It is probably always a rash enterprise to predict that the Supreme Court will overturn a judgment of the Court of Appeal. The suggestion I made that the Supreme Court would reverse the Court of Appeal’s decision in McDonald (by her litigation friend Duncan J McDonald) v (1) McDonald (2) McDonald (acting by Mr Andrew Hughes and Mr Julian Smith joint receivers) [2014] EWCA Civ 1049 and conclude that article 8 does have horizontal effect in possession proceedings has proved ill-founded.1
In a judgment issued in June 2016, a unanimous Supreme Court bench concluded that, in this context, article 8 could only have vertical effect. Ms McDonald was defending a Housing Act (HA) 1988 s21 claim in respect of her assured short-hold tenancy. The nominal claimants were her parents.
The backstory was that Ms McDonald suffered from quite severe psychiatric problems, and her parents had bought a property for her to live in (the rent being covered by housing benefit). However, subsequently her parents defaulted on the mortgage, and the mortgage lender appointed receivers, who brought the claim.
Prima facie, if a landlord complies with the formalities of serving a valid section 21 notice, the court must grant an outright possession order. It is now well-established that if a section 21 claim is brought by a social landlord, the tenant can raise a defence under article 8 which has two dimensions. The first, and most useful, is that the lawfulness of the various steps which the landlord has taken in bringing the claim are subject to review against orthodox administrative law principles, just as if the landlord was a government body.2 The second, thus far of little practical value, is that the court can assess if it would be substantively proportionate to make an order in the light of the defendant’s personal circumstances and other relevant matters, and if so on what terms. Strictly speaking, it is for the defendant to raise these matters; however, the Pre-action protocol for possession claims by social landlords indicates that a possession claim brought on any mandatory ground (of which section 21 is one) should now include a statement of the reasons for bringing the claim, and relevant evidence to enable the court to assess the proportionality issue. The relevant provision is at Part 3 of the pre-action protocol.3
The … decision will disappoint observers who think that a person’s interests in remaining in their home outweigh the financial interests of a landlord
The argument deployed for Ms McDonald was that the second dimension of article 8 should apply even in section 21 proceedings brought by private landlords. (There does not seem to be any basis for thinking that the first dimension could apply in the private sector). If that doctrinal argument was correct in principle, it could then be argued, as a matter of fact, that in the circumstances (notably, Ms McDonald’s fragile health and the absence of any immediate threat to the lender’s financial interests) it would not be proportionate for an Order to be made. The most direct route to achieve this result would be to persuade the court that the absence of any proportionality requirement in section 21 was incompatible with article 8, and that the incompatibility could be removed by reading such a requirement into section 21 itself.
Ms McDonald’s strongest card was perhaps a series of European Court of Human Rights’ (ECtHRs’) judgments in which the possession proceedings in issue had been brought by private sector claimants.4 These decisions had not persuaded the Court of Appeal however; primarily, it seems, on the basis that the defendant states in those cases had not contested the applicability of article 8, in which event it could not properly be said that the ECtHR had ever decided that article 8 could be horizontally applicable.
As the matter moved on to the Supreme Court the parties were joined by various interveners, most notably perhaps the Residential Landlords Association (RLA) Ltd, a campaigning/ pressure group that lobbies domestic and EU lawmakers to safeguard the interests of private landlords, evidently (somewhat surprisingly one might think) in order to protect tenants as well as landlords.5 The RLA’s position on McDonald seemed rather less bipartisan; the association’s spokesperson indicated that the RLA was intervening because it was concerned that a reversal of the Court of Appeal judgment would encourage tenants to produce bogus defences.6 The concern was obviously not without foundation. Yet, the likely consequence of article 8 being horizontally applicable was not so much that many tenants would defeat possession claims brought by private landlords, but that some tenants (and how many is utterly unknown and unknowable) would put their landlords to the time, trouble and expense of presenting a reasoned and argued case to support a section 21 claim.
The Supreme Court – in a judgment jointly written by Lord Neuberger and Lady Hale – rejected the suggestion that there was any clear authority from the ECtHR to indicate that proportionality review should be available in private sector possession proceedings: no such conclusion could properly be drawn from the cases relied on by the defendant (paras 40–46 ). The court held that there was unlikely to be any proper role for article 8 to play in altering the legal basis of contractual relations between private parties: ‘To hold otherwise would involve the convention effectively being directly enforceable as between private citizens so as to alter their contractual rights and obligations, whereas the purpose of the convention is, as we have mentioned, to protect citizens from having their rights infringed by the state’ (para 41).
This presumption is evidently stronger when, as in the section 21 procedure, those contractual rights have been considered by parliament and subject to statutory regulation. Perhaps, surprisingly, the court saw no need for parliament actually to have considered expressly whether section 21 was compatible with article 8: parliament had apparently ‘effectively confirmed’ the acceptability of section 21 by not altering it to require proportionality review on those occasions since 2000 when the HA 1988 had been amended (para 40).
Lord Neuberger and Lady Hale also navigated their way around the potentially awkward House of Lords’ judgment in Campbell v MGN Ltd [2004] UKHL 22; [2004] 2 AC 457. In Campbell, the court held that article 8 was horizontally effective in the context of privacy rights, so that – in the absence of legislative protection for such rights – it was proper for the court to extend the common law tort of breach of confidence to protect privacy interests, even in cases where both parties were private individuals. In McDonald, the Supreme Court observed that that rationale was only applicable in circumstances where there was no legislative provision, and so it was proper for the courts to assume that parliament had impliedly authorised them to alter the common law. In contrast, section 21 proceedings were part of an elaborate statutory scheme that had been visited repeatedly and approved by parliament.
The Supreme Court’s decision will disappoint observers who think that a person’s interests in remaining in their home outweigh the financial interests of a landlord, at least to the very modest extent of requiring a landlord – if put to the test by the tenant – to offer a court some credible basis for deciding that an eviction (which is, of course, the outcome to which a possession order leads) is proportionate in the circumstances.
It remains to be seen if McDonald will find its way to the ECtHR, although the prospect of success there for the tenant has likely been undermined by that court’s judgment in Vrzić v Croatia App No 43777/13, 12 July 2016, which could certainly be read to confirm that article 8 never applies horizontally in the possession proceeding context to the extent of requiring proportionality analysis before a possession order is granted or enforced (paras 63–73 ). Vrzić did, however, present some rather a typical facts (including a judgment debt of some €250,000) and could credibly be given a narrower meaning.
For the moment, however, private sector landlords can proceed secure in the knowledge that a section 21 claim cannot be met by an article 8 proportionality defence.