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|Judgments - City Council of Bristol v. Lovell
Lord Hope of Craighead Lord Clyde
LORD GOFF OF CHIEVELEY
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hoffmann. For the reasons he gives I would allow the appeal.
LORD LLOYD OF BERWICK
It is helpful to have in mind the order of events leading up to this appeal. The tenant, Mr. Lovell, was first in the field. He claimed to exercise his right to buy his home under Part V of the Housing Act 1985 by notice served on the Council in about April 1994. The Council might have responded by serving a counter-notice under section 124 denying the tenant's right to buy, and stating the grounds. But they did not do so. They admitted the right to buy, and then, on 30 June, served a further notice stating the price and other terms of sale. On 14 October the tenant accepted the Council's terms. On 4 November the tenant's solicitors approved the form of transfer, and called for completion under section 138. There can, I think, be no doubt that at that stage the Council were under a duty to convey the freehold, and the tenant was in a position to enforce that duty by claiming an injunction under section 138(3). The statutory conditions were satisfied.
But in the meantime the Council had served a notice under Part IV of the Act informing the tenant that they intended to make a claim for possession. The notice was not served until 4 July, that is to say, some few days after they had told the tenant of the terms of sale. The proposed grounds included Ground 2 of Schedule 2. But the grounds did not at that stage include an allegation that the tenant was dealing in drugs. On 21 September 1994 the Council commenced proceedings. But again there was no mention of drug-dealing. It was only after the tenant's solicitors had approved the form of transfer, and called for completion, that the Council amended their particulars of claim to allege that the tenant was a drug-dealer. On 4 January 1995 the tenant amended his defence to add a counterclaim for an order that the Council convey the premises under Part V of the Act, whereupon the Council answered with allegations of misrepresentation, fraud and illegality. In particular, they alleged that the money with which the tenant was proposing to buy the premises came from the proceeds of his drug-dealing.
On 10 January 1995 the tenant applied for an injunction pursuant to his counterclaim. On 27 January the District Judge declined to grant relief on the ground that an injunction is an equitable remedy, and he could not be satisfied at that stage that the tenant had come with clean hands. He stressed that he was not adjourning the injunction proceedings so as to enable the possession action to be tried first. But that was the effect of his order.
So the question which arises is whether the judge was entitled to adjourn the application for an injunction once the conditions set out in section 138 had been satisfied. If the Council had already obtained an order for possession, then the case would have fallen within section 121(1). The right to buy could not have been exercised. But there was no order for possession in existence on 10 January, when the tenant applied for an injunction, or on 27 January when the district Judge refused an injunction; and there is nothing in section 121 or elsewhere in the Act about an application for an order for possession.
Similarly if the tenant had a bankruptcy petition pending against him, he could not have exercised his right to buy: see section 121(2). But that was not the case here.
The only other qualification on the landlord's duty to convey the freehold once the statutory conditions are satisfied is contained in section 138(2). It provides that the landlord is not bound to comply with section 138(1) if, and so long as, the tenant is four weeks or more behind with his rent. But that is the only exception. The implication is that in all other circumstances the duty is absolute and peremptory.
How then can it be said that the judge was entitled to refuse the injunction when the case came before him on 27 January? It is said that he was entitled to adjourn the application, on the ground that all courts have an inherent power to adjourn proceedings in the interests of proper case management. There is nothing in the Act, so it is said, to exclude the judge's ordinary discretion under Ord. 13, r. 3(1) of the County Court Rules 1981 to adjourn the tenant's application for an injunction so as to allow the Council's application for a possession order to be heard first. It was considerations of this kind which weighed with Lord Woolf M.R. but which in the end he put on one side having regard to previous decisions of the Court of Appeal.
I am bound to say that I have serious doubts about this line of argument, attractive though it can be made to seem at first sight. I have two concerns: one general and the other particular.
As to the general concern, I accept of course that all courts are in control of their own proceedings, and can regulate the order in which cases are brought on for hearing. They can fix dates, and they can vacate dates. But they must not do so in such a way as to deprive one or other party of his substantive rights. The distinction is fundamental. Thus a court will not hesitate to grant an adjournment in an appropriate case if one or other party is not ready for trial, or if, for example, a witness is not available, even if, without the evidence of that witness, the party in question would be bound to fail. But in all such cases the substantive rights of the parties are unaffected. The adjournment touches only their enforcement.
In the present case the purpose of the adjournment was quite different. It was to enable the Council to mount a defence which was not otherwise available when the tenant's application came on for hearing, thereby depriving him of his substantive right to buy. On 27 January there was no defence to the tenant's claim for an injunction under section 138(3). The effect, if not the purpose, of the adjournment was to provide the Council with the opportunity of putting forward a defence by obtaining an order for possession. It seems to me that this goes far beyond the ordinary limits of case management. The general rule must be that courts are obliged to decide cases as they come before them in accordance with the rights of the parties as they then stand. The Divisional Court has recently held that magistrates were wrong to grant an adjournment in a case under the Environment Protection Act 1990 on precisely this ground: see Reg. v. Dudley Magistrates Court, Ex parte Hollis (unreported) following and applying Reg. v. Walsall Justices, Ex parte W  1 Q.B 253. Moses J, said: "The wide discretion as to whether to grant an adjournment conferred by section 10 and section 54 of the Magistrates Court Act 1980 cannot, usually, be impugned. But it is a power which must not be exercised in a manner which undermines the statute under which the proceedings are brought or in a way which deprives a litigant of rights conferred by that statute. An adjournment cannot be granted if the only purpose is to avoid the consequences which the law provides will follow, should the hearing continue."
My particular concern relates to the specific provisions of Part V of the Act. It is said that Parliament must have intended judges to be able to exercise their discretion under Ord. 13, r. 3(1) of the County Court Rules even though the statutory conditions for the grant of an injunction under section 138(3) have been fulfilled. Again I have doubts. There is nothing in the language of the Act to support such a view. Indeed, as has been pointed out in previous cases, the language is drawn very tightly in favour of the tenant. Once the right to buy has arisen, the circumstances excluding the exercise of the right are strictly confined. In Taylor v. Newham London Borough Council  1 W.L.R. 444 it was argued that more general considerations might still be relevant. The argument was rejected. Sir Thomas Bingham M.R. said, at pp. 451-452:
A little later he said:
So far from supporting the argument that the judge has a discretion to adjourn proceedings for an injunction under section 138(3) the language and purpose of Part V of the Act point the other way.
I should refer next to Dance v. Welwyn Hatfield District Council  1 W.L.R. 1097. The essential facts were very similar to those of the present case. As in the present case, it was the tenants who were first in the field by claiming the right to buy; and as in the present case it was the Council who then gave notice of their intention to apply for a possession order. The only difference on the facts is that it was the tenants who were the first to commence proceedings, and the Council who then counterclaimed for a possession order. In that sense the parties were the other way round. But this cannot affect the question whether the judge had a discretion to adjourn the tenants' application for an injunction until the Council's claim for possession had been determined. This is what the judge decided to do, as in the present case. But the Court of Appeal held that he was wrong. It is important to recognise that the discretion with which the Court of Appeal was concerned was the procedural discretion to adjourn the application. That was what the case was about: see per Nourse L.J., at p. 1102.
In a judgment with which Sir Nicolas Browne-Wilkinson V.-C. agreed, McCowan L.J. said, at pp. 1106-1107:
As I understand it McCowan L.J. was deciding that the judge did not have a procedural discretion to adjourn the tenants' application because, under the terms of the Act, the tenants were entitled there and then to a grant of the freehold. The Council had no defence to the tenants' application. I am not persuaded that this line of reasoning involves any non sequitur.
I return to Taylor v. Newham London Borough Council. The facts again were very similar, the only difference being that there were separate proceedings brought by the Council for a possession order on Ground 2 (racial harassment) and by the tenant for an injunction. The judge ordered both proceedings to come on together: see p. 446. If the possession action were to be decided first, then it would or might have provided the Council with a defence to the tenants' claim for an injunction. But on a preliminary issue the judge held that he had no discretion to withhold the injunction.
In the Court of Appeal Sir Thomas Bingham M.R. quoted at length the passage which I have already quoted from the judgment of McCowan L.J. in Dance v. Welwyn Hatfield District Council, pointing out that McCowan L.J.'s judgment had the agreement of the Vice-Chancellor. Sir Thomas Bingham M.R. continued:
It is said that Taylor v. Newham London Borough Council does not assist us, because nobody asked the right question. But as I understand Sir Thomas Bingham M.R.'s judgment in the passages I have quoted he was directing his mind to the very same procedural question which had been decided in Dance's case, namely, whether a judge has a discretion to adjourn injunction proceedings so as to await the outcome of the possession action. The court answered that question in the negative.
But for one factor to which I shall come, I would for my part be content to follow and approve the decisions in Dance and Taylor, together with the judgments of Hobhouse L.J. and Morritt L.J. in the court below. As Lord Woolf M.R. observed there is no ground for distinguishing between the three cases. In particular I regard it as irrelevant that in Dance's case the claim for possession was on Ground 10, whereas the allegations in the present case are obviously much more serious. The underlying merits cannot affect the question whether the procedural discretion exists once the conditions are satisfied.
The factor which has caused me to change my mind arises out of a concession made by counsel for the tenant towards the end of his argument. He was asked whether it would be open to the Council to pursue its claim for possession (assuming no order had been made to the contrary) or even start fresh proceedings for a possession order, notwithstanding the grant of an injunction under section 138(3). To my surprise Mr. Woolley said that it would. I do not think he was obliged to make that concession whether by the language of section 139(2) of the Act (or any other provision of Part V) or by reason of the decision of the Court of Appeal in Bradford City Metropolitan Council v. McMahon  1 W.L.R. 52. To my mind Parliament cannot have intended that the Council should be able, in effect, to reverse a mandatory injunction by obtaining a subsequent order for possession. The intention must have been that the grant of an injunction was to be, so to speak, the end of the road, subject only to the provisions of section 140 and 141. If I am right that Mr. Woolley's concession was wrongly made, then it would have the additional advantage of bringing the English and Scottish procedures more closely into line.
But I cannot ignore the concession, even if I think it was wrong. If it be assumed that a mandatory injunction is not the end of the road, and that it is open to this or any other landlord to obtain a possession order at any time up to the actual grant, notwithstanding a mandatory injunction against him, then the only sensible course in practice would be to allow the possession action to be determined first. Otherwise court proceedings would be brought into disrepute. If so, and still on the same assumption, it must follow that the court has a procedural discretion to adjourn the tenant's application. It is for that reason, and that reason alone, that I would allow the appeal.
Mr. Lovell is the secure tenant of a house belonging to the Bristol City Council on its Southmead Estate. The Council wants to evict him. It says that he is using the house as a shop to sell drugs. It has been suitably adapted to the trade, with steel grilles over doors and windows, kennels for Rottweiler dogs, surveillance cameras to check visitors, a radio scanner tuned to police frequency and equipment for locating covert listening devices. The Council says that his use of the house has been a nuisance and annoyance to neighbours, which is a statutory ground for a possession order (Ground 2 in Schedule 2) under Part IV of the Housing Act 1985.
Mr. Lovell, on the other hand, wants to acquire the freehold under the "right to buy" provisions in Part V of the same Act. He has served the appropriate notices and his statutory right to buy (by virtue of his occupation of the house as a secure tenant for more than two years) has been admitted by the Council. The price calculated by the Council (£16,660) is acceptable to him and he says that he will pay in cash. Section 138(1) of the Act provides that in such a case "the landlord shall make to the tenant . . . a grant of the dwelling-house for an estate in fee simple." Subsection (3) says that "[t]he duty imposed on the landlord by subsection (1) is enforceable by injunction."
The way in which the respective claims have come before the court is that on 21 September 1994 the Council issued proceedings for possession. On 4 January 1995 Mr. Lovell served a defence and counterclaim, denying the allegations about his unlawful use of the house, and counterclaiming for conveyance of the freehold.
The situation at the close of pleadings therefore was that Mr. Lovell had established his right to buy and that the conditions in section 138(1), giving rise to the statutory duty to convey the freehold, had been satisfied. On the other hand, the right to buy would cease to be exercisable if the court made an order for possession. Section 121(1) reads as follows:
This means that if an order for possession were made, Mr. Lovell would no longer be entitled to an injunction. The "right to buy" is defined in section 118(1) as "the right . . . to acquire the freehold of the dwelling-house" and an application for an injunction therefore involves exercising the right to buy: Enfield London Borough Council v. McKeon  1 W.L.R. 1007. So the outcome of the case appeared likely to depend upon the order in which the claims were heard. If the Council's claim was heard first and succeeded, Mr. Lovell would fail in his claim to the freehold. Conversely, if Mr. Lovell's claim was heard first, he would obtain his injunction and upon the grant of the freehold the Council would cease to be his landlord and its claim to possession would lapse.
On 3 February 1995 Mr. Lovell attempted to have his claim heard first by making an interlocutory application for an injunction under C.C.R. Ord. 13, r. 6(1). The District Judge refused to grant it. He said that it should come on for trial with the Council's claim for possession. His decision was reversed by His Honour Judge Batterbury, who held that Mr. Lovell was entitled to an immediate injunction. The judge was affirmed by the Court of Appeal, which held that it was bound by previous authority to decide that the judge had no discretion to refuse the application.
The question is therefore whether the judge had a discretion. It is however very important to be clear as to what kind of discretion we are talking about. The fact that the statutory remedy is an injunction naturally brings to mind the fact that an injunction is traditionally said to be a discretionary remedy. This is true not only of interlocutory injunctions, where the discretionary nature of the remedy is obvious, but also of final injunctions. An injunction granted under section 138(3) is a final mandatory order. So that suggests that we are concerned with the discretion to grant or refuse a final injunction.
In my view, however, that kind of discretion has nothing to do with the case. The reason why an injunction is a discretionary remedy is because it formed part of the remedial jurisdiction of the Court of Chancery. If the Chancellor considered that the remedies available at law, such as damages, were inadequate, he could grant an injunction to give the plaintiff more effective relief. If he did not think that it was just or expedient to do so, he could leave the plaintiff to his rights at common law. The discretion is therefore as to the remedy which the court will provide for the invasion of the plaintiff's rights.