London Borough of Lambeth & Hyde Southbank Ltd v O'Kane

A former secure tenant who remains in occupation after breaching a suspended possession order does not acquire a new tenancy merely because the landlord accepts payments, increases the occupation charge, issues rent cards or continues normal housing-management practices. The whole factual context must force the conclusion that the parties intended to create a new contractual tenancy. Special circumstances are required.

The original tenancy cannot be revived by the landlord waiving the breach. Revival requires an order under section 85 of the Housing Act 1985. The practical difficulty or impossibility of revival is relevant evidence, but it is not a legal precondition to finding that no new tenancy arose.

These conjoined appeals concerned former secure tenants whose tenancies had ended following breaches of suspended possession orders. They remained in occupation as tolerated trespassers while their former landlords accepted occupation payments, issued rent cards or notices, and refrained from enforcing possession.

In the O'Kane appeal, the surviving partner of a deceased occupier contended that Lambeth had waived the breach or granted a new tenancy, thereby creating succession rights. In the Helena appeals, former tenants sought to discharge possession orders on the basis that new tenancies had arisen. They also disputed whether an assignment of rent arrears transferred arrears of mesne profits.

The central questions were whether the landlords' conduct created new tenancies, whether waiver could revive the former secure tenancies, and whether the assignment covered mesne profits.

1. All appeals dismissed. Lady Justice Arden, with whom Sir Martin Nourse and Lord Justice Auld agreed, held that a landlord cannot waive breaches of a suspended possession order so as to revive the original secure tenancy. The contrary argument was precluded by Marshall v Bradford MDC. Revival requires an application to the court under section 85 of the Housing Act 1985. The Court of Appeal could not reconsider Marshall's conformity with an earlier House of Lords decision; any error of that kind could be corrected only by the House of Lords.

2. Special circumstances are required before a new tenancy can arise between a tolerated trespasser and the former landlord. It is insufficient that the facts are merely consistent with a new tenancy. The facts, viewed objectively and in their full context, must force the conclusion that the parties intended to create a new contractual relationship. This approach is compatible with Street v Mountford because the parties must first intend to enter legal relations before the legal characteristics of their relationship are classified.

3. Rent increases, rent cards, tenancy terminology and a decoration allowance were relevant evidence but did not compel the inference of a new tenancy. They were consistent with increasing mesne profits, maintaining housing stock and continuing to forbear from enforcing possession. Significant outstanding arrears formed part of the factual context. The trial judges were therefore entitled to find that no new tenancies arose.

4. The continuing legal or practical revivability of the former tenancy is evidential, not a condition of the tolerated-trespasser analysis. A transfer of housing stock to a landlord unable to grant secure tenancies does not remove the former tenant's ability to seek relief under section 85(2) or 85(4). Similarly, practical difficulty in obtaining the participation of a former joint tenant or a deceased joint tenant's personal representatives does not itself create a new tenancy.

5. The transfer agreement and deed of assignment had to be read together and construed purposively. References to sums owed by tenants, leaseholders and occupiers included sums owed by tolerated trespassers. The assignment therefore transferred arrears of mesne profits as well as rent arrears.

6. The Helena cases were remitted to the County Court for further consideration following dismissal of the appeals.

1. Court of Appeal (Civil Division): All appeals were dismissed. The Helena cases were remitted to the County Court for further consideration.
2. Lambeth County Court: HHJ Welchman made a possession order and held that the deceased occupier remained a tolerated trespasser, leaving no tenancy capable of succession.
3. St Helens County Court: HHJ Mackay dismissed the Helena appellants' applications, held that no new tenancies had arisen, and accepted that the assignment transferred the relevant arrears.