CASE BRIEFING

Validity of tenancies allocated unlawfully

Birmingham CC -v- Qasim & others [2009] EWCA Civ 1080 (Lord Neuberger MR, Sedley LJ & Owen J)

Background
A  local  housing  authority’s  power  to  dispose  of  residential  property,  including  to  grant  a tenancy, is contained in Part II of the Housing Act 1985. Under s.159(2) of the Housing Act 1996, an allocation occurs when a local housing authority select  a  person  to  be  their  tenant  or  nominate  them  to  be  the  tenant  of  another  social landlord.  Under s.167(1),  the authority must have an allocation scheme.  Under s.167(8), the authority may not allocate housing other than in accordance with their allocation scheme. A  council  tenant  is  a  secure  tenant  under  Part  IV  of  the  Housing  Act  1985  (subject  to exceptions which do not apply in this  ase).   Schedule 2 to the Housing Act 1985 sets out an exclusive list of circumstances in which a secure tenant may be evicted so that common law methods of termination are not available to the landlord – LB Islington -v- Uckac [2006] 1 WLR 1303 (CA).

Facts
A Council officer abused his position to grant tenancies to people who would not otherwise been allocated housing at that time.  In most of the cases, he made it look as if there had been  a mutual exchange with another council  tenant.   The Council carried out an extensive audit but could not find any wrongdoing on the part of any of the tenants.   Nevertheless, the Council  took  possession  proceedings  against  15  of  the  tenants  (who  held  eight  tenancies between them) on the same grounds:-

• Ground 1 of Schedule 2 to the Housing Act 1985, namely that a term of the tenancy had been broken or not performed.   The Council relied on wording in their standard tenancy terms and conditions which stated that they may repossess a property if the tenant had given false information to get the tenancy.
• Ground 6, namely that a premium had been paid for an assignment by way of exchange.
• The  Council  alleged  that  each grant  was a  nullity  in public law for having been made following an unlawful allocation so that they were entitled to possession without more.

Two of the original 15 Defendants dropped out of the proceedings at an early stage.  Two (the 5th & 10th Defendants) were represented by myself and Tyndallwoods solicitors.  An application was made on behalf of the 10th Defendant to strike out the claim and/or for summary judgment, to which the other Defendants joined.  The application was taken as a preliminary matter at the commencement of the trial of the action.

The county court judge, Matthew Brunning, Deputy Circuit Judge, granted summary judgment on  the  first  two  grounds  and  struck  out  all  three.   The  Council  appealed  to  the  Court  of Appeal on the last issue only.

Held
The Court of Appeal rejected the appeal and upheld the county court judgment.   Both Lord Neuberger MR and Sedley LJ gave judgments, making the following points:-
1. Lord  Neuberger  MR  defined  the  issue:  “The  appeal  raises  the  question  whether  a tenancy granted by a local housing authority, which, at least on the face of it, is a secure tenancy  under  section  79  of  Part  IV  of  the  Housing  Act  1985,  is  nonetheless  void, because it was granted to someone who had not been selected in accordance with the authority’s housing allocation scheme, pursuant to Part VI of the Housing Act 1996.” [1]

2. The  Council  argued  that  housing  authorities  are  only  empowered  to  grant  tenanciesstrictly in accordance with their allocation scheme and, therefore, had no capacity or power to grant a tenancy outside that scheme.  Lord Neuberger held that, if that were correct, he would be of the opinion that such a tenancy could not survive by reason of the fact that secure tenancies may only be determined in accordance with Part IV of the Housing Act 1985.   However, he further held that it was not necessary to decide this
point on this appeal. [12, 13]

3. Lord Neuberger MR also held that it was unnecessary to decide whether the tenancies survived  as  licences  or  whether  they  should  be  treated  as  valid  because  of  the Defendants’ human rights under ECHR Art.8 and/or Art.1 of the First Protocol. [13]

4. Part II of the Housing Act 1985 and Part VI of the Housing Act 1996 are concerned with different,  if  in  practice  often  closely  connected,  activities.   The  former  addresses  the issue of grants of tenancies and gives a pretty free hand to a local authority.  The latter is  not  concerned  with  disposals  or  the  grant  of  tenancies  but  with  policy  and management  decisions  relating  to  the  identification  of  priorities  between  competing prospective tenants. [18, 19]

5. What happened in each of the present cases was a breach of the statutorily prescribed procedure for selecting an applicant to be a secure tenant, not a purported disposal by way  of  the  grant  of  a  secure  tenancy  other  than  in  accordance  with  statutory requirements.   The  Council’s  submission  that  an  allocation  includes  the  grant  of  the relevant tenancy must be rejected. [14, 24]

6. The Council’s failure related to allocation, which is a purely public law obligation and is essentially procedural in nature, and the allocation remained effective at least unless and until  it  was  set  aside  by  the  court.   Therefore,  the  subsequent  grant  of  the  tenancy, although effected pursuant to a defective allocation, was not ultra vires (i.e. outside the Council’s capacity or power). [27, 48]

7. The Court of Appeal’s reasoning in LB Islington -v- Uckac does not apply to a claim, such as this one, which is based on lack of capacity, but it is inconsistent with the Council’s arguments.  [32,  33,  40]   Similarly,  the  Council’s  arguments  do  not  sit  well  with  the Court of Appeal’s decision in Akinbolu v Hackney LBC (1996) 29 HLR 259 which rejected
the argument that a tenancy was void when granted to an illegal immigrant.

8. A   further   reason   for   rejecting   the   Council’s   analysis   is   its   impracticality   and unattractiveness, i.e. on their arguments a tenancy could be void even if the failure had been minor and had arisen out of an honest misunderstanding and even if the tenant had been innocent and had lived at the accommodation for many years. [34]

9. The  Court  of  Appeal’s  conclusion  means  that  the  grant  of  a  secure  tenancy  to  an ineligible  person  would  be  effective  but,  if  the  tenant  had concealed their  ineligibility, Ground 5 (grant induced by false statement) could normally be relied on. [35]

10. An  unlawful  allocation  does  not  render  the  subsequent  grant  of  a  tenancy  void  or ineffective. [37, 49]

11. The rejection of the Council’s arguments does not deprive s.167(8) of any effect.   An unlawful  allocation  may  be  challenged  in  the  Administrative  Court,  albeit  that  the applicant  would  have  to  act  quickly  if  they  wanted  to  stop  a  specific  tenancy  being
granted. [39]

12. Lord Neuberger MR supported the comments of the Court of Appeal in LB Islington -v- Uckac that Ground 5 of Schedule 2 to the Housing Act 1985 may benefit from further scrutiny.

13. Neither LB Islington -v- Uckac nor this decision necessarily imply that, where the applicant and  a  council  officer  are  involved  in  dishonestly  enabling  the  applicant  to  obtain  a tenancy, the authority would be precluded from setting aside the tenancy or treating it as void. [42]

14. Further, this case concerned a person to whom the Council had properly delegated the task  of  granting  tenancies.    Different  considerations  may  apply  where  a  tenancy  is granted by a person with no such authority. [43]

Analysis
The  Council’s  arguments  were  based  on  a  fundamental  misunderstanding  of  public  law.   An authority’s decision which is unlawful has been termed by the courts as “void”.  In many cases, the  courts  have  warned  against  using  this  word  and  against  importing  its  meaning  from  the context of contractual disputes.   The Council fell foul of this warning, assuming that “void” in the public  law  context meant exactly the same as “void” in the context of  contract law, i.e. “void” means it is treated as never having existed.  However, in the public law context, as Lord Neuberger MR and Sedley LJ both explained, a decision which is valid on its face continues to have effect unless and until a court holds otherwise, even if that decision may be termed “void”.

Therefore, in this case, the allocations were void but remained valid at the time of the grant of each tenancy because no court had yet held them to be void. However, Lord Neuberger MR also sought to limit the extent of this judgment (see paragraphs 13 and 14 above).  It is doubtful that he is right, at least for all but a very exceptional and rare case.   In any case where an applicant has acted dishonestly, the chances of their actions not falling  within Ground 5  of  Schedule 2 to the Housing Act 1985 are remote to non-existent.

The dishonesty would involve misleading the local authority which must, by definition, involve making a false statement at some point. Where  a  local  authority  officer  acts  outside  their  authority  in  granting  a  tenancy,  the circumstances  could  only  fall  outside  this  judgment  if  it  were  clear  to the  applicant  that  the officer had no authority (Sedley LJ referred to a “doorkeeper”).   Otherwise, if they appear to have authority, it is difficult to see why such a tenancy would be treated any differently from those in this case. The Council pointed out, and the Court of Appeal effectively accepted, that a tenancy granted to a person who is ineligible is nevertheless valid (see paragraph 9 above).  This means that, if a person  who  is  ineligible  due  to  their  immigration  status  does  manage  to  obtain  a  council tenancy, its validity is unaffected by their ineligibility.