Christina Sharples v Places for People Homes Ltd.

An order for possession of a dwelling let on an assured tenancy for rent arrears is not a remedy in respect of those arrears under Insolvency Act 1986 section 285(3)(a), even where the arrears are provable in bankruptcy. The same applies under section 251G(2)(a) where the arrears are subject to a debt relief order. Possession proceedings should normally continue under Housing Act 1988. However, on a discretionary rent-arrears ground, a suspended order should not be conditional on payment of arrears covered by bankruptcy or a debt relief order. It may be conditional on payment of current rent and other arrears. Section 285(3)(b) is implicitly confined to proceedings against the bankrupt in respect of the provable debt.

These were conjoined appeals concerning assured tenancies and insolvency. Christina Sharples was adjudged bankrupt shortly before possession proceedings for rent arrears were heard. The Salford County Court made a possession order on mandatory Ground 8, and His Honour Judge Tetlow dismissed her appeal.

Stephen Godfrey was made subject to a debt relief order including his rent arrears. The Oxford County Court made a suspended possession order on discretionary Ground 10, conditional on payment of the arrears, and His Honour Judge Charles Harris QC dismissed his appeal.

The central issue was whether bankruptcy or a debt relief order prevented possession proceedings, or prevented conditions requiring payment of the relevant arrears.

Lord Justice Etherton gave the leading judgment. Lord Justice Wilson and Lord Justice Mummery agreed.

1. Sharples appeal. The appeal was dismissed. An assured tenancy is property for the purposes of section 285, but an order for possession is not a remedy against the tenant’s property or person in respect of provable rent arrears. Its object is to restore the landlord’s proprietary right to possession, rather than to enforce payment. This applies whether the order is outright or suspended: Ezekiel v Orakpo [1977] 1 QB 260, Razzaq v Pala [1997] 1 WLR 1336 and Harlow District Council v Hall [2006] EWCA Civ 156 supported that conclusion.
2. Section 285(3)(b) is implicitly limited to proceedings against the bankrupt in respect of the provable debt. Possession proceedings in which no monetary claim is made for those arrears are therefore not subject to the automatic stay. Proceedings should normally be dealt with under the housing legislation rather than stayed under sections 285(1) or (2).
3. Godfrey appeal. The appeal was allowed only to vary the order. The expression in respect of in section 251G(2)(a) has the same relevant meaning as for the debt in section 251G(2)(b)(ii). A possession order for arrears covered by a debt relief order is therefore not prohibited, whether outright or suspended. Proceedings should normally continue and should not ordinarily be stayed under section 251G(3).
4. In a discretionary possession case, the relevant arrears do not prevent a suspended possession order, but it is unreasonable to make suspension conditional on their payment. The order may be conditional on payment of current rent and arrears outside the bankruptcy or debt relief order. The order for payment of Godfrey’s arrears was deleted, and the weekly instalments were confined to costs.

1. Court of Appeal (Civil Division): Conjoined appeals allowed and dismissed as stated above, under [2011] EWCA Civ 813 .
2. Salford County Court: District Judge Hovington made a possession order against Sharples on Ground 8. His Honour Judge Tetlow dismissed her appeal on 28 August 2009.
3. Oxford County Court: District Judge Gatter made a suspended possession order against Godfrey on Ground 10. His Honour Judge Charles Harris QC dismissed his appeal on 22 February 2010.