complied with, the court may, if it thinks fit, discharge or rescind the order for possession. "

The concept of the tolerated trespasser

[6]As I said in London Borough of Newham v Hawkins [2005] EWCA Civ 451:
" 33.Very many tenants today in the public sector are tolerated trespassers.. As explained above, this means that a possession order has been made against them, or, if a possession order was made against them suspended on terms, those terms have been breached. If this happens, but nonetheless the landlord permits them to remain in . occupation, they are termed "tolerated trespassers"
. This phrase was first used in the Burrows case. [Burrows v. London Borough of Brent [1996] 1 WLR 1448.] The tenancy which the tolerated trespasser previously held has terminated. The tenant and landlord have respectively no rights or obligations under that tenancy. Their respective rights and obligations have to be founded in some other agreement, express or implied, unless the previous tenancy is revived. 34.However, the harsh effect of termination of a secure tenancy pursuant to a possession order is modified by section 85. Section 85 provides in effect that a possession order can be varied and revoked. Moreover, it can be so varied or revoked even if it was suspended on terms and those terms had been breached. If a breach occurs, the tenancy can be revived retrospectively. Furthermore, under section 85(4), a tolerated trespasser who satisfies the conditions in that subsection may also apply to have the possession order discharged. That too will revive the tenancy retrospectively. The opportunity to apply to the court under section 85(2) or (4) is not lost until the possession order is executed. The propositions are established by the Burrows case, discussed further below. 35.Accordingly, when a person remains in possession of demised premises after the making of a possession order, or after a suspended possession order has been breached, he may, depending on the facts, be either a tolerated trespasser or, if the date for possession has been postponed, or the possession order has been revoked, be a tenant under the original tenancy once more. Alternatively, if the parties have agreed to a new tenancy, he may be a tenant under that new agreement. 36.m the Burrows case, Lord Browne-Wilkinson stated that, until a possession order was executed, the court could by variation of its order change the date on which possession is to be given and thereby revive a secure tenancy which had already been terminated. Lord Browne-Wilkinson explained that, in practice, landlords may often wish to extend an indulgence to a tenant who, for instance, has lost his job, and who has failed to pay rent and is in breach of a suspended possession order. Lord Browne-Wilkinson held that Parliament could not have intended that, in that situation, the mere extension of such indulgence should lead to the creation of a new secure tenancy. He continued:
"What, then, is the correct legal analysis? I start from the proposition that where a former tenant is by agreement allowed t6 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, on 5 February 1992 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 Miss Burrows 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 judgment, 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. Once the effect of section 85 is appreciated, the absurdities which led the Court of Appeal not to accept that Miss Burrows could be a tolerated trespasser disappear. Technically the old secure tenancy is, during the limbo period, no longer in existence and therefore neither the repairing covenants in the tenancy nor the Defective Premises Act 1972 apply. But the tenant can at any time apply to the court for an order varying the date on which possession is to be given and thereby retrospectively revive the old secure tenancy, together with its covenants. If the tenant has complied with the agreed conditions, there can be little doubt that the court would make the required order. Moreover, the tenant will not be a homeless person within section 58(2) of the Act of 1985 because the tenant will be occupying the residence by virtue of any "rule of law giving him the right to remain in occupation:" see section 58(2)( c). If the tenant were in breach of any of the covenants in the old secure tenancy, Brent could apply to vary the order so as retrospectively to revive the old tenancy together with" its covenants. Finally, there is a method (albeit a clumsy one) whereby the order for possession even if an immediate unconditional order, can be discharged or rescinded if so desired under section 85(4). The power in that subsection to discharge or rescind only arises "if the conditions are complied with," a requirement which cannot be satisfied in the case of an unconditional order. But there is no reason why the order cannot be discharged by consent or, if such consent is not forthcoming, by the court varying the original order so as to impose the agreed conditions and then discharging the varied order. It was submitted that the fact that the tenancy was granted to Miss Burrows jointly with Mr. Allen whereas the agreement of 5 February 1992 was made with Miss Burrows alone, indicated that the agreement must have given rise to a new tenancy with Miss Burrows alone. Therefore there must be "a new tenancy. However, since in my view on its proper analysis the arrangement contained in the agreement of 5 February 1992 gave rise to no new tenancy with anyone, that factor is irrelevant. I therefore reach the conclusion that, in the absence of special circumstances, an agreement by a landlord not to enforce strictly an order for possession, whether conditional or unconditional, does not create a new secure tenancy or licence under Part IV of Act of 1985. As Brent, by making the agreement of 5 February 1992, did not grant a new tenancy or licence to Miss Burrows as from 12 February 1992. It follows that the possession order of 29 . January 1992 was properly enforced. I would therefore reverse the decisions of the Court of Appeal and the trial judge and dismiss Miss Burrows's action." 37.For the reasons explained by Lord Browne-Wilkinson, a new tenancy will not generally arise from the fact that a tolerated trespasser remains in possession with the landlord's consent. Rather more is required to take such a case out of the everyday situation where landlords simply allow former tenants to remain in occupation if they make satisfactory payments and their occupation is otherwise satisfactory."
The background and the judgments below The O'Kane appeal

The background and the judgments below

[7]Like the Hawkins case, this case concerns succession rights. Mr O'Kane is the surviving partner of a same sex relationship between him and Mr Kennedy. Mr Kennedy died on 26 August 2003.[8]Lambeth granted Mr Kennedy a tenancy of 23 Reed House, Kennington Park Estate London SE 11 ("the property") on 14 December 1992. On 5 August 1997 a suspended possession order was made, suspended on terms that he paid £5 a week in addition to the current rent. That order was in existence at the date of Mr Kennedy's death.[9]On 11 August 1997, that suspende4 order was breached and accordingly the secure tenancy terminated pursuant to section 82 (2) of the 1985 Act. Lambeth then applied for a warrant for possession. The execution-of the warrant was, by virtue of an order dated 23 July 1999, suspended on payment of £2.60 per week. By virtue of County Court Rule 26.1 (annexed to Schedule 2 of the Civil Procedure Rules) that warrant ceased to be effective after February 2000, unless renewed. Lambeth took no steps to evict Mr Kennedy, who did keep up the payments of £2.60 per week plus current weekly charge. However, the judge found that he did not keep up with the terms of the original suspended order, which required him to pay £5 a week.[10]In a number of documents, Lambeth referred to the charge payable by Mr Kennedy after the possession order took effect as rent. On 23 July 1999, Lambeth wrote to Mr Kennedy informing him that following the suspension of the warrant he had to pay his current "rent" plus £2.60 of arrears each week. On 21 February 2000, Lambeth sent Mr Kennedy notice of variation of tenancy conditions. He received a three page letter together with a booklet setting out the tenancy conditions. The last page of this document contained a checklist of do's and don'ts. The first statement under this heading was "You" must commit yourself to this checklist. It forms part of your conditions of tenancy. If you do not sign it we will withdraw your offer of accommodation." Later on the same page there was a statement as follows "I understand and agree to the conditions listed above and that if I break this agreement the Council has the right to take action to evict me from my home." There was then a place for Mr Kennedy to sign' and for his signature to be witnessed. However there was a legend in bold type 'at the end of the three page covering letter stating that "A secure tenant is a tenant who has not had a notice to quit or a notice seeking possession served or is not in breach of an absolute or suspended possession order." There is no evidence that Mr Kennedy signed the tenancy agreement.[11]In addition, Mr Kennedy received four notices of a revision in rent and water charges. The first notice was dated 21 February 2000. It referred to rent and not mesne profits. On this occasion a revised rent was less than the current rent. As with the other notices of revised rent, this document was addressed to Mr Kennedy by name, and it was stated to be a notice. In the case of secure tenancies, terms can only be varied by notice if the notice complies with s103 of the 1985 Act. None of the notices of revised rent or water charges, however, referred to section 103. The document explained that Mr Kennedy had the right to terminate his "tenancy." The second notice of rent and water charges revision was dated 21 February 2001. As with the previous notice it was addressed to Mr Kennedy in person. The increase was only in the water charge. However again the document used the word "rent" and not mesne profits or charge. The third notice of rent and water charges was dated 21 February 2002 and it was to all intents and purposes in the same form as the second notice. There was a covering letter on this occasion referring again to rent and service charges.[12]The fourth notice of increase in rent was dated 21 February 2003 and was to all intents and purposes in the same form as the third notice of rent and water charges.[13]According to evidence filed on behalf of Lambeth, the rent increase letters were sent out to all properties, regardless of whether the recipient was a secure tenant, introductory tenant, licensee or tolerated trespasser. This is because Lambeth's computer system (as opposed to individual occupiers' files) cannot distinguish between such persons[14]On 15 October 2002 Mr Kennedy received a decoration allowance payment for his flat from Lambeth amounting to £51.75. This was to compensate him for water damage. Provision was made in the tenancy conditions referred to above for Lambeth to be responsible for certain repairs.[15]The argument on behalf of Mr O'Kane before the judge was that the relationship of landlord and tenant had continued following the breach of the suspended possession order and that either Lambeth had waived the breaches or the parties had entered into new a tenancy. The judge rejected both parts of this argument: - " 24'. I disagree with [Counsel for Mr O'Kane, Mr Robert Latham]. One understands the fact that at times the language used is imprecise. People are referred to as tenants when in fact they are not such. That is a slip or an error that the court falls into as readily as anyone else, and indeed, as I have already drawn attention to, the reference to current rent in court orders when in fact it is the current weekly charge. That has happened really because of peculiarities, if I can put it that way, of the regime that arises under the Housing Act 1985. The situation of having an occupant whose standing with the premises and tenancy is in a state of limbo is well known to this court. The twilight area has created an understanding and working practices which tolerate this situation. It seems to me against a background of very substantial arrears to start with, undoubted breaches of the terms of the suspended order, a tolerance and acceptance of that, an application made by the tenant to have an eviction warrant suspended on terms, which is suspended on terms which go to the limits of what he can afford to pay, and the mere fact that the local authority do not take any active step after the 12 month period when they could have enforced the warrant without seeking any further order from the court on the basis of a breach, or seeking an extension, is said to amount to the waiver of the breach or the grant of a new tenancy, in my judgment, does not really accord with the realities of the situation that exists in this case and exists in other cases .. 25. One sees the point that is raised, but one can also see the caveat that has been put forward in the terms of the tenancy agreement to which I have referred. As I say, I come to the conclusion that it is not the case that there is in this instance any subsisting tenancy. The fact was, at the time of his death, Mr Gabriel Kennedy was a tolerated trespasser and it follows that there is no tenancy that can pass to his partner."

The Helena appeals

[16]Helena is the assignee of St. Helens' Metropolitan Borough Council's housing stock. The assignment was effected by an agreement dated 1 July 2002. This agreement provided for the execution of a deed of assignment of rent and service charge arrears. This was executed on 26 July 2002. It is this deed which gives rise to the second ground of appeal in the Helena appeals .[17]The order under appeal was made in three cases. Each of the three appellants. in the Helena appeal was a person to whom St Helens had granted a tenancy. In fact, in the case of Ms Pinder and Ms O'Donnell, they were originally joint tenants· with their spouses. For convenience, we have been taken through the facts of the Pinder case alone, and it has been assumed that our decision in that case will apply for the purposes of the other Helena appeals. Accordingly, I will consider only the facts of that case. Moreover, it is sufficient to look at the facts as they were prior to the stock transfer as Mr Jan Luba QC, for the appellants, accepts that if there was no new tenancy as a result of those acts prior to the stock transfer, nothing that happened thereafter could affect the position.[18]In each case, there was a suspended possession order in common form, which was breached. None of the orders regulates the position after the tenancy is lost save that they all provide that, if a total of the money judgment and costs is paid off, the order becomes unenforceable. Ms Pinder and her husband Kieran Pinder became secure tenants of St Helens on 2 November 1998. A suspended possession order was dated 23 August 2000. It required among other things the payment of instalments of £2.65 per week in addition to the current rent. These terms were not complied with, and a warrant for possession was sought. On 20 November 2001, a warrant was suspended so long as the defendant, Ms Pinder, paid current instalments together with £10 a week off the arrears. After this date, 8t Helens sent Ms Pinder a rent card. This· set out her ·rent per week for 2002/2003 and called it "increased rent." (In fact, before April 2001, the council had also increased Ms Pinder's rent by £1.46 per week to £47.81 per week). These terms were not complied with. Helena took the transfer of the stock including Ms Pinder's home on 1 July 2002 and sent a rent card notifying a rent of £49.94 from 1 July 2002. In April 2004, Helena obtained a possession warrant. However Ms Pinder (and the other appellants) applied to discharge the possession order on the grounds that she had been granted a new tenancy, and also on the ground that the mesne profits due from her had not been validly assigned to Helena. The judge by his judgment dismissed this application. The judge was satisfied that there was no new tenancy. He went on to reject an argument that the deed of assignment of rent and service charge arrears did not serve to transfer the mesne profits as well as the arrears. Submissions The O'Kane case

Submissions

[19]Mr Robert Latham, for Mr O'Kane, submits that either Lambeth waived the breaches of the possession order so that Mr Kennedy's original tenancy revived or alternatively a new tenancy arose by virtue of the issue of new tenancy conditions, the rent increases and the decoration allowance referred to above.[20]As to waiver, Mr Latham relies on passages from the judgment of Millett LJ in Greenwich LBC v. Regan (1996) 28 HLR 469. In these passages, Millett LJ indicated that a local authority could waive a breach of the suspended possession order and that if it reached an agreement to that effect with the tenant those breaches. had to be treated as if they had not occurred. However the Regan case preceded the Burrows case, to which I have referred above. In the course of his speech, Lord Browne-Wilkinson approved much of what had been said by Millett LJ in the Regan case. However, the question arises whether the particular passage on which Mr Latham· relies was so approved.[21]That question came before this court in Marshall v. Bradford MDC [2002] HLR 22 (Schiemann, Chadwick LJJ and Sir Christopher Staughton). In that case there were three issues;(1) whether it was proper for the judge to have struck out disrepair proceedings when it could be seen that an application to discharge or rescind a suspended possession order would be likely to succeed(2) whether the secure tenancy revived automatically once it could be seen that the suspended possession order was under its own terms no longer enforceable and(3) whether the district council had waived any right to rely upon the tenants' failure to comply with the conditions in the possession order.[22]Chadwick LJ, with whom the other members of the court agreed, took the waiver point first. He considered what had been said by Millett LJ in the Regan case. However, he concluded that passages in the speech of Lord Browne-Wilkinson were inconsistent with the view expressed by Millett LJ that the agreement not to execute the order for possession made during the period of limbo had of itself, and without an order of the court, the effect of reviving the original secure tenancy. He held that that analysis had been accepted by this court in Lambeth BC v. Rogers (1999) 32 HLR 361. He therefore concluded that it was not open to a landlord to waive breaches of an order so as to resuscitate the original tenancy. There had to be an application to the court. "The power to discharge or rescind the· order of possession, conferred by section 85 (4) of 1985 Act, is a power which can only be exercised in the light of the circumstances prevailing at the time"(p.443).[23]Mr Latham submits that this court is not bound by the conclusion of Chadwick LJ in the Marshall case. He submits that the observations were not part of the ratio decidendi. In the alternative he submits that the court is not bound to follow the decision in Marshall because it cannot stand with the decision in the Burrows case.[24]On the new tenancy point, Mr Latham submits that it was not open to Lambeth as landlord arbitrarily to increase mesne profits. He submits there was clearly an agreement between Lambeth and Mr Kennedy permitting the latter to remain in possession. This could only be referable to an agreement staying or suspending the possession order. Here, on Mr Latham's submission, the facts force the conclusion. that there was a new tenancy. Mr Latham relies 011 the documents summarised above. He submits that the letter inviting Mr Kennedy to take up new tenancy conditions was consistent with the relationship of landlord and tenant and the sentence added at the end (and set out in paragraph 10 above) was ambiguous. Likewise the notices of increase in rent were not consistent with an increase in mesne profits. Likewise the decoration allowance would not have been payable unless there was a tenancy governed by a tenancy agreement and for that reason too there was, on Mr Latham's submission, clearly a new tenancy[25]Mr Toby Watkin, for Lambeth and Hyde Southbank Ltd, to whom Lambeth has now assigned its housing stock, submits that the facts were not sufficient to force the . conclusion that there was a new tenancy as required by the Burrows case. He submits that, in relation to mesne profits, it was possible for a higher sum to be demanded after determination of a tenancy. In the Burrows case the point now relied upon by Mr Latham was not taken. The payment of rent could not be referable to a tenancy because the order in that case was for an immediate possession order. Furthermore, there were increases of rent, which the Court of Appeal in the Burrows case did not consider affected their conclusion. Mr Watkin also relies on the Regan case and the Hawkins case.[26]Mr Watkin rejects the significance of the expiry of the warrants. He accepts that the warrant could not be enforced without a further order of the court. But that did not necessarily mean that payment had to be referable to a new tenancy. He distinguishers Leadenhall Residential 2 Ltd v. Stirling [2002] I WLR 499, Mr Watkin submitted that, where there was a revivable order, the court never gets to the stage of finding a new tenancy on the basis only of demands of "rent".[27]Mr Watkins relies on the additional statement at the end of the covering letter offering new tenancy conditions referred to above.[28]Mr Watkins distinguishes Swindon BC v. Aston [2003] HLR 610 on the grounds that the order in that case was no longer revivable. Mr Watkins also relies on Westminster BC v. Basson (1990) 23 HLR 225.[29]Mr Watkins submits that the reason for the landlord paying a decoration allowance was to maintain the housing stock. It was not evidence of the creation of a new tenancy.[30]Mr Watkins submits that it is not always favourable to the tenant to assert a new tenancy. He may lose succession rights. He may lose a qualifying period for the right to buy. Mr Watkins submits that the question whether there was a new tenancy was highly fact sensitive and an appellate court should not lightly intervene. It should only do so if there is a legal constraint requiring it to intervene.

Submissions in the Helena appeals

[31]Mr Luba submits that there are three forms of tolerated trespassers. There are those who are "consensual" tolerated trespassers because the former landlord and former tenant reached some form of agreement that execution of the suspended possession order would not be sought if the terms which they have agreed are thereafter complied with. The second category are "precarious" tolerated trespassers where there has been no agreement, or any such agreement has been broken, but nevertheless execution of the order is not sought, or execution having been initially sought and stayed on terms, no further action is taken to enforce possession following breach of those terms. The third class of tolerated trespassers is the category of "court - sanctioned" tolerated trespassers, who remain protected from eviction, by the stay of a warrant for possession granted by the court subject to conditions with which the trespassers are in fact complying. The Helena appeals are concerned with precarious tolerated trespassers.[32]Mr Luba submits that although the court has previously approached the question whether a new tenancy h1:is arisen as a question of fact, on a case by case basis, the court should take a bolder approach. If the cases are dealt with on a case by case basis, there will be many applications for the court. He notes that tolerated trespassers do not have the benefit of contractual repairing obligations: see Lambeth LBC v Rogers, where the tenancy was revived. The tolerated trespasser may, however, have a claim in nuisance: Pemberton v. Southwark LBC [2000] 1 WLR 1672.) Likewise tolerated trespassers do not enjoy succession rights: see the Hawkins case, above.[33]Mr Luba emphasises the importance of the issues on the Helena appeals. Helena has some fourteen thousand tenants and other occupiers of whom some six hundred are in the position of the appellants. Moreover at least eighty of their cases are stayed pending the determination of the Helena appeals. These statistics demonstrate that the questions on these appeals affect many thousands of occupiers up and down the country.[34]Mr Luba submits that local authorities and other social landlords are using county court possession proceedings as a routine means of enforcing payment for rent. They claim possession not to secure outright eviction but rather to achieve a "lever" for future payment. He submits that the effect of the Burrows case was to put the social landlord to an election. On the one hand, it can carry on with the occupier as a tolerated trespasser with substantial rent arrears. However once it does something inconsistent with the limbo tenancy, the former landlord necessarily enters into a new tenancy with the former tenant.[35]Mr Luba submits that his approach is consistent with principle. Once the landlord treats the relationship as one of tenancy, then the necessary hallmarks of a tenancy in law exist. They are exclusive possession, rent and a term (Street v. Mountford [1985] AC 805). He submits that it is impossible to say that the parties do not intend a legal relationship between them.[36]In those circumstances, the conclusion is inevitable that a new tenancy has been created because Street v Mountford decides that the existence of a tenancy cannot depend on the parties' intentions. In the alternative, Mr. Luba submits that on the facts of the Helena appeals there are "special circumstances", taking the Helena cases out of the Burrows case. Mr Luba helpfully takes the facts of Ms Pinder's appeal as representative of the other Helena appeals. He relies particularly on the increases in rent. He submits that by serving notices of increase in rent and issuing new rent cards reflecting those increases, the local authority offered to accept the occupier's contiJ1ued occupation with exclusive possession if the amounts set out in the notices were paid. The increased rent was not referable to the existing order for the payment of an amount in respect of occupation. Moreover the agreement for an increased rent was no longer consistent with the frozen covenant as to rent in the limbo tenancy. The notices of increase of rent manifest the landlord's intention to permit the occupier to have exclusive possession on the terms set out in the notice. Moreover each increase of rent was followed by a rent card. Mr Luba submits that Part IV of the Housing Act 1985 was not intended to be a scheme for the mass conversion of secure tenants into tolerated trespassers. If the court were to say that the landlord's increases in the rent resulted in the creation of a new tenancy, that would be consistent. with principle. Under the principle as set out in Street v. Mountford, the question is not whether the parties intended a new tenancy but whether they intended that the occupier should enjoy exclusive possession for a term and for payment. Mr Luba relies on the judgment of Millett LJ in the Regan case at p.156. He further submits that the decisions of this court in the Burrows case, London Borough of Tower Hamlets v Ayinde (1994) 26 HLR 631 and the Regan case all support his arguments. In Ms. Pinder's case, after April 2001 the local authority was saying to Ms Pinder that she could have exclusive possession at a new, and increased, rent. Accordingly the relationship between her and the landlord was one of landlord and tenant.[37]Mr Luba also relies on the Aston case. He further accepts. that the submission which he makes could have been made and accepted in most of the cases in which the tolerated trespasser/new tenancy issue has come before the courts.[38]Mr Luba submits that there was no evidence that any of the appellants was informed by. St Helens' or Helena that payment was being received strictly on the basis of mesne profits or that there was any agreement to forbear from executing the original orders or warrants for possession whilst payments were made. He further submits that neither the possession orders nor the stays of warrants specifically fixed future rent and the terms of the order did not provide or allow for any increases in rent. It is on that basis that he submits that the occupation of the premises is not referable to the possession orders. He accordingly submits that the occupation can only be referable to a new tenancy.[39]Mr Luba further submits that, in the case of Ms O'Donnell and Ms Pinder, the tenancies were joint tenancies and their partners had left. They could not be parties to any application for the revival of their limbo tenancies and such an application would not have been successfully made in their partner's absence because it would cast on their partners the obligations in the tenancies and a backdated joint and several liability for unpaid rent: see Marshall v. Bradford MBC. Mr Luba submits that, as these appellants could not have applied for the postponement of the date of possession of their properties followed by rescission and discharge under section 85(4), the Burrows case is distinguishable. The situation, on his submission, is analogous to that in the Aston case, where the tenant had discharged all the arrears and therefore could not apply to the court to discharge the possession order. This court in that case held that where it was no longer open to the tenant to make an application under section 85 (2) because the arrears were discharged but had not been paid in accordance with the timetable laid down in the order, the tenant would not be able to apply for the discharge of his order under section 85 (4) as envisaged in the Burrows case. Accordingly, in ·the case of these appellants their continued occupation is no longer referable to the right of revival.[40]Mr Luba submits that, where there is a joint tenancy which goes into "limbo" and then one of the joint tenants dies, the surviving former joint tenant cannot apply for a revival of the joint-tenancy under section 85(4). All the deceased joint tenant had was a personal and non-transmissible right to apply for revival (Brent LBC v. Knightly (1997) 29 HLR 857). An order for revival on the application of a survivor could not be made because it would throw on to the estate of the deceased joint tenant a liability for rent for the period prior to death. Further the continuance of a joint tenancy requires the will of all the joint tenants to take it from period to period: Hammersmith & Fulham LBC v. Monk [1992] 1 AC 478.[41]Mr Luba accepts that, if new tenancies were not granted prior to the transfer by St. Helens to Helena in July 2002, nothing done' by Helena after that date could have had that effect.[42]Mr Luba reserves his position on the question whether a landlord can revise a charge for mesne profits. He accepts that this point is no longer open to him in the light of the decision of this court in the Hawkins case.[43]Mr Edward Bartley Jones QC, for Helena, submits that, if the appellants are right, new secure or assured tenancies have been created which cannot be terminated by reason of the arrears accruing prior to the creation of the new tenancies. That would mean in effect that the arrears would in all probability have to be written off, there being little prospect of enforcing any money judgment.[44]Mr Bartley Jones makes submissions about the effect of the transfer from 8t Helens to Helena. Once this occurred, the secure tenancies created by 8t Helens became assured tenancies because Helena could not fulfil the "landlord" condition necessary for the creation and maintenance of a secure tenancy. However, Mr Bartley Jones submits that although for s85 to apply initially there must be a secure tenancy, there is nothing in s85 (2) which requires the tenancy to have continued as a secure tenancy for the powers in s85 (2) and s85 (3) to be exercised. On the contrary, s85 (2) applies "at any time before the execution of the order." In addition, s85 (3) refers to "payments in respect of occupation after the termination of the tenancy (mesne profits)." Mr Luba does not disagree with these submissions.[45]Mr Bartley Jones submits that Mr Luba's submission amounts to a submission that any increase in rent by a "landlord" to a tolerated trespasser or the issue to him of a rent card creates a new tenancy as a matter of law. Indeed Mr Bartley Jones submits that this would be so even if the increase <?f rent or issue of a rent card was subject to an express caveat that there was no intention to create a new tenancy. Mr Bartley Jones submits that Mr. Luba's submission is inconsistent with paragraph 38 of my judgment in Hawkins case. I there said that "there was no offer of new terms or demand for an increased rent which might have shown that the intention of the parties was to create a new tenancy." (emphasis added). Mr Bartley Jones points out that Mr Luba does not analyse the judge's findings of fact or the judge's legal approach. He submits that Mr Luba's approach is accordingly wrong in principle. He submits that his submission on intention to create legal relations was a point available in the Burrows case but not taken. Furthermore he submits that courts have never to date sought to analyse the position of tolerated trespassers with a right of revival differently from those where no such right exists. Likewise with respect to the joint tenancy point, Mr Bartley Jones submits that this was a point which could have been taken in the Burrows case but did not concern the House of Lords (see for example 1455H and 1450B).[46]Mr Bartley Jones submits that the relevant question is, "quo animo" did the parties act? He submits that the "animus" of St Helens in demanding an increased rent was that the trespasser should be allowed to remain in possession on terms varying from time to time.[47]Mr Bartley Jones further submits that in order to find a new tenancy the court has to be satisfied that objectively a legal relationship was created over and above that of tolerated trespasser and that there was an intention to create such a relationship. Mr Bartley Jones submits that where the former tenant has not discharged arrears of rent it is unlikely that the former landlord would want to enter into a new tenancy with him. Once arrears have been discharged, it is easier for the court to find a new tenancy. However, even in those circumstances the issue of new terms of tenancy or of an increase in rent is merely evidence from which the court can infer that the necessary intention to create legal relations existed.[48]Likewise, the existence of a right of revival of the former tenancy as a matter of a law may assist the court to conclude that there was no new tenancy but it is possible that even if the right is totally absent the landlord may not have intended to create a new tenancy. In the Stirling case there was a concession that the increase in rent had· created a new tenancy (see 502 C-D). Mr Bartley Jones submits that in the Stirling case the question whether an increase in rent resulted in a new tenancy did not arise for consideration or determination by the Court of Appeal. In paragraph 31 of his judgment, Lloyd J said:
"The increased payment could not be justified by reference to the order, and therefore had to be analysed on a different legal basis. It is not disputed, and could not be, that this created a new tenancy. From then on, the legal relations between the parties were effected. In my judgment, until then, they were not."
Mr Bartley Jones submits that Lloyd J did not decide that any increase in rent would create a new tenancy. The court has to apply the "quo animo" test.[49]Mr Bartley Jones submits that the "quo animo" test is a question of fact. He points out that St Helens had in 1998 initially refused to accede to Ms Pinder's request to transfer the joint tenancy of herself and her former. partner to herself and her new husband unless and until then the rent arrears of £150.98 were discharged. Mr Bartley Jones also points out that the new rent card issued by Helena shows the commencement date of the tenancy as the date of the original tenancy so that statement of itself proves nothing.[50]Mr Bartley Jones submits that rent cards were issued during the course of the possession proceedings and accordingly have little or no probative value; see Westminster City Council v. Basson (1990) 23 HLR 225 at 229 per Mustill LJ. Mr Bartley Jones further submits that in any event references to "rent" are not conclusive of any intent to create anew tenancy (see the Regan case at 483).[51]Mr Bartley Jones points out that Helena deliberately refrained from sending out new assured tenancy agreements to persons in the position of the appellants. Further, when Helena increased the charges for use and occupation it made it clear that all that was being demanded was an increase in charge for use and occupation. Helena Appeals - the assignment point.[52]We have not been shown the entire contractual documentation for effecting the transfer of 8t Helens' housing stock to Helena, but the parties are agreed that the relevant parts are those which are before the Court. I am content to proceed on that basis. For the purpose of these appeals, an important clause in the deed of assignment of rent and service charge is clause 1, which provides as follows: - " ASSIGNMENT In consideration of the covenant on the part of [Helena] in Clause 2 hereof to pay the sum of five hundred and thirty nine thousand, eight hundred and sixty pounds and ninety seven pence (£539,860.97) and notwithstanding the provisions of Section 141 of the Law of Property Act 1925 to the intent that [Helena] shall have the right to recover all arrears of rent and (where· applicable) service charge ("the Arrears") due to [St Helens] from the tenants and leaseholders and occupiers of the Property as at the. Completion Date ("the Former Tenants") [St Helens] HEREBY ASSIGNS to [Helena]1.1 all the Council's rights and remedies for recovery of and interest in the Arrears brief details of which are set out in Part 1 of the Annex hereto; and1.2 (so far as [St Helens] is able) the benefit of any of the existing procedures issued by [St Helens] against and orders for possession and money judgements obtained by [St Helens] against the Former Tenants and/or other occupiers of the premises comprised in the Property brief particulars of which are set out in Part 11 of the Annex hereto."[53]Also relevant is the definition of "Qualifying Tenant" in the agreement dated 1 July 2002:
"Qualifying Tenant" shall mean a secure tenant of [St Helens] within the meaning of Section 79 of the Housing Act 1985 and introductory tenants within the meaning of Section 124 of the Housing Act 1996 of any Dwelling as at the Completion Date in respect of whom there is inforce no outstanding order of the court for possession of his Dwelling, no current Court proceedings for possession and no subsisting valid notice of intention to seek possession or a notice of proceedings for possession PROVIDED THAT any secure tenant of any Dwelling who is not a Qualifying Tenant as at the Completion Date shall, if he has the possession order discharged or the notice of intention to seek possession withdrawn, subsequently qualify to be a Qualifying Tenant and following such circumstances shall be deemed to have been a Qualifying Tenant with effect from the Completion Date; ... "
[54]Mr Luba relies on the definition in the deed of assignment of a "qualifying tenant." This is because the proviso refers to the revival of a former secure tenancy.[55]Mr Luba submits that clause 1.1 of the deed of assignment did not assign to Helena mesne profits as well as arrears of rent. The parties could have provided for the assignment of arrears of mesne profits as well as of rent but chose not to do so. Accordingly the appellants are entitled to a declaration that such arrears are not within the deed of assignment.[56]Mr Bartley Jones points out that St Helens has agreed to execute a supplementary agreement if necessary, and that its intention was always to assign arrears of mesne profits as well as arrears of rent.[57]Mr Bartley Jones submits that there is no reason why St Helens should wish to retain arrears of mesne profits and yet assign all other monies owing to Helena. Conclusions The waiver issue

Conclusions

[58]Mr Latham's first submission is that Lambeth waived Mr O'Kane's breaches of the 'suspended possession order made against him so that his tenancy was revived. In my judgment this argument is not open to Mr. Latham in this court in the light of the Marshall case, which I have already summarised in paragraphs 21 and 22 above. In my judgment it is clear that the conclusion of Chadwick LJ was not obiter. As I have explained in paragraph 21 above, there were three issues in that case. As a result of his conclusion on waiver, Chadwick LJ was able to hold that no question arose as to the impropriety of striking out the disrepair proceedings on the grounds that the order of discharge was bound to be made (issue (1) in that case). It is moreover clear from paragraph 39 of his judgment that, combined with his conclusion on the second issue, his conclusion on waiver rendered it unnecessary for him to consider the discretion issue. The other members of the Court, Schiemann LJ and Sir Christopher Staughton, agreed with his judgment.[59]In my judgment, it is not open to this court to review the judgment of Chadwick LJ, as we are invited to do by Mr Latham, for conformity with the decision of the House of Lords in the Burrows case. The judgment of Chadwick LJ expressly deals with that case. In a short judgment in Williams v. Glasbrook Brothers Ltd [1947] 2 All ER 884, Lord Greene MR held, in similar circumstances that it was not open to the Court of Appeal to review a previous decision of this Court for conformity with an earlier decision of the House of Lords, and Cohen and Asquith LJJ agreed with "him. If there has been a mistake by this Court in the interpretation of the decision of the House of Lords in the Burrows case, only the House of Lords can now rectify it.

The new tenancy issue

[60]The Burrows case establishes that "special circumstances" are .required before a new tenancy can be found between a tolerated trespasser and the former landlord who has permitted him to remain in occupation: see per Lord Browne-Wilkinson in the passage in the Burrows case" cited in the Hawkins case, and set out in paragraph "6 above. Mr. Luba submits in effect that there is an inconsistency between "the decisions of the House of Lords in Street v Mountford and in the Burrows case. The former decision established that, provided the parties intended to enter into legal relations, the question whether their relationship was one of landlord and tenant depended on whether the indicia of that relationship were present. The Burrows case, on the other hand, decides that the question whether the parties entered into a new tenancy turns on what the parties' intentions were when the former tenant remained in occupation (see per Lord Browne - Wilkinson in the passage from the Burrows case set out in paragraph 6 above). On this basis, there is no inconsistency between the two decisions. Nonetheless Mr. Luba's argument serves a useful purpose. It acts as a reminder of the importance of establishing whether the intention of the parties was to enter into contractual relations.[61]In his speech in the Burrows case (set out in paragraph 6 above), Lord Browne-Wilkinson refers to the possibility of an order of the court under section 85(4) of the 1985 Act (set out in paragraph 5 above), reviving the tenancy. If the tolerated trespasser cannot bring himself within that provision because he cannot show that he has complied with all the conditions in the order, then he has first to apply in effect for a variation of those terms, using the provisions of section 85(2). New terms for possession can be substituted and accordingly it is only those new terms which have to be complied with for the court's jurisdiction under section 85(4) to arise.[62]Mr Luba accepts. that, in the normal way, a "limbo" tenancy (that is, a tenancy enjoyed by a tolerated trespasser before his tenancy came to an end as a result of the tenant becoming liable to give up possession) does not cease to be capable of being revived by the process described by Lord Browne-Wilkinson in the Burrows case simply because the landlord's housing stock has been transferred to a landlord who cannot fulfil the 'landlord' condition for a secure tenancy. A secure tenancy so transferred will become an assured tenancy under the Housing Act 1988. In my judgment, Mr Luba's concession was correct. As Mr Bartley Jones points out, there is no requirement in section 85(2) or section 85(4) that the "limbo" tenancy should remain a secure tenancy. It would be very odd if the effect of a transfer of the former landlord's interest resulted in the tolerated trespasser losing his previous right to make an application under those provisions.[63]Mr Luba seeks to meet this difficulty arising from the effect of section 85 following the stock transfer by reliance on Street v. Mountford. He submits that the characteristics of a tenancy are present when the former landlord permits, ·or does not take steps to prevent, a tolerated trespasser from remaining in possession. Accordingly he submits that a new tenancy must arise once there is some outward manifestation by the former landlord of his agreement to the tolerated trespasser remaining in possession which is not wholly referable to the terms of the possession order or the limbo tenancy. I have already dealt with his submission on Street v Mountford above.[64]In my judgment, this argument is also inconsistent with the Burrows case. The speech of Lord Browne-Wilkinson makes it clear that it is not enough that the facts are consistent with a new tenancy.: they must actually force that conclusion. The House of Lords in the Burrows case drew the balance between the interests of the tolerated trespasser and those of the former public sector landlord at that point. It is a point which may differ from the point at which; as a matter of social policy, Mr Luba would like to draw the balance. Mr. Luba may be able to persuade the House of Lords that he is right but the law is clear and it is binding on us.[65]Mr Bartley Jones lays emphasis on the former landlord's intention: he submits that a former landlord should not be taken to have intended to create legal relations with the tolerated trespasser if there were still arrears owing. But that proposition too cannot be elevated into a proposition of law. It is in fact unnecessary to approach the former landlord's intention with any a priori assumption because (as already indicated) the Burrows case lays down a different approach, which is binding on us.[66]The question whether a new tenancy arises involved questions of fact for the trial judge. As to the facts in the 0 'Kane case, the rent increases are consistent with the landlord's desire to increase mesne profits. In my judgment, there is nothing in those increases to force the conclusion that the landlord intended to create a new tenancy. The full context of fact must be considered, and that context includes the fact that Mr Kennedy still owed significant arrears. The decoration allowance was consistent with the landlord wishing to compensate Mr Kennedy as he would a tenant for landlord's repairs. It does not show an intention to create a new tenancy. In all the circumstances, in my judgment the judge was entitled to come to the conclusions on the facts that he did. Subject to the submission on joint tenancies, the same conclusion must follow in the Helena appeals.[67]In relation to the joint tenancies enjoyed by Ms Pinder and Ms O'Donnell, Mr Luba's essential submission is that an application to revive their tenancies is not a practical proposition because their joint tenants no longer live with them, the joint tenants would have to consent to any order to revive the tenancies and that is most unlikely because the liabilities under the tenancy would be resuscitated. Mr Luba compares their position with that of a joint tenancy which has determined on the death of one of the joint tenants. Mr Luba submits that the normal rule that a survivor of a joint tenancy becomes sole tenant on the death of the joint tenant does not apply to a tenancy which has been determined and is in limbo. He therefore submits that in that case there is no possibility of revival and therefore any new terms between the former landlord and the survivor can only be an agreement for a new tenancy. Because the right to apply for a new tenancy is a personal and non-transmissible right, an application can only be made under section 85 by the survivor and the court would decline to make an order for revival because it would impose liabilities upon the deceased for the period prior to death. The survivor would have to show a will to continue the tenancy for that period after the determination and would be unable to . show that. However, as Mr .Bartley Jones points out, this does not mean that an order under section 85 could never be made. It simply means that it could not be made without joining the personal representatives of the deceased and obtaining their consent. There would be jurisdiction under section 85 to make an order if that happened and that is sufficient for the purposes of the Burrows case. Indeed in that case Ms Burrows was originally a joint tenant. The subsequent arrangements between her and the former landlord had not involved the other joint tenant, but the House of Lords held that that point did not mean that a tenancy arose in Ms Burrows' name alone: see the Burrows case at 1455H .. Likewise, the application of the Burrows case is not affected by the fact that in practice it would be difficult for two of the appellants in the Helena appeals to obtain the consent of their former joint tenants.[68]In my judgment, Lord Browne-Wilkinson's speech does not make it a condition of a conclusion that no new tenancy has been created that the "limbo" tenancy was revivable using section 85. As Mr Bartley Jones points out, the fact that the "limbo" tenancy could be revived is part of the factual matrix and has some evidential weight in considering whether a new tenancy has been created. Of course, if both parties know that revival is in law or in practice impossible, that might lead the court. to find that the parties must have intended to create legal relations when for instance the charge for occupation was increased. However, revivability of the "limbo" tenancy is not a precondition.[69]This conclusion is not in conflict with this court's decision in Swindon BC v Aston, and indeed accords with it. In that case, this court found that the right to apply to the court under section 85(4) had by virtue of the terms of the court's order ceased to be capable of being revived under section 85 (see page 619), and that decision is binding on us. However that factor was not the only factor that led this court to the conclusion that a new tenancy had been created. There were other factors, such as the fact that . the landlord was seeking to enforce a term found only in terms sent to the tolerated trespasser after the former tenancy ceased to be capable of being revived (see page 620). The decision in Leadenhall Residential 2 Ltd v Stirling is also distinguishable since the decision in that case, that a new tenancy with a tolerated trespasser was created on the former landlord giving notice of an increase in rent, turned on a concession in that case. Although Lloyd J (as he then was) thought that the concession was correct, the point was not in issue before this court and the other members of the court expressed no view on its correctness.[70]Even with that factor - the practical loss of revivability - in the case of Ms O'Donnell and Ms Pinder, there is nothing to take the facts of those cases out of the normal situation <;>f a former landlord simply being content to forbear from enforcing the possession order. The issue of a rent card and the making of increases of rent are evidence of the former landlord's continued forbearance. There is no factor which is consistent only with the creation of a new tenancy between them and St. Helens. Therefore the judge was entitled to find that no new tenancies came into existence in these cases.

The assignment issue

[71]Mr Luba makes much of the point that the. agreement of 1 July 2002 recognises that some occupiers (to use a neutral phrase) had had possession orders made against them: see the definition of "qualifying tenant" set out in paragraph 53 above, which is used to determine those to whom Helena accepted an obligation to issue new tenancy agreements. Moreover, he points out that clause 1 expressly defines "arrears" by reference to rent and service charges and not mesne profits. But the court must apply a purposive construction. The agreement and the deed must be read together. The· parties clearly referred to rent owed by tenants, leaseholders "and occupiers" (see clause 1 of the agreement set out in paragraph 51 above). Occupiers would include tolerated trespassers. Although the parties did not refer in terms to mesne profits there or in the deed of arrangement, the true interpretation of the deed of assignment, in my judgment, is that arrears of mesne profits owed by tolerated trespassers were assigned in the same way as arrears of rent.

Disposition

[72]For the reasons given above, I would dismiss all these appeals. The parties are agreed that in those circumstances each of the Helena cases must be remitted to the County Court for further consideration.

Sir Martin Nourse:

[73]I agree.

Auld LJ

[74]I also agree that the appeals should be dismissed for the reasons given by Lady Justice Arden.

Cited in 2 later judgments