New lease of life
12 November 2001
On 15 October, the majority of landlord and tenant (L&T) claims were finally brought within the main body of the Civil Procedure Rules (CPR), producing a mixture of relief tempered with some frustration.
While getting to grips with the new procedures has been the main task for L&T specialists this year, the Government's proposals for the reform of the Landlord and Tenant Act 1954 and a number of significant landlord and tenant judgments has meant that there have been plenty of other developments to digest.
The rush to introduce the CPR by 26 April 1999 did not leave time for many specialised areas of practice to be properly brought within the body of the rules. While other specialist areas got their own practice directions and pre-action protocols, L&T specialists were left to try to make sense of a confusing mixture of the old and the new. Many of the old rules and forms familiar from the pre-CPR days were preserved, but often altered subtly, while even the simplest procedure seemed to require double-checking against assorted parts and schedules.
The introduction of Parts 55 and 56 and their practice directions have done away with the previous confusion, effectively placing almost all of the specialist L&T rules in one place.
Business tenancy lease renewals are now dealt with in Part 56, along with other frequently sought forms of L&T remedy, such as acquisition orders under the Landlord & Tenant Act 1987, and rather more obscure provisions such as applications under the Chancel Repairs Act 1932.
The business tenancy renewal procedures represent a compromise between the pre-CPR practice of delaying renewal proceedings for many months or years while negotiations trundled along, and the general CPR approach of seeking an expeditious hearing of disputes.
Under Part 56, although claim forms have to be served within two months of issue, the defendant landlord has an automatic right to a three-month stay for negotiation. This is a more generous approach than for normal claims, where a one-month stay is at the discretion of the court unless agreed by the other side. It is presumably within a court's case management powers to extend a stay for a further period or periods, although evidence that the parties are actively negotiated will increasingly be expected.
Possession proceedings, including mortgage claims and squatter actions, are dealt with by Part 55. The normal period between issue and hearing is intended to be no more than eight weeks. Before practitioners start celebrating a much-needed injection of speed into the processing of standard possession claims, it appears that this 'standard period' is more a statement of a general aim rather than an entitlement. The Part 55 practice direction provides specifically that the court should consider abridging time between issue and hearing where there is evidence of actual or likely violence. This should be useful ammunition for landlords who are seeking expeditious trial dates and who are faced with judges reluctant to interfere with the court list.
The new rules also make express provision for the situation where a defendant fails to enter a defence but turns up at court on the day of hearing wishing to defend the claim. Unsurprisingly, in light of the effect of the Human Rights Act 1988, defendants who appear on the day of the hearing can participate in the hearing but run the risk of being penalised in costs. In many arrears cases where the landlord has little prospect of recovering the debt due, the prospect of additional costs may provide little comfort.
If an action is to be genuinely defended on grounds that appear to be substantial, the court will usually decide to give directions for trial. It remains to be seen whether the courts will use the requirement that a proposed defence must be substantial as an effective filter against sketchy defences put forward to put off the evil day when the bailiffs call.
An interesting aspect of the new rules, and one which has the potential to save many hours of waiting for housing officers and witnesses, is the provision that, prior to allocation to the fast-track or multi-track, a claim can be proved by evidence in writing alone. The evidence must be served in advance on the defendant.
This provision allows a landlord to prove its case without the need for any witness to attend. While this will leave a landlord with little prospect of proceeding on the day if the tenant disputes the claim, the potential saving in time, if such an approach is widely accepted by the courts, is considerable.
One aspect of the new procedures that is already proving unpopular with many practitioners is the restriction on the ability to issue in the High Court. The High Court will be the appropriate venue only in 'exceptional circumstances', and these must be proved by a witness statement. For many years, the High Court has been many practitioners' preferred venue for bringing squatters claims. It is normally able to offer quicker hearings in front of experienced masters. However, the practice direction suggests that High Court squatters actions are now a thing of the past unless there is a substantial risk of public disturbance or serious harm to persons or property.
Parts 55 and 56 are already with us, but further changes are not far away. The Department of the Environment, Transport and the Regions' (DETR) consultation on its proposed reforms to Part 2 of the Landlord and Tenant Act 1954 is now over. The main proposals include extending to the landlord the ability to make an application for a new tenancy, abolishing the tenant's counter notice and attaching various 'health warnings' to statutory notices to ensure that tenants do not lose their renewal rights inadvertantly.
A welcome move is the proposal to remove the necessity of obtaining court approval for tenancies that are to be excluded from the protection of the 1954 act. However, it is not clear when the Government intends to legislate on changes to the 1954 act. Given that the Law Commission report that led to the DETR consultation dates back to 1992, the pace of change in this area has not been swift so far.
Although procedural changes have dominated in the last six months, there have been a number of significant landlord and tenant judgments. The Court of Appeal's decision in Daejan Properties London Leasehold Valuation Tribunal has created waves. Leasehold Valuation Tribunals have at a stroke been deprived of a significant area of what they had regarded as their jurisdiction.
The Court of Appeal avoided the prospect of possible satellite litigation about whether a tenant's proposals contained in a request for a new business tenancy were genuinely intended, by allowing the appeal in Sun Life Assurance Thales Tracs. Not to be outdone, the House of Lords has also been busy revisiting (yet again) the lease/licence distinction in Uratemp Ventures Collins. It is comforting to know that at least some things don't change. n
Malcolm Sheehan was junior counsel for the appellant in Sun Life Assurance Thales Tracs and is a member of the property group at 2 Harcourt Buildings, the chambers of Roger Henderson QC