(Court of Appeal; Thomas and Hughes LJJ, Coleridge J; 3 July 2007)
The parties divorced in 1997. In 1998 an order was made that the husband pay £300 per month to the wife in child maintenance. Between April 2002 and June 2003 the husband did not pay the maintenance. In June 2003 he transferred his share of the matrimonial home to the wife in consideration for £8,500 and the wife waiving her claim for future child maintenance.
In December 2004 the wife sold the matrimonial home and from February 2005 she rented a property from the husband on the condition that she was entitled to housing benefit which would cover 90% of the rent. The wife paid £12,000 deposit plus £1,150 rent in advance: a total of £13,150. In the event housing benefit was not available the local authority had erred when they told the wife it was. Upon discovering this, the wife offered to leave the property after six months if the husband paid her back £6,250 (£13,150 less six months' rent). The husband did not accept the offer but said that when the £13,150 ran out he would start eviction proceedings against the wife and children.
The husband served notice on the wife in January 2006 and commenced possession proceedings in February 2006, when the wife had been in occupation for 12 months. In defence to the proceedings the wife claimed the tenancy was void for mistake and/or frustration because the condition that housing benefit was payable - on which the wife's obligation to pay rent relied - could not be performed. The judge agreed, and further held that the husband was entitled to possession of the property. Because the husband had refused the wife's offer to vacate after six months, he had forced the situation where she had no option but to stay as she had no money to put down a deposit on a new property. Occupation rent was not therefore payable beyond the first six months and he was ordered to pay the wife £8,050 (£13,150 less six months rent at £850 found by the judge to be a fair market rent). The original maintenance order should be set aside and £216.66 per month should be paid in maintenance by the husband. The wife vacated the property on 15 February 2007.
The husband appealed the judge's decision.
It was an implied condition of the agreement between the parties that if housing benefit was not available, the tenancy would come to an end. There was therefore no need to consider whether the tenancy was void for mistake or frustration. The wife was liable to pay mesne profits for the 12.5 months when she occupied the property without permission (and without paying) but not for the six months between the date she offered to vacate the property and the date the husband served notice on her. The fair market rent was £1045.
The judge was wrong to try and deal with the maintenance issue at the same hearing on minimal notice and in circumstances where the parties were not properly prepared the variation of the original maintenance order would be set aside and judgment was entered for the husband for mesne profits of £6,388.50 (12.5 months rent less the balance of the £12,000 deposit owed to the wife after the first six months occupation).