Goodwill SIP Ltd & Ors v London Borough of Newham [2011] EWHC 980 (QB)

[2011] EWHC 980 (QB)Case No HQ09X05030
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 14/04/2011
Before
MR JUSTICE HICKINBOTTOM
Between
(1) GOODWILL SIP LIMITEDClaimants(2) ROSSMORE HOTEL LIMITEDClaimant(3) CEDAR HOTEL LIMITEDClaimant(4) CITY BEST HOTEL LIMITEDClaimant(5) REDBRIDGE HOTEL LIMITEDClaimantLONDON BOROUGH OF NEWHAMDefendant
Robert Duddridge (instructed by Edwin Coe) for ClaimantsMatthew Hutchings (instructed by Head of Legal Services, London Borough of Newham) for DefendantHearing Hearing dates: 2, 3, 4 and 10 March 2011
Judgment

Introduction

[1]In this action, the Claimants claim for sums due under invoices rendered to the Defendant local housing authority (“the Council”) for accommodation provided to assist the Council in the performance of its statutory obligations towards persons in its area who are or may be homeless.[2]Each invoice relates to a person who applied to the Council for accommodation as a homeless person, and who was temporarily housed in accommodation owned by the Claimants whilst the Council determined its obligations to house the person longer term. However, in each case the applicant “overstayed”, i.e. remained in occupation of the Claimant’s accommodation after the Council’s statutory duty to accommodate that person had been terminated, and after the Council had cancelled that person’s accommodation booking with the Claimants. In terms of liability, the issue between the parties is whether the Council remained liable to pay the Claimants for the accommodation of the housing applicant in these circumstances, until that applicant in fact ceased to occupy the Claimant’s accommodation. Quantum is not in issue: the amount of the invoices in dispute is agreed in the sum of £78,334.[3]Additionally, the Council counterclaims for sums it contends it mistakenly overpaid to the Claimants in respect of one particular housing applicant (Ms Michelle Grant) for the period 29 March 2007 and 11 January 2009.

The Relevant Statutory Provisions

[4]In respect of the provision of accommodation facilities, the relationship between the parties was contractual, and their respective rights and obligations are dependent upon the terms of the contract between them. However, the Council’s statutory duties towards the homeless are essential background to that agreement.[5]The relevant provisions are found in Part VII of the Housing Act 1996; and, so far as this claim is concerned, they are uncontroversial. In respect of homeless persons within its area, a local housing authority such as the Council has the following relevant duties: i) Where the authority receives an application for assistance on the grounds of homelessness, it has obligations to investigate, to decide whether it has a duty to secure accommodation for occupation by the applicant, and then to notify the applicant of its decision (section 184). ii) If the section 184 decision is that the authority owes a duty to accommodate the applicant, it has a duty to secure that accommodation (section 193). iii) If the section 184 decision is that the authority owes no such duty, then the applicant may request a review of that decision by the authority, in which case the authority is bound to review its decision (section 202): and, if the applicant is dissatisfied with the result of that review, he may appeal to the county court on a point of law (section 204). iv) Following an application for housing and pending a section 184 decision, in respect of certain vulnerable applicants (for whom the precise identifying criteria are immaterial to this claim), the authority has a duty to provide temporary accommodation (section 188), which may be discharged by the authority securing suitable accommodation from a third party (section 206(1)(b)). v) Once a section 184 decision has been made and notified, the duty to provide temporary accommodation ceases (section 188(3)): but an authority has power to extend temporary accommodation pending a review and/or appeal (section 204(4)). Because it has a public law duty to act reasonably, an authority also has the power to extend the period of temporary accommodation to allow an unsuccessful housing applicant reasonable time to find alternative accommodation.

The Nature of the Claimants’ Business

[6]Sukhbinder Singh Takhar (“Mr Takhar”), and his son Pirthipal (“Mr Bob Takhar”), have been supplying services to the Council in the form of temporary accommodation for housing applicants since about 1985. In April 2004, they formed the Claimant companies, which trade as “the SIP Group”, to provide this service. The precise provider of particular accommodation to a specific housing applicant, whether prior to or after April 2004, is not material to this claim; and, in this judgment, I shall simply refer to the various providers from time-to-time collectively as “the Claimants”.[7]The Claimants own a considerable number of properties, which are used to provide accommodation for private sector lettings, and for use as temporary accommodation by local housing authorities. The latter include private hotel rooms (provided on a bed and breakfast basis), and larger self-contained properties and flats (known as “annex accommodation”) in respect of which, until February 2007, breakfast, cleaning and linen were also provided. All accommodation provided to local authorities is on a temporary and per night basis. In practice, housing applicants tend to be placed first in hotel accommodation, and, if temporary accommodation is still required, they are later moved to annex accommodation.[8]This claim particularly concerns annexes owned by the Claimants which were used to provide temporary accommodation facilities to the Council in discharge of the statutory obligations to which I have referred.

The Claimant’s Historical Relationship with the Council

[9]Until 2006, the scheme for providing accommodation was administered on behalf of the Council by the Paddington Churches Housing Association (“the Housing Association”). However, whilst the Claimants contracted with the Housing Association with regard to the provision of accommodation services, the Council continued to be responsible for an applicant’s housing application, and employees of the Council dealt with much of the day-to-day administration of the accommodation as agents of the Housing Association. Some of them were actually based in the Claimant’s properties. Part of the administration, including invoicing, was however dealt with by an employee of the Housing Association, Miss Sarah Arnold, and her team.[10]On 1 April 2005, the Housing Association entered into new written agreements with the Claimants, all in substantially the same terms. Under each contract, the Housing Association “block booked” all of the rooms in the premises covered by the agreement for a 24 month period from 1 April 2005 (clause 1): and agreed to pay a fixed fee per night, whether the rooms were occupied or unoccupied (clause 2). However, the particular Claimant company was required to ensure that registers provided by the Housing Authorities were signed each day by all residents in occupation, and returned to the Housing Authority regularly (clause 4).[11]Each contract was therefore, in effect, a head licence agreement under which individual placements of housing applicants could be made. Rightly on what I have seen, it is common ground between the parties that the contract gave neither the Housing Association/Council nor individual applicants any right to exclusive possession or any formal interest in the relevant land, but merely a contractual licence (the Housing Association/Council) or sub-licence (the individual applicants). The Claimants only contracted with the Housing Association, and never had any agreement with an individual housing applicant.[12]Clause 5(a) of the standard agreement between the Claimants and the Housing Association provided as follows: “Where [the Housing Authority] notifies the [Claimant] owner of its intention to terminate responsibility for a household, it is the owner’s responsibility to ensure that the household leave [the premises], and that their personal effects are cleared from the room. Where the booking is ended by [the Housing Authority], they will under no circumstances pay for any extension of that booking not agreed. If personal effects need to be stored, the owner must make appropriate arrangements for storage for a minimum of 7 days at no cost to [the Housing Authority]”.[13]Clause 38 provided that any failure by the Housing Authority to enforce any terms of the agreement should not be a waiver of either the terms or of the right thereafter to enforce the terms. By clause 39, either party had the right to terminate the agreement on six months’ notice. By clause 41, the Housing Authority had the right to assign the agreement to (amongst others) the Council. By clause 42, the Housing Authority appointed the Council to act as its agent in respect of its responsibilities under the agreement, and the Claimant owner agreed to co-operate fully with the Council in the fulfilment of that role.[14]Despite clause 5(a), the effect of block booking was that, if occupants “overstayed” (i.e. remained in occupancy despite the Housing Association/Council notifying the Claimant owner of its intention to terminate responsibility for housing for that occupant), that was of limited practical effect - because, under the block booking agreement, the Claimant owner was paid for each room each night, whether it was occupied or not.[15]However,(i) the Claimants still had to comply with the requirement that each applicant signed the register on a daily basis, which enabled the Housing Association/Council to monitor usage of accommodation:(ii) the failure to remove an overstayer might have a practical impact, if the accommodation were full and the Housing Association/Council wished to use the overstayer’s accommodation for another applicant (although on the evidence that seems to have been more theoretical than real): and(iii) the evidence was that, in any event, overstayers were very few. Until 2004, there was no evidence that any housing applicant in hotel accommodation overstayed; nor of any applicant overstaying in annex accommodation except, on rare occasions, when the police were called by the Claimants and the occupant shortly thereafter vacated. There was no evidence of the Housing Association/Council ever taking any steps to evict any housing applicant in such temporary accommodation, although the Takhars recalled speaking to a Housing Association employee on a number of occasions and being told to seek police assistance to remove an overstayer, if required, which they did. Where there was an eviction, the Claimants attended and changed the locks, at their expense.[16]The first problem with an overstayer for the Housing Association/Council occurred in 2004, but in a property that was owned by an accommodation provider other than the Claimants. In May 2004, the Council’s section 184 investigation into Mrs Roma Desnousse was concluded, with the decision that the Council had no obligation to provide her with longer term accommodation. The Council advised her (and the accommodation provider) that her temporary accommodation booking would cease on 14 June 2004. However, Mrs Desnousse took the point that she was protected by the provisions of the Protection from Eviction Act 1977 and Article 8 of the European Convention on Human Rights such that she could not be evicted without a court order. She took protective proceedings against the accommodation provider and, although they were dismissed by the county court in December 2004, the judge gave permission to appeal; and, before the Court of Appeal, because of the general importance of the point, both the Housing Association and the Council were joined as respondents. The appeal was dismissed on 17 May 2006 (Desnousse v London Borough of Newham & Others [2006] EWCA Civ 547; [2006] QB 831).[17]However, during the course of those proceedings, the Council was (understandably) reluctant to have any steps taken against overstaying housing applicants who took the same point. As a result, by the time the Council had digested the effects of the Court of Appeal judgment in early 2007, the Council had a block of 14 overstayers, five in annex accommodation owned by the Claimants (including Ms Michelle Grant, who is the subject of the Council’s counterclaim). I shall refer to these as “the Desnousse overstayers”, and shall return to them, and the steps taken to evict them, shortly (see paragraphs 23 and following below).[18]Before I do so, I should deal with other developments in this period. The block booking system ensured that rooms in properties were available to the Council at all times. Every morning, each provider faxed through a list of rooms and annexes they had available for that night. During the day, the Council would receive applications for housing which needed to be assessed. During the course of that assessment, as I have described, the 1996 Act obliged the Council to find suitable accommodation for certain applicants. The details of those applicants would be passed to the Council’s representatives working as agents of the Housing Association, and they would match the requests to the accommodation known to be available. They then contacted the manager of the particular accommodation, and gave him details of those who would be staying with them that night. Depending on the anticipated length of the assessment period, the booking would either be for a fixed period or open ended. In the case of the former, the booking would expire by the effluxion of time. In the case of the latter, when the Council had determined the housing application and considered its obligation temporarily to house the applicant had ended, through the Housing Association it would send out a termination letter to the provider. It is clear that the paper work was not always perfect or timely, but the managers of accommodation (such as the Takhars) and those responsible for the accommodation scheme at the Housing Association were generally on very good terms, and in frequent contact with one another. Any issues about a particular applicant could be dealt with by a telephone call.[19]The block booking system had advantages: the Council knew precisely the rooms they had available on any night. However, by the financial year 2006-7, the amount paid by the Council to the Claimants for providing this temporary accommodation had risen to nearly £3.7m, and, although the largest, they were not the only provider. The Council became concerned to reduce costs, and procure a more cost efficient service. Therefore, on 1 August 2006, the Council sent a notice to each provider (including the Claimants) terminating the April 2005 agreements from 13 February 2007 and, in the meantime, largely taking over the benefits of the agreements from the Housing Association. In practice, in the notice period, the Housing Association ceased to play any part in the accommodation scheme, and Miss Arnold and her team moved to work directly for the Council, although performing much the same functions as they had before.[20]The 6 month notice period gave some time for the Council to negotiate new agreements. The Council intended to instigate a public procurement process involving formal tendering on the basis of part block booking and part spot booking. Whereas in block booking the Council paid for rooms whether occupied or not, in spot booking it paid only for rooms that it required on a particular night. It was hoped that, as a result of this process, new three-year contracts would be awarded on that mixed basis by mid-2007. However, the Council considered that the new contracts could not be put in place before July 2007 at the earliest. As the 2005 block booking contracts were to end in February 2007, interim arrangements had to be made. The negotiations were in respect of those interim arrangements. I pause there to note that, although the Council’s intention was to have new contracts in place by mid-2007, the procurement process has still not been completed, and the interim arrangements are still in place.[21]The negotiations do not appear to have got underway in earnest until January 2007. That month Ms Modester Anucha was appointed the Strategic Manager of Housing Needs within the Council’s Housing Department, and, as such, she was responsible for putting the interim arrangements in place. For her, two matters were vital, namely that the Council only paid(i) for nights upon which a room was required and occupied, and(ii) at a standard rate agreed by the London Boroughs through what is known as the Bed & Breakfast Information Exchange (“the BABIE rate”). As a result, on 30 January 2007, at Ms Anucha’s direction, Miss Arnold wrote to the Claimants in the following terms:
“As you are aware the block booking contracts for [the SIP Group] are due to finish on 13 February 2007. After this date we will no longer being [sic] paying for the accommodation on this term. We are however happy to continue to use the hotel and annexes on a spot booking basis meaning that we only pay for the nights that we use the property and will not pay for any nights when the property or room is vacant. We will in addition to this only pay current BABIE rates for the use of these and will also be taking into account the property condition before we make a booking… If you wish to discuss this matter further then please call me on the number below…”
A letter in similar terms was written to each provider.[22]The letter offered an opportunity to discuss, and it was an offer that the Takhars took up. There was a series of meetings between them, and particularly Ms Anucha and Miss Arnold for the Council, notably on 19 February and 2 March 2007. A number of factual issues arise from those meetings; but, before I deal with them, I need briefly to return to housing applicants who had overstayed as a result of taking the point raised in the Desnousse case, i.e. that a court order was required before possession could be obtained (see paragraph 17 above).[23]As I have indicated, by January/February 2007, there were 14 such overstayers, five occupying accommodation owned by the Claimants. Miss Arnold’s evidence was that, although the Council did not consider that it was responsible for evicting overstayers (nor, after the demise of block booking on 13 February 2007, for paying the provider the room rate for the period of overstay), because of the hiatus caused by the Desnousse proceedings, as a “good will gesture” to providers, the Council decided to pay the costs of evicting those particular overstayers and, after 13 February 2007, to pay the appropriate BABIE rate for the accommodation until removal of the overstayers had been enforced. The Council did so, she said, because(i) the Council accepted that evictions were not practicable whilst the Desnousse case was pending (because the procedure for eviction was not clear),(ii) the Council had taken some time to consider the impact of the Court of Appeal judgments, and(iii) the overstayers were all in one “batch” and could therefore be evicted by the same bailiff over a short period of time. In relation to (i), she said that the reason for the hiatus in steps towards eviction was made known to all providers, including the Claimants, albeit not in writing. The overstaying occupants were given 14 days written notice of eviction. Miss Arnold accepted that the providers were not sent any paper work in relation to these evictions, but she said they were well aware that they were happening because they were telephoned in respect of each eviction, so that they could attend the eviction with the appropriate keys and, if necessary, to change the locks. She attended each eviction as the Council’s representative. Miss Arnold’s evidence was effectively supported by Ms Anucha, who said that it was “very clear” why the Council agreed to bear the expenses that they did in relation to these 14 overstayers.[24]I will deal with the particular position of Ms Grant when I deal with the counterclaim; but, in relation to the reasons for the Council bearing the costs of these evictions (and the BABIE accommodation rate in respect of these overstayers until they in fact left the accommodation), and the manner in which the evictions were effected, I accept the substance of Miss Arnold’s evidence. It was compelling, and generally supported by both Ms Anucha and the contemporaneous documents.[25]In particular, although they denied (or, at least, did not recall) it, I find that the Takhars were told by Miss Arnold the reason why no steps could be taken to evict those overstayers who had taken the Desnousse point – the email from Mr Takhar to Miss Arnold dated 8 November 2006 concerning what should be done with overstayers who refuse to move out, with its reference to Miss Arnold speaking to the Council’s solicitors, is some evidence as to that, albeit I accept of limited weight – although that evidence of Miss Arnold is neutral as to who was responsible for evictions.[26]Further, I find that there was no lack of clarity or firmness in the Council’s position in respect of its own responsibility for evicting overstayers or paying providers the accommodation rate for overstayers, either in February/March 2007 when these evictions were being carried out or at any other material time.[27]The Claimants’ claim was originally based upon the premise that the Housing Association/Council had “over a period of several years” removed overstayers and paid the Claimants on invoices for accommodation occupied by overstayers, pleading a resulting estoppel against the Council restraining it from relying upon clause 5(a) and from denying liability for invoices in respect of such overstayers (see paragraph 8 of the Particulars of Claim, to an extent reiterated in paragraph 1 of the Reply). However, as I have indicated, there is no evidence that, prior to the eviction of the Desnousse overstayers in March 2007, the Housing Association or Council took any steps to evict any overstayer, or suggested to the Takhars that they had done so.[28]The estoppel argument was, quite properly, not pursued by Mr Duddridge for the Claimants at trial; but it was replaced by a different, if factually related, contention that at all material times the Council considered itself responsible for evictions (and payment of the accommodation rate in the meantime) or, at least, there was confusion and inconsistency of view in the ranks of the Council as to their responsibilities.[29]However, there was no evidence (and certainly no compelling evidence) in support of that contention either. Both Miss Arnold and Ms Anucha were clear as to what they thought, namely that the Council had no obligation to evict overstayers and no obligation, post-13 February 2007, to pay for accommodation occupied by overstayers.[30]The contemporaneous documents support that evidence. After the eviction of the Desnousse overstayers, the issue of overstayers in the accommodation of the Claimants did not arise again until Mr Takhar wrote to Miss Arnold on 19 October 2007, asking for the Council “to take an active role in assisting us [the Claimants] to remove [overstaying] tenants” in a particular property. Miss Arnold responded on 22 October:
“I have spoken to your staff several times with regards to the fact that the family are refusing to leave. As I have said on numerous occasions it is down to the landlord or agent of the property to get the family to move once the booking has been cancelled. If the family are refusing access to the property then can you not let yourselves in with your own set of keys and change the locks. Please remember that these families do not have a tenancy agreement to reside at the property. They hold a bare licence for the time that the booking is valid. After it has been cancelled they have no right to remain in the property. Maybe you need to look at asking the local police for some help with regards to removing the family. I cannot authorise payment for these families that are refusing to leave as the booking has been cancelled by the Council.”
[31]It is true that Mr Takhar responded the next day, in the following terms:
“You may be aware that in the past bookings when tenants overstayed their booking, [the Council] were responsible for this. In this case the tenants are of [the Council] and they have overstayed their booking. It is the responsibility of [the Council] to evict these tenants and pay up till the date of eviction or assist us in removing them…. We have been advised by our solicitor that no agreement is in place with [the Council] which states that we are responsible for this matter. I hope you will look into this matter urgently and kindly email us of what actions you will be taking to resolve this issue”
[32]I will come on to deal with the contractual terms that were agreed between the parties in due course. The point here is simply that the documents confirm the Council’s internal view. Following Mr Takhar’s email, Miss Arnold sent an email to her line manager (Ms Karen Shaw):
“Not sure where I am to go from here. We did assist landlord removing tenants with use of bailiffs but that was only a batch that we did whilst we were waiting for the Desnousse case to come out. We agreed that once we had the ruling on this we wouldn’t do anymore and we haven’t. Not sure what to do next as I made it clear in my email that we wouldn’t be paying and Modester [i.e. Ms Anucha] has reiterated this.”
[33]With the possible exception of Mr Stuart Hannam, all of the Council employees who gave evidence indicated that the Council’s internal view was, throughout, clear, consistent and firm.[34]Mr Hannam was called by the Claimants, who sought to cast doubt upon the consistency of the views within the Council. He was the Bed and Breakfast Team Leader in the Council’s Housing Department from April 2008 (when he effectively took over from Miss Arnold, who made an internal move) until December 2010. However, even he referred to “the party line” of the Council, which is recorded in his own minutes of a meeting he had with Mr Takhar on 17 October 2008. Mr Takhar is recorded as saying that Miss Arnold had in the past assisted providers to evict/remove overstayers, but Mr Hannam is minuted as saying:
“[The Council] are unable to assist with overstayers… [Mr Hannam] advised that [his] instructions are we cannot get involved in removing persons from private properties (such as nightly booked accommodation) as they were only under a licence not a tenancy, which leaves responsibility for removal onto the owner of the premises.”
[35]Mr Hannam did say that, at his brief handover meeting with Miss Arnold in April 2008, she referred to 6-7 overstayers, about whom she was liaising with enforcement. He said that she told him that it was not the responsibility of providers to evict overstayers, but nothing should be done in respect of these overstayers unless and until providers raised the issue. Miss Arnold denied that there was any discussion between them about overstayers. Mr Hannam said that he raised the issue of overstayers later with Ms Shaw and with Mr Gareth Hall (the Accommodation Manager in the Council’s Housing Department from 30 June 2008), but they never came back to him.[36]However, I am afraid I did not find Mr Hannam to be an impressive witness. For example, he referred to a list of overstayers which, he said, was shown to him by Miss Arnold (31 January 2011 Statement, paragraph 4) – but in his oral evidence he accepted that he was shown no list as such, only emails concerning (as I understood it) the eviction of the Desnousse overstayers, which had taken place a year before. He could not recall seeing any emails concerning later overstayers.[37]In the circumstances, I am not persuaded that there was any discussion about overstayers between Miss Arnold and Mr Hannam: and certainly no discussion in the terms recalled by Mr Hannam. The Desnousse overstayers had been evicted a year before. Miss Arnold was firmly of the view that providers were responsible for evicting overstayers, and the Council was not: the October 2007 correspondence to which I have referred (see paragraph 30 above) is testament to that. If there had been any discussion of overstayers, it would only have been in those terms. Had Miss Arnold referred to the eviction of the Desnousse overstayers, then she would have told Mr Hannam the reason for the Council assisting providers in those evictions, in the terms she explained it in her evidence. She was clear in her own mind as to the Council’s position in relation to overstayers, and clear about why the Council were assisting the providers in evicting the Desnousse overstayers. She would not have been reticent in making those views known to Mr Hannam.[38]Nor am I persuaded that Ms Shaw or Mr Hall or any other superior of Mr Hannam failed to respond to any request from Mr Hannam as to the Council’s approach to overstayers. That approach was unequivocal, and appears to have been made clear to Mr Hannam when he did ask about it, for example in his preparation for the 17 October 2008 meeting to which I have referred. He said that what he said at that meeting was the party line of the Council as given to him by Mr Hall.[39]I now return to the negotiations between the Council and the Claimants in respect of the interim arrangements for the provision of temporary accommodation, pending the results of the procurement process. There is no doubt that the focus of these negotiations was the proposal in the 30 January 2007 letter (see paragraph 21 above) that the Council would only accept accommodation on a spot booking basis, and at the BABIE rate. Given the intractability of the Council which effectively refused to compromise on either element of this proposal, and given the commercial impact of that proposal on the Claimants (a reduction of income in a substantial seven-figure sum), that is not at all surprising.[40]However, both Mr Takhar and his son said that responsibility for evictions was also discussed at a meeting with Ms Anucha and Miss Arnold on 19 February 2007. At that time, the Council had taken a decision to bear the costs of evicting the Desnousse overstayers, and to pay providers for accommodation occupied by such overstayers at the BABIE rate from 13 February 2007 until eviction. Mr Duddridge submitted that, in those circumstances, it would have been curious if responsibility for evictions had not been raised at the meetings. Mr Takhar said in his evidence that it would simply not be commercially feasible for the Claimants to be responsible for evicting overstayers: they would (he said) be in court in relation to possession proceedings “every day”. Both Mr Takhar and his son said that, at the 19 February meeting, the issue was raised and Miss Arnold had said that, under the interim scheme, providers would be responsible for evicting overstayers: and the Takhars had indicated that they would not agree to that. Ms Anucha and Miss Arnold said that they would come back to the Takhars on the point, but they never did. In their evidence, Ms Anucha and Miss Arnold said that responsibility for evictions was never discussed at that (or any other) meeting.[41]I am quite satisfied that there was no discussion of responsibility for evictions at the 19 February 2007 meeting. Ms Anucha and Miss Arnold were firm and compelling in their evidence that it was not discussed. There is no reference to it in Ms Anucha’s notes of the meeting: although they are short, I accept her evidence that she would have noted down that as an issue if it was unresolved, as the Takhars suggest. There is no reference to it in Mr Takhar’s follow up email of 20 February 2007: nor in Ms Anucha’s response of 23 February. Again, had there been an outstanding issue – and one of some importance, according to Mr Takhar – one would have expected there to be some reference. Indeed, there was no follow up by the Takhars in respect of responsibility for evictions at all, at the next meeting on 2 March 2007 or thereafter. The issue did not arise again until the exchange in October 2007, to which I have referred.[42]Furthermore, had the issue been raised with either Ms Anucha or Miss Arnold, they would not have needed to leave it over. As I have explained, the internal view of the Council (including both Ms Anucha and Miss Arnold) was that providers had been and would continue to be responsible for evicting overstayers. That view was clear and consistent, and well-known to both Ms Anucha and Miss Arnold. Ms Anucha said (and I accept) that she had worked for two other Councils’ before, and in her 20 years’ experience in this field, she had not heard of anyone other than providers being responsible for evicting overstayers. I had the benefit of seeing Ms Anucha give evidence, and have no doubt at all that, if the issue had been raised, she would have robustly indicated the Council’s party line, and it would not have been open to negotiation.

The Terms of Contract between the Parties post-13 February 2007

[43]The negotiations between the parties of course bear upon the terms of the agreement under which they operated for the provision of temporary accommodation after the expiry of the 2005 block booking agreements, on 13 February 2007. It is to those terms I now turn.[44]The Council’s case is simple and straightforward. It is set out in paragraph 8 of the Defence. Until 13 February 2007, the 2005 block booking agreements set out the contractual terms between the parties, including clause 5(a), the benefit of which moved from the Housing Association to the Council in August 2006. For the period after 13 February 2007, the parties agreed that(i) bookings would be made on a spot booking basis, i.e. the Council would only pay for nights they in fact booked accommodation, and(ii) the Council would pay for that accommodation at the BABIE rate. Save for those variations, the terms of the 2005 agreements would continue to apply.[45]As a matter of pleading, that was admitted by the Claimants, who formally admitted that, save for those two changes, “the relationship between the parties was otherwise intended to continue as before” (paragraph 4 of the Reply). However, the Claimants originally relied upon the Council being estopped, both pre- and post-February 2007, from relying upon clause 5(a) which expressly imposed the burden of removing overstayers on the Claimants, and expressly relieved the Council from any obligation to pay for accommodation of an overstayer after notifying the Claimant that the Council’s obligation to house the housing applicant had ceased (see paragraph 12 above). For the reasons set out above (paragraphs 27-8), the Claimants did not pursue that estoppel claim at trial; and, by the end of the trial, Mr Duddridge properly accepted that, at least until 13 February 2007, it was fully open to the Council to rely upon clause 5(a).[46]However, at trial, Mr Duddridge submitted that the Council could not rely upon that clause after that date. That submission was based to an extent on paragraph 5 of the Reply, which reads:
“… [I]t is denied that it was expressly or impliedly agreed that clause 5(a) of the [2005 agreements] would apply. The Claimants specifically refused to be responsible for the removal of overstayers. [The Housing Association] had at all material times taken responsibility for the removal of overstayers. At first, the [Council] continued to take responsibility for the removal of overstayers after the [2 March 2007 meeting]. Business efficacy did not require that the Claimants take responsibility for the removal of overstayers or that the [Council] cease to make payments in respect of them.”
[47]He developed the submission during the course of the trial, as follows. The 2005 block booking agreements were terminated, as of 13 February 2007, and none of their terms survived that date. Thereafter, each spot booking gave rise to a separate contractual licence. Some terms of those individual contracts were expressly agreed (e.g. that the rate should be at the BABIE rate), but they were few. Other terms could be implied into the contract on the principle set out in The Moorcock (1889) 14 PD 64 at page 68, because they are necessary, in a business sense, to give efficacy to the contract. That certainly seems to be the right test (see Wettern Electric Ltd v Welsh Development Agency [1983] 1 QB 796 at page 808D-E). Mr Duddridge submitted that terms as to the management of the relevant accommodation, including standards of service, are so necessary: but a term that the provider will be responsible for evicting overstayers and, in the meantime, the Council will not be liable to pay for the occupation of the relevant accommodation, is not.[48]He submitted that such a term is not only unnecessary, but counterintuitive and unfair. The Council, not the Claimants, is in effective control over the accommodation process. Furthermore, the Council is the Claimant’s licensee: once the license is terminated the Council is prima facie bound to give the Claimants vacant possession and accommodation free from trespassers to whom the Council had allowed entry as sub-licensees. If one of the Council’s housing applicants overstayed, despite Desnousse a prudent provider would wish to have a court order before evicting that overstayer; and, even using the expedited process, that could take three or even five months. For that period, it would be incongruous and unfair (submitted Mr Duddridge) if the Claimants were deprived of income from the accommodation occupied.[49]These submissions were powerfully made, and with ingenuity; but I do not consider they have any real merit, for the following reasons.[50]Mr Duddridge’s submissions are based upon the premise that, after 13 February 2007, none of the terms of the 2005 agreements survived. That is flatly contradicted by the Claimants’ pleaded admission that, save for spot booking and the nightly rate, both the Council and the Claimants intended the contractual relationship to continue as before (paragraph 4 of the Reply: see paragraph 45 above). That is not just a technical pleading point – although the Claimants made no application to amend their pleadings, and there must be very real doubt as to whether such an application made at trial would have been successful – because solicitors on the Claimants’ behalf signed the pleading with the usual statement that the facts in the pleading were true. The pleaded intention of the Claimants is therefore evidence, and evidence of some weight. As I indicate below, that is far from the only evidence that the Claimants intended the terms of the 2005 agreements to continue to apply to post-13 February 2007 bookings under the interim arrangement.[51]In any event, the submission that terms as to the management of the accommodation including service standards could properly be implied by reason of business necessity is not compelling. It might possibly be that some such terms and standards are necessary: but it is far from the case that each and every particular term and standard as to accommodation management set out in the 2005 agreements are necessary. As Mr Duddridge all but accepted in his closing submissions, the parties clearly operated on the basis that at least those terms and standards should continue to apply to the placements made under the interim arrangements.[52]But it is clear on the evidence, including the Reply to which I have referred, that the parties operated on the basis that all the terms of the 2005 agreements were to continue to apply to placements made under the interim arrangements, save for those which had to bow to the express variations that had been agreed because of incompatibility, e.g. in respect of spot booking and the rate. That is precisely the admission made by the Claimants in the Reply. On all of the evidence, it was well made.[53]Other than the terms that were expressly varied, it was not suggested that there was any term of the 2005 agreements other than clause 5(a) that was not carried forward into the post-13 February 2007 contracts. One example was the continued registration requirement, which the Claimants maintained.[54]In relation to clause 5(a), I have found, contrary to the allegation in paragraph 5 of the Reply (and the evidence of the Takhars), that responsibility for evictions was not discussed at the 19 February 2007 meeting or elsewhere, until the October 2007 exchange between Mr Takhar and Miss Arnold. Contrary to the further assertions in the Reply, neither the Housing Association nor the Council had taken any steps to evict any overstayer, except the Desnousse overstayers: nor, with that same exception, did the Council take any steps after 13 February 2007. The limited steps that had been taken (in terms of, e.g., calling the police and changing the locks) had been taken by the Claimants and at their expense. The Claimants had agreed that clause 5(a) should form a part of the contractual arrangements between the parties in 2005, and at trial Mr Duddridge conceded that the clause had full force until 13 February 2007. At the time the interim arrangement was negotiated, there was nothing to suggest that the Claimants were not agreeable to that clause continuing after that date.[55]With regard to the Desnousse overstayers, I accept that the Council could have kept the Claimants better informed. Whilst, as I have found, the Council did inform them as to why no steps should be taken to evict the overstayers pending the ultimate conclusion of Desnousse, and they informed the Claimants of particular evictions (so that they could attend with the keys etc, which they did), I am not satisfied that the Council did clearly tell the Claimants that the assistance the Council provided to evict these overstayers (and the payment of their accommodation during the period of overstay) was a one-off, and why that was so. Given that these were the first substantial overstayers who had to be dealt with, it may have been more helpful if the Council had done so.[56]But, in my judgment, that does not affect the contractual position between the parties. Crucial to that position is the intention of the parties, and the extent to which the parties were ad idem, with regard to the terms that were to apply to the provision of accommodation under interim arrangement. However, it is well-established that contractual intention must be assessed objectively rather than subjectively, i.e. by reference to what a particular party said and did. I have found that the Takhars did not raise the issue of responsibility for overstayers during the negotiations in respect of the interim arrangements; and, on the evidence, it is unclear to me whether (and, if so, the extent to which) they had such responsibility in mind at that stage. I accept that they may have misunderstood the extent to which the Housing Authority/Council had in fact been instrumental in evicting overstayers before the Desnousse overstayers, and/or the content and effect of clauses 5(a) and 38 of the 2005 agreements. However, towards the Council, they acted as if their intention was to continue to provide accommodation placements on the terms of the 2005 agreements except where those terms were incompatible with variations which had been expressly agreed between them (e.g. with regard to spot booking and rates).[57]As I have indicated, save for clause 5(a), there is no suggestion from the Claimants that any of the 2005 agreement terms compatible with the agreed variations were not adopted post-13 February 2007. Clearly, all of the terms with regard to the management and service of the accommodation simply continued to apply.[58]In his written evidence, Mr Bob Takhar said that, in relation to overstayers post-13 February 2007, he and his father “wanted things to continue as before”. Whilst that is written in the context of a version of events at the February and March 2007 meetings which I do not accept, it exhibits a general intention.[59]Furthermore, in relation to two overstayers, the Claimants were forced to issue proceedings in Ilford County Court for a possession order against them, as trespassers. The district judge wondered why the Council was not a party to those proceedings, and Miss Arnold prepared a statement in response. In that statement (dated 15 December 2009), she indicated that the Council did not have a sufficient interest to sue for possession (paragraphs 12-13); but, more importantly for these purposes, she referred to the 19 February and 2 March 2007 meetings with the Takhars in the following terms:
“At these meetings we agreed the arrangements that would be put in place for the future procurement of Bed and Breakfast accommodation. The meetings took place at the Council’s offices and it was agreed that the previous arrangements would continue save that: (a) the bookings would be on spot booking basis so that the Council would only pay for the nights on which the accommodation was actually being used by its homeless sub-licensee; and (b) the Council would only pay in accordance with the industry standard BABIE rates.”
There then follows reference to various letters and emails that, it is said, evidence these terms. There is express reference to clause 5(a) in paragraph 4 of the statement, apparently as one of the relevant terms carried forward. That statement was relied upon by the Claimants in the possession proceedings. Whilst of course there is no question of issue estoppel, or anything of that sort, it is in my view telling that, in those proceedings, the Claimants relied upon evidence as the basis of a possession action which was to the same effect as the evidence in this case, including paragraph 4 of the Reply.[60]Finally, as I have already indicated, the Claimants were content for clause 5(a) to be incorporated in the two-year 2007 agreement. At the time of the negotiations for the post-13 February 2007 interim arrangements, they gave no indication to the Council that they were not content for that term to continue to have effect. Similarly, with regard to clause 38.[61]On an objective assessment, although they may not have fully appreciated the scope and effect of these terms, the Takhars clearly intended to continue accommodation placements on the basis of the terms of the 2005 agreements, except where those terms were incompatible with the express variations that were agreed. That too was the intention of the Council. In respect of that contractual intention, there was that consensus ad idem between them.[62]For those reasons, I am firmly of the view, and find, that in February/March 2007, the parties both intended and agreed to continue to work on the basis of the terms of the 2005 agreements (including clauses 5(a) and 38 thereof), except and insofar as those terms were incompatible with the express variations they had agreed. Insofar as the Council went beyond its contractual obligations in the steps it took to evict the Desnousse overstayers (and pay providers for their accommodation pending actual removal), the Council was entitled thereafter to rely upon clause 38 to enforce clause 5(a) to its full effect and extent.[63]With regard to Mr Duddridge’s submission in relation to fairness, whilst I do not consider consideration of fairness to be helpful in respect of the issue of the intention of the parties and content and construction of the terms of this commercial contract, the submission is not forceful in any event. Clause 5(a) was a term of the 2005 agreement, and the Claimants conceded at trial that it applied with full effect until 13 February 2007. I do not see why it should be considered unfair or incongruous for it to apply after that date.[64]In any event, I have found that no issue in relation to overstayers was raised in the discussions between the Claimants and the Council in the Spring 2007. However, had the issue been raised by the Claimants then, the Council (in the form of Ms Anucha and/or Miss Arnold) would have informed them that such a term as clause 5(a) must form part of the contract as it moved forward. As I understand it, it formed part of the interim arrangements with other providers, and it would have been improper if the Council had, during this interim stage, given more favourable terms to one provider over others. That was the Council’s party line, and I have no doubt that it would have been robustly maintained.[65]Further, despite Mr Takhar’s suggestion to the contrary, the number of housing applicants involved and the amount of money involved was relatively small. This claim is worth £80,000. The loss of income to the Claimants as a result of the agreed variations was nearly £3m. I have no doubt that, if the issue had been raised and the Council had responded to it in the manner I have indicated, the Takhars would nevertheless have proceeded with the interim arrangements on that basis, no doubt in the hope that they would be successful in the procurement process for the longer term contract.[66]Whilst these matters do not, in my view, bear upon the objective intention of the parties, or the proper construction of the contractual provisions, they may come as some comfort to the Claimants in relation to the fairness of the conclusions I have reached.[67]In summary, therefore, I have no doubt that the parties did intend and agreed to continue to work under the provisions of the 2005 agreement except where in conflict with the express variations they agreed. Those provisions included clause 5(a). The Council was therefore entitled to rely upon that clause after 13 February 2007, to impose upon the Claimants the burden of evicting overstayers and relieving the Council of any responsibility for paying for that accommodation after it had brought the booking to an end and before the eviction had actually taken place. Clause 38 prevented any steps that the Council took in respect of evicting the Desnousse overstayers from possibly compromising its ability later to rely on clause 5(a).[68]For those reasons, the Claimant’s claim on the invoices for such accommodation fails.

The Counterclaim

[69]The Council’s counterclaim concerns Ms Michelle Grant.[70]Ms Grant was a Desnousse overstayer. She had been the subject of an accommodation booking from 1 December 2004 to 31 March 2005 when the Housing Association gave the Claimants notice terminating the booking. By that time, she was occupying the Claimant’s annex accommodation at 113 Wellesley Road, Ilford.[71]However, despite that notice, having raised the Desnousse point, Ms Grant stayed in occupation, until March 2008. On 28 March 2007, the Council says that she was evicted from that accommodation as part of the Desnousse batch. The evidence relied upon was a receipted invoice from the bailiff dated 10 April 2007 which, under the heading, “Ms M Grant, 113 Wellesley Road, Ilford, Essex IG1 4LL”, reads, “To evict the above as per your instructions”; and the evidence of Miss Arnold. Miss Arnold said in her written evidence (25 February 2011 statement, paragraph 23) that she could recall attending 113 Wellesley Road, but in the witness box she accepted she could give no direct evidence as to the eviction, only to the fact that she would not have let enforcement against an overstayer drift. She said that she could not recall any eviction being aborted or not being carried out; and, if there had been such an eviction left outstanding, she would have recalled it and followed it up. To do so would have been important, of course, because the Council had decided to pay the relevant providers in respect of Desnousse overstayers until they were removed.[72]The Claimants, however, contend that Ms Grant was never evicted in March 2007. They rely most heavily upon the accommodation registers for the relevant property, which appear to show Ms Grant’s self-registration every day, uninterrupted in March 2007, through to January 2009. However, Mr Bob Takhar also recalled that particular eviction being postponed (so the Claimants never sent anyone to it, with the keys), and enforcement was never renewed until 2009 after new audit checks had revealed that Ms Grant was still in occupation (and the Council were still paying for her), despite the notice of termination as long ago as March 2005. The Council does not accept that Mr Bob Takhar was told that the eviction was being postponed: and suggests that the apparently continuous occupation of the accommodation by Ms Grant might be accounted for by her eviction and almost immediate unlawful reoccupation.[73]Ms Grant was eventually removed from the accommodation on 11 January 2009, and the Council claim for the accommodation costs it submits it wrongly paid to the Claimants for her unlawful accommodation from the first eviction on 28 March 2007 to her second eviction on 11 January 2009.[74]The Council accepted that it would pay for a Desnousse overstayer until he or she had been evicted. Consequently, it seems to me that the determinative issue in relation to this claim is whether Ms Grant was evicted on 27 March 2007. If she was evicted at that time, and subsequently unlawfully re-entered, then, the Council submit with force, it cannot be responsible for either the costs of re-eviction or the accommodation rate during her further unlawful stay. But if she was not evicted at all until 11 January 2009, then the Council’s acceptance that it would pay for such overstayers until eviction would bite, even though the eviction was long delayed because of an oversight on the Council’s part.[75]Although I do not find the evidence in respect of this issue easy, I am not satisfied that Ms Grant was evicted in March 2007. The completed register, signed on an uninterrupted daily basis by Ms Grant or one of her family, including for every day of the week of 28 March 2007, could possibly be explained by her re-entering the property shortly after eviction; but that seems to me very unlikely. In my view, the register is strong evidence that she was never evicted then. Miss Arnold – generally, I consider, a good and reliable witness – was, as I have said, frankly unable to give direct evidence in relation to this eviction, although she was the Council representative at each of the evictions that was made. The evidence which she gave as to what would have happened of course has some weight – but not as much as direct evidence concerning the eviction. Mr Bob Takhar gave evidence as to the calling off of that particular eviction, and there was no evidence that Ms Grant had in fact broken through new locks fitted to the accommodation or had otherwise re-entered after having been evicted. The bailiff would, no doubt, have charged for attendance, whether or not the eviction had in fact taken place: so I do not give much weight to the bailiff’s receipted invoice.[76]This claim is the Council’s claim, and the burden of proving the claim is upon it. The Council has failed to persuade me that Ms Grant was evicted in March 2007. In those circumstances, for the reasons I have given, the Council payments for her accommodation were properly made, in accordance with the Council’s decision to pay providers for the periods of overstay of Desnousse overstayers until eviction which, in Ms Grant’s case, I find did not take place until 11 January 2009.[77]For those reasons, the Council’s counterclaim fails.

Conclusion

[78]For the reasons I have given, the Claimants’ claim and the Council’s counterclaim both fail. I shall give judgment accordingly.