Housing association secures outright possession order on appeal

A housing association has successfully appealed a Recorder’s decision to grant only a suspended order of possession, with the High Court judge concluding that the original ruling was “fatally and demonstrably flawed”.

In Poplar Housing & Regeneration Community Association Ltd v Begum & Anor [2017] EWHC 2040 (QB) the social landlord had brought a claim against the tenants of one of its properties in the E14 area of London, alleging that they had acted in breach of several terms of the lease.

An investigation by council officers had suggested that the respondents were living, together with their two children, at the home of the first respondent’s mother, who also lived in a Poplar Harca property.

The sub-tenants admitted, under caution, that they were paying a monthly rent of £400 to the respondents.

The claim was heard by Mr Recorder Wilson QC, who on 5 April 2017 dismissed the social landlord’s primary claim for possession of the flat upon finding that the respondents had not parted with possession of the whole of it and had, therefore, retained security of tenure.

He allowed the alternative claim for possession but, in the exercise of his discretion under section 9 of the Housing Act 1988, suspended enforcement of the possession order. He made no order in the claim for an Unlawful Profit Order (UPO).

Poplar Harca challenged this decision by way of appeal to the High Court on the ground that the Recorder ought to have made an order for outright possession.

An issue also arose as to whether the Recorder was right to refuse to make a UPO in the appellant's favour under section 5 of the Prevention of Social Housing Fraud Act 2013.

Allowing Poplar Harca’s appeal, Mr Justice Turner said he was satisfied that the decision of the Recorder was "fatally and demonstrably flawed".

The judge said: “In paragraph 34 (b) of his judgment he identified as a special circumstance the fact that this ‘is not a case where tenants were unscrupulously making a profit by subletting: the defendants were collecting £400m a month by subletting but their own rent to Poplar Harca was £146.78 a week which amounts to rather over £600 a month.’

“This was a serious error. The Recorder had plainly overlooked the fact that the respondents were, throughout the relevant period, pocketing weekly Housing Benefit of £138.91 to cover the rent on the flat which they were no longer occupying and, at the same time, fraudulently harvesting an additional £400 per month from [the sub-tenants].”

This mistake went on seriously to contaminate the Recorder's assessment of the motive which lay behind the respondents' decision to stay with the second respondent's mother, Mr Justice Turner said.

“The Recorder was persuaded that the respondents had moved out of the flat primarily so that the second respondent could look after her seriously (and indisputably) ill brother. However, the Recorder expressly prayed in aid when reaching this conclusion his mistaken assumption that there was no profit to be had from the move. Once the existence of the substantial profit element is reintroduced into the equation, his balancing exercise is rendered irredeemably contaminated,” the High Court judge found.

He also considered the Recorder’s categorisation of the altruistic motives of the respondents, as he found them to have been, as a factor which took the case “right out of the ordinary run of cases".

The judge said: “Putting it bluntly, I am entirely satisfied that the Recorder was taken in by the respondents”. He observed:

1. The respondents' case was “so clouded by a miasma of lies that there was no evidence to support the Recorder's conclusion that they, with their children, had decided to move in with the first respondent's mother for wholly altruistic reasons. Indeed, on their case, they had never moved in at all.”
2. If the real reason for moving in were to look after the first respondent's brother, they could have done this without, at the same time, renting out their flat for profit to the sub-tenants.
3. It was but a short walk from the flat to the first respondent's home, “a fact which further undermines the conclusion that it was necessary for the whole family to decamp completely to allow the first defendant access to attend to her brother when needed.”

Mr Justice Turner continued: “The fact that the Recorder exercised his discretion on a demonstrably flawed basis means that this Court must exercise that discretion afresh.

“In doing so, notwithstanding the passage of time since the hearing before the Recorder, I am entirely satisfied that it would be wrong to exercise my discretion to suspend the possession order in this case. In particular, the sheer scale and persistence of the respondent's initial fraudulent deceit aggravated by further and subsequent drug related offending wholly justifies the condign consequences of an outright order.”

The judge said he would also “stress that it is not compassionate to allow profiteering fraudsters indefinitely to continue to occupy premises and thereby exclude from such accommodation more needy and deserving families. In particular, in this case, there was a complete dearth of material which could amount to cogent evidence that the respondents would mend their ways in future. Accordingly, possession will be granted to take effect in 21 days from the date of this judgment.”

In relation to the UPO, Mr Justice Turner said the Recorder was wrong to conclude that the maximum amount payable was zero and, in the absence of any material upon which he would be minded to reduce the amount payable, he awarded the sum of £1,550.