UPPER TRIBUNAL (LANDS CHAMBER)

	
UT Neutral citation number: [2015] UKUT 0501 (LC)
LT Case Number: LRX/38/2015

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

LANDLORD AND TENANT – Breach of Covenant – construction of terms of lease – whether ceasing to be a member constitutes a breach – whether a determination should be made under section 168 Commonhold and Leasehold Reform Act 2002

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
FIRST-TIER TRIBUNAL (PROPERTY CHAMBER) 

BETWEEN	VINE HOUSING CO-OPERATIVE LTD	
Appellant
	and
	MARK SMITH	
Respondent
Re: Flat 2, 53 Bonnington Square,
London
SW8 1TF

Before His Honour Judge Nigel Gerald
Sitting at: Royal Courts of Justice, Strand, London WC2A 2LL
on
11 September 2015

Stephen Evans representative for the Appellant
Ms Goldman, instructed by Miramar Legal for the Respondent

No cases are referred to in this decision

© CROWN COPYRIGHT 2015

	DECISION
Introduction
1.	The appellant landlord appeals against the 3 March 2015 decision of the First-tier Tribunal Property Chamber (Residential Property) (“F-tT”), permission to appeal having been granted by the Deputy President of this Tribunal on 21 May 2015.  The appeal is to be by way of review.
2.	The facts and matters in issue can be shortly stated and are not in dispute.  On 11 May 2003 the respondent was granted a weekly tenancy of the ground floor flat situated at Flat 22, 5 Bonnington Square, London SW8 1TF.  Clause 2 entitled “Condition of Tenancy” provide as follows:
“This tenancy is granted on the condition that:
	“2.1 Housing Need – The Tenant shall not be at any time the owner of, or the tenant of, any habitable property other than the Premises in which the Tenant could reasonably be expected to live.
	“2.2 Membership and Policy – The Tenant shall be a member of the Co-operative throughout the tenancy and will comply with the Co-operative policies and regulations and abide by the terms of the Co-operative Membership Policy/Agreement.  The Tenant shall also comply with the Co-operative’s Disputes Procedure in case of dispute with either another tenant or the Co-operative.”
3.	The material rules for these purposes are to be found in Rule 9 of the Co-operative Rules which provide as follows:
“A member shall cease to be a member if he or she:
	“A. Dies;
	 “B. Resigns either by writing to the secretary or in person at a general meeting or;
	 “C. Is expelled from membership by a general meeting or
 “D. His or her tenancy or lease is terminated (or he or she ceases to occupy the dwellings managed by the Co-operative) in which case he or she shall cease to be a member 28 days later, unless by that time he or she has either entered into a new tenancy or lease with the Co-operative or has been accepted as a prospective tenant; or
	“E. Is a prospective tenant and has either
	(i) Notified the Co-operative that he or she no longer requires accommodation, or
		(ii)	Failed to respond in writing within 28 days to written request, sent to his or her address in the register of members, to confirm that he or she still requires accommodation.”
4.	It is accepted that on 5 September 2013 the respondent was expelled from membership at a general meeting of the appellant of which the respondent had been given due notice but for reasons of his own choosing did not attend.  At no stage since then has the respondent sought to challenge or otherwise overturn that decision.
5.	It was in those circumstances that the appellant applied to the F-tT for a determination that the respondent had been in breach of covenant of the lease pursuant to section 168 of the Commonhold and leasehold Reform Act 2002, that being a necessary pre-cursor to the issuance of a notice under section 146 of the Law of Property Act 1925 seeking forfeiture of the lease.
6.	The kernel of 3 March 2015 decision of the F-tT is to be found in the following paragraph:
“15.	In the Tribunal’s view, being expelled from the Co-operative does not constitute a breach of clause 2.2 of the Lease.  The relevant part of clause 2.2 states that “The Tenant shall be a member of the Co-operative throughout the tenancy”, and yet he did not resign his membership or cause it to lapse in any way.  On the contrary, the evidence indicates that he took no steps whatsoever to relinquish his membership and that it was the Applicant who chose to take steps to expel him.  It may be that the Applicant was justified in doing so, although little information has been provided as part of this application to enable the Tribunal to satisfy itself on this point.  However, in the Tribunal’s view, being stripped of membership of an organisation (possibly against one’s will) does not by itself constitute breach of a covenant to be a member of that organisation.”
7.	The appellant submitted that the F-tT was simply wrong in its finding because not only was it admitted that the respondent tenant had ceased to be a member of the Co-operative, but the reason or cause of cessation of membership is of no materiality to the question of breach.  Under clause 2.2 of the lease it is a simple question of fact: is the tenant a member of the Co-operative or not? If the answer to that question is “no”, it follows that he is in breach of condition 2.2 so that the appellant is entitled to exercise its discretion and terminate the lease under 6.2.  
8.	The reasoning of the F-tT was not something which had been advanced by the respondent and before me Ms Goldman quite rightly and properly accepted, albeit with some reluctance, that as a matter of law the F-tT was wrong.  That perfectly proper concession was made because as a matter of fact the respondent is no longer and was not at the time of the F-tT’s decision a member of the co-operative and therefore was in breach.
9.	The F-tT gave a further reason as to why the application should be dismissed which was that in its view it was an abuse of process.  The reasoning can be found in the following paragraphs of the decision:
“16. The Tribunal has serious concerns as to why this application was made at all.  It relies on an event that was already known about when the previous determination took place, in circumstances where the Applicant’s own counsel at the time did not consider that the sole ground cited in the current application was a valid ground.  Given the passage of time between the previous determination and the current application, it does also strongly suggest that the Applicant is not aware of any current breach of covenant.
“17. The Tribunal therefore considers this application to constitute an abuse of process and – subject to receiving any submissions which could explain the applicant’s conduct – the Tribunal might well have been minded to make a cost award against the Applicant if there had been any evidence before the Tribunal that the Respondent has himself incurred any costs.”
10.	The material background to this aspect of the decision is that on 20 November 2013 a differently constituted F-tT had decided that the respondent in a separate application had been in breach of a covenant against using the premises for illegal purposes, causing a nuisance and also having pets on the premises.  That decision was made some 2½ months after the 5 September 2013 resolution to expel the respondent from the Co-operative, which point was not in issue before the F-tT on 20 November 2013.  That application had been made by the appellant again under section 168 as a necessary pre-cursor to the issuance of a section 146 notice.
11.	The appellant submitted that the F-tT erred because it cannot be an abuse of process to seek a determination as to breach of covenant different from that which has already been determined by a differently constituted F-tT.  If there was any question of relevance to any question in the mind of the F-tT as to why it was that the appellant had applied for a determination of breach in relation to expulsion – the background to which, it is common ground, was the respondent’s illegal and anti-social behaviour which had formed the factual basis to the F-tT’s 30 November 2013 decision – then the F-tT should have either sought explanation from the appellant or have ordered an oral hearing.
12.	Ms Goldman for the respondent properly conceded that it would be inappropriate to describe the second application, namely the one before the F-tT which is the subject of this appeal, as being an abuse of process because there is nothing in principle or in law wrong for a landlord to seek to utilise whatever powers or rights it has to seek to forfeit a lease.  
13.	In this case there are two distinct groups of breaches of covenant, namely, breaches by illegal use and anti-social behaviour as determined by the other F-tT on 20 November 2013 and, secondly, breach by expulsion determined by the differently constituted F-tT which is the subject of this appeal.  The practical reason why the expulsion ground was not before the first F-tT was that it had happened subsequent to issuance of the first application and the first hearing before the F-tT was at a time when the internal appeal procedure of the Co-operative had not been exhausted so that as at 20 November 2013 it was not clear whether that issue of expulsion would be upheld.  
14.	In those circumstances it follows that this aspect of the appeal should also be allowed.  Even without that concession properly made, I would have held that the appeal should be allowed.  The question before the F-tT on both occasions was the straightforward question of whether or not there had been a breach of covenant.  What happens subsequent to that determination is partly in the gift of the landlord, namely, whether or not a section 146 notice should be issued and then whether or not possession proceedings should be issued before the county court.  It is also partly in the gift of the county court namely whether or not, if and when the application for possession comes before the judge, possession should be granted or the forfeiture relieved. These events are of no concern to, and indeed are pure conjunction and speculation by, the F-tT.  Indeed the motivations behind the making of applications, provided properly made in the sense that they raise the question of whether or not there had been a breach of covenant of a lease, are of no concern to the F-tT.  The whole purpose of an application under section 168, however, is leave those matters to the landlord and then the county court, sure in the knowledge that the F-tT has determined that there has been breach.
15.	It was in this context that Ms Goldman went on to argue that there was very real concern so far as her client was concerned that the reason why the appellant was utilising the expulsion ground for forfeiting the lease was to put the respondent in as difficult a position as possible. Not only had there been no section 146 notice subsequent to the first F-tT’s decision, since when I am told but do not know that the respondent’s conduct and behaviour has been exemplary, but it may be difficult for the county court to avoid making an order for possession if the respondent is no longer a member of the Co-operative.  
16.	That is something of which I cannot comment or make any observations about, suffice to say that that is a matter for determination by the county court in the light of the facts and circumstances then presenting to the county court which may no doubt take into account not only  the conduct of the respondent tenant but also the question of whether or not it would be appropriate to grant relief from forfeiture on terms that the respondent be given an opportunity to re-apply for membership of the Co-operative.
17.	As I have said none of those matters are germane to the issue before me or indeed to the issue before the F-tT.  There has been in this case no abuse of process.  
18.	Ms Goldman also went on to argue, accepting that since 5 September 2013 her client has taken not one step to challenge the expulsion either within the procedure laid down by the Rules of the appellant or by court application, that the expulsion and Rules may breach the respondent’s article 6 and article 8 rights of the Human Rights Act.  
19.	Whether or not that is so I cannot comment.  However, because the present position is, and since 5 September 2013 has been, that the respondent has ceased to be and is no longer a member of the Co-operative, as a matter of law and fact he is in breach of covenant 2.2 of the lease from which it follows that the appellant is entitled to the determination it seeks and, if it so chooses, to issue a section 146 notice and thereafter to apply for forfeiture of the lease in respect of which the respondent will be entitled to make an application for relief from forfeiture.
20.	In both circumstances I allow this appeal.

Dated 15 September 2015

His Honour Judge Gerald