Tolerated Trespassers

The Court of Appeal recently considered the case of Jones v London Borough of Merton [2008] EWCA Civ 660. This case is important to public sector landlords as well as being relevant for the general interest of the property sector, in giving guidance as to when a person no longer has possession of a property.

Background
What constitutes a tolerated trespasser? A tenant may become a tolerated trespasser when, under a secure or assured periodic tenancy, the period of the tenancy comes to an end but the occupier does not relinquish possession of the property.

In Jones v London Borough of Merton, the court defined a tolerated trespasser as:

"a former secure tenant against whom an order for possession has been made in which the specified date for him to give possession has passed but which has not been executed. So he has a valuable right potentially to secure the revival of his tenancy."

The court also set out the three distinct scenarios in which the tolerated trespasser may exist:

Actively tolerated by the former landlord – when the parties enter into an express agreement that the former landlord will not take action to enforce a possession order if the former tenant meets certain requirements, such as, payment of rent.
Passively tolerated by the former landlord – when the former landlord fails to take any action to enforce a possession order and the former tenant remains in possession of the property.
Tolerated by the court – when a possession order requested from the court by a former landlord is stayed or suspended by powers of the court.

Facts
Mr Jones was the tenant under a secure tenancy of a housing association flat in Mitcham. The London Borough of Merton (Merton Council) was the landlord. On 14 January 2005, Merton Council was granted an order for possession against Mr Jones ordering him to vacate the flat from February 2005. However, Mr Jones continued to occupy the flat and became a tolerated trespasser by virtue of Merton Council's inaction as regards enforcement of the possession order. Mr Jones' physical occupation continued until June 2005 albeit he left some of his possessions in the flat and retained keys to the property. From that date there had been various communications to Merton Council regarding vacating the flat, including a request for a housing transfer.

In a meeting in October 2005 Mr Jones was informed by Merton Council that he could not be transferred to new accommodation until all rent arrears on the existing flat had been settled. This had risen to a sum of £1,231.76 and Mr Jones' father settled the rent arrears on his son's behalf. No further payments were made as payment of rent on the property and Mr Jones sent a friend to the property to remove all his remaining possessions in November 2005.

The Housing Officer at Merton Council advised Mr Jones that he remained liable for the payment of rent on the property as a tenant even though he was no longer living in the flat. He further advised him not to terminate the tenancy until his re-housing had been finalised. The re-housing took place in June 2006.

Initial decision
As no rental payments were made on the flat after October 2005 arrears began to accrue again and in December 2006 the County Court ordered Mr Jones to pay Merton Council £3,200 by way of mesne profits (an amount equivalent to the rent during the disputed period of occupation) from October 2005 until September 2006. The decision was based on the judge's acceptance of the argument put forward by Merton Council that the rules for the surrender of a tenancy requiring the tenant to give express notice to the landlord and for that surrender to be accepted, applied also to the date of cessation of liability for mesne profits. The Court concluded that since Merton Council had not accepted that Mr Jones' liability to pay mesne profits had ceased, he remained liable until the date Merton Council agreed to terminate the relationship.

Court of Appeal decision
Mr Jones appealed the decision of the County Court. He had claimed that he had given up possession of the flat prior to 3 October 2005 and if notice was required (this point however being disputed), it had been given on that date. Therefore, Mr Jones was not liable to pay the equivalent rent to Merton Council for any period after that date. Mr Jones claimed that as he was a tolerated trespasser, (passively tolerated by his former landlord), his liability to pay mesne profits continued only until he had given up possession of the flat.

Merton Council argued that despite the fact that "normal" trespassers do not remain liable to pay mesne profits after they have given up possession of a property, tolerated trespassers should be treated differently.

Merton Council argued that for reasons of public policy, tolerated trespassers should be required to give notice to their former landlord that they have given up possession of a property. This would have the effect of limiting revival of the former tenancy and permitting the Landlord to proceed with the re-letting of the property.

After consideration, the Court ruled that there was nothing in law, which treated the liability of a tolerated trespasser for the payment of mesne profits any differently from that of other former tenants or trespassers. A former tenant who wrongfully remained in possession of a property once their ordinary tenancy had come to an end, would no longer be liable for mesne profits once they had given up possession. There was no requirement to give notice to the former landlord.

The Court of Appeal was also required to resolve the dispute as to when exactly Mr Jones gave up possession of the flat.

On this issue of possession the Court of Appeal applied the case of J A Pye (Oxford) Ltd and Others v Graham. In this case the House of Lords ruled that to demonstrate legal possession of a property two elements must be present:

Factual possession – a sufficient degree of custody and control over the premises.
Intention to possess – an intention to use that custody and control for the tenants own purpose and benefit.

The House of Lords ruled that it was not sufficient to simply physically possess a property – there had to also be the requisite intention, without that there can be no possession. However, the House of Lords did recognise that one usually leads to the other as an intention of a person to have possession of a property is usually deduced from the person's physical acts themselves.

This was applied to Mr Jones showing that he had given up possession of his flat. It was not sufficient for him to simply have the intention of giving up possession if his actions demonstrated otherwise.

Using this analysis the Court ruled that in October 2005 Mr Jones had shown that he no longer had the intention to reside in his flat. However, until he removed his belongings in November 2005 he could not show that he no longer intended to possess the flat. By leaving belongings in the property until November 2005, Mr Jones' physical actions and factual possession contradicted his intention to give up possession.

The Court of Appeal therefore allowed the appeal and ruled that Mr Jones intended to remain in possession of the flat until November 2005 and that intention ended once he removed all belongings from the property albeit he did not return the keys to the Landlord at that stage. Mr Jones was ordered to pay Merton Council mesne profits for the period from October 2005 until November 2005 to the total sum of £343.36.

Change to the law proposed
A tenant becoming a tolerated trespasser can cause problems for both the former tenant and the landlord. Most people do not realise when their tenancy comes to an end or how their rights are affected. These difficulties have led the Department for Communities and Local Government to issue a consultation paper on tolerated trespassers and how best to deal with the issues that arise from such status.

The consultation closed on 7 November 2007. As a result of the responses received, the Government has decided to use the Housing and Regeneration Bill to amend housing legislation and abolish the status of tolerated trespassers. The amendments to housing legislation, once the Bill becomes law, will prevent future tolerated trespassers being created. Their secure tenancy will not end until the person has been evicted. This will restore tenancy status to all "tenants" who currently exist as tolerated trespassers.

Hopefully such changes will make the rights of both tenants and landlords clearer in situations where an order for possession has been issued but there is still a gap between that order being granted and it being enforced.

Even though this case mainly effects public sector housing the application of the case of J A Pye (Oxford) Ltd and Others v Graham is of wider interest to the property sector as a whole. It gives an example of how the Courts will apply the decision from that case to identify when a person gives up possession.

See: The Jones v London Borough of Merton [2008] EWCA Civ 660 judgment

See: The Housing and Regeneration Bill (182-page PDF)

J A Pye (Oxford) Limited v Graham [2002] UKHL30, [2003] 1A.C.419