Which test will the Court apply when considering a tenant's application to set aside a final possession order which was made in the tenant's absence?

Article

01 March, 2012

Past case law dictates that the rules which the court will apply may depend upon the circumstances of the case and whether the order was made at a final trial of fact or at an initial possession hearing.

Depending upon the situation which results in the possession order being made, the tenant may be able to apply to have the order set aside in accordance with the Civil Procedure Rules (CPR) or, alternatively, if such an application is unsuccessful, may be able to appeal against the Court's refusal to set aside the order.

Up until 2010 it was widely accepted that if a possession order was made at a trial in the tenant's absence, the tenant would be able to apply to have the order set aside under the provisions of CPR 39.3(5). This rule requires the tenant to prove all aspects of the following three stage test if the order is to be set aside:-

1. That they acted promptly when they found out that the court had exercised its power to enter judgment or make an order against them;

2. That they had a good reason for not attending the trial; and

3. That they have a reasonable prospect of defending the order against them at trial.

If a tenant cannot prove any aspect of this test, their application to set the order aside will be unsuccessful. This test was applied in the case of Estate Acquisition and Development Ltd v Wiltshire (2006.)

In the case of Focelux Limited v Binnie (2010), the Court adopted a slightly different approach. In this case, the tenant had not been residing at his leasehold property which meant that he had not received the notice of hearing from the court. Consequently, he did not attend the initial possession hearing and an order for possession was made in his absence. He subsequently applied to court asking for the order to be set aside.

The court held that the initial hearing had not been a 'trial' and consequently CPR 39.3 did not apply. Instead the court decided to determine the matter in accordance with its extensive case management powers under CPR 3.1(2) (m). This would allow it to vary or revoke an order which it had previously made at an initial hearing. Furthermore, the court recognised that the checklist set out in CPR 3.9 could be useful in assisting with the exercise of the court's discretion. In accordance with this rule the court was able to consider whether justice had been administered, whether or not the tenant's failure to attend the initial hearing was intentional and the effects that setting aside the order would be likely to have on both parties. This allowed the court to take a broader approach to an application to set aside than if they had applied the test in rule 39.3(5). Under the circumstances of the case, the court decided to allow the possession order to be set aside. At first glance the Focelux case seemed to set a precedent making it easier for tenants to successfully apply for possession orders to be set aside in cases where they did not attend the initial hearing.

However, the case of Hackney LBC v Findlay (2011) re-examined this particular issue and confirmed that in Forcelux the court had been faced with a particularly unusual and compelling set of circumstances. Consequently the court had felt compelled not to give the provisions of rule 39.3 precedence being mindful that if the possession order was allowed to remain, it would lead to the tenant's loss of a valuable asset (a long lease) for failure to pay a modest sum (£300 ground rent and £600 insurance premiums). Findlay made it clear that the general rule when considering a tenant's application to set aside a possession order, was that the provisions of CPR 39.3(5) should take precedence over those in CPR 3.9. The case also stated that in the case of secure and assured tenancies where there is a statutory right at any time before eviction to apply for the date of possession to be stayed or suspended, then the test in CPR 39.5 should not be applied so stringently if this would lead to the intention behind the Housing Acts being frustrated.

In the case of Bank of Scotland v Pereira & Others (2011) the Court of Appeal considered the relationship between an application to set aside an order under CPR 39.3 and a right of appeal under CPR part 52 in situations where a Defendant had not attended the hearing.

In this case the appellant appealed against the court's refusal to set aside an order whilst at the same time seeking permission to appeal against the order itself. Her appeal was dismissed and her application refused. During the case the court realised that it was impossible to lay down rules which would cover every case. However, they laid down the following guidelines which would be applicable to the majority of cases:

a) a party seeking a new trial because they had not attended the original trial should normally proceed under CPR 39.3 provided that they reasonably believed they could satisfy the requirements of CPR 39.3(5);
b) if they could not establish that they had good reason for not attending the trial and/ or that they had made their rule 39.3 application promptly, they could seek to appeal against the decision. The rights of appeal of an unsuccessful party should not in principle be any different whether they attended trial or not, though in practice a party who had not attended might face greater difficulties;
c) the right to appeal a trial judge's order where a rule 39.3 application had failed, should in principle, be no different than if the application had not been made, although the appeal court would take a great deal of persuading to depart from a conclusion reached by the judge hearing the application. To do so in the absence of good reason would be invidious.
d) a party would not normally be allowed to raise the same arguments on appeal as made in a rule 39.3 application which had failed as having no prospect of success at retrial. The proper course would usually be to challenge the refual of the rule 39.3 application. However, there would be exceptional cases where it would be wrong to preclude a party from seeking permission to appeal on the basis that the judge was wrong for reasons rejected in the rule 39.3 application;
e) a party whose rule 39.3 application had failed would normally be in servere difficulties in seeking to rely on evidence on appeal which was not before the trial judge. The appeal court's approach had to depend to some extent on the facts and, in addition to the requirements of rules 39.3. Where the new evidence could not reasonably have been available, the position of a party who had failed to attend trial should normally be no different from a party who had attended. However, it would be very different where an application to adduce new evidence or for a retrial was essentially based on the fact that the applicant had not attended the trial. The policy behind rule 39.3 was to prevent a party seeking a retrial unless the requirements of 39.3(5) were satisfied;
f) similar considerations applied if a party did not make an application under 39.3 but appealed the trial judge's decision and sought to put in new evidence or a retrial.

In conclusion, in the majority of cases, the court is likely to give the three stage test set out in CPR 39.3(5) precedence over rule 3.1 when deciding whether possession orders should be set aside. Similarly, unless exceptional circumstances apply, the court would usually expect a tenant to apply to set aside under 39.3(5) rather than to evoke the appeal procedure under rule 52. The court would not expect a Defendant to appeal on the basis of evidence which could have been placed before the original trial judge had the Defendant attended the trial. However, the position would be different in cases where new evidence has come to light which would not have been available at the trial irrespective of whether the Defendant attended.

For more information and assistance on these issues, please contact the Housing Department at Forbes Solicitors on 01772 220022, email rebecca.mccann@forbessolicitors.co.uk or Shirley Faragher

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