Hanoman v London Borough of Southwark

The House of Lords held that, for the purposes of section 153B of the Housing Act 1985 (as inserted by the Housing Act 1988), sums of housing benefit which are credited by a local authority to a tenant's rent account as a rent rebate under section 134(1A) of the Social Security Administration Act 1992 constitute "payments of rent". The court adopted a contextual and purposive approach to the phrase "payment of rent", rejecting a literal meaning that would require an actual transfer of money from tenant to landlord. Key statutory provisions considered were sections 153A and 153B of the Housing Act 1985 and section 134 of the Social Security Administration Act 1992.

The court reasoned that a narrow construction would frustrate the sanctionary purpose of sections 153A and 153B, produce anomalous distinctions between tenants whose housing benefit takes the form of rent allowances and those whose benefit takes the form of rent rebates, and would be inconsistent with authorities recognising that the word "payment" varies with context.

This appeal concerned the statutory right-to-buy scheme under Part V of the Housing Act 1985 and the effect of the delay provisions inserted in 1988. The respondent tenant, Mr Hanoman, served a section 122 right-to-buy notice in October 1999. A dispute as to its withdrawal led to High Court proceedings in which Peter Smith J declared that Mr Hanoman's application remained subsisting (Hanoman v Southwark London Borough Council [2004] EWHC 2039 (Ch)). The tenant served a section 153A "notice of delay" and, having received no counter notice, served an operative notice of delay bringing section 153B into play.

The central factual and legal issue was whether credits of housing benefit to a tenant's rent account by way of a rent rebate (under section 134(1A) of the Social Security Administration Act 1992), which reduced the tenant's liability to pay rent to nil, amount to "payments of rent" for the purposes of section 153B so as to reduce the purchase price of the property. The Council argued that a rent rebate is not a payment by the tenant and therefore cannot trigger the reductions in purchase price under section 153B; the tenant contended that such credits are payments of rent for that statutory purpose.

Issues framed by the court:

• Does crediting housing benefit as a rent rebate to a tenant's rent account amount to a "payment of rent" within section 153B of the Housing Act 1985?
• If so, should the statutory scheme be construed so as to treat such credits as payments for the purposes of calculating reductions to the purchase price and related consequences (including consequences under section 155(3A))?

The House of Lords (dismissing the appeal) applied a purposive and contextual interpretation. The court relied on the flexible meaning of "payment" in context, the statutory purpose of penalising dilatory landlords, and the need to avoid absurd or unprincipled distinctions between different classes of tenants (those receiving rent allowance versus rent rebate). The court therefore concluded that housing benefit credited as a rent rebate is to be treated as a payment of rent under section 153B and ordered that the lower courts' decisions in favour of the tenant stand.

Appeal dismissed. The House of Lords held that the periodic crediting of housing benefit to a tenant's rent account as a rent rebate under section 134(1A) of the Social Security Administration Act 1992 is a "payment of rent" for the purposes of section 153B of the Housing Act 1985. The court applied a contextual and purposive construction to avoid defeating the sanctionary purpose of the delay provisions and to prevent anomalous distinctions between tenants whose benefit takes different forms.

High Court (Chancery Division): Peter Smith J declared the tenant's section 122 right-to-buy notice still subsisting (Hanoman v Southwark London Borough Council [2004] EWHC 2039 (Ch)). Court of Appeal: decision for the respondent (reported at [2008] EWCA Civ 624). House of Lords: appeal dismissed ([2009] UKHL 29).