Christina Sharples v Places for People Homes Ltd.

This appeal concerns whether personal insolvency (bankruptcy or a debt relief order) prevents a landlord obtaining an order for possession of a dwelling let on an assured tenancy on the ground of rent arrears. The Court of Appeal held that Insolvency Act 1986 s.285(3)(a) does not preclude a possession order for rent arrears provable in the tenant's bankruptcy, and that the corresponding moratorium in the DRO regime (IA s.251G(2)) likewise does not preclude a possession order. However, where possession is sought on a discretionary ground and the arrears are subject to a DRO or provable in bankruptcy, it is not reasonable to make a suspended possession order conditional on payment of those arrears; such an order may be conditional on payment of current rent.

The court relied on authorities including Ezekiel v Orakpo, Razzaq v Pala and Harlow District Council v Hall in concluding that possession proceedings are not a remedy "in respect of" the provable debt but are designed to restore the landlord's proprietary rights. The court rejected arguments based on the Human Rights Act 1998 and purposive readings that would extend the moratorium to preclude possession orders.

Background and parties: The appellant, Christina Sharples, was tenant of an assured tenancy and was adjudged bankrupt on 14 May 2009. The landlord, Places for People Homes Limited, obtained a possession order on Ground 8 (rent arrears) of Schedule 2 to the Housing Act 1988. Ms Sharples appealed the possession order, arguing that the bankruptcy and the moratorium in Insolvency Act 1986 s.285(3) precluded the making of a possession order based on rent arrears provable in the bankruptcy.

Procedural history: Possession proceedings were heard by District Judge Hovington on 19 May 2009 (order for possession). The appellant appealed to His Honour Judge Tetlow in Salford County Court who dismissed the appeal. The matter reached the Court of Appeal by way of civil appeal ([2011] EWCA Civ 813).

Relief sought and issues: The appellant sought to prevent enforcement of possession on the ground that (i) IA s.285(3)(a) prohibits any remedy against the property or person of the bankrupt "in respect of" a provable debt, and (ii) the equivalent DRO moratorium (IA s.251G) should similarly bar possession. The court framed the issues as (a) whether a possession order under HA 1988 is a "remedy in respect of" the provable debt, and (b) if not, what constraints the bankruptcy or DRO moratoria place on possession proceedings and on conditional/suspended possession orders.

Court's reasoning: The court reviewed and applied Ezekiel v Orakpo, Razzaq v Pala and Harlow District Council v Hall, concluding that forfeiture or a court possession order restores the landlord's proprietary rights rather than serving as a direct enforcement of the debt. Consequently IA s.285(3)(a) does not preclude making possession orders for rent arrears provable in bankruptcy, and IA s.251G(2) does not preclude possession orders where arrears are the subject of a DRO. The court held that IA s.285(3)(b) should be read as limited to proceedings "in respect of" the provable debt, preserving the effect of earlier authority. The court emphasised that while arrears provable in bankruptcy or subject to a DRO may not be the basis for recovery by court order, it would be unreasonable to make a suspended possession order conditional on payment of arrears which will be discharged under insolvency procedures; suspended orders should be conditional on payment of current rent (and any arrears not provable or not covered by a DRO).

Subsidiary findings: The court rejected submissions that the Human Rights Act 1998 required a different construction that would protect occupation post-bankruptcy; it also rejected arguments that policy considerations or the Pre-Action Protocol should alter the statutory meaning of the moratorium provisions.

Appeal dismissed. The Court of Appeal held that IA 1986 s.285(3)(a) does not prevent a landlord obtaining an order for possession of a dwelling let on an assured tenancy on the ground of rent arrears provable in the tenant's bankruptcy; similarly IA s.251G(2) (DRO moratorium) does not preclude such a possession order. The court further held that s.285(3)(b) should be read as limited to proceedings "in respect of" a provable debt. However, the court held that a suspended possession order should not be made conditional on payment of arrears that are provable in bankruptcy or are the subject of a DRO; the condition may properly relate to current rent.

On appeal from Salford County Court (His Honour Judge Tetlow) following a possession order made by District Judge Hovington on 19 May 2009. Appeal heard in the Court of Appeal (Civil Division), judgment delivered 15 July 2011, neutral citation [2011] EWCA Civ 813. (Case originated as possession proceedings in the County Court.)