Salix Homes v Mantato

Cause of action estoppel does not bar fresh possession proceedings merely because an earlier possession order remains undischarged. The question is whether the later claim rests on the same necessary factual ingredients. Later rent arrears, a change from a secure to an assured tenancy, and reliance on different statutory grounds may make the causes of action distinct. Non-disclosure or potential unfairness may raise abuse of process, which is distinct from estoppel.

When setting aside a possession order under the Civil Procedure Rules 1998, CPR 39.3(5) should generally be applied by close analogy. Promptness, a good reason for non-attendance and a reasonable prospect of success are required, absent unusual and compelling circumstances.

Salix Homes appealed against an order of Deputy District Judge Thexton dated 8 June 2018. The order set aside a possession order and warrant obtained after Mr Mantato failed to attend proceedings for possession of his home, struck out the claim and directed his readmission.

An earlier possession order had been made for rent arrears while the tenancy was a secure tenancy under the Housing Act 1985. After the landlord's interest transferred to Salix Homes, the tenancy became an assured tenancy under the Housing Act 1988. Salix Homes later brought proceedings based on further arrears and persistent delay in payment. The central issues were whether the later claim was barred by cause of action estoppel or merger, and how the application to set aside should be approached.

1. Appeal allowed. The June 2017 possession order was restored.
2. Cause of action. Res judicata comprises distinct principles. As explained in Virgin Atlantic Airways Ltd v Premium Aircraft Interiors UK Ltd [2013] UKSC 46, cause of action estoppel and abuse of process are distinct, although overlapping. Following Letang v Cooper [1965] 1 QB 232, the court identified a cause of action by reference to the factual situation necessary to obtain the claimed remedy.
3. The later rent arrears had accrued after the original possession order and were not part of its judgment debt. The condition requiring payment of current rent and instalments towards the judgment debt postponed the fixing of a possession date; it was not a judgment for future rent. The landlord therefore had a different cause of action for the later arrears. The fact that fresh proceedings might not have been necessary to obtain possession did not alter the cause-of-action analysis.
4. The statutory basis was also different. The earlier proceedings concerned a secure tenancy under the Housing Act 1985, including its landlord and tenant conditions and Ground 1 in Schedule 2. The later proceedings concerned an assured tenancy under the Housing Act 1988, relying on discretionary Grounds 10 and 11 in Schedule 2 and the requirement of reasonableness. The causes of action were not the same.
5. Failure to disclose the earlier proceedings and possible unfairness from having two possession orders might support an abuse-of-process argument. They did not establish cause of action estoppel. Abuse of process was not determined because no respondent's notice sought to uphold the order on that alternative basis.
6. Setting aside. Under CPR 3.1, CPR 39.3(5) should generally be applied by close analogy. The applicant must act promptly, have a good reason for failing to attend and show a reasonable prospect of success. The unusual and compelling circumstances in Forcelux Ltd v Binnie [2009] EWCA Civ 854 were exceptional and were not present here. The approach in Hackney LBC v Findlay [2011] EWCA Civ 8 governed.
7. An arguable estoppel defence, a short possession hearing, non-disclosure of the earlier history and failures concerning rental schedules were not unusual and compelling circumstances comparable to Forcelux. The application was made about nine months after the order, and no good reason for non-attendance had been provided. The Deputy District Judge had not properly applied the three conditions.

1. Court of Appeal (Civil Division) — In [2019] EWCA Civ 445, the appeal was allowed and the June 2017 possession order was restored.
2. Manchester County Court — District Judge Khan made the June 2017 possession order. On 8 June 2018, Deputy District Judge Thexton set it aside, set aside the warrant, struck out the claim and ordered Mr Mantato's readmission.