Judgment obtained by fraud?

On 24 February 2021 the Court of Appeal handed down judgment in Dale v Banga and others [2021] EWCA Civ 240. The opening paragraph of the (main) judgment of Lady Justice Asplin makes it clear what the issue in the appeal was:

“This appeal raises the question of what the appeal court should do when fresh evidence is adduced after a trial which allegedly shows that the judgment below was obtained by fraud, the conduct relied upon being that of a witness and of a party to the action which took place after the events in issue, and is unrelated to the issues which were before the court. In particular, it raises the following questions: whether the fresh evidence (permission to rely upon it having already been granted) is capable of establishing that the Respondents misled the judge at trial by asserting that a letter of revocation in relation to a will had been duly attested; if so, whether the question of whether the judge was misled (the fraud issue) should be referred to the lower court to be determined or should be the subject of a separate action; and, if it is determined that the lower court was misled by fraud, whether a previous will should be admitted to probate on the basis of the original judge’s obiter dicta.”

This is an issue which this blog has previously dealt with.

The “fresh evidence” concerned the discovery that one of the two attesting witnesses to the letter had been sent to prison for fraud offences, and Mr Banga himself had been indicted with attempting to pervert the course of justice (though no evidence was offered at trial and he was acquitted):

“7…It is alleged, nevertheless, that it is incontrovertible that Mr Banga had sought to pervert the course of justice by the production of false invoices. 

8. Mr Brennan, on behalf of Mrs Dale, submits that if the fresh evidence had been available to be adduced at trial it would have entirely changed the way in which the judge approached the question of the proper attestation of the Letter and his conclusion in that regard. It is said that the fresh evidence: undermines Mr Arif’s credibility as a witness of fact (as to the attestation of the Letter); supports the conclusion that Mr Arif and Mr Banga are sufficiently dishonest to have attempted to deceive the court about the circumstances in which the Letter was signed by the attesting witnesses and even that it was a forgery and was produced on another occasion; made Mr Arif the obvious person to have been chosen to assist in attempting to deceive the court; and gave Mr Arif an obvious motive to assist Mr Banga and his family.”

Coming back to Asplin LJ’s judgment, she explained what would be necessary to allow for a set aside of the final judgment:

  • It is not sufficient that the evidence given below can now be proved to have been mistaken.
  • It is not sufficient that a witness committed perjury.
  • “It is necessary that the judgment was obtained by fraud and that the fraud was that of a party to the action or was at least suborned by or knowingly relied upon by that party” (27).
  • There are two options then available – a new action to set aside the judgment (as preferred by the Court of Appeal – Salekipour v Parmer [2018] QB 833) or an appeal against the original order as in the present case, alleging that the judgment upon which it is based was obtained by fraud (39-41).

As for the test on appeal:

“42…It seems to me that it is necessary to decide whether the new evidence is capable of showing that the judge was deliberately misled by the Respondents and that the judgment may have been obtained by fraud. It must be sufficient to justify pleading a case of fraud. It must be capable of showing that there was conscious and deliberate dishonesty which was causative of the judgment being obtained in the terms it was. The conscious and deliberate dishonesty must be that of a party to the action, or was at least suborned by or knowingly relied upon by a party.

43. Secondly, if that threshold test is satisfied, the court must determine whether on the facts and in the circumstances of the particular case, it is appropriate that the fraud issue should be remitted or otherwise dealt with within the same proceedings. There is no question but that the appeal court has power to “refer any claim or issue for determination by the lower court”: CPR 52.20(2)(b). The question is whether the discretion to do so should be exercised. It is not possible to list the matters which will be relevant to the exercise of that discretion because they inevitably depend on the circumstances.”

Ultimately, the court declined to remit the issue of fraud to the lower court and dismissed the appeal:

“45. Unlike in Noble v Owens, the new evidence is of allegedly similar fact and bad character. It does not go directly to the central matters of fact before the judge. It requires inferences to be drawn based upon the alleged lack of credibility of the witnesses who gave evidence before him and their alleged propensities. It is tangential. Furthermore, all of the conduct from which it is said that the inferences should be drawn post-dates the alleged attestation of the Letter.”

Cases cited in judgment:

Odyssey Re (London) Ltd & Ors v OIC Run Off Limited & Ors [2000] EWCA Civ 71

Cinpres Gas Injection Ltd v Melea Ltd [2008] EWCA Civ 9

Takhar v Gracefield Developments Ltd & Ors [2020] AC 450

Royal Bank of Scotland plc v Highland Financial Partners lp [2013] 1 CLC 596

Noble v Owens [2010] EWCA Civ 224, [2010] 1 WLR 2491

Salekipour v Parmar [2017] EWCA Civ 2141, [2018] QB 833

The (current) notice periods for “fraud” possession actions under Covid-19

Introduction
This is a short article on the notice provisions for possession actions relying on:

  1. A notice to quit – where sub-letting / parting with possession of the whole is alleged, and/or it is said that the tenant(s) was not living at the demised premises as their only or principal home at the time the notice expired.
  2. A notice seeking possession – where it is alleged that tenant(s) were granted the tenancy because of a false statement (i.e. grounds 5 or 17 of Schedule 2 to the Housing Acts 1985 or 1988 respectively).

Notices to quit
The “easy” part of the explanation is that notices to quit have never been reformed by reason of the pandemic under the Coronavirus Act 2020 or otherwise save so far as concerns Rent Act tenancies. That remains the case.

Notices seeking possession
The notice seeking possession route is more complicated and I have chaired a recent webinar on the subject with four colleagues from Cornerstone Barristers. I have also produced a table of the changes but you can also of course check the amended notice sections of the Housing Acts and/or the Regulations themselves.

To remind ourselves of the wording of ground 5 / ground 17:

“The tenant is the person, or one of the persons, to whom the tenancy was granted and the landlord was induced to grant the tenancy by a false statement made knowingly or recklessly by —

(a)the tenant, or

(b)a person acting at the tenant’s instigation.”

The Coronavirus Act 2020, Schedule 29 had changed the usual 14-days (assured tenancies) and 28-days (secure tenancies) notice period to 3 months and now this temporary amendment has itself been amended by the Coronavirus Act 2020 (Residential Tenancies: Protection from Eviction) (Amendment) (England) Regulations 2020 from 29 August 2020 to 31 March 2021.

The effect is that:

  1. Ground 5 requires 28-days notice so long as it is not joined by any other grounds other than 1, 2ZA and/or 2A (so long as with 1 at least 6 months rent is unpaid at the date of service). Also Ground 2 (no period) and section 84A (28 days (periodic) / 1 month (fixed term)) Schedule 29 changes have been suspended and these can include any other ground.
  2. Ground 17 requires 14-days notice so long as it is not joined by any other grounds other than 14A and/or 14ZA. Also Ground 7A (28 days (periodic) / 1 month (fixed term)) and Ground 14 (no period) Schedule 29 changes have been suspended and these can include any other ground.

Housing fraud and Covid 19

Introduction

The circumstances arising from the current pandemic have led to many pressing practical issues for social landlords and tenants alike. Much of the focus has been, quite rightly, on matters surrounding homelessness and rent, but in the housing fraud field the particular concerns can be identified in 3 broad topics:

1. Investigations.

2. Service of notices.

3. Court proceedings.

This short post considers the current state of play in these 3 areas, with the obvious caveat that matters are constantly changing, and what a social landlord can still do.

Investigations

One of the obvious impacts on ongoing and proposed fraud investigations is that staff numbers are inevitably reduced, and tenants and other potential witnesses are similarly unavailable.

Even if health is not an issue the government policy of self isolation means that, for example, caution interviews are unlikely to go ahead and home visits are going to be effected in the same way. They have have generally been suspended, and anecdotally some staff temporarily redeployed.

  • Pre-action (protocol) letters can still be drafted and sent.
  • information can still be obtained from third parties, such as banks and fuel suppliers, in the usual way – see for example The Prevention of Social Housing Fraud (Power to Require Information) (England) Regulations 2014/899.
  • E-mail and telephone/video conferencing can be used in place of direct face to face interview where appropriate.
Notices

The much lauded legislative attempt to restrict possession actions in the courts for a period because of Covid 19, the Coronavirus Act 2020 (section 81, Schedule 29), does not change or restrict the services of notice to quit on secure or assured periodic tenants, though there may be questions of proof of service (though personal or even hand-delivery service should not be required given that most tenancy agreements provide for service by post).

Schedule 29 does though change the process with regard to notices seeking possession – at least when served during the initial period of 26 March to 30 September 2020 – and requires 3 months notice to be given. This will therefore effect in particular:

  • Ground 5 Sch 2 Housing Act 1985/Ground 17 Sch 2 Housing Act 1988 (false statement) notices seeking possession.
  • Ground 1 Sch 2 Housing Act 1985/Ground 12 Sch 2 Housing Act 1988 (breach of tenancy) notices seeking possession.
  • Introductory tenancy section 128 notices.
  • Flexible tenancy section 107D notices.

The Schedule 29 reforms do not impact upon notices served prior to 26 March 2020 and they therefore remain valid (assuming they otherwise were), and are capable of being relied upon in possession proceedings.

Possession proceedings

There is no restriction at all on the issue of possession proceedings, save for the obvious practical hurdles in the current circumstances (e.g. signing the statement of truth, though see the electronic signature provisions in CPR r. 5.3 and PD5A), albeit all such proceedings are stayed during the 90 day period starting from 27 March 2020 by reason of the new Practice Direction 51Z:

1. This practice direction is made under rule 51.2 of the Civil Procedure Rules (“CPR”). It is intended to assess modifications to the rules and Practice Directions that may be necessary during the Coronavirus pandemic and the need to ensure that the administration of justice, including the enforcement of orders, is carried out so as not to endanger public health. As such it makes provision to stay proceedings for, and to enforce, possession. It ceases to have effect on 30 October 2020.

2. All proceedings for possession brought under CPR Part 55 and all proceedings seeking to enforce an order for possession by a warrant or writ of possession are stayed for a period of 90 days from the date this Direction comes into force.

3. For the avoidance of doubt, claims for injunctive relief are not subject to the stay in paragraph 2.

HMCTS’ daily operational summary of 3 April 2020 provided that injunctions, a remedy often used in shared ownership sub-letting scenarios, are a priority 1 case (work that must be done), though does go on to say in a separate bullet point immediately following “emphasis must be on those with a real time element (such as post-termination employment restrictions), noise or interference with property”. Other noteworthy matters to take from the summary are that enforcement work involving bailiffs/sheriffs is not a priority or even recorded as work that could be done (Priority 2), multi-track trials are priority if the parties agree the trial is urgent and fast-track trials are only priority 2 and, again, even then only if the parties agree the trial is urgent.

In summary therefore:

  • Possession claims can still be issued as before, but they will thereafter be stayed.
  • Notices to quit in sub-letting/parting with possession of the whole and only or principal home cases are not effected by the temporary changes brought in by the Coronavirus Act 2020.
  • Notices seeking possession are, conversely, effected though not if served prior to the aforementioned changes.
  • Injunction claims are still available though in a fraud context are unlikely to be seen as a priority.
Criminal cases

The operational summary says in respect of magistrates’ courts that they are only covering urgent work (not, therefore, including fraud trials such as under the Prevention of Social Housing Fraud Act 2013).

Similarly, Crown Courts are said to be covering only urgent work.

Conclusion

As noted in the Introduction, we are living through uncertain and ever-changing times. It is entirely understandable that social landlords presently have different priorities but insofar as fraud remains relevant work can still continue albeit there are obvious restrictions and will be inevitable delays.

Tenancy by false statement & Second Tenancy

Introduction

On Tuesday, 17 March 2020 the Court of Appeal handed down judgment in the (Ground 5) possession claim case of Oshin v The Royal Borough of Greenwich [2020] EWCA CIV 388. Lord Justice Floyd delivered the main judgment of the court, and explained:

  1. The issue in this appeal is whether the respondent local authority, the Royal Borough of Greenwich, was induced to grant the appellant, Blessing Oshin, a tenancy of 15 Jessup Close, London SE18 (“Jessup Close”), by a false statement knowingly or recklessly made by her. The issue arises in the local authority’s claim for possession against the appellant of Jessup Close, pursuant to Ground 5 of Schedule 2 of the Housing Act 1985. By a decision dated 13 April 2018 Deputy District Judge John Calver (“the DDJ”) held that the respondent had been induced to grant the tenancy by the appellant’s false statement and granted an order for possession. The appellant’s appeal to the County Court at Central London was dismissed by HHJ Saunders by his decision dated 30 August 2018.
The Legislation

Ground 5 of Schedule 2 to the Housing Act 1985 provides (as mirrored in Ground 17 of Schedule 2 of the Housing Act 1988 with regard to assured tenancies):

The tenant is the person, or one of the persons, to whom the tenancy was granted and the landlord was induced to grant the tenancy by a false statement made knowingly or recklessly by—

(a) the tenant, or

(b) a person acting at the tenant’s instigation.

This is a discretionary ground of possession and as such the claimant landlord must show not only that Ground 5 is satisfied but that it is reasonable to make a possession order (s. 84(2)(a)). It will then be for the defendant tenant to argue that any such order should be suspended or postponed on terms (s. 85(2)). In June 2019 I wrote about the public policy aspect of judicial consideration in this area.

The False Statement

Turning back to Oshin, the false statement alleged was described in Floyd L.J.’s judgment thus:

3. In about 1999 the appellant was living with a close friend at 112 Robert Street, London SE18 (“Robert Street”). She had no tenancy at Robert Street, and so applied to the respondent to have her name placed on the housing list. On 2 February 2001 she completed in her own name the respondent’s “Housing Application Form” (“the 2001 form”). The 2001 form has a number of questions requiring responses from an applicant. Question 10 on the form was headed “Immigration Status” and asked:

“Has anyone you have mentioned so far lived outside the United Kingdom in the last 5 years? Please [tick] the correct box.”

4. The appellant ticked the “No” box. This was untrue. The DDJ held that the appellant arrived in the United Kingdom in September 1998 from Nigeria, and that she had therefore lived outside the United Kingdom in the five years prior to the completion of the 2001 form. 

5. Underneath the boxes marked “Yes” and “No” the form stated:

“If Yes and an Asylum/Immigration Form has not been already been completed, please ask for one.”

6. The appellant also answered Question 15 on the 2001 form. That question was designed to elicit an applicant’s addresses in the previous five years. She answered by saying that from 1990 to 1999 she had been living in private rented accommodation at 49 Camberwell New Road, London SE5. In the light of the DDJ’s finding that she first came to the United Kingdom in 1998, that statement was also untrue. Her false answer gave the impression that she had been living in the UK for more than 10 years at the date of the 2001 form.

Ms Oshin was granted the tenancy of 112 Robert Street, London SE18 (“Robert Street”), the Jessup Close tenancy agreement then being entered into in 2008, and repeated these falsehoods in 2005 (post Robert Street grant) with regard to her two sons when she advised Greenwich that they were now living with her (having joined her from Nigeria in 2004).

The courts below

A Deputy DJ found that the 2001 falsehoods were material (though not those in 2005 as the 2 sons were minors and would not be tenants of any property offered) and held that it was reasonable to make a possession order. The issue of reasonableness was not contested in the Court of Appeal.

On appeal by Ms Oshin, HHJ Saunders found against her.

Grounds of Appeal

Lewison L.J. granted permission for a second appeal on 2 grounds:

Ground 1 – The false statement induced the grant of the Robert Street tenancy but not the Jessup Close tenancy.

Ground 2 – The false statements did not induce the grant of either tenancy, because the respondent was unaware of the appellant’s immigration status.

Appellant’s arguments

It was argued on behalf of Ms Oshin that the allocation process had closed once the Robert Street tenancy had been granted in 2005, and that the form was of no relevance thereafter and therefore to the 2008 Jessup Close grant of tenancy (when Ms Oshin could no longer be said to be an applicant for housing). Further, it was said that with regard to the 2005 update the information concerning her sons had no impact on the grant of the latter tenancy.

As for Ground 2, it was said that the false statement did not induce the grant of any tenancy as it could not sufficiently conclude whether an applicant was eligible for social housing whatever the answer. It was said that a more direct question as to the applicant’s immigration status was required.

Judicial conclusion

Floyd L.J. did not accept the arguments made on behalf of Ms Oshin, and the appeal was dismissed. Rather he held and maintained (approved by Coulson & McCombe L.JJs):

  • Ground One – The 2005 form was an amendment to that made in 2001 and so it was inevitable that Greenwich would consult both in seeking larger accommodation and allocating, ultimately, Jessup Close: para. 18.
  • The argument that once a property has been allocated any false statement in an application is no longer operative is simply wrong: para. 20.
  • The Deputy DJ was entitled to conclude that the 2001 application played on Greenwich’s mind when allocating the Jessup Close tenancy in 2008: para. 24.
  • Ground Two – Greenwich were clearly asking about time out of the UK in the context of immigration status and though the correct answer would not have been determinative as to eligibility for a social housing tenancy it would have required the completion of an Asylum Immigration form to that end: para. 29.
  • “I accept that, in order to be material, the false statement must be relevant to whether the applicant is eligible for social housing. That, however, is not the same thing as requiring that the statement be directly determinative of that question. The appellant’s false statements did not mean that she was entitled to social housing, but they still had sufficient materiality to be capable of inducing the local authority to grant her a tenancy when she was not entitled to one. I would therefore reject ground 2 as well.”: para. 31.
Comment

This was an interesting appeal on its facts, albeit robustly dealt with by the Court of Appeal. It confirms that whilst one is looking at the grant of the current tenancy, there can on the right facts remain the position with respect to the grant of an earlier tenancy and the information provided by or on behalf of the tenant for that purpose.

That doesn’t work if a new tenant appears, such as by assignment, as was clear from the Court of Appeal’s judgment in LB Islington v Uckac [2006] 1 W.L.R. 1303.

But here, as Floyd L.J. said at para. 23 of the Oshin judgment:

“In the end, therefore, the question of what induced the grant of the Jessup Close tenancy was a question of fact for the DDJ to decide. The proper approach to such questions was explained in the judgment of Newman J, sitting as a judge of this court, with which Peter Gibson and Sedley LJJ agreed, in Waltham Forest LBC v Roberts [2005] EWCA Civ 940; [2005] H.L.R. 2 at [41] to [43]. The court does not have to decide “what really would have happened”, but whether the false statement had played “… a real and substantial part, though not by itself a decisive part, in inducing the Authority to act”. It had to be “one of the inducing causes”. In considering inducement “it is helpful to start by considering the materiality of the statement”. “A false statement of a material matter is likely to have induced the misrepresentee”.” 

Tenancy succession or Possession?

Recently I was in trial on a possession claim which, in essence, came down to the question of whether the second defendant had (statutorily) succeeded to his mother’s secure tenancy. Save for a public law argument concerning the sufficiency of the local authority’s pre-proceedings investigation into the succession claim there was little to distinguish this case from many others that frequently come before the courts.

However, I thought it might be of interest to put down in writing some brief reflections on the trial process, and the necessary issues of evidence inevitably facing the judge and parties in cases such as this. I have previously written on succession insofar as it concerned the enforceability of tenancy terms extending the statutory succession rights.

Returning to the claim in issue, the second defendant had the burden of showing he had lived at the relevant property at the time of his mother’s death as his only or principal home, and that he had resided with her throughout the period of 12 months immediately preceding that time: see section 87, Housing Act 1985 (and note restriction of section 160(6), Localism Act 2011 amendments to succession rights, as now found at section 86A of the 1985 Act, to 1 April 2012 and later tenancies) along with Governors of the Peabody Donation Fund v Grant (1983) 6 H.L.R. 41:

“The learned county court judge, rightly in my judgment, held that the burden was on the tenant to bring herself within the terms of that section. He further went on to hold that the tenant had to show two things: she had to show that this flat was her only or principal home at the time of Mr Charles Murphy’s death and that she was not only a member of Mr Charles Murphy’s family but had resided with him throughout the period of twelve months ending with the tenant’s death.” (Donaldson LJ at 44)

The question of succession is one of fact. The “Encyclopaedia of Housing Law” says at R-003:

“The question whether or not the would-be successor has been residing with the deceased is one of fact: Middleton v Bull (1951) 2 T.L.R. 1010, CA. Accordingly, where there is evidence which both supports and undermines the would-be successor, it will be difficult for the court to resolve the issue other than at trial, see e.g. Evans v Brent LBC, QBD, December 18, 2012, HousingView, January 7, 2013.”

The local authority evidence in the cases leading to this post largely centred upon the hearsay information obtained by the managing agents charged with the original investigation, and was presented ultimately, because of employee changes, by an officer not directly involved in the case. The second defendant on the other hand relied upon not only his own statement, but also that of one of his sisters and both attended trial to give oral evidence.

I would highlight the main issues arising from the trial, its preparation and outcome as follows:

  1. Electoral roll information, occupant details held by the landlord, and the benefit position of the deceased (e.g. non declaration of would-be successor living at the same property) are all potentially useful pieces of evidence but are rarely determinative on their own.
  2. Similarly, neighbour feedback, often hearsay, can be helpful to the central questions at issue but (usually) are simply part of a wider body of information to be assessed. For example, the fact that the would-be successor was often at the property or undertook significant caring responsibilities towards the tenant does not necessarily or of itself show the required quality of residence.
  3. Identifying accommodation where the would-be successor might have been residing contrary to their stated position is clearly helpful (though is not essential), and allows a positive case to be asserted by the landlord (e.g. evidence of ATM usage and the geographical location of the same as shown on bank statements).
  4. Inconsistencies both within the would-be successor’s own evidence and between their position and information provided by others is crucial not only as to their credibility but also to undermine, where appropriate, the stated position. To give two examples from the recent trial, (a) the sister said her brother had really pretty much always lived at their mother’s upon returning to London in 2000, whereas he said he had moved in to help care for her in around 2016/early 2017; and (b) his letter claiming succession had “nearly” crossed out before “a year” when describing how long he had lived with his mother, and his answer to the Judge’s question about this was not impressive (including referencing the fact he had been told he must have been there for at least a year).
  5. Evidence not sought or made available by or on behalf of the would-be successor, including the absence of certain (expected) witnesses, can be strongly indicative of a weak case. I have previously written specifically on this issue.
  6. There maybe some credibility and truth in the would-be successor’s case even if ultimately they do not succeed in defending the possession claim. For example, they may well have been providing care and support to their mother (tenant), and staying with her at times. But note in particular the authority of LB Islington v Freeman [2011] P.T.S.R. 1695 re quality of residence:

28. The authorities also clearly establish that mere physical presence is not enough to amount to “residing with”. There must be to a significant degree an intention which can be characterised as making a home with the tenant – not just staying there.
29. Moreover – and this was not in dispute – the nature of the occupation must have the necessary qualities of “residing with” for the whole year before the death.”

It is frequently difficult to accurately predict the outcome of any trial in succession cases – the uncertainty as to how the judge will treat the evidence (or lack of) and as to how the would-be successor and their witnesses “come across” under cross examination being but two factors underlining such uncertainty.

As an example of the former, a few years ago I had one judge “brush aside” the fact that the would-be successor in fact claimed benefits from an address other than that of her supposed partner/co-habitant (i.e. the tenant) because he found that she simply didn’t bother changing her address when she moved in with her partner and that lots of people did the same.

In the case that has prompted this post, the judge conversely was exercised by the fact that the would-be successor used a different address for benefit purposes until a few months before his mother’s death when it was changed to hers, and did not accept his explanation for it not being changed earlier and at the very least noted the paucity of evidence with respect to the same.

These claims are not necessarily fraud cases – a possession order may not be made or the court may accept the factual version of events put forward by the would-be successor yet not find it sufficient to make positive findings on the only or principal home and/or residence questions. Given the frequent and genuine connection many defendants have with the deceased tenant’s home they are not the easiest of cases and tough decisions often have to be made.

What many claims show is that not only is the assessment of evidence, naturally, central to any final determination but the absence of evidence maybe of similar or greater import.

Assessment of witness evidence – recent authority

This blog has previously considered the issue of witness evidence. For example, on 8 August 2018 I looked at their credibility and probative value. In October 2019 the Court of Appeal, in Kogan v Martin & Ors [2019] EWCA Civ 1645, had reason to revisit certain jurisprudence concerning the assessment of witness evidence, and the trial judge’s treatment of the same.

The facts of the case are not relevant for the purposes of this article. More relevantly Lord Justice Floyd delivered the judgment of the court and stressed two important factors:

(1) Witness recollection has to be assessed in its proper context:

88. We think that there is real substance in this ground of appeal. We start by recalling that the judge read Leggatt J’s statements in Gestmin v Credit Suisse and Blue v Ashley as an “admonition” against placing any reliance at all on the recollections of witnesses. We consider that to have been a serious error in the present case for a number of reasons. First, as has very recently been noted by HHJ Gore QC in CBX v North West Anglia NHS Trust [2019] 7 WLUK 57, Gestmin is not to be taken as laying down any general principle for the assessment of evidence. It is one of a line of distinguished judicial observations that emphasise the fallibility of human memory and the need to assess witness evidence in its proper place alongside contemporaneous documentary evidence and evidence upon which undoubted or probable reliance can be placed. Earlier statements of this kind are discussed by Lord Bingham in his well-known essay The Judge as Juror: The Judicial Determination of Factual Issues (from The Business of Judging, Oxford 2000). But a proper awareness of the fallibility of memory does not relieve judges of the task of making findings of fact based upon all of the evidence. Heuristics or mental short cuts are no substitute for this essential judicial function. In particular, where a party’s sworn evidence is disbelieved, the court must say why that is; it cannot simply ignore the evidence.

(b) The nature of transactions will dictate the importance, likelihood or anticipation of documentary corroboration:

89. Secondly, the judge in the present case did not remark that the observations in Gestmin were expressly addressed to commercial cases. For a paradigm example of such a case, in which a careful examination of the abundant documentation ought to have been at the heart of an inquiry into commercial fraud, see Simetra Global Assets Ltd & Anor v Ikon Finance Ltd & Ors [2019] EWCA Civ 1413 and the apposite remarks of Males LJ at paras. 48-49. Here, by contrast, the two parties were private individuals living together for much of the relevant time. That fact made it inherently improbable that details of all their interactions over the creation of the screenplay would be fully recorded in documents. Ms Kogan’s case was that they were bouncing ideas off each other at speed, whereas Mr Martin regarded their interactions as his use of Ms Kogan as a sounding board. Which of these was, objectively, a correct description of their interaction was not likely to be resolved by documents alone, but was a fundamental issue which required to be resolved.

postcriPt

HHJ Pearce referred to the cases above in his judgment of 8 January 2020 in Donovan & Anor v Grainmarket Asset Management Ltd [2020] EWHC 17 (Comm) and said:

“164. Each of the parties in this case attacks the evidence adduced by the opposing side on the grounds that the other’s witnesses, especially the leading players, are unreliable if not downright dishonest.

165. In considering the oral evidence in this case, including the significance and extent of any dishonesty and any attacks on the reliability of witnesses, I bear in mind the comments of Leggatt J (as he then was) in Gestmin v Credit Suisse [2013] EWHC 3560 at paragraphs 16 to 20 cited by him and expanded upon in paragraphs 66 to 70 of his judgment in Blue v Ashley [2017] EWHC 1928: “The best approach for a judge to adopt in the trial of a commercial case is to place little if any reliance on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.”

166. This valuable expression of the need to be cautious about accepting witness evidence does not of course entirely discharge the judge from the duty of making an assessment of witnesses and their evidence (see HHJ Gore QC in CBX v North West Anglia NHS Trust [2019] WLUK 57, cited with approval in Kogan v Martin [2019] EWCA Civ 1645). Even in a commercial case with the parties taking firmly entrenched positions, it is necessary to look with some care at the evidence of the main actors where that might provide valuable context and explanation.

167. It is a striking feature of this case, that in period when the business relationship between Mr Donovan and Mr Crader was breaking down in , they nevertheless remained on polite terms within emails and indeed seemed to show sympathy for the position of the other even if they did not accept it. That goodwill was also apparent during the witnesses’ oral evidence though it is singularly absent from their written statements. This might suggest that this court should not be too quick to find that the evidence of the witnesses has been adversely affected by the typical bad feeling that permeates commercial litigation. However, both sides made telling points about the reliability of the others’ witnesses that I bear in mind.”

Housing Fraud – September to November 2019

What has been happening in the social housing fraud sphere since the last review at the end of August 2019?

With the Tenancy Fraud Forum about to hold its November conference in Birmingham

it is a good time to review the social housing fraud news since the last update in August.

Some cases

Some fraud work, figures & research

…and some training

Tenancy Fraud Conference

This sold out conference – organised by the Tenancy Fraud Forum and Anthony Collins Solicitors, and chaired by Katrina Robinson MBE – will be held in Birmingham on Tuesday, 19 November 2019

There will be sessions on:

  • How to investigate Right to Buy, Voluntary Right to Buy and Right to Acquire Fraud
  • Intention to Return Defences and How to Prepare for Them
  • Tackling Fraud and Subletting in Shared Ownership
  • Interviewing Suspects for Possession Claims and Unlawful Profit Orders
  • Succession Fraud – Spot It and Stop It

Three months of social housing fraud on Twitter

Social Landlords acting on Housing Fraud

Social Housing Fraud Prosecutions

Civil actions

Airbnb & social tenancies

Introduction

Short term “holiday lets” through companies such as Airbnb, Booking.com and HomeAway are increasingly common, and their use (and overuse) has attracted the attention of legislation and legislators, particularly in London.

On the social housing front, there has been much comment of late concerning a county court case in which the City of Westminster obtained a possession order against one of its (former) tenants because of his use of his local authority property (he had been reportedly advertising the local authority property on the Airbnb website since 2013, and indeed had received more than 300 reviews). Permission to appeal that decision was refused.

The two issues which attracted most publicity were:

(a) The size of the unlawful profit order (UPO) subsequently made, frequently misreported as a ‘fine’.

(b) The fact that the sub-letting alleged and proved was by way of the Airbnb bookings, rather than the more “usual” and “traditional” longer-term tenancy arrangement.

Unlawful Profit Orders

To enable a UPO to be made in a secure tenancy case, section 5(3) of the Prevention of Social Housing Fraud Act 2013 (“the 2013 Act”) provides the requirement that the tenant:

“(a) in breach of an express or implied term of the tenancy, has sub-let or parted with possession of—

(i) the whole of the dwelling-house, or

(ii) part of the dwelling-house without the landlord’s written consent,

(b) has ceased to occupy the dwelling-house as the tenant’s only or principal home, and

(c) has received money as a result of the conduct described in paragraph (a).”

In other words, in the Westminster case it must have been sufficiently demonstrated (as well as the obvious receipt of money from the Airbnb activity) that:

  1. The tenant was no longer living at the demised premises as their only or principal home.
  2. His use of Airbnb represented either a sub-letting (which the reports of the case suggest) or a parting with possession.
The issue

It is the second of those issues that has for some time led to questions as to whether such activity as allowing Airbnb-style activity is sufficient to constitute sub-letting or parting with possession. Or indeed whether the occupants are rather lodgers of sort or licensees. The reason for such questions often surrounds the short-term nature of the individual booking, and whether that impacted upon the nature of the occupation (see Koumetto below, and paragraph 57 of the court judgment).

It should be remembered at this point that in a different factual scenario, such as where a tenant allows an Airbnb-style “guest” to stay in the premises at the same time as them, or even where they move out for the period of one or more bookings without having any other “principal home”:

(a) There may still be a breach of tenancy condition (or even perhaps a sub-letting, if only of part, though see the “lodgers” section below), allowing for a possession and/or injunction claim – social landlords may well wish to bring their tenancy agreements ‘up to date’ to expressly address this form of property use, if they haven’t already done so, where existing terms are insufficiently clear. To illustrate the benefits, in Koumetto (see below) the Australian case of Swan v Uecker [2016] VSC 313 was cited, and Croft J there ended a judgment with these concluding remarks at [80] (emphasis added): 

“…the context provided by the terms of the particular apartment lease are important. Although this apartment lease is a residential lease, many commercial leases restrict the tenant from sub-leasing, assigning the lease, granting any licence to occupy all or part of the leased premises or otherwise parting with possession without the landlord’s prior consent. Broad terms such as this would prevent, for example, sub-letting or licensing without the landlord’s consent and would avoid the need—as in the present case—to characterise the nature of the same arrangement like the AirBnB arrangement for occupation of the whole of the leased premises as a sub-lease or a licence 

(b) No criminal offence is committed under the 2013 Act – section 1 (secure tenancies) or section 2 (assured tenancies) – unless the tenant no longer lives at the demised premises as their only or principal home.

(c) Similarly, no (section 5) civil UPO is available if the tenant still lives there as their only or principal home (see above for the secure tenancy UPO conditions).

(d) Where there is sufficient evidence to show that the tenant has in fact moved out, and no longer lives at the subject premises as their only or principal home, then the only benefits in seeking evidence of parting with possession/sub-letting as well are:

  • It could help in demonstrating a criminal offence had been committed.
  • It would allow a UPO to be sought.
  • It avoids the possibility of the tenant preventing the termination of their tenancy following the service of a notice to quit by returning to live at the premises prior to its expiry: Hussey v Camden LBC (1995) 27 H.L.R. 5 at 7, and sections 93(2) and 15A of the Housing Acts 1985 and 1988.
Lodgers

If a tenant has a lodger, this will not be treated as a sub-letting, and by definition the tenant remains at the property and cannot therefore ordinarily be said to have parted with possession (though see the reference to the case of Stening below).

Woodfall, Landlord and Tenant says at 1.028:

“The occupier of apartments is not a tenant unless the premises are exclusively let to him, which distinguishes such a person from a lodger…The use of the expression “lodger” connotes that the lodger must lodge in the house of another person and lodge with him; if a householder retains to himself the general control of a house, with the right of interference, a person who occupies a part of that house would seem to be a lodger. The word interference simply means that the householder must retain sufficient control of the accommodation as to prevent the lodger from having exclusive possession.”

By way of example, in Monmouth BC v Marlog (1994) 27 H.L.R. 30, where a person shared a council house with the tenant, each having their own bedroom, under an informal rent sharing arrangement, the Court of Appeal held that the natural inference to be drawn from this was of a licence rather than sub-tenancy.

In Aslan v Murphy [1990] 1 W.L.R. 766 Lord Donaldson said at 770F-G:

“The occupier has in the end to be a tenant or a lodger. He cannot be both. But there is a spectrum of exclusivity ranging from the occupier of a detached property under a full repairing lease, who is without doubt a tenant, to the overnight occupier of a hotel bedroom who, however up-market the hotel, is without doubt a lodger. The dividing line — the sorting of the forks from the spades — will not necessarily or even usually depend upon a single factor, but upon a combination of factors.”

(Secure tenants have an unconditional (statutory) right to take in lodgers, and can also sub-let part with consent: see section 93(1), Housing Act 1985.)

However, when moving away from the traditional concept of lodgers and considering use of the premises for one or more licensees whilst the tenant lives elsewhere, in Stening v Abrahams [1931] 1 Ch. 470 Farwell J cautioned against a simplistic take that a licence cannot be a parting with possession at 473:

A lessee cannot be said to part with the possession of any part of the premises unless his agreement with his licensee wholly ousts him from the legal possession of that part. If there is anything in the nature of a right to concurrent user there is no parting with possession. Retention of a key may be a negative indicium, and the authorities on the whole show that nothing short of a complete exclusion of the grantor or licensor from the legal possession for all purposes amounts to a parting with possession. The fact that the agreement is in form a licence is immaterial, as the licence may give the licensee so exclusive a right to the legal possession as to amount to a parting with possession.

The conclusion I would draw from the above is that, subject to the precise terms of the Airbnb or similar arrangement, it cannot readily be concluded that the “guest” is occupying by way of being a lodger even where the tenant remains in occupation. That view is compounded by my conclusion on the issue of sub-letting or parting with possession.

Sub-letting or Parting with Possession?

As therefore for whether an Airbnb-style arrangement can be seen as a parting with possession or subletting, and acknowledging the case-law ‘background’ of Stening outlined above, at paragraph 32(5) of the judgment of Ward LJ in Clarence House Ltd v National Westminster Bank plc [2010] 1 W.L.R. 1216, referring to a series of judgments, including Stening and Lam (see below), the basic principle was set out as follows:

“This stream of cases is consistent with the notion that a leasehold covenant against parting with or sharing possession is concerned with the question of whether the tenant has allowed another into physical occupation with the intention of relinquishing his own exclusive possession of the premises to that other.”

Sir Harry Gibbs had said as to such general principles behind parting with possession, in Lam Kee Ying v Lam Shes Tong [1975] A.C. 247 at 256C:

“A covenant which forbids a parting with possession is not broken by a lessee who in law retains the possession even though he allows another to use and occupy the premises. It may be that the covenant, on this construction, will be of little value to a lessor in many cases and will admit of easy evasion by a lessee who is competently advised, but the words of the covenant must be strictly construed, since if the covenant is broken a forfeiture may result”.

Demonstrating the potential difficulties in demonstrating either sub-letting or parting with possession, Stening and Lam were again (as with Clarence House) both cited in the Court of Appeal authority of Hussey already referred to above, a case where the local authority sought possession on sub-letting grounds – the tenant living away from his flat at times, whilst third parties were conversely in occupation of the flat on occasions too. Leggatt L.J. said in delivering the main judgment of the Court in allowing the tenant’s appeal, at p. 11:

“It is common ground that the judge did not overtly apply his mind to the right question, namely whether for any period before January 1991 Mr Hussey had sublet or parted with possession of his flat. In my judgment it is not possible to infer from what the judge actually said that he must have found that Mr Hussey did part with possession of his flat and I did not understand Mr Bhose to feel able to argue the contrary. What the council does contend is that if the judge had considered the points there could only have been one answer as to parting with possession of his flat. It is obvious that from time to time others were in sole occupation of it, but it does not follow that they enjoyed exclusive possession. Mr Hussey’s right to enter and use the premises if and when he chose was not negatived. There might have been proof that he gave up his key, or of the manner in which rent was paid either to him by another or by another in his stead. There was no such evidence.”

Airbnb use was expressly considered in Bermondsey Exchange Freeholders Ltd v Ninos Koumetto (as Trustee in Bankruptcy of Kevin Geoghehan Conway) [2018] 4 WLUK 619, an appeal against an injunction granted to prevent the use of a leasehold flat for short-term rental or commercial hire. HHJ Luba QC, who I understand heard the permission to appeal application in the Westminster case, said in obiter remarks (given that the relevant lease clause below prevented allowing others into possession, as well as the more formal sub-letting, etc):

“56. Despite Mr Hanham’s attractive submissions that a decision that there had been an ‘underletting’ was not open to her, I am not satisfied that there were the necessary features here to displace the presumption from Street v Mountford that the provision of exclusive possession of premises to another for a period and for payment for that period constitutes a letting.”

The Judge was, at that part of his judgment dismissing the appeal, dealing with the clause of the subject lease which provided that the tenant covenanted:

“Not to part with or share possession of the whole of the Demised Premises or permit any company or person to occupy the same save by way of an assignment or underlease of the whole of the Demised Premises”

Crucially and typically HHJ Luba QC addressed the particular nature of Airbnb head-on, as he followed on from paragraph 56 of his judgment cited above:

57. Neither the short duration of the arrangement, nor any notional provision for ‘services’ (such as leaving the flat stocked with material from which to assemble a breakfast or other meal), nor reservation of a right of entry, nor any combination of those features, displace that presumption from applying to an Airbnb-style arrangment.”

The district judge at first instance had found that the arrangement represented a parting with possession and HHJ Luba QC therefore rejected the appellant’s argument, as set out at paragraph 48 of the judgment:

“As to the first limb of the sub-clause, he contended that the Judge had been wrong to find that the nature of the arrangements made with occupiers had been lettings akin to holiday lets. He submitted that the arrangements that had been in evidence were those entered into with Airbnb and they did not amount to tenancies but only licences. There had thus been neither parting with ‘possession’ nor sharing of ‘possession’. The Judge had been wrong in law to hold that the arrangements amounted to lettings or any parting with or sharing of ‘possession’.”

Subject to the precise terms of arrangement it seems to me that there is a strong argument against characterising the occupation of any such ‘guest’ as a mere licensee such that there could be said to be no sub-letting or parting with possession.

Conclusion

Congratulations are rightly due to the City of Westminster and their legal team in obtaining possession in the case which opens this blog. What the above shows however is that the housing/legal status of an Airbnb or similar booking is not without some uncertainty and argument.

Whilst there may ultimately be a case on this issue in the higher courts, the reality for a local authority or private registered provider of social housing (or registered social landlord) is that their concerns will focus on those tenants moving away from their properties with a view to raising money by such arrangements as took place in the Westminster case (though that is not to say that “tenant-remaining arrangements” should not and do not justify vigorous investigation, and raise related issues such as benefit fraud, property condition and anti-social behaviour).

They may secure possession of the relevant property, as already explained, without needing to show a sub-letting or any parting with possession. But should they choose or need to adopt the Westminster route then with the usual caveats there are positive indications that such action could be taken, and taken successfully.