Landlord and tenant — Lease or licence — Local housing authority authorising use of houses awaiting development for short term use — Grantor without legal estate — Whether grantee has lease or licence
In 1986 Lambeth London Borough Council,
who had acquired a building in 1975 for redevelopment purposes, licensed the
defendant housing trust to use the building for short term housing purposes. In
January 1989 the plaintiff entered into a written agreement with the trust to
occupy accommodation in part of the building. The terms of the agreement made
clear that: the plaintiff would have a weekly licence commencing from February
1989; the building was on licence from the council who, pending its
development, had permitted the trust to provide temporary housing accommodation;
and no security of tenure or exclusive possession was being granted to the
plaintiff. In June 1995 the plaintiff brought proceedings in the county court
claiming that he was the tenant of the premises and the trust was in breach of
the implied covenant under section 11 of the Landlord and Tenant Act 1985 to
keep the premises in repair. In the court below it was held that he was a
licensee. The appellant appealed contending, inter alia, that a tenancy
could be created by estoppel even where the grantor has no interest in the
land, and the fact that the grantee knows that the grantor has no estate does
not prevent a tenancy by estoppel arising.
licence. If a grantor has no power to exclude the true owner from possession,
he has no power to grant a legal right to exclusive possession and his grant
cannot take effect as a tenancy. The grantor may be estopped from denying his
lack of title and, if so, his grant will create a tenancy by estoppel. But
there can be no estoppel unless the grantor’s denial of title is inconsistent
with the terms of his grant. Both parties knew that the trust had no title and
could not grant a tenancy. There was no inconsistency between the terms of the
document and the trust’s assertion that it has not granted a tenancy.
by estoppel. It was not open, in the light of Street v Mountford
[1985] 1 EGLR 128 and subsequent cases, to try to look behind the terms and
effect of the grant.
The following cases are referred to in
this report.
AG Securities v Vaughan; Antoniades v Villiers
[1990] 1 AC 417; [1988] 3 WLR 1205; [1988] 3 All ER 1058; (1989) 57 P&CR
17; [1988] 2 EGLR 78; [1988] 47 EG 193, HL
Aslan v Murphy (Nos 1 & 2) [1990] 1
WLR 766; [1989] 3 All ER 130; [1989] 2 EGLR 57; [1989] 38 EG 109, CA
Camden London Borough Council v Shortlife Community
Housing Ltd (1992) 90 LGR 358; 25 HLR 330
Cuthbertson v Irving (1859–60) 4 H&N 742
Errington v Errington and Woods [1952] 1 KB
290; [1952] 1 All ER 149, CA
Family Housing Association v Jones [1990] 1 WLR
779; [1990] 1 All ER 385; [1990] 1 EGLR 82; [1990] 24 EG 118, CA
First National Bank plc v Thompson [1996] Ch
231; [1996] 2 WLR 293; [1996] 1 All ER 140, CA
Goodtitle d Edwards v Bailey (1777) 2 Cowp
597
Grundt v Great Boulder Proprietary Gold Mine
Ltd (1937) 59 CLR 641
Lewisham Borough Council v Roberts [1949] 2 KB
608; [1949] 1 All ER 815; (1949) 65 TLR 423
Minister of Agriculture and Fisheries v Hulkin [1948] EGD
195; (1948) 151 EG 464
Minister of Agriculture and Fisheries v Matthews [1950] 1 KB
148; sub nom Ministry of Agriculture and Fisheries v Matthews, 65 TLR 655;
[1949] 2 All ER 724; 154 EG 352
Morton v Woods (1869) LR 4 QB 293
Street v Mountford [1985] AC 809; [1985]
2 WLR 877; [1985] 2 All ER 289; [1985] 1 EGLR 128; (1985) 274 EG 821, HL;
reversing (1984) 49 P&CR 324; [1984] 2 EGLR 119; 271 EG 1153, CA
Westminster City Council v Clarke [1992] 2 AC
288
This was an appeal by Gary Bruton against
the decision of Judge James in Lambeth County Court where he held in a
preliminary hearing in proceedings by the appellant against the respondent,
Quadrant Housing Trust, for a declaration and other relief.
David Watkinson and Margaret Jones
(instructed by GL Hockfield & Co) appeared for the appellant; Terence
Gallivan (instructed by Devonshires) represented the respondent.
Giving judgment, KENNEDY LJ said:
The facts are set out in the judgment of Sir Brian Neill, but my conclusions
are the same as those of Millett LJ for the reasons that he gives. It seems to
me that commonsense rebels against the suggestion that a homeless person who is
housed by a housing association in residential accommodation which he knows that
the association does not own, thereby becomes a tenant, just because he agrees
in writing to make regular payments, he is given exclusive possession and he is
not a lodger.
In Street v Mountford
[1985] AC 809* Lord Templeman recognised at p823E that although in any ordinary
case an occupier of residential accommodation at a rent for a term is either a
lodger or a tenant, an occupier who enjoys exclusive possession is not
necessarily a tenant. He may be a lodger or a service occupier or fall within
the other exceptional categories mentioned by Denning LJ in Errington v Errington
and Woods [1952] 1 KB 290. That case was concerned with occupiers in
exclusive possession who had been held to be not tenants but only licensees.
Denning LJ gave a number of examples and then said, at p298:
*Editor’s note: Also reported at [1985] 1
EGLR 128
The result of all these cases is that,
although a person who is let into exclusive possession is prima facie to
be considered to be a tenant, nevertheless he will not be held to be so if the
circumstances negative any intention to create a tenancy. Words alone may not
suffice. Parties cannot turn a tenancy into a licence merely by calling it one.
But if the circumstances and the conduct of the parties show that all that was
intended was that the occupier should be granted a personal privilege, with no
interest in the land, he will be held to be a licensee only.
That passage was cited with approval by
Lord Templeman in Street v Mountford at p820H, and he went on to
say that in Errington and the cases to which it referred there were
‘exceptional circumstances which negatived the prima facie intention to
create a tenancy notwithstanding that the occupier enjoyed exclusive
occupation’ as, for example, ‘where the owner, a requisitioning authority, had
no power to grant a tenancy’. As Millett LJ has explained in his judgment it
would seem that they had no power because they did not possess any legal
estate. Why then can it not be said that the present case is also an example of
exceptional circumstances which negative the prima facie intention to
create a tenancy? Both parties knew that the housing association did not have
and had no chance of acquiring any legal estate. They expressly proceeded on
that basis and there would seem to me no obvious reason why in law they should
not be assumed to have meant what they said. This is not a case in which their
actions must be said to have been at variance with reality. Here, what they
described as a spade was in fact a spade.
In AG Securities v Vaughan
[1990] 1 AC 417* and in Aslan v Murphy (Nos 1 & 2) [1990] 1
WLR 766† the question whether occupiers were to be regarded as tenants or
licensees was reconsidered by the House of Lords and by the Court of Appeal
respectively. Nothing of significance for present purposes was added to what
had been said in Street v Mountford, save that in Aslan’s
case Lord Donaldson MR said, at p772H:
*Editor’s note: Also reported at [1988] 2
EGLR 78
†Editor’s note: Also reported at [1989] 2
EGLR 57
The judge was, of course, quite right to
approach the matter on this basis that it is not a crime, nor is it contrary to
public policy, for a property owner to license occupiers to occupy a property
on terms which do not give rise to a tenancy.
That observation was no doubt considered
to be necessary because, unlike the present case, so many of the earlier cases
were concerned with blatant attempts to avoid the provisions of the Rent Acts.
I recognise that in Family Housing
Association v Jones [1990] 1 WLR 779*, where the facts were very
similar, this court held that a tenancy was created, but the case for the
housing association does not seem to have been presented on the basis that to
the knowledge of both parties there was no present or prospective legal estate
from which a tenancy could be created. The focus seems to have been on the
exclusivity of the occupier’s right to possession (see Balcombe LJ at p789B-D
and Slade LJ at p792D) so, in my judgment, we are free to decide the present
case on the point which has now been raised. Although Family Housing
Association v Jones was considered by the House of Lords in Westminster
City Council v Clarke [1992] 2 AC 288, no consideration seems to
have been given to the part of the decision which for present purposes is
material.
*Editor’s note: Also reported at [1990] 1
EGLR 82
I would therefore dismiss this appeal.
Agreeing, MILLETT LJ said: This
case raises a familiar problem in an unusual setting. The question is whether a
document which purports to grant a licence to occupy residential accommodation
nevertheless takes effect in law as the grant of a tenancy. The feature which
distinguishes the present case from the commonplace is that the grantor had, and
was known to the grantee to have, no title to the land.
The case is thus located at the
intersection of two settled principles of law. The first is that the grant of
exclusive possession of land for a fixed term at a rent creates a tenancy.
Whether the arrangements in any particular case create a tenancy or a licence
does not depend upon the parties’ professed intentions, but on the legal effect
of the transaction into which they have entered. Save in exceptional
circumstances, the only intention which is relevant is the intention to grant
exclusive possession. This was decided by the House of Lords in the seminal
case of Street v Mountford [1985] AC 809.
The second principle is that the grantor
of an interest in land is estopped from disputing the validity or effect of his
own grant. A man who purports to grant a tenancy is not permitted to deny that
he has done so by asserting his own want of title. If he has none, the grant
creates a tenancy by estoppel binding on him and those who claim through him, though
it cannot of course bind those with a superior title.
The question on this appeal is whether
these two principles can be combined so that a grantor who has, and is known to
have, no title and who therefore agrees to grant no more than a licence, nevertheless
brings into being a tenancy by estoppel if he excludes himself and those
claiming through him from possession.
In Street v Mountford Lord
Templeman gave only three examples of exceptional circumstances where the grant
of exclusive possession does not create a tenancy. First, where the
circumstances negative any intention to create legal relations at all. Second,
where the possession of the grantee is referable to some other legal
relationship, such as vendor and purchaser or master and servant. Third, where
the grantor has no power to create a tenancy, as in the case of a
requisitioning authority. As I pointed out in Camden London Borough Council
v Shortlife Community Housing Ltd (1992) 25 HLR 330, the first and third
of these are not exceptions to a general rule. The relationship of landlord and
tenant is a legal relationship. It cannot be brought into existence by an
arrangement which is not intended to create legal relations at all or by a body
which has no power to create it. The
tenancy requires the grant of a legal right to exclusive possession.
The precise scope of the third category
is, however, not clear. Is it confined to want of capacity or does it extend to
want of title? Lack of capacity to grant a tenancy would, of course, prevent
the creation of a tenancy by estoppel for the reasons given by Lord Greene MR
in Minister of Agriculture and Fisheries v Hulkin* unreported,
but cited in Minister of Agriculture and Fisheries v Matthews
[1950] 1 KB 148, at p154:
*Editor’s note: Reported at [1948] EGD
195
Accepting the view which Mr Bailleu (the
defendant’s counsel) accepts, that the Minister had no power under the regulations
to grant a tenancy, it is perfectly manifest to my mind that he could not by
estoppel give himself such power. The power given to an authority under a
statute is limited to the four corners of the power given. It would entirely
destroy the whole doctrine of ultra vires if it was possible for the donee of a
statutory power to extend his power by creating an estoppel.
Despite the concession made by the
defendant’s counsel in that case, which Lord Greene may have accepted only for
the sake of argument, the reason a requisitioning authority cannot grant a
tenancy of the requisitioned land is not, in my judgment, due to any want of vires.
The cases do not suggest that the requisitioning authority lacked power to hold
land or to grant tenancies of land which they owned. The problem was that the
requisitioning authority had no power to acquire and did not acquire any estate
or interest in the land which they requisitioned. In Lewisham Borough
Council v Roberts [1949] 2 KB 608 Denning LJ said, at p622:
it is necessary to consider the nature of
the power to requisition land. It is only a power to take possession of land.
It is not a power to acquire any estate or interest in land … Once possession
is taken the Crown can exercise all the powers incident to possession, such as
to licence other people to use the premises … (see Southgate Borough Council
v Watson [1944] KB 541); but it cannot grant a lease, or create any
legal interest in the land in favour of any other person, because it has
itself no estate in the land out of which to carve any interest …
(Emphasis supplied.)
Thus the want of title was due to the
absence of any power to acquire title to the property under the relevant
regulations; but the inability to grant a tenancy was due to the want of title.
If this is right, then the third category
of case where the grant of exclusive possession does not create a tenancy may
not be limited to the case where the grantor has no capacity to grant a
tenancy, but may extend to the case where it has no estate or interest in the
land which enables it to do so. But this is not clearly demonstrated, for Lord
Templeman did not have tenancies by estoppel in mind. It is therefore necessary
to consider how such tenancies arise.
In Goodtitle d Edwards v Bailey
(1777) 2 Cowp 597 Lord Mansfield CJ said, at pp600–601:
… it shall never lie in [the grantor’s]
mouth to dispute the title of the party to whom he has so undertaken; no more
than it shall be permitted to a mortgagor to dispute the title of his
mortgagee. No man shall be allowed to dispute his own solemn deed.
The doctrine is clearly a form of
estoppel, though it is not a species of estoppel by representation and does not
depend on any recital or other representation of title: see First National
Bank plc v Thompson [1996] Ch 231. It is the product of a
fundamental principle of the common law which precludes a grantor from
disputing the validity of his own grant. The estoppel is not excluded by the
fact that the want of title appears in the deed, as it did in Goodtitle
v Bailey itself, or by the fact that the grantee knows that the grantor
has no title: see Morton v Woods (1869) LR 4 QB 293. It is,
however, excluded if the grantor has any legal title, even if it is
insufficient to support the grant.
The doctrine is, therefore, both peculiar
and ancient. It has sometimes been regarded as a special subspecies of estoppel
by convention. As it is put in Spencer Bower Estoppel by Representation,
at p160:
The claim of the party raising the
estoppel is, not that he believed the assumed version of the facts was true,
but that he believed (and agreed) that it should be treated as true.
In Grundt v Great Boulder
Proprietary Gold Mine Ltd (1937) 59 CLR 641 Dixon J said in the High Court
of Australia, at p676:
It is important to notice that belief in
the correctness of the facts or state of affairs assumed is not always
necessary. Parties may adopt as the conventional basis of a transaction between
them an assumption which they know to be contrary to the actual state of
affairs. A tenant may know that his landlord’s title is defective, but by
accepting the tenancy he adopts an assumption which precludes him from relying
on the defect.
In the present case both parties knew
that the trust had no title and could not grant a tenancy. That is not
sufficient to prevent the creation of a tenancy by estoppel. But the trust did
not purport to grant a tenancy. The document was carefully drawn by the trust
and accepted by Mr Bruton as a licence. There is no inconsistency between the
terms of the document and the trust’s assertion that it has not granted a
tenancy. There is no ground for holding that the parties must be taken to have
adopted an assumed basis for the transaction. They did not agree that the trust
should grant a tenancy even though it had no title; they agreed that it should
grant a licence because it could not grant a tenancy.
Tenancies by estoppel were developed at a
time when title to land was doubtful and difficult to establish. They most
frequently arose when the grantor’s land was in mortgage. In such a case the
defect in title was technical and remediable and the parties could reasonably
be supposed to be willing to disregard it. The circumstances of the present
case are very different. The trust had no title because the council had no
power to grant it any. The case is, therefore, like that of the requisitioning
authority, but at one removed.
It is submitted that this is contrary to Street
v Mountford. The first step, it is said, is to construe the document in
the light of that case and without regard to the fact that the trust had no
title. Despite the professed intention to create a licence, the document
granted exclusive possession of the premises and accordingly created a tenancy
as between the parties. The trust’s want of title does not affect the
relationship between them, though it prevents the tenancy being more than a
tenancy by estoppel.
This is a powerful and attractive
argument, but in the end I am not persuaded by it. It seems to me to disregard
both the reason for the first and third of the exceptions in Street v Mountford
and the basis of the doctrine of tenancy by estoppel.
A tenancy is a legal estate. The essence
of a legal estate is that it binds the whole world, not just the parties to the
grant and their successors. The hallmark of a tenancy is the grant of exclusive
possession. In this context, therefore, exclusive possession means possession
to the exclusion of the whole world, not merely of the grantor and those
claiming through him. If the grantor has no power to exclude the true owner
from possession, he has no power to grant a legal right to exclusive possession
and his grant cannot take effect as a tenancy. He may still be estopped from
asserting his want of title and, if so, his grant will create a tenancy by
estoppel. But a tenancy by estoppel is not merely a particular species of
tenancy which binds only the parties to it. It is firmly based on estoppel, and
there can be no estoppel unless the grantor’s denial of title is inconsistent with
the terms of his grant.
In my judgment, the two doctrines cannot
be combined in the way contended for. They are, when analysed, mutually
exclusive. Street v Mountford rejects the professed intentions of
the parties in favour of the true effect of the transaction. Estoppel by
convention gives effect to the professed intentions of the parties. Any attempt
to combine them produces a hopeless circularity. Approached separately, they
have distinct requirements which are not satisfied in the present case.
I have not overlooked the decision of
this court in Family Housing Association v Jones [1990] 1 WLR 779
which was approved by Lord Templeman in Westminster City Council v Clarke
[1992] 2 AC 288. The facts of the earlier case were closely similar to the
present. They concerned a purported licence to occupy residential accommodation
granted by a short life housing association which had no legal estate or
interest in the land. The occupier was given an apparent right of exclusive
possession. The arrangements were held to create a tenancy. But the fact that
the grantor had no title was not referred to in argument or the judgments and
its significance appears to have been overlooked. It is not clear to me what
kind of tenancy was created. It can, I think, only have been a tenancy by
estoppel; but no consideration was given to the question whether the necessary
conditions for the creation of such a tenancy existed. In the later case the
grantor was the landowner and the point did not arise. In the circumstances we
are not, in my judgment, precluded from considering these questions for
ourselves.
In my opinion, there is nothing in law to
prevent a party in possession of land, but lacking any legal estate or interest
in the land, from granting a licence to permit another to occupy the land.
Provided that the grantor makes it clear that it is a licence only and not a
tenancy, the grant will not take effect as a tenancy by estoppel.
In the present case my conclusion does
not significantly affect Mr Bruton’s security of tenure, since he was always
liable to be evicted at the suit of the council. But it avoids saddling the
trust with the statutory obligations of a landlord, which it never intended to
undertake and which would effectively disable it from carrying out the socially
valuable function which it performs.
I would dismiss the appeal.
Dissenting, SIR BRIAN NEILL said:
It is with diffidence and with regret that I find myself unable to agree with
the judgments of my lords, particularly because their solution to this
difficult problem appears to me to be both socially desirable and eminently
sensible. As I understand the opinions of Lord Templeman in Street v Mountford
[1985] AC 809 and in Westminster City Council v Clarke [1992] 2
AC 288, however, the court has to look at what the parties did and not at what
they thought they were doing nor at what they intended to do. Nor is the label
which the parties give to the transaction decisive. Moreover, the authorities
seem to suggest that in the case of residential accommodation the only
recognised dichotomy is between lodgers and tenants.
At one time I thought that this case
could be distinguished from the general principle laid down in Street v Mountford
by equating it with the requisition cases such as Lewisham Borough
Council v Roberts [1949] 2 KB 608. But the doctrine which permits
the creation of a tenancy by estoppel appears to me to prevent the requisition
cases being explained on the basis of want of title alone.
Nor, with regret, have I been able to
find a satisfactory way to circumvent the decision of this court in Family
Housing Association v Jones [1990] 1 WLR 779, where the facts were
strikingly similar to those in this case. It is true that the court in Jones’
case did not consider the effect of the grantor’s lack of title, but it was a
reserved decision in which quite detailed reference was made to the statutory
framework against which the agreement between the housing association and Mrs
Jones was made. It is also to be noted that the decision was cited with
apparent approval (save in respect of one point) in the House of Lords in Clarke’s
case.
I should therefore set out in a little
more detail the reasons for my dissent.
Facts
This is an appeal by Mr Gary Bruton from
the order dated June 28 1996 of Judge James in Lambeth County Court whereby, on
the trial of a preliminary issue, he held that at all material times Mr Bruton
occupied certain premises at 2 Oval House, Rushcroft Road, London SW2, as a
licensee and not as a tenant. The appeal is brought by leave of the Court of
Appeal given on December 3 1996. The premises consist of a self-contained
ground-floor flat, comprising a living room, two bedrooms, a box room, a
kitchen and a bathroom.
Oval House is a three-storey Victorian
mansion block. In February 1975 Oval House, together with other blocks in
Rushcroft Road, was acquired by compulsory purchase by Lambeth London Borough
Council (the council). At that time it was intended that Rushcroft Road should
be included in a redevelopment scheme to regenerate the centre of Brixton. In
order, however, to make use of the property before the redevelopment could take
place and to prevent vandalism, the council granted a licence in respect of
Oval House and other blocks in Rushcroft Road to London & Quadrant Housing
Trust (the trust) to use for occupation under short-term occupancy agreements
by people on the trust’s waiting list. The short term unit of the trust manages
schemes providing temporary accommodation for the homeless and other persons in
need of short term housing.
It seems that the licence to the trust
was originally in the form of a letter or letters, but this informal
arrangement was subsequently replaced by a licence in writing dated March 27
1986. More recently this licence has in turn been replaced by a lease dated
December 4 1995 of Oval House and other properties, but the existence and terms
of this lease are not relevant to this appeal.
The scheme for the redevelopment of
Rushcroft Road which was in contemplation in 1975 was not proceeded with and no
subsequent scheme has been brought to fruition. In the result, Oval House
continues to be used for short term housing by the homeless and other people in
need of accommodation.
The 1986 licence between the council and
the trust was entitled ‘Licence of Short-Life Properties’. The licence recited
the fact that the trust was a voluntary organisation concerned with
homelessness and further recited that the council, being under a duty to
provide accommodation for homeless persons, were able by virtue of the
provisions of the Housing (Homeless Persons) Act 1977 to assist a voluntary
organisation concerned with homelessness by permitting them to use the premises
belonging to the council. It is not necessary to refer to the terms of the
licence in detail, but it is to be noted that by clause 2(g) of the licence the
trust undertook to ensure that no occupier became a secure tenant within the
meaning of the Housing Acts and Rent Acts or under any other Acts or
regulations without the prior consent of the council, and that no occupier
should acquire any rights of security or other rights while in occupation.
On January 31 1989, Mr Bruton signed an
agreement with the trust for the occupation by him of the premises. The terms
of the agreement were set out in a letter from the trust to him and in a
document attached containing conditions and in a written acceptance by him of
these terms. The letter dated January 31 contained the following material
provisions:
Occupation of Short-Life Accommodation at
2 Oval House, Rushcroft Road, SW2 on a temporary basis.
As has been explained to you, the above
property is being offered to you by [the Trust] on a weekly Licence from 6
February 1989. The Trust has the property on Licence from [the council] who
acquired the property for development (within the meaning of Section 22 of The
Town & Country Planning Act 1971), and pending this development, it is
being used to provide temporary housing accommodation.
It is offered to you on the condition
that you will vacate upon receiving reasonable notice from the Trust, which
will not normally be less than four weeks.
You understand and agree that while you
are living in the property, you will allow access at all times during normal
working hours to the staff of the Trust, the owners and agents for all purposes
connected with the work of the Trust.
There is a doubt as to the precise form
of the document containing conditions which was attached to the letter of
January 31. It is clear, however, that the relevant provisions in the attached
conditions were those set out in para 4(g) which was in these terms:
To permit the Trust or its agents,
surveyors or consultants to enter the property for the purpose of inspecting
the state of repair, and cleanliness of the property or any purpose connected
at all reasonable hours of the day.
Mr Bruton had been living in the premises
before 1989. Thus, in 1985 he had moved into the flat of which Ms Nicola
Groocock was then the licensee. Ms Groocock left the premises towards the end
of 1988. Thereafter Mr Bruton was the sole occupant of the flat.
Proceedings in the county court
On June 15 1995 Mr Bruton brought
proceedings in Lambeth County Court claiming that he was the tenant of the
premises and that the trust was in breach of an implied covenant to keep the
premises in repair. It was alleged that this covenant was to be implied by
virtue of section 11 of the Landlord and Tenant Act 1985. Mr Bruton claimed
damages and other relief, including an order for the specific performance of
the trust’s alleged obligations to repair.
On July 25 1995 the trust served a
defence denying that Mr Bruton was a tenant and pleading that he was a
licensee. Later, the defence was amended and a counterclaim was added seeking
possession of the premises following the service of a notice to quit on
December 21 1995. In April 1996 Mr Bruton served a reply claiming that he was a
secure tenant of the premises within Part IV of the Housing Act 1985 or, in the
alternative, that he was an assured tenant within Part I of the Housing Act 1988.
He denied that the notice to quit had determined his right to occupy.
It was in these circumstances that on May
1 1996 Judge James made an order for the trial as a preliminary issue of the
question whether Mr Bruton was a tenant or a licensee.
The trial of the preliminary issue took
place on June 28 1996. At the trial a number of matters were considered. Mr
Bruton contended that before 1989 he had had a personal right of occupation
together with Mrs Groocock, but the judge rejected this contention and held
that his personal right of occupation began on the execution of the licence in
1989. There was also a debate before the judge as to the meaning of the word
‘dispose’ in section 32 of the Housing Act 1985. In this court, however, the
only matter which has been argued before us is whether or not Mr Bruton’s right
to occupy the premises amounted to a tenancy or whether he was a mere licensee.
The judge expressed his conclusion on this aspect of the case as follows:
I am confident that the housing officer
concerned would not have offered a tenancy, which would have been contrary to
everything involved. If a legal term was used it was probably licence and the
documents fit in with that; and furthermore I think it clear from those
documents that what was discussed between the parties and assumed between them
would have been occupation of uncertain duration and subject to various
restrictions inappropriate to a tenancy, as set out in the documents, so that
whether or not the term licence was used, what would have been assumed by the
parties would have been a state of affairs that any layman would have described
as a licence …
In ordinary language, I am confident that
the representative of the housing trust and the plaintiff mutually understood
that the premises were as they were described, namely short-term occupation of
premises on a weekly licence, while awaiting development, and the occupant may
therefore have to go at short notice, and the trust had various rights of entry
and other rights beyond those normal to a landlord and tenant relationship,
specifically those which went towards the purpose of ultimate redevelopment. I
do not suppose this worried Mr Bruton at the time. He realised years would pass
before anything happened. That does not affect the mutual understanding as the
basis on which he entered the agreement with the trust.
… the trust could not grant a lease to Mr
Bruton unless that was the effect of an estoppel, and that is ruled out by my
finding I have already made on the mutual understanding between Mr Bruton and
the trust.
That is sufficient to decide the
preliminary issue and I shall go no further but hold that the plaintiff is a
licensee of 2 Oval House now and at all material times.
Appeal
Mr David Watkinson developed his argument
on behalf of Mr Bruton on the following lines:
1. It was accepted that at the material
time the trust had a lesser interest in the premises than a tenancy and that
accordingly it could not itself create a tenancy otherwise than by estoppel.
2. A tenancy by estoppel can be created,
however, even where the grantor has no estate in the land. Indeed it is of the
essence of a tenancy by estoppel that the grantor does not have an estate in
the land.
3. The fact that the grantee knows that
the grantor has no estate does not prevent a tenancy by estoppel arising. This
estoppel is not a species of estoppel by representation but depends upon the
fundamental principle of the common law (which was recognised by Millett LJ in First
National Bank plc v Thompson [1996] Ch 231, at p237B) which
precludes a grantor from disputing the validity or effect of his own grant.
4. The estoppel can arise even where it
has not been ‘fed’ by the subsequent acquisition by the grantor of an estate in
the land: see, for example, Cuthbertson v Irving (1859–60) 4
H&N 742.
5. It is therefore necessary to examine
the nature of the grant by the grantor to establish whether or not the ‘badges’
of a tenancy are present. These badges are: (a) the provision for a term; (b)
the provision for rent; and (c) the grant of exclusive possession. As Lord
Templeman said in Street v Mountford [1985] AC 809, at p819F:
If the agreement satisfied all the
requirements of a tenancy, then the agreement produced a tenancy and the
parties cannot alter the effect of the agreement by insisting that they only
created a licence.
6. Any express reservation to the
landlord of limited rights to enter and view the state of the premises and to
repair and maintain the premises only serves to emphasise the fact that the
grantee is entitled to exclusive possession and is a tenant: see Street
v Mountford, at p818C.
7. The matter was put beyond doubt by the
decision of the Court of Appeal in Family Housing Association v Jones
[1990] 1 WLR 779 and by the reasoning of the Court of Appeal in that case.
This is a formidable argument.
Mr Terence Gallivan, on behalf of the
trust, sought to counter the argument by submitting that the decision of this
court in Family Housing Association v Jones could be
distinguished on the basis that the question of a tenancy by estoppel had not
been argued. He submitted that the judge had made a finding of fact as to the
mutual understanding of the parties and that this court should not interfere
with that finding. Furthermore, he pointed to the serious effects which a
decision in favour of the appellant would have. In Lambeth alone there were
over 1,000 properties provided for occupants on a short term basis. It might
well be that the trust would have a defence under section 11(3) of the Landlord
and Tenant Act 1985 to the claim for an alleged breach of the implied covenant,
but the cost of defending such proceedings against an impecunious plaintiff
would be considerable.
Mr Gallivan further argued that the
rights of access given to the trust by the terms of the licence were
inconsistent with the grant of exclusive possession when judged against the
fact that the property was going to be redeveloped in due course.
I turn therefore to the decision in Family
Housing Association v Jones. In that case Mrs Jones applied to a
local housing authority to be housed as a homeless person with a priority need.
She was referred to the housing association which had a licence to use certain
local authority properties as temporary accommodation for homeless families
referred by the local authority. The housing association entered into an
agreement with Mrs Jones under which she and her son were housed in a
self-contained flat in the block. The agreement was described as a licence and
contained an express provision that Mrs Jones did not have exclusive possession
as against the housing association. The agreement also contained a term that
obliged Mrs Jones ‘not to impede access to the property to any representative,
agent, or builder, of Family Housing Association, for inspection or maintenance
or any other purpose’. In the county court the judge held that Mrs Jones was a
licensee and he granted an order for possession, but this decision was reversed
by the Court of Appeal. It was said that since the accommodation comprised a
self-contained flat of which the only contemplated occupants were Mrs Jones and
her son, she enjoyed
requirements appropriate for the creation of a weekly tenancy. Furthermore, the
intention to create such a tenancy was not negatived by the fact that the
arrangement had been entered into to provide her with temporary accommodation
pursuant to the licence agreement between the housing association and the local
authority.
It is to be noted that the decision of
the Court of Appeal in Family Housing Association v Jones was
referred to by Lord Templeman in his speech in Westminster City Council
v Clarke [1992] 2 AC 288, though according to the headnote at p289 the
earlier decision was said to have been overruled. An examination of the speech
of Lord Templeman at p300, however, shows that Lord Templeman’s disapproval of
the decision in Family Housing Association v Jones was limited to
the Court of Appeal’s views as to the proper construction of section 79(3) of
the Housing Act 1985. I do not understand that any doubt was thrown on the
essential conclusion in the earlier case to the effect that as Mrs Jones
occupied the property on a weekly basis and paid a rent (even though not so
described) and had exclusive possession, all the necessary ingredients of a
tenancy were present. Indeed, it is to be noted that in Westminster City
Council v Clarke, Lord Templeman referred again at p229H to the
general principle that a grant of exclusive possession of residential
accommodation at a rent creates a tenancy notwithstanding the fact that the
parties intended to grant, and expressed themselves as having granted, a licence
and not a tenancy.
The facts relating to the occupation of
his room by Mr Clarke were unusual and enabled the House of Lords on those
particular facts to decide that he was only a licensee with the rights of a
lodger. I am satisfied, however, that if one looks at the terms of the grant in
this case, one is driven to the conclusion that the ‘badges’ of a tenancy were
present. It is not suggested that the trust had the right to require Mr Bruton
to share the occupation of the flat with anyone else.
It is true that any contract has to be
construed by reference to the factual matrix surrounding its conclusion. It can
therefore be argued that whatever ‘badges’ the 1989 agreement displayed, the
parties’ intention cannot have been to create a tenancy of a flat which
everyone knew formed part of a block awaiting redevelopment. But I do not think
that it is open to this court, in the light of Street v Mountford
and the subsequent cases, to try to look behind the terms and effect of the
grant. The rights of the trust to enter were no greater than those of the
Family Housing Association in Mrs Jones’ case.
Accordingly, I, for my part, would have
concluded that Mr Watkinson’s argument should succeed and that the appeal
should be allowed. I would have held that, as between the trust and Mr Bruton,
he is a tenant, though this finding would not of course affect the rights of
the council.
Appeal dismissed.
