Liverpool City Council v Irwin

Liverpool City Council v Irwin
Liverpool City Council v Irwin
Court	House of Lords
Citation	[1977] AC 239
Case history
Prior action	[1976] QB 319
Keywords
	Implied terms

Liverpool City Council v Irwin [1976] UKHL 1 is a leading English contract law case, concerning the basis on which courts may imply terms into contracts.

Facts

There was a fifteen storey tower block known as ‘the Piggeries’ in Everton, Liverpool. It had seventy units, a stairwell, two lifts, and a rubbish chute. Mr and Mrs Irwin were tenants from July 1966. The common parts were vandalised, the lifts did not work, the stair lights failed, the chute was blocked, lavatory cisterns blocked and overflowed. The tenants refused to pay rent. In an action by the council to eject them, they counterclaimed that the council was in breach of a duty to keep the common parts of the estates in decent repair.

Judgment

Court of Appeal

Lord Denning MR dissented from Roskill LJ and Ormrod LJ and argued that a contractual term can be implied when it is ‘reasonable’. After the Moorcock, Reigate and Shirlaw, he mentioned the ‘stacks’ of cases where terms are implied.

At one time the district of Everton in Liverpool was a slum. The houses were said to be unfit for human habitation. So the city council demolished them and built three tower blocks instead. That was in 1966. But within 18 months the conditions there became so bad that, by all accounts, these tower blocks were not fit for human habitation. They became known locally as "The Piggeries." The council have done their best to make them fit, but with little success. It would seem now that these tower blocks ought to be demolished, just as some have been in the United States. The situation comes to our notice because the tenants are claiming damages from the council. They say that the council are in breach of the implied terms of the tenancies: and ought to recompense them for the appalling conditions in which they live.
What are these conditions? Much of it is due to hooligans and vandals. These tower blocks are 15 storeys high. Each houses 70 families. The tower blocks are not divided into flats, but into maisonettes. These were thought to be suitable for couples with young children. Each family has its own maisonette on two floors with an inside staircase. Each has three bedrooms along with sitting-room, kitchen, bathroom and an outside balcony. Each has its own front door opening on to a public landing. There are two lifts to serve the 15 storeys and there is a staircase open to all of them. There is a rubbish chute going the whole height of the building. On each public landing there is a little door through which tenants can push their rubbish into the chute, whence it should fall and be collected at the bottom. There is a resident caretaker always on duty.
No doubt the designers of these tower blocks were very proud of them when they were built. But let me tell what has happened in practice.
First, the lifts were continually out of action. Either one or other of them, and sometimes both of them together. The council housing officer said:

"Lifts are permanently vandalised. Buttons ripped off operating panels. Lights in lifts smashed. Regularly used as public conveniences."

When the lifts are not working, people have to go up or down the staircase; but vandals constantly take out the electric light bulbs so that the staircase is very dark. The council housing officer said:

"Lighting on staircase virtually non-existent through vandalism. Lights ripped off walls. We have tried everything."

The judge himself visited the block and put his own experiences on record:

"... I travelled to the ninth floor by lift. Half an hour later no lift was operating and I had to return to the ground floor by using the staircase: throughout the whole of its length there was no light. ... It was still daylight outside, but down the stairs it was very dark. We had to negotiate about 90 to 100 steps ... by holding on to the handrail, [counsel and then I] succeeded in negotiating them ... but I heaved a very great sigh of relief when I finally did reach the ground level. How on earth a woman with two or three small children and possibly laden with shopping baskets could be expected to negotiate those stairs with any degree of peace of mind baffles me: and it is not to be forgotten that these premises are provided for the use, not of single persons or of married couples without children, but they are family houses."

It is fair to point out that on those two lifts £14,024 had been spent in 18 months on repairs and getting the lifts to work: whilst the total rent roll of the premises is only about £15,000 a year. When you think of the initial capital cost and annual outlay on lifts, repairs, maintenance, caretaker and so forth, the loss must be colossal.
Second, the rubbish chute frequently becomes blocked. It is about 18 inches square. The tenants throw all sorts of things down it. Anything they want to get rid of, such as rolls of lino and T.V. frames; and on one occasion a flock mattress, as well as the day-to-day rubbish. The tenants are told that "all vegetables or other refuse likely to cause a nuisance shall be burnt," but there are no facilities for burning them in the maisonettes. In order to clear the blockages, the council have made holes in the walls so as to get rods in to clear the chute. These holes are then refilled with concrete, but before the concrete gets hard, someone or other pokes out the concrete so as to keep the holes open. This meant that there were unguarded apertures on each floor which would cause anxiety for families with young children.
Third, playground, etc. Within 18 months the play facilities had been gutted or rendered unusable; the play leader had been withdrawn because of hooligans and vandalism. They were used as a dumping ground. The drying rooms were not used by the tenants because of stealing. They were used for dumping rubbish.
Fourth, the lavatory cisterns often overflow. They were placed in an unsuitable position. The water is carried by the overflow pipe and runs on to the balcony below and floods that dwelling. There is standing water in the passages. The tenants try to stop it by bending the arm of the ballcock: but that means that the cistern only half fills and the lavatory does not flush properly. So the sanitation is bad. If one of the maisonettes happens to be unoccupied, vandals break in and steal part of the water system, thus precipitating a deluge in the dwelling below. The judge said that this dwelling "although on the ninth floor, suffered substantially from damp. I myself saw evidence of this." Owing to the damp, electric fittings have come away from the ceiling and become dangerous.
Fifth. On several occasions water supply for both drinking and sanitation had failed - for as long as a weekend on some occasions.
The judge summed up the position in these words:

"I was appalled by the general condition of the property and it astonished me that a city such as Liverpool could expect that tenants would live in and put up with conditions such as I saw. ... I ought to draw attention to the fact that there was a considerable number of unoccupied properties in this block of buildings which were apparently protected only by having corrugated sheet iron put over the windows ... what a depressing appearance. ..."

Such being the general picture, I turn to the particular facts of this case. Mr. Irwin is a crane driver. He went into this property on July 11, 1966, eight years ago, when it was new. He was in maisonette No. 50 on the ninth floor. He was only paying a very low rent - £3 1s. 10d. a week, inclusive of rates. He was issued with a form headed "Conditions of Tenancy." It contained all sorts of things which the tenant was to do, or not to do. There were long paragraphs headed: "The tenant shall not" and "The tenant shall." But there was not a single word as to anything the council was to do or not to do.
After eight years, by way of protest, Mr. Irwin and his wife stopped paying the rent. The council took proceedings for possession and got an order. The tenants counterclaimed for damages (a) for breach of the covenant for quiet enjoyment and (b) for breach of duty to repair. The judge found in their favour and awarded nominal damages of £10. The council appeal to this court.
We are told that this is a test case. If that decision of the judge is right, I can well see that all the tenants will make claims for the gross discomfort and inconvenience which they suffer. They will not recover merely nominal damages. They will recover high damages which will offset their rents for years to come. The rent of this dwelling - £3 a week for a crane driver - was small indeed. There should be a limit to what he can claim for it. Collectively all the tenants must bear some responsibility for the appalling conditions. Singly they ought not to be able to claim damages for it, at any rate, not if the city council do the best they can with the resources available to them. But still, we must consider the legal position.

Covenant for quiet enjoyment

Mr. Godfrey for the tenants conceded that there was no breach by the landlords of the implied covenant for quiet enjoyment. He was quite right to make that concession. That covenant extends, I think, so as to protect the tenant in his possession and enjoyment of the demised premises from any invasion or interruption or disturbance of it by the landlord or those claiming through him: Browne v Flower [1911] 1 Ch 219: Kenny v Preen [1963] 1 QB 499. But here there was nothing done by the landlord which amounted to an invasion, interruption or disturbance of the tenant. Failure to repair the demised premises, or the common parts, cannot be said to be a breach of the covenant for quiet enjoyment. Obligation to repair the maisonette itself
The council were not under any duty at common law to repair the maisonette itself. But they were under a statutory duty by section 32 (1) of the Housing Act 1961, which says that there is an implied covenant by the lessor:

"(a) to keep in repair the structure and exterior of the dwelling house (including drains, gutters and external pipes); and (b) to keep in repair and proper working order the installations in the dwelling house - (i) for the supply of water, gas and electricity, and for sanitation (including basins, sinks, baths and sanitary conveniences but not, except as aforesaid, fixtures, fittings and appliances for making use of the supply of water, gas or electricity); and (ii) for space heating or heating water."

There is no evidence of any failure by the council to repair the structures or exterior: nor do I see any failure in respect of the installations for water, gas or electricity. The trouble was due to the design of the building itself. If a hot water system is inefficient owing to unsuitable design - for example, if the tank is too small - the landlord is not bound to alter it. His only duty is to keep the existing system, inefficient as it is, in proper working order. He is not bound to put in a new efficient system. So here, the lavatory cisterns gave trouble because the whole system was unsuitably designed. The council were bound to keep the existing system, inefficient as it was, in proper working order: but they were not bound to instal a new system. Obligation to repair the lifts, staircases, etc.
The lifts, staircases, and so forth, were not let to the tenants. The council kept them in their own control. The question arises: were they under any contractual duty to the tenant to keep them in repair?
So far as the law of tort is concerned, there was at one time some uncertainty owing to the distinction drawn between invitees and licensees. But since 1957, it is clear that the council were under a duty of care - the common duty of care - which they owed to all the visitors, tenants, wives, children, tradesmen, guests and all. If any of these is injured by any breach of that duty, he or she can recover damages from the council. This duty is imposed by the Occupiers' Liability Act 1957. It is to take "such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises." It is concerned with safety, not with comfort or convenience. A visitor, be he tenant or anyone else, can claim damages if he falls down and is injured: but not for walking up and down 200 steps.
So far as the tenant himself is concerned, the question is whether the city council were under a contractual duty to him; and, if so, what was the extent of it. There was no express term. Was there an implied term?
It is often said that the courts only imply a term in a contract when it is reasonable and necessary to do so in order to give business efficacy to the transaction: see The Moorcock (1889) 14 PD 64, 68. (Emphasis is put on the word "necessary": Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592, 605.) Or when it is obvious that both parties must have intended it: so obvious indeed that if an officious bystander had asked them whether there was to be such a term, both would have suppressed it testily: "Yes, of course": see Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206, 227.
Those expressions have been repeated so often that it is with some trepidation that I venture to question them. I do so because they do not truly represent the way in which the courts act. Let me take some instances. There are stacks of them. Such as the terms implied by the courts into a contract for the sale of goods - Jones v Just (1868) LR 3 QB 197: or the hire of goods - Asley Industrial Trust Ltd v Grimley [1963] 1 WLR 584: into a contract for work and materials - Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454: or into a contract for letting an unfurnished house - Hart v Windsor (1843) 12 M & W 68: or a furnished house - Collins v Hopkins [1923] 2 KB 617: or into the carriage of a passenger by railway: see Readhead v Midland Railway Co (1869) LR 4 QB 379 : or to enter on premises: see Francis v Cockrell (1870) LR 5 QB 501 : or to buy a house in course of erection: see Hancock v BW Brazier (Anerley) Ltd [1966] 1 WLR 1317.
If you read the discussion in those cases, you will see that in none of them did the court ask: what did both parties intend? If asked, each party would have said he never gave it a thought: or the one would have intended something different from the other. Nor did the court ask: Is it necessary to give business efficacy to the transaction? If asked, the answer would have been: "It is reasonable, but it is not necessary." The judgments in all those cases show that the courts implied a term according to whether or not it was reasonable in all the circumstances to do so. Very often it was conceded that there was some implied term. The only question was: "What was the extent of it?" Such as, was it an absolute warranty of fitness, or only a promise to use reasonable care? That cannot be solved by inquiring what they both intended, or into what was necessary. But only into what was reasonable. This is to be decided as matter of law, not as matter of fact. Lord Wright pulled the blinkers off our eyes when he said in 1935 to the Holdsworth Club:

"The truth is that the court .... decides this question in accordance with what seems to be just or reasonable in its eyes. The judge finds in himself the criterion of what is reasonable. The court is in this sense making a contract for the parties - though it is almost blasphemy to say so." (Lord Wright of Durley, Legal Essays and Addresses (1939), p259.)

In 1956, Lord Radcliffe put it elegantly when he said of the parties to an implied term:

"their actual persons should be allowed to rest in peace. In their place there rises the figure of the fair and reasonable man. and the spokesman of the fair and reasonable man, who represents after all no more than the anthropomorphic conception of justice, is and must be the court itself": see Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 728.

In 1969, Lord Reid put it simply when he said: "... no warranty ought to be implied in a contract unless it is in all the circumstances reasonable," see Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454, 465: and Lord Upjohn echoed it when he said, at p471, that the implied warranty was "imposed by law."
Is there a term to be implied in this tenancy about the lifts and staircases and other common parts? Mr. Francis said there was no contractual obligation on the landlord at all. He repeated the old clichés about "necessary to give business efficacy" and the "officious bystander," and said there was no term to be implied at all.
He likened this to a lease of premises in which there is no implied covenant by the landlord to keep the demised premises in repair: or to the lease of a party wall in which there is no implied covenant to keep the party wall in repair: see Colebeck v Girdlers Co (1876) 1 QBD 234 . But in those cases the landlord did not retain occupation or control. Such cases have no application to blocks of flats when the landlord himself retains occupation and control of the roof, lifts, staircase, and so forth. No one has ever doubted that the landlord is under an implied contractual obligation to the tenant in respect of those common parts. The only question has been as to the extent of the obligation. In Miller v Hancock [1893] 2 QB 177 the court were referred to Colebeck v Girdlers Co, but quite rightly treated is as of no relevance. Both Lord Esher MR and Bowen LJ said that the landlord was under an absolute obligation to maintain the staircase. Bowen LJ said, at p181:

"It seems to me that it would render the whole transaction inefficacious and absurd if an implied undertaking were not assumed on the part of the landlord to maintain the staircase so far as might be necessary for the reasonable enjoyment of the demised premises."

Later cases have shown, however, that it is not an absolute obligation: see Cockburn v Smith [1924] 2 KB 119, 133, by Scrutton LJ But it is certainly an implied obligation to use reasonable care. It was distinctly so held by Lush J. in Dunster v Hollis [1918] 2 KB 795 , and his ruling has never been doubted since. It has been accepted by all the textwriters and by the Law Commission [Report on Obligations of Landlords and Tenants (Law Com. No. 67)], paragraph 114 (c). In the latest edition of Woodfall, Landlord and Tenant, 27th ed. (1968), p. 657, it is stated thus:

"Where the lessor retains in his possession and control something ancillary to the premises demised, such as a roof or staircase, the maintenance of which in proper repair is necessary for the protection of the demised premises or the safe enjoyment of them by the tenant, the lessor is under an obligation to take reasonable care that the premises retained in his occupation are not in such a condition as to cause damage to the tenant or to the premises demised."

That proposition has been accepted for nearly 60 years: and I am surprised to hear it now said that the landlord is under no contractual obligation to the tenant at all. Seeing it so plainly existed before 1957, I do not think that the Occupiers' Liability Act 1957 (which cleared up the law of tort) took away this contractual obligation.
The only question to my mind is the extent of the obligation. Is it confined to safety from personal injury? Or does it extend to fitness for use? To my mind it is the obligation of the landlord to take reasonable care, not only to keep the lifts and staircase reasonably safe, but also to keep them reasonably fit for use by the tenant and his family, and visitors. Suppose the lifts fall out of repair and break down. Can the landlord say to the tenant: "It is not my obligation to repair the lifts. You must repair them yourselves or walk up and down the 200 steps. It's up to you." If the electric light bulbs blow out on the staircase, can the landlord say: "I am not going to replace them, now or at any time. You must go up and down in the dark as best you can." Mr. Francis suggested that so long as nobody suffers personal injury, no one can complain. Not even the tenants. But that as soon as someone does suffer personal injury, he can bring an action for damages under the Occupiers' Liability Act 1957. I cannot accept this suggestion. It is clearly the duty of the landlord, not only to take care to keep the lifts and staircase safe, but also to take care to keep them reasonably fit for the use of the tenant and his visitors. If the lifts break down, the landlord ought to repair them. If the lights on the staircase fail, the landlord ought to replace them.
I am confirmed in this view by the fact that the Law Commission, in their codification of the law of landlord and tenant, recommend that some such term should be implied by statute: see Law Com. No. 67, paragraphs 148-149 and draft clause 16, p. 86. But I do not think we need wait for a statute. We are well able to imply it now in the same way as judges have implied terms for centuries. Some people seem to think that now that there is a Law Commission the judges should leave it to them to put right any defect and to make any new development. The judges must no longer play a constructive role. They must be automatons applying the existing rules. Just think what this means. The law must stand still until the Law Commission have reported and Parliament passed a statute on it: and, meanwhile, every litigant must have his case decided by the dead hand of the past. I decline to reduce the judges to such a sterile role. They should develop the law, case by case, as they have done in the past: so that the litigants before them can have their differences decided by the law as it should be and is, and not by the law of the past. So I hold here that there is clearly to be implied for the common parts some such term as the Law Commission recommend. The landlord must take reasonable care to keep the lifts, staircase, etc. safe and fit for use by the tenants and their families and visitors.
Such being the obligation, the remaining question is whether there was any evidence of a breach of it? On the pleadings the tenants did not allege negligence. They only alleged an absolute warranty. There was, accordingly, no inquiry into negligence. There were two fundamental causes of the trouble. First, the very design of these tower blocks. Second, the vandals and hooligans. For neither of these is the City council responsible. The council did their best to cope with these troubles: but, despite their best endeavours, they failed. They have been beaten by the vandals and hooligans. They were not in breach of their duty to use reasonable care.
It is to be remembered, too, that these tower blocks are occupied by council tenants at very low rents. They are allowed, in practice, virtual security of tenure so long as they pay their rent. If they were to recover damages for the discomfort and inconvenience they have suffered, the amount of such damages could be offset against their rents: and they would be able to stay in the flats for years without paying anything. That does not seem to me to be right, especially when they are all, in a sense, responsible for the deplorable state of affairs. There is no evidence that it is the tenants themselves or their families who actually do the wicked damage. But collectively the tenants could do much to improve the situation. They should do their part in disciplining these youngsters. Other tower blocks a few streets away do not suffer these troubles. Nor should these. In the circumstances I would not award the tenants any damages.
I would allow the appeal and give judgment for the city council.

House of Lords

Lord Wilberforce held it was a necessary term of living on an estate that landlords keep stairwells in order. However tenants also had a duty of reasonable care and on the facts the council was not in breach of its obligations. Applying the business efficacy or the officious bystander test would not result in the term’s implication, but asking what the relationship required would.

Lord Cross' judgment went as follows.

My Lords, I have had the advantage of reading the speeches of my noble and learned friends Lord Wilberforce, Lord Salmon and Lord Edmund-Davies. I agree with them that on the main point - the liability of the respondent council to pay damages to the appellants for failure to keep the staircases and chutes in repair and the lifts in working order - this appeal should be dismissed, but that it should be allowed so far as concerns the claim under section 32 of the Housing Act 1961 relating to the lavatory cistern inside the maisonette. I do not wish to add anything with regard to the latter claim, but in view of its general importance and because I am - with respect to him - unable to agree with a passage in the judgment of Lord Denning MR I will add a few words of my own on the main point.
When it implies a term in a contract the court is sometimes laying down a general rule that in all contracts of a certain type - sale of goods, master and servant, landlord and tenant and so on - some provision is to be implied unless the parties have expressly excluded it. In deciding whether or not to lay down such a prima facie rule the court will naturally ask itself whether in the general run of such cases the term in question would be one which it would be reasonable to insert. Sometimes, however, there is no question of laying down any prima facie rule applicable to all cases of a defined type but what the court is being in effect asked to do is to rectify a particular - often a very detailed - contract by inserting in it a term which the parties have not expressed. Here it is not enough for the court to say that the suggested term is a reasonable one the presence of which would make the contract a better or fairer one; it must be able to say that the insertion of the term is necessary to give - as it is put -'business efficacy' to the contract and that if its absence had been pointed out at the time both parties - assuming them to have been reasonable men - would have agreed without hesitation to its insertion. The distinction between the two types of case was pointed out by Viscount Simonds and Lord Tucker in their speeches in Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555, 579, 594, but I think that Lord Denning MR in proceeding - albeit with some trepidation - to 'kill off' MacKinnon LJ's 'officious bystander' (Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206, 227) must have overlooked it. Counsel for the appellant did not in fact rely on this passage in the speech of Lord Denning. His main argument was that when a landlord lets a number of flats or offices to a number of different tenants giving all of them rights to use the staircases, corridors and lifts there is to be implied, in the absence of any provision to the contrary, an obligation on the landlord to keep the 'common parts' in repair and the lifts in working order. But, for good measure, he also submitted that he could succeed on the 'officious bystander' test.
I have no hesitation in rejecting this alternative submission. We are not here dealing with an ordinary commercial contract by which a property company is letting one of its flats for profit. The respondent council is a public body charged by law with the duty of providing housing for members of the public selected because of their need for it at rents which are subsidised by the general body of ratepayers. Moreover the officials in the council's housing department would know very well that some of the tenants in any given block might subject the chutes and lifts to rough treatment and that there was an ever present danger of deliberate damage by young 'vandals' - some of whom might in fact be children of the tenants in that or neighbouring blocks. In these circumstances, if at the time when the respondents were granted their tenancy one of them had said to the council's representative: 'I suppose that the council will be under a legal liability to us to keep the chutes and the lifts in working order and the staircases properly lighted,' the answer might well have been - indeed I think, as Roskill LJ thought [1976] QB 319, 338, in all probability would have been - 'Certainly not.' The official might have added in explanation- 'Of course we do not expect our tenants to keep them in repair themselves - though we do expect them to use them with care and to co-operate in combating vandalism. The council is a responsible body conscious of its duty both to its tenants and to the general body of ratepayers and we will always do our best in what may be difficult circumstances to keep the staircases lighted and the lifts and chutes working, but we cannot be expected to subject ourselves to a liability to be sued by any tenant for defects which may be directly or indirectly due to the negligence of some of the other tenants in the very block in question.' Some people might think that it would have been, on balance, wrong for the council to adopt such an attitude, but no one could possibly describe such an attitude as irrational or perverse.

Notes

References

E Peden (2001) 117 LQR 459