Too many weak housing cases
22 November 2007, letter published in Law Society Gazette
In your coverage of the policy paper from the Social Housing Law Association about Legal Aid you quote the Legal Services Commission as denying that it 'did not hold data on the outcome of cases because 60% of funded cases concluded in 2006/07 achieved a substantive benefit for the client' (see [2007] Gazette, 25 October, 4).

One of the points made by SHLA is that the notion of 'substantive benefit' is too subjective and misleading. Consider the recent case of R(Lawer) v Restormel BC [2007] EWHC 2299 (Admin) where a legally aided woman obtained an out-of-hours injunction that required a council to house her until the injunction was set aside the following week. The High Court judge described the case as hopeless and devoid of arguable merit and he noted that it had always had no reasonable prospect of success.

However, Ms Lawer obtained a 'substantive benefit' because she secured accommodation. There are many other cases where funded clients secure adjournments or extra time which may enable their lawyers to claim 'a substantive benefit' even if the case is ultimately lost. Thus, the LSC's data concerning the outcome of cases is of little value.

The problem could be overcome by the LSC replacing its substantive benefit test with an objective and meaningful one: were costs substantially won or lost? If the LSC recorded and published this data then SHLA strongly suspects that the figure would be significantly lower than the 60% derived from the 'substantive benefit' test.

Nick Billingham, Social Housing Law Association

Too many weak housing cases
25 October 2007, article published in Law Society Gazette

Too many weak housing cases receive legal aid, denying access to justice for many people of modest means with stronger cases, according to the Social Housing Law Association (SHLA).

In a policy statement on the need for legal aid reform, the SHLA said it was concerned that many who are ineligible for legal aid on grounds of income, despite only having modest means, are denied access to justice even though their cases have a reasonable prospect of success.

The SHLA also suggested that the use of public money to bring and defend weak cases caused social landlords to spend more on legal proceedings than they should have to.

SHLA chairman Jon Holbrook said: 'The key problem is costs protection, which creates an unlevel playing field between tenants with legal aid, who invariably will not have to pay the winner's costs, no matter how weak the tenant's case is, and landlords who invariably will have to pay the winner's costs.'

'It creates a situation whereby so far as costs are concerned it's "heads the tenant wins, tails the landlord loses".'

The SHLA proposed reform of costs protection, so that the Legal Services Commission (LSC) could be required to pay the winning party's costs where the funded party lost. It also suggested tightening the merits test and relaxing the means test.

The LSC spends £24 million annually on housing advice, yet according to the SHLA has little idea what proportion of the cases are won or lost, as it uses the lower and subjective test of whether the funded party received a substantive benefit.

According to the SHLA, of cases reported in the 2005 Housing Law Reports, 44 involved social landlords. Tenants (who will have received legal aid unless appearing in person) initiated 80% and won 23%, while 20% were initiated by social landlords, who won 77%.

An LSC spokesman said: 'Legal aid in housing disputes has a vital role in safeguarding the interests of many vulnerable clients. We must be careful not to remove existing protection for such clients, especially those in danger of losing their homes.'

He denied that the LSC did not hold data on the outcome of cases and said 60% of funded cases concluded in 2006/07 achieved a substantive benefit for the client.

Catherine Baksi

Click here for a copy of SHLA’s policy statement on Legal Aid: the need for reform

Rent arrears script needs rewrite
14 September 2007, article published in Inside Housing

Readers of this magazine’s letters page will be aware that the problem of handling tenants with longstanding rent arrears continues to be a burning issue. However, one case that hasn’t received much coverage provides some new lessons in tackling the problem.

The drama known as Catalyst v Colemack played for almost seven years at Brentford County Court. The first two acts followed a familiar pattern. Act one: tenant fails to pay their rent and ignores the problem. Landlord visits the tenant and gets no response to a calling card. Letters inviting the tenant to make contact are ignored.

Act two: after receiving a notice seeking possession, the tenant comes into the housing office and says the council has failed to pay housing benefit. The housing benefit office tells the landlord that the tenant has failed to provide requested information.

At the beginning of act three, the making of a possession order, defendant Ms Colemack’s arrears stood at about £3,000.

Act four, in which the tenant breaches the terms and the landlord gets an eviction date, was repeated several times as Ms Colemack made seven successful applications to suspend a warrant, described by the judge as her ‘last chance’.

Meanwhile her arrears increased from £3,000 to more than £12,000. Finally, Catalyst Housing Group appealed the seventh warrant suspension and a circuit judge allowed the drama to end.

These dramas are expensive to produce. To keep Catalyst v Colemack running for seven years the landlord had to grant Colemack an interest-free unsecured loan of between £3,000 and £12,000 over that period. That loan subsequently became a grant. Each act also required a variety of housing officers and lawyers to manage the debt and attend court.

This drama caries a damaging message: it tells defaulting tenants that they do not need to be responsible for prioritising their rent payments and that if they want an interest-free unsecured loan then a trip to the county court may be more fruitful than a visit to the bank manager.

No matter how unusual this script is it’s time to re-write it.

First, the script should have regard to common sense. It should not usually be reasonable for a tenant to be allowed to hold an unsecured interest-free debt for more than a few years.

In other words if the tenant can only afford to reduce their arrears by about £3 per week (£150 per year) then an arrears figure in excess of £500 should normally warrant the making of an outright possession order (absent exceptional circumstances such as housing benefit maladministration).

This argument will be even stronger where the landlord has followed the Rent Arrears Pre-Action Protocol.

Second, the statutory schemes under the housing acts establish that the parties’ rights are determined by the making of a possession order. Given the primacy of the possession order the court will always need compelling and credible evidence from the occupier before it accedes to an application to suspend a warrant.

Third, as Catalyst v Colemack shows, arrears often increase at key moments, such as when rent agreements are made, a notice seeking possession was served, proceedings were issued, a possession orders are made and various warrants are suspended.

A compelling way of presenting this to the judge is to create a graph. Exporting data from a table to a graph is not difficult.

Finally, when a judge gives their reasons for either suspending a possession order or a warrant make a note and then send it to the court so that it can endorse it as a correct record. That way you should be able to ensure that when a judge gives the occupier ‘a last chance’ it really is a last chance.

Dramas like Catalyst v Colemack illustrate how the interests of a particular tenant can be allowed to trump those of tenants as a whole since rent arrears have to be paid for by other tenants.

Providing the re-written script takes account of exceptional circumstances a more robust approach to the making and enforcing of possession orders will be to the benefit of those in need of social housing as a whole.

Jon Holbrook, Chair, Social Housing Law Association

To see the graph and to read a fuller commentary on the case of Catalyst v Colemack Click here (SHLA members only)

System should do more for would-be tenants
13 July 2007, letter published in Inside Housing

In a recent letter I welcomed the Court of Appeal's comment that 'tenants who fail to pay their rent do so at the expense of other tenants who pay theirs' (Inside Housing, 25 May). I went on to add that it would be good 'if courts, as a general rule, limited the making of conditional possession orders to cases where the tenant's arrears could be paid off within a year or two.' By suggesting this as a 'general rule' I intended to make clear that there will always be exceptions where a longer period is justified, but proposed that the starting point should not be to make an order extending the repayments over many years.

Andrew Arden QC addresses the issue of how courts should decide whether somebody should be evicted or not by saying that this is an issue 'of policy for housing workers, not issues of housing law' (Inside Housing, 15 and 29 June). I do not agree: there is a legal framework that governs whether a person should be evicted and social landlords and their lawyers are therefore required to address these issues in court when seeking possession orders or resisting applications to suspend warrants. Moreover, it is an issue of legal policy whether the approach of the courts in rent arrears cases strikes a fair balance between the rights of the individual tenant and the wider interests of their tenants as a whole as well as those in need of social housing.

Mr Arden makes the more general point that he is 'troubled by an increasing tendency on the part of housing lawyers to take a partisan stance' and he notes that the Social Housing Law Association could be used as a focus for divisiveness. I certainly hope that this is not the case. The SHLA does not consider itself to be a partisan landlord's organisation. One of the SHLA's concerns is that the courts do not always strike a fair balance between the rights of the individual tenant and the wider interests in play.

One of the SHLA's aims is to argue for greater weight to be given to the wider interests of those benefiting from or in need of social housing. The rent recovery systems of social landlords can be thwarted by an excessively lenient approach adopted by some courts towards tenants who run up substantial rent arrears without good reason. If social landlords are not allowed to obtain and enforce possession orders in appropriate circumstances, then it will be tenants in housing need who lose out: rent arrears reduce the resources available to provide more and better homes. On the other side of the scales, welfare benefits together with a diligent attitude by housing managers who work in the social housing sector should be able to ensure in most cases that responsible tenants do not accrue substantial arrears that they cannot repay within a year or two.

The SHLA does not dispute that there is room for a plurality of views as to precisely where the legal system should strike the balance in rent arrears cases. It is right that this should be debated and it is an issue on which SHLA and its members are entitled to express a view.

Jon Holbrook, chair, Social Housing Law Association

Lenient approach to rent arrears is unhelpful
22 June 2007, letter published in Inside Housing

Tracey Bloom asks "is it not preferable to allow some tenants with financial problems time to pay their debts rather than evicting them?" (Inside Housing, 8 June) My answer is that anyone with rent arrears should be given a reasonable period to pay off their debts. As a rule of thumb this would usually mean no more than a year or two. Of course, there will always be exceptions where a longer period is justified, but the starting point should not be to make an order extending the repayments over many years.

In my letter of 25 May I noted that Mrs White 'should count herself lucky not to have been evicted when she had accumulated rent arrears of £2,250 which she could only afford to pay off at £5 per week.' In other words the court effectively gave her an interest free unsecured loan of £2,250 for 8 years. On the face of it she was treated with excessive leniency.

Social landlords understand the difference between tenants who have debts which they are making a determined effort to pay off and those who make inadequate effort. But Tracey Bloom makes no effort to distinguish between the two as she prefers to paint an emotive picture of all who default on their rent as poor and all who are evicted as being placed with 'their children on the margins of society'.

What does Ms Bloom thinks happens to flats when tenants with substantial arrears are evicted? Due to the country's housing shortage they are quickly re-let to others with substantial housing needs. Ms Bloom is wrong to claim that a robust approach to rent arrears cases will create 'many more homeless people'.

In fact a robust approach to the making and enforcing of possession orders would encourage many tenants to give a greater priority to paying their rent. At present there are many tenants who run up substantial rent arrears because they know that the courts will frequently give them one more chance (again and again) to reduce them (even if the arrears continue to increase). This approach undermines the court's authority, encourages some tenants to be irresponsible and hampers the ability of social landlords to build more homes.

Jon Holbrook, chair, Social Housing Law Association

The law must get a grip on tolerated trespassers
25 May 2007, letter published in Inside Housing

Tenants who fail to pay their rent do so at the expense of other tenants who pay theirs. It was refreshing to see the Court of Appeal acknowledge this fact in a recent case, White v Knowsley HT, about tolerated trespassers (Inside Housing, 4 May).

Once acknowledged there is less reason to be concerned about the situation of tolerated trespassers. Indeed in the Knowsley case the tenant, Mrs White, should count herself lucky not to have been evicted when she had accumulated rent arrears of £2,250 which she could only afford to pay off at £5 per week. In other words the court gave her over 8 years to pay off her arrears.

Is it right that a defaulting tenant should be given what is effectively an unsecured interest-free loan of £2,250 for over 8 years? And if she is effectively given such a loan, can she complain if she loses rights relating to repair, succession and the right to buy?
 
Instead of focusing on the assumed plight of tolerated trespassers it would be better if courts, as a general rule, limited the making of conditional possession orders to cases where the tenant’s arrears could be paid off within a year or two, at most. Other cases should usually result in the making of outright possession orders. Such an approach would reduce significantly the number of tolerated trespassers in the country and moreover, do much to reduce levels of debt carried by social landlords. This would be to the benefit of all their tenants.

Jon Holbrook, chair, Social Housing Law Association

Dispelling the myth
22nd March 2007, letter published in Law Society Gazette

Your recent article 'Gimme shelter' recognises the good work that Shelter does, and that local authorities contribute to, but it perpetuates the myth that local authorities are engaged in 'bad practice' (see [2007] Gazette, 1 March, 22). That myth has been perpetuated without any factual backing over the years.

It may be surprising to hear that the Legal Services Commission (LSC) has no idea how many cases that have been initiated by legal aid housing lawyers have been a 'substantive benefit' to the tenant. That designation can be highly subjective.

That being said, the LSC has stated in its annual report that for non-family civil legal aid cases, the number of cases reporting a 'substantive benefit' was a mere 45% in 2005/2006.

With legal aid housing lawyers taking in more than £38 million from the tax payer last year, and claims on the fund rising 28% in 2006, it would seem to be relatively important for the LSC to know whether the money was being spent challenging ‘bad practice’ or funding misconceived challenges.

There is an urgent need for an overhaul of housing legal aid accounting, so that funds are clearly targeted towards the most deserving cases, and the myth of local authority ‘bad practice’ is dispelled.

Warren Bradley, Social Housing Law Association, London

Legal Action magazine (14th February 2007)

Legal Action magazine has refused to carry a SHLA membership insert. Alison Hannah on behalf of the educational charitable trust that publishes the magazine said: 'as the SHLA's stated aim is to further the interests of social landlords, this does not fit well with our focus. We took the view that the insert was not appropriate for our magazine, because of our target audience, and do not see that this in any way conflicts with our charitable status.'

Nick Billingham on behalf of SHLA said: 'It is a shame that Legal Action has taken this line. SHLA represents the interests of social landlords whose own objects are generally to provide housing to people in necessitous circumstances. Sadly, it appears that Legal Action are under the illusion that social landlords have no community of interest with their tenants and that their charitable objects to improve the well-being of tenants and those seeking housing have no connection or affinity with Legal Action's own charitable objectives.'

Legal aid reform

In a news item in Inside Housing on 9 February 2007 SHLA was quoted as saying that some reform of Legal Aid was needed as granting public funds to tenants created a fundamental inequality between landlords and tenants. SHLA said:

'The landlord knows that even if it wins a case against a publicly funded tenant then it will not recover its costs. This gives publicly funded tenants a substantial economic leverage over social landlords who may settle cases merely to avoid having to incur legal costs.'