The firm was instructed by one of its portfolio landlords in respect of residential premises in Westminster. The premises was a flat located in a building owned by Westminster Council, and which was located within a conservation area. The client was the owner of a long lease.
The tenant had been occupying the property since 1997, at first under a fixed term assured tenancy, which upon expiry of the fixed term, became a statutory periodic assured tenancy. The tenant had raised issues of disrepair which resulted in the client deciding to decant the tenant and fully renovate the property.
Following the renovation, the tenant fell into arrears. In February 2018, the landlord served a section 8 notice on the tenant on the basis of rent arrears relying on ground 10. Following expiry of the notice, the tenant remained in arrears and possession proceedings were issued.
The Defendant's tactics
A common tactic by defendants when facing possession proceedings based on rent arrears is to raise allegations of disrepair and to seek to suggest that such a sum reduces or extinguishes the rental arrears. In practice, despite the Court having the power to order possession at a first hearing summarily when faced with an unmeritorious defence, Courts are reluctant to do so without a factual enquiry which often means requiring expert and factual evidence. This tactic can delay possession being granted for months if not years, all the while arrears are likely to continue to accrue. In addition, landlords are faced with having to shoulder the additional costs of a full trial.
In response to the claim for possession and arrears, the tenant issued a defence and counterclaim. The tenant included multiple claims within her counterclaim, with a large portion being dedicated to alleged disrepair at the premises and damages flowing from the landlord's alleged breach of duty under section 11 of the Landlord and Tenant Act 1987.
Throughout the progress of litigation, the landlord (through RFB and their agents) requested access to the premises in order to (1) investigate any alleged disrepair and (2) complete any remedial works required.
Despite the tenant granting access to their own disrepair expert and the landlord's expert, the tenant continuously refused access to the landlord on the grounds that she would need her belongings to be placed in storage at the landlord's expense. The tenant's belongings stored at the premises consisted of voluminous black bin bags, which, as observed by the landlord's expert, took up almost 70% of the space in the premises.
It remained the case of the landlord and its agents that they were, at all times, ready, willing and able to carry out any repairs, but the tenant would consistently refuse access or would cancel appointments made with contractors - often on the day of the inspection.
At the trial for these proceedings, the tenant and the landlord's agents were cross-examined on the issues of reporting instances of disrepair, requests for access, access being refused and the state of the premises following the previous renovation.
In his judgment, HHJ Luba QC found that he preferred the evidence put forward by the landlord's agents. HHJ Luba QC specifically commented on the tenant's treatment of the property, in particular that the excessive storage of black bin sacks would exacerbate any alleged issues at the premises. HHJ Luba QC also held that following the previous renovation, the Property was left in a good standard of condition. HHJ Luba QC held that the deterioration in the state of the Property following the renovation was, on the balance of probabilities, more likely to flow from tenant misuse than any alleged breach of duty by the landlord.
HHJ Luba QC ordered that the entirety of the tenant's counterclaim be struck out, which included the entire claim for disrepair and damages.
A positive result without a doubt, but the client had to endure a delay of 4 years since service of the notice.
Validity of Rent Increases
Another central element of the tenant's defence and counterclaim was that the landlord's rent increases had failed to follow the form set out in the tenancy agreement and, as such, were invalid. The tenant included in their counterclaim a claim for the return of alleged overpaid rent.
The clauses of the tenancy which dealt with rent increases were as follows:-
"The rent which shall be payable under this Agreement shall be:-
- Until the first Review Date the Initial Rent, and
- During each successive Review Period a rent ('the New
Rent') equal to the greater of:
- The rent payable immediately prior to the Review Date plus 5% thereof;
- Such rent as may be ascertained in accordance with subclause 3 below;
The landlord shall before each Review Date give written notice to the Tenant of the New Rent for the Review Period."
Over the years, the tenant and landlord had engaged in a process of agreeing the rent in advance of the review period. The landlord would often write to the tenant and state that the rent was due to be increased, after which the tenant and landlord would enter into negotiations to agree on a new rent. This rent would be lower than the amount which could have been claimed under the provisions of the tenancy agreement.
In the counterclaim, the tenant alleged that (1) the rent increases were invalid as they did not follow the formula set out in the tenancy agreement and (2) rent increase notices were required to be sent out to the tenant in advance of the review date, informing the tenant of the new rent.
The landlord's position was that (1) the parties were able to separately agree a rent which differed from the formula set out in the tenancy agreement and (2) the requirement for a rent increase notice did not take the form of a trigger notice (i.e., the rent increase only becoming valid on the receipt of a valid rent increase notice). Rather, the notice envisaged by the tenancy agreement was simply an informatory note - letting the tenant know what their rent was going to be. The notice would not have required the landlord to even set out the precise rent - simply the mechanism to be applied (whether that be by reference to the RPI or a 5% increase, as the tenant could work it out for themselves). On strict interpretation of the tenancy agreement, the notice could be provided as late as 11:59 pm the night before the next review period.
During the tenant's cross-examination at trial, she admitted that it was the usual course of action for herself and the landlord to privately agree the rent which was to be paid, which was lower than that which she accepted could be due under the tenancy agreement. The tenant also admitted that the rent which she had was by way of housing benefit and discretionary housing payments. The tenant still asserted she should be entitled to the return of any unpaid rent and would then privately liaise with the housing benefit office to determine who would keep the overpayment.
HHJ Luba QC preferred the landlord's interpretation of the rent review terms of the tenancy agreement and, as such, ordered that the rent up until the review period in March 2018 was agreed between the landlord and the tenant and was set at those figures.
Thereafter, in the absence of express agreement, the rent would increase either by reference to the Retail Price Index or by 5% whichever the higher. The resulted in a significant rent increase from 2018 onwards. HHJ Luba QC held that the rent review notice was not a trigger notice, but as asserted by the landlord, an informatory note setting out the method by which the rent would be increased as the tenant had express confirmation in the tenancy agreement of what the rent would be each review period by completing the calculations.
Of further relevance, during the tenant's cross-examination, it was discussed what position the tenant would be left in if the rent were to increase beyond that payable immediately before March 2018. The tenant stated that if the rent increased beyond that figure, they would not be able to afford the rent and would have to explore the possibility of obtaining part-time employment.
In summary, this case was beleaguered by several factors which would frustrate and complicate even the most straightforward of rent arrears possession cases. As Property Litigators will know, the combination of the legal aid defendant and a disrepair counterclaim often spell delay in the mind of Claimant Landlords, and it is all too common to see unmeritorious disrepair counterclaims being taken all the way to trial due to parties refusing to make reasonable concessions, and indeed the Court's backlog meaning listing dates for a trial for disrepair are often a long wait.
HHJ Luba QC's judgment in this case was practical and fully considered, and granted the Claimant Landlord its long-awaited victory. The case shows that whilst tenants can use unmeritorious allegations of disrepair to delay possession, ultimately the Courts will cut through the noise and order possession.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.