Landlord and tenant — Service tenancy — Housing Act 1985 — Accommodation for better performance of employee’s duties — Whether tenant required to occupy premises for better performance of his duties — Whether essential for employee to occupy precise premises let
In 1970 the defendant was employed by the
plaintiffs as a school caretaker and allowed to occupy a house in the vicinity
of the school. In proceedings by the plaintiffs to recover possession of the
house, the defendant relied on the provisions of the Housing Act 1985 that give
security of tenure to employees of a local authority. In the county court the
judge, implying a term into his contract of employment, accepted that the
defendant’s ‘contract of employment require[d] him to occupy the dwelling-house
for the better performance of his duties’ within the meaning of para 2(1) of
Schedule 1 to the Housing Act 1985, and that accordingly the defendant did not
have a secure tenancy. The defendant appealed contending that: (1) it had not
been shown to the required standard that he necessarily had to occupy the house
for the purposes of
London Borough Council [1993] 3 WLR 821 had been misapplied, as para 2(1)
of Schedule 1 to the 1985 Act was not complied with unless it was essential for
the employee to occupy the precise accommodation that he was in fact occupying.
dismissed. In applying Hughes a court had to discover what were the
duties that an employee was required to perform, and, then, having regard to
the nature of those duties, ask itself whether or not it was really practical
for the duties to be carried out if the employee did not live at the premises
in question. If it was impractical to carry out the duties unless living in the
property in question, then that was a situation in which the necessary term can
be implied so that the situation complies with requirements of para 2(1) of
Schedule 1 to the 1985 Act. Where there was a requirement for regular
attendance at the premises at which a tenant was employed that would be
difficult to fulfil unless the tenant lived at the accommodation provided by
the employee, then it can appropriately be said that it is required for the
better performance of the tenant’s duties.
The following case is
referred to in this report.
Hughes v Greenwich
London Borough Council [1994] 1 AC 170; [1993] 3 WLR 821; [1993] 4 All ER
577
This was an appeal by the
defendant, John Lamond, from a decision of Judge Catlin in Kingston upon Thames
County Court, who had granted an order for possession in proceedings by the
plaintiffs, Surrey County Council.
Matthew Pascall (instructed by the solicitor to
Surrey County Council) appeared for the plaintiffs; Alastair Panton (instructed
by Downs, of Dorking) represented the defendant.
Giving the first judgment, LORD WOOLF MR said: This case
raises a point of some importance and interest in relation to employees who
live in accommodation belonging to their employer where the employer wishes to
recover possession of the premises concerned.
On 11 December 1997 Judge Catlin, in a very clear
and carefully considered judgment, gave judgment for Surrey County Council for
possession of premises, 1 Devon Road, Hersham, Walton-on-Thames, in accordance
with para 2(1) of Schedule 1 to the Housing Act 1985. The provisions of that
Act reflect the provisions of the earlier Housing Act 1980. On the information
before the court, the 1980 Act gave, for the first time, an employee security
of tenure in relation to accommodation provided by a local authority employer.
However, para 2(1) contains so far as relevant:
Subject to paragraph 4(b) a tenancy is not a
secure tenancy if the tenant is an employee of the landlord or of a local
authority and his contract of employment requires him to occupy the
dwelling-house for the better performance of his duties.
Subpara (2) contains a similar provision, which
applies to members of the police force, though the test there is different from
that in subpara (1). Subpara (3) makes provision for firemen who are employees
of a fire authority, but, again, the provisions are not in the same terms as
subpara (1).
Mr Lamond was employed by the county council in
1970, prior to the commencement of provisions of the Housing Act 1980 granting
security of tenure to employees of a local authority. No doubt it is for that
reason that Mr Lamond’s contract of employment did not expressly deal with the
question of whether he was required to occupy the premises at 1 Devon Road for
the better performance of his duties.
The defendant contends that he was not required to
occupy those premises for the better performance of such duties.
It is common ground between the parties that the
tenancy in question would be a secure tenancy unless Schedule 1 para 2(1)
applies. When the defendant was originally employed by the council as the
caretaker of the school, he was allowed to occupy the premises in question
because of his employment. That is not in dispute. The school is not
immediately adjacent to 1 Devon Road. A plan before the court shows the
distance of the school from 1 Devon Road. Although 1 Devon Road is in the
vicinity of the school, it is a sufficient distance away to mean that an alarm
bell ringing in the school would not be heard at 1 Devon Road.
There are also other houses in the vicinity of the
school that could have provided accommodation for the defendant, if they had
been available and if the county council had been in a position to arrange
this. However, 1 Devon Road was acquired to be used for the occupation of the
school caretaker. Since the defendant’s employment with the local authority
ended, the authority have not been in a position to provide accommodation for
the defendant’s successor. The evidence before the judge indicated that if the
premises were vacated by the defendant, they would then be occupied by the
caretaker who replaced the defendant.
The terms on which the defendant was employed were
not clearly set out in the contractual documents submitted to the defendant at
the time he first took employment. However, evidence was given by the
headteacher of the school. He indicated that the post for which the defendant
applied was a post of principal residential caretaker. The headmaster
says in his statement that the defendant’s responsibilities involved carrying
out security arrangements for the building, including being the keyholder,
ensuring that the premises were locked and unlocked at the appropriate times,
preventing trespassing and the parking of unauthorised vehicles within the
premises, carrying out regular checks and maintenance of drains and gullies,
and providing safe access to classrooms in the event of snow, minor floods and
similar emergency situations. The defendant was also responsible for advising
as to the need for repairs. He was responsible for directing contractors on the
site. These duties had to be carried out both during term-time and in the
holidays.
The defendant’s name and address was placed at the
school gates so that the contractors or delivery men could contact him. In the
case of deliveries it was often not possible to know exactly when they would be
arriving and they would therefore arrive at the school, see his name and
address at the gates and go to his home. In addition, the defendant also agreed
to perform overtime on a regular basis, which involved working on Sunday
mornings and evenings.
In his evidence, which was accepted by the judge,
the headmaster said that it was 162m between the premises in question and the
school. The judge posed this question in his judgment:
The question I am required to ask myself is: have
the plaintiffs established on the balance of probabilities that it was the
obvious but unexpressed intention of the parties that [the defendant] should be
required to live in the school house as a requirement of his contract of
employment for the better performance of his duties?
Applying the bystander test as to the implication
of terms into a contract and the law as I refer to it above, I am satisfied
that the plaintiffs have established to the required standard that the common
intentions of the parties at the time and throughout was that Mr Lamond should
be required to live in the school house as a requirement of his contract of
employment for the better performance of his duties. I consider that was
obviously the case and such a term should be implied into the contract of
employment.
Earlier in his judgment, the judge had referred to
a series of authorities that had been cited to him including, in particular,
the decision of the House of Lords in Hughes v Greenwich London
Borough Council [1993] 3 WLR 821. He said:
So far as the case of Hughes v Greenwich
is concerned, the principal finding in that case is that in order for a term to
be implied in a contract, there had to be a compelling reason deeming that term
to form part of the contract.
In the South Glamorgan case the main
finding was that on the evidence there was a clear basis for finding that there
was an implied term in the contract of employment that the defendant was
required to reside at the house for the better performance of his duties.
I do not understand either of these authorities
[to] establish that there are any peculiar principles to be applied in landlord
and tenant relationships when considering whether or not a term should be
implied by the court which is not expressed in the contract.
It is not disputed that as a matter of law such a
term may be implied in this type of contract; whether or not such a term should
be implied depends on the presumed intention of the parties.
Here the plaintiff says the term should be
implied as it represents the obvious but unexpressed common intention of the
parties.
The court will only imply [a] term if it is one
which must necessarily have been intended by the parties and there must be a
compelling reason for deeming that term to form part of the contract.
Mr Alastair Panton, for the appellant defendant,
submits that the judge was not entitled to reach his conclusion for two
reasons: (1) because it could not be shown to the required standard that Mr
Lamond necessarily had to occupy this property for the purposes of his
employment, and unless that could be shown no term could be implied; and (2)
the judge had misapplied, in the passages to which I have referred, the true
effect of the decision of the House of Lords Hughes and, in particular,
had misunderstood that case because he had not focused on the fact that it has
to be necessary not to occupy any premises in the area but to occupy the
precise premises, in this case 1
occupied. The statutory test contained in the Housing Act 1985 Schedule 1 para
2(1), so it was submitted, is not complied with unless it is essential for the
employee to occupy the precise accommodation that he is in fact occupying. If
he is able to do his job equally well by occupying the next door house, the
statutory test could not be complied with.
In my judgment, the judge has correctly set out
the law. On the evidence before him he was perfectly entitled to reach his
conclusion. I consider that Mr Panton is reading the speech of Lord Lowry in
the case of Hughes, with which the other members of the House agreed, in
far too restrictive a way.
Hughes dealt with
the position of a headmaster and not a residential caretaker. Although Mr
Panton would not accept this, it seems to me that there is a clear distinction
between the position of a headmaster and that of a caretaker, especially a
caretaker who is required to be a resident caretaker as was the situation here.
In the case of a headmaster, no doubt it would be more convenient for him to
live within the vicinity of the school, but he can perform his duties equally
well if he is within motoring distance of the school.
Because of the duties of a resident caretaker, in
my judgment, the position of the defendant is very different. It seems to me,
as it did to the judge, that it was essential for the defendant to live nearby
the school. The only place where he could live near the school was in the accommodation
that was offered to him as part of the terms of his employment by the local
authority.
In his speech in Hughes, Lord Lowry made
certain comments that perhaps explain why Mr Panton construed that speech in
the way that he has. At p827 Lord Lowry refers to a concession made by counsel,
Mr Reynold. The speech is in these terms:
Mr Reynold concedes that, for the council to
succeed, a term has to be implied in the contract of employment that the
headmaster ‘is required to occupy the dwelling house Cedars for the better
performance of his duties’, but he adduced no decided case referring to the
doctrine of the implied term which in any way supported the proposition that on
the facts found here any such term could possibly be implied in this case. In
my opinion, the only way in which the term which the council need to imply here
could be implied into the contract would be to show that, unless he lived in
the Cedars, Mr Hughes could not perform his duties as headmaster. Mr Reynold
has insisted that to put the case in this way amounts to glossing or even
distorting the words of paragraph 2(1) of Schedule 1, which merely speaks of
‘the better performance of his duties’. It is at this point that I must part
company with counsel’s argument. In order that a term may be implied, there has
to be a compelling reason for deeming that term to form part of the contract,
and that compelling reason is missing in this case, unless it was essential
that Mr Hughes should live in the house in order to do his job, but the facts found
contradict that proposition. Without going into detail, I need only refer to Luxor
(Eastbourne) Limited v Cooper [1941] AC 108, 125, and (a case on
which Mr Reynold relied) Liverpool City Council v Irwin [1977] AC
239, 258. I may perhaps illustrate my view by referring to what I said in the
Court of Appeal in JM Reilly Ltd v Belfast Corporation [1970] NI
68, 83-84, in a passage which has no claim to originality of thought:
‘It is not enough for the court to conclude, (and
I guard myself against doing so), that such a term would have made the contract
more reasonable; terms will be implied not in order to make for the parties a
contract which the court considers fair, but only to make effective the
contract which the parties have made for themselves. The principle is clearly
and authoritatively stated in Luxor (Eastbourne) Ltd v Cooper
[1941] AC 108, and even in Devonald v Rosser [1906] 2 KB 728,
which may at first sight appear to give a more liberal expression to the
doctrine, one finds on analysis a loyal adherence to the rule of necessary
implication in the passage (at p743) where Farwell LJ asks, ‘What, then,
are we to infer would be a reasonable bargain such as the parties, being
businessmen, must have intended to make?”
Once the principle stated above is accepted, it
becomes pointless for the council to argue that a requirement must be implied
in a contract just because in fact for Mr Hughes to live in Cedars may have
promoted (or even did promote) the better performance of his duties, and
equally pointless to contrast the language of paragraph 2(1) of Schedule 1,
with that used in section 145(4)(a) of the Income and Corporation Taxes Act
1988.
The parallel drawn by Balcombe LJ, 24 HLR 605,
609, with the situation described by Lord Upjohn in Commissioner of
Valuation for Northern Ireland v Fermanagh Protestant Board of Education
[1969] 1 WLR 1708, 1722 (also reported [1970] NI 89, together with the
judgments in the Court of Appeal) is well taken, in my opinion, and illustrates
in another context the difference between what is essential and what is merely
conducive to the better performance of the occupier’s duties: in the context of
liability for or exemption from rates, the occupation is that of the employer
if either the contract provides that the employee shall occupy or
it is essential for the performance of his duties that the employee occupies
the hereditament, but the occupation is that of the employee (and rates are
payable by him) if the contract is silent, even though by living in the hereditament
the employee can better perform his duties: cf Glasgow Corporation
v Johnstone [1965] AC 609. I entirely agree with the comment of Balcombe
LJ, 24 HLR 605, 609, on the passage which he quotes from the speech of Lord
Upjohn [1969] 1 WLR 1708, 1722:
‘It seems to me to be implicit in this passage
that a term can only be implied that an employee shall occupy a particular
house when such occupation is essential for the performance of his duties:
otherwise there will be no scope for the implication of such a term upon the
application of the principles referred to by Lord Donaldson of Lymington MR in
his judgment. When the occupation is required only for ‘the better performance’
of his duties, then an express term is needed; there is no basis upon which a term
can be implied.’
Mr Reynold has referred your Lordships to Chitty
on Contract 26th ed (1989), vol 1 ‘General Principles’ ch 13 ‘Implied
Terms’, and in particular to paragraphs 904 to 907, which, in my respectful
opinion confirm by reference to the decided cases everything which I have
ventured to say on the subject:
‘[904]… The court will be prepared to imply a term
if there arises from the language of the contract itself, and the circumstances
under which it is entered into, an inference that the parties must have
intended the stipulation in question…
[905] A term will be implied if it is necessary,
in the business sense, to give efficacy to the contract…
[907] Obvious inference from agreement. A term
which has not been expressed may also be implied if it was so obviously a
stipulation in the agreement that the parties must have intended it to form
part of their contract… Further, since ‘the general presumption is that the
parties have expressed every material term which they intended should govern their
contract, whether oral or in writing’, the court will only imply a term if it
is one which must necessarily have been intended by them…’
Among the authorities cited for the last
proposition is Liverpool City Council v Irwin [1977] AC 239, on
which the council relied in support of their argument that the parties shared
an obvious but unexpressed intention that Mr Hughes should live at Cedars and
that it was not open to the court to infer that he was not obliged to live
there.
When giving effect to what Lord Lowry said in that
judgment, it is important to remember the situation with which he was dealing.
As I have indicated, it was not essential for the headmaster in Hughes,
as found by the trial judge, to live at the property that was in issue. In Lord
Lowry’s words it was merely ‘conducive to the better performance of the
occupier’s duties’. In these circumstances a term could not be implied
requiring the headmaster to live at the premises for the better performance of
his duties.
In this case the judge found that the position was
different. At the conclusion of the school’s headmaster’s evidence, the judge
asked him
it would not have been impossible for the defendant to carry out his duties
without living in close proximity to the school. The headmaster says, in
reference to a passage in his statement that indicated the contrary:
It means what it says but when I said that just
now I thought you were referring to what I said in court and not to the
statement. It would have been impossible because he has to be on call. He has
to be able to come to the school at a moment’s notice. Now it makes it much
more difficult if somebody is living much further away. On occasion I would
have called the caretaker out — and still do… I mean it, but when looking at
the pedantics of the word ‘impossible’, then I would say no, I would retract
that.
Judge Catlin: You would retract?
The headmaster: I would retract the word
‘impossible’ if I had the opportunity to do that. I would have substituted
‘much more difficult’ because clearly there is nothing ‘impossible’.
Those remarks are, no doubt, absolutely right,
nothing is ‘impossible’. But, from a practical point of view, in order for the
caretaker to perform his duties, it really was, using these words in the sense
that they were used by Lord Lowry, ‘essential that he should live in the
property which was the only property available’.
In order that Hughes can be properly
applied to situations such as this, a court has to discover what are the duties
that an employee is required to perform, and, then, having regard to the nature
of those duties, ask itself whether or not it was really practical for the
duties to be carried out if the employee did not live at the premises in
question. If it was really impractical to carry out the duties unless living in
the property in question, then that is a situation in which the necessary term
can be implied so the situation complies with the requirements of the schedule.
The approach of Lord Lowry, in my judgment, was
not suggesting any other test. Where you have a requirement for a regular
attendance at the premises at which you are employed, both within and outside
normal working hours, which it would be difficult to fulfil unless you lived at
the accommodation provided by your employer so you will be able to carry out
your duties properly, then it can appropriately be said that it is required for
the better performance of your duties to live at that accommodation. The
judge’s approach, looking at the whole of the facts, is the right one. In my
judgment, his decision cannot be faulted. I would dismiss this appeal.
Agreeing, Brooke
LJ said: I agree and I am only adding a few words of my own because
of the extent to which Mr Panton relies on the speech of Lord Lowry in the case
of Hughes. That was an entirely different case. Mr Hughes had gone to
work in a special boarding school out in the country, owned by a London local
authority, in 1958. Part of the terms of his contract of employment as
headteacher was entitlement to free board, lodging and laundry. He had
originally lived in the main school building, but he then moved to a rather
damp former gardener’s cottage in the school grounds. Eventually, five years
after he was appointed, the education committee built a house for him about 400
yards from the school building. It was separately fenced, invisible from the
school and down a drive not used by the pupils. Under a later contract, which
was the relevant contract for the purposes of the case, he was once again
provided with free board and lodging, but nothing was said about any
requirement to live in the house for the better performance of his duties.
In 1998 the school closed down and the buildings
were to be used as a residential and teaching annexe for another special
boarding school. On those facts, in a case involving a school headteacher, the
circuit judge held that, given all his foreseeable duties as headteacher, the
council could not have said that he simply could not do the job for which he
had been appointed if he lived in the local village outside the school gates,
and that they were entitled to insist that he must live on the site. The task
of the House of Lords was to consider the legal principles to be applied to
that case on the facts as found by the circuit judge.
This case is quite different. In 1970 Mr and Mrs
Lamond were living with their children, aged six and two, in a tied house owned
by a brewery company. Mr Lamond’s employment came to an end. He was looking for
a lighter job near his home that offered accommodation with the job, as he was
having to give up his tied accommodation. The school authorities had purchased
1 Devon Road for their caretaker and they called the house ‘School House’.
There was no question of the Lamonds living anywhere else in the vicinity. They
could not afford to do so, and there was no other accommodation realistically available
to them. It was the school caretaker’s house. In my judgment, the judge applied
the basic principles of contract law correctly. His conclusion was expressed in
the following terms:
I am satisfied that the plaintiffs have
established to the required standard that the common intentions of the parties
at the time and throughout was that Mr Lamond should be required to live in the
school house as a requirement of his contract of employment for the better
performance of his duties. I consider that was obviously the case and such a
term should be implied into the contract of employment.
I consider that the judge directed himself
correctly on the law and applied the law correctly to the facts which he found.
For these reasons and for the reasons given by my
lord, I, too, would dismiss this appeal.
In addition, Lord
Woolf said: I add in this matter in his judgment the judge concluded
by expressing the hope that an appropriate solution to the housing problems of
Mr and Mrs Lamond should be found, and he also expressed his sympathy for their
personal position. I repeat those expressions of sympathy. However, it does
seem to me there is no alternative but to actually remove the stay on the order
and that I will do.
BROOKE LJ agreed and did not add anything further.
Appeal dismissed.
