Inner House rules that landlord can demolish property subject to repairing standard order

Nicholas Charlton appealed a decision of the Upper Tribunal to grant a possession order to the Josephine Marshall Trust in respect of the property, over which he had an assured tenancy under the Housing (Scotland) Act 1988 since 2005.

The case was heard by the Lord President, Lord Carloway, sitting with Lord Malcolm and Lord Glennie.

Considerable disrepair

In the time since the property was first leased in 2005, it had fallen into a considerable state of disrepair. The appellant originally obtained a Repairing Standards Enforcement Order in respect of the property in 2017 which required the landlord to obtain a specialist report and carry out such works as it recommended. The landlord instructed an architect to examine the building, who concluded that, owing to the building’s condition, it was at the end of its useful life. He suggested that a new building be built in its place, as any works that could be carried out to the existing one would not improve the situation.

The respondent’s trustees applied to Argyll and Bute Council for a demolition warrant, which was granted, as well as planning permission to demolish the cottage. The appellant meanwhile obtained a valuation report which stated that the cottage was worth £100,000 and would be worth £25,000 more with essential repairs carried out.

The respondent applied to the First-tier Tribunal for Scotland for recovery of possession. This was refused due to planning permission not having been granted and the imposed RSEO. The time limit on the RSEO later expired, and the FtT issued a notice of non-compliance.

On appeal to the Upper Tribunal, by which time planning permission had been granted, the decision not to allow recovery of possession was reversed. The UT concluded that the RSEO was not a barrier to the landlord forming the necessary intention to demolish the let property, and it could exist alongside the demolition warrant. Otherwise, it would lead to the “absurd result” that a property could not be demolished until monies had been wasted on its repair.

The tenant appealed this decision to the Court of Session, arguing that the landlord must have the practical ability to demolish for a warrant to have effect. It was also submitted that intention to demolish was not a statutory exception to compliance with an RSEO under the Housing (Scotland)Act 2006.

The landlord submitted that an order for possession would override any security of tenure or repairing standards duties. The 2006 Act was designed to ensure that tenanted property was in a proper state of repair, not that it be forever kept in that state and available for let.

No obstacle

The opinion of the court was delivered by Lord Malcolm. After taking into account previous case law, he said: “[I]f one leaves the RSEO out of account, there is no obstacle to granting the landlord’s application for an order for possession on the basis of an intention to demolish the cottage. In agreement with the UT, it is clear that the landlord has formed the necessary genuine and settled intention to demolish, and that there is the practical ability to bring it about. There is no good reason to think that the trustees will change their mind, not least given that the condition of the cottage makes the proposed work obviously desirable.”

He continued: “If a landlord, in breach of the statutory duty, allows a tenanted property to deteriorate to such an extent that it must be demolished, in itself that will not prevent him from forming the necessary intention to demolish for the purposes of an application under section 18(3) of the 1988 Act. The tenant submitted that everything changes if the tenant obtains an RSEO in respect of the condition of the premises before the landlord is granted a possession order. Any such “race” seems artificial and is unattractive.”

In respect of the tenant’s submissions, he said: “[T]he landlord has not simply said that the subjects will be demolished, come what may. The trust has applied to the tribunal for an order for possession to allow it to execute the necessary works. If demolition occurs, it will be because the same tribunal system which imposed the RSEO has granted the section 18 order. The landlord’s intention, and its legality, should be viewed in that context.”

He continued: “Given these considerations, it is difficult to categorise an RSEO as an insurmountable obstacle to a landlord forming a lawful intention to demolish. And, contrary to the tenant’s submission, demolition is not circumventing the RSEO; it is the end point of a different process under the 1988 Act, which can and does operate in harmony with the repairing standard regime. Once it is appreciated that an RSEO is not fixed and immutable, the tenant’s objection falls away. The appropriate intention can be formed on the basis that the tribunal can grant the possession order, either contemporaneously with a revocation of the RSEO, or on the anticipation that this will be done after demolition has occurred.”

In considering the purpose of the 2006 Act, he said: “For the purposes of the present discussion, it was to ensure that tenanted properties are in, or are put in, a proper condition. Thus, although the tribunal has no power to enforce its orders, an offence is committed if a landlord enters into a tenancy or an occupancy arrangement when an RSEO is in force over the property concerned. In itself this demonstrates that an RSEO does not prevent a tenancy from coming to an end. There is nothing in either piece of legislation to suggest that termination for demolition or reconstruction is an exception.”

Refusing the tenant’s appeal, he concluded: “It was suggested that there is an inconsistency in the UT maintaining the RSEO meantime while granting the order for possession for the purposes of demolition. No doubt it would have been open to the UT to revoke the RSEO; however it was entitled to insist on protection against a change of mind on the part of the landlord. The situation of an order for possession running alongside an extant RSEO is the result of two separate regimes being operated to their respective end points according to their own rules and processes.”