TENANT ALLOWED TO COUNTERCLAIM – 11 YEARS AFTER POSSESSION ORDER MADE!

The phrase that, “It’s not over until the fat lady sings,” should perhaps be changed to, “The case is not over until the Bailiffs go in,” as far as Housing professionals are concerned following the Case of Midland Heart Ltd. -v- Adawah

Midland Heart Limited obtained a possession order against the tenant in 2002 and at approximately 3 year intervals they made applications for warrants for possession of land, which were met by the tenant’s successful applications to suspend the warrant.

In 2014 a further warrant for possession was applied for and this time the tenant not only applied to suspend the warrant but also for permission to counterclaim for disrepair, as the tenant’s surveyor’s report said that the poor condition of the property was a statutory nuisance. Not surprisingly the Landlord argued that for the Court to allow a counterclaim at this stage to set off any arrears was in effect allowing the tenant to file a defence 11 years after the original proceedings, which would circumvent the requirements of an appeal or an application to set aside the original judgment and – more significantly – also meant the Landlord could not plead the Limitation defence.

Unfortunately the Court did not agree with the Landlord. The issue was whether or not the Court action was at an end and, as the Claimant had not obtained actual possession or a warrant of possession had not been fully executed, the case was still proceeding. It was, therefore, up to the Court to exercise its discretion on whether to allow the counterclaim to be filed. The Court found that just because there was a substantial delay this did not of itself mean the tenant could not file a counterclaim. The tenant would have been entitled to issue separate proceedings – and use any judgment obtained in those proceedings – to offset the judgment sum for the rent arrears. Therefore, it was more cost effective to give the tenant permission to make a counterclaim in the current proceedings than for these to be separate proceedings. The Limitation defence had not been raised before the District Judge and therefore could not be raised on appeal

The outcome of this case may be a surprise to housing professionals, who would have assumed that attempting to raise a counterclaim to offset against arrears 11 years after the original judgment was bound to fail. However, whilst cases such as Knowsley Housing Trust -v- White and subsequent legislation saw the concept of “tolerated trespassers” come to an end – as the Courts and Parliament decided that the tenancy ends when the Bailiff successfully takes possession of the property – the consequence is that a case not otherwise withdrawn, dismissed or struck out must be ongoing until the Bailiff attends.

This ruling highlights that Housing Managers must be vigilant in ensuring that issues of disrepair are not outstanding when obtaining possession for rent arrears at whatever stage the case may be. However, this case does seem to contrast with a general litigation climate, as the Courts take a robust view that litigants must actively pursue or defend cases, must strictly comply with directions and must make application for permission to extend the time to comply with directions within the time for the original direction to take place. In that context it does seem incongruous that the Court will also accept a counterclaim filed 11 years after the Judgment had been given.

If you have any queries regarding this matter please contact Jeremy Teall of Prince Evans Solicitors at jteall@prince-evans.co.uk

Prince Evans Solicitors LLP
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