Coltrane v Day

An uncleared cheque delivered to a landlord before a possession hearing is conditional payment from delivery where the landlord accepts it, or is already bound to accept payment by cheque, and the cheque is honoured on first presentation. The rent is then not unpaid for Ground 8 purposes at the hearing.

Accordingly, a court may adjourn a Ground 8 possession claim briefly while the cheque clears because it cannot yet be satisfied that the landlord is entitled to possession. If the cheque is dishonoured, possession must be ordered by reference to the original hearing. A landlord may promptly refuse and return a late cheque where there is no agreement to accept it.

The tenant held an assured tenancy at a weekly rent. Housing-benefit administrative difficulties caused rent arrears. The landlord served a valid notice under section 8 of the Housing Act 1988 and commenced possession proceedings under Ground 8.

Before the hearing, the tenant sent the landlord's solicitors a cheque for all arrears. The landlord neither returned nor rejected it. She paid it into her bank after the hearing and it was honoured on first presentation. The deputy district judge adjourned the claim pending clearance, but His Honour Judge Cox allowed the landlord's appeal and made a possession order.

The central issue was whether the rent remained unpaid at the hearing merely because the accepted cheque had not then cleared.

1. The appeal was allowed unanimously. Tuckey LJ gave the leading judgment; Wall J agreed and added reasons, and Potter LJ agreed with both judgments. The circuit judge's possession order was set aside.

2. The established general rule was that an accepted cheque is conditional payment from its delivery. If it is honoured on first presentation, the debt is discharged from that delivery date. Nothing in Ground 8 of the Housing Act 1988 displaced that rule. The wording of Ground 8 was materially similar to provisions to which the rule had been applied. The rule applied even though acceptance of the cheque suspended a right to sue while clearance was pending.

3. An uncleared cheque delivered to the landlord or the landlord's agent at or before the hearing, and accepted by the landlord or tendered under an earlier agreement requiring acceptance, must therefore be treated as payment from delivery if it is subsequently honoured. At the hearing the court cannot be satisfied that the landlord is entitled to possession merely because the cheque remains uncleared. Under section 9 of the Housing Act 1988, it has jurisdiction to adjourn briefly to establish whether the cheque will be paid. If it is dishonoured on first presentation, possession must be ordered, assessed by reference to the original rather than adjourned hearing.

4. The court rejected the contention that this construction frustrated Parliament's scheme. Ground 8 permits payment up to the hearing. A landlord without an express or implied agreement to accept a cheque may refuse a late cheque, but should do so promptly and return it. Whether to adjourn remains a judicial decision on the evidence, including whether funds exist to meet the cheque; any adjournment should ordinarily be short.

5. Here, rent had habitually been paid and accepted by cheque. The cheque was delivered to the landlord's solicitors before the hearing, was not rejected, and was honoured. It had therefore discharged the arrears from delivery. The deputy district judge had jurisdiction to adjourn, while the circuit judge erred in holding otherwise.

• Court of Appeal (Civil Division) — in [2003] EWCA Civ 342, allowed the tenant's appeal and set aside the possession order.
• Mayor’s and City of London County Court — His Honour Judge Cox allowed the landlord's appeal from the deputy district judge and made an order for possession.
• County Court — the deputy district judge adjourned the Ground 8 possession claim pending clearance of the tenant's cheque.