Harlow District Council v Hall

A possession order which specifies a date for possession but merely suspends enforcement thereafter terminates a secure tenancy on the specified date. Compliance with conditions postponing enforcement does not extend the tenancy.

Where the tenancy ended before the tenant’s bankruptcy, maintaining the possession order is not a remedy against the tenant’s property for the purposes of section 285(3) of the Insolvency Act 1986. A possession order is also not a remedy against the tenant’s statutory right to seek postponement or discharge, because that right arises from the order itself.

The council obtained a possession order against its secure tenant for rent arrears. The order required possession on 9 February 2005 but provided that it would not be enforced while prescribed payments were made. A bankruptcy order was made against the tenant on the following day.

The county court dismissed the tenant’s application to discharge the possession order. His Honour Judge O’Brien dismissed his appeal. The tenant appealed to the Court of Appeal, contending that the rent arrears and costs were provable debts and that section 285(3) of the Insolvency Act 1986 therefore precluded maintenance or enforcement of the possession order.

The central questions were when the secure tenancy ended and whether the possession order constituted a remedy against the tenant’s property in respect of provable debts.

1. The appeal was dismissed unanimously. The possession order required the tenant to give possession on 9 February 2005. Its provision preventing enforcement while payment conditions were observed suspended execution; it did not postpone the date for possession. Under section 82(2) of the Housing Act 1985, the secure tenancy therefore ended on 9 February, before the bankruptcy order was made.

2. Sections 82(2) and 85(2) distinguish postponement of the date for possession from a stay or suspension of execution. The latter can operate only after the date on which possession must be given. An order must consequently be construed to identify whether, and until what date, possession itself was postponed. The forms considered in Thompson v Elmbridge Borough Council and Greenwich London Borough Council v Regan were materially different because they had been generously construed as postponing possession until breach of their conditions.

3. Because the secure tenancy no longer subsisted when bankruptcy occurred, maintaining the possession order was not a remedy against that tenancy as property under section 285(3) of the Insolvency Act 1986. The court assumed, without deciding, that the tenant’s continuing right to apply under sections 85(2) and 85(4) of the Housing Act 1985 might itself be property. The possession order was nevertheless not a remedy against that right: the right arose and continued precisely because the order existed.

4. The restriction in section 285 exists to preserve the bankrupt’s estate for unsecured creditors. A secure tenancy does not vest in the trustee, and current income does not vest absent the relevant statutory notice or order. The Chancellor further considered, with the agreement of Chadwick LJ and Sir Paul Kennedy, that the outcome would have been the same had bankruptcy preceded the possession date. Applying the reasoning in Ezekiel v Orakpo, the continuance or enforcement of an order terminating a secure tenancy is not a remedy enforcing payment of rent arrears, irrespective of the timing of the bankruptcy order.

1. Court of Appeal (Civil Division): The tenant’s appeal was dismissed by [2006] EWCA Civ 156. The possession order, as subsequently varied, remained effective.
2. Harlow County Court, His Honour Judge O’Brien: The tenant’s appeal from District Judge Shanks was dismissed on 15 July 2005.
3. Harlow County Court, District Judge Shanks: The tenant’s application to discharge the possession order following bankruptcy was dismissed.
4. Harlow County Court, District Judge Pelly: A possession order for rent arrears was made on 12 January 2005, requiring possession on 9 February 2005 but suspending enforcement while payment conditions were observed.