Landlord and tenant — Secure tenancy — Joint tenancy — Non-assignable joint tenancy — Deed of release of beneficial interest by one joint tenant to another — Distinction between assignment and release of interest of joint tenant – Section 91(1) of Housing Act 1985 — Whether deed effective to turn non-assignable joint tenancy into sole secure tenancy
In 1994 the appellant council granted the
respondent and H a secure tenancy satisfying the requirements of Part IV of the
Housing Act 1985. In July 1996 H moved out. The respondent, who wanted to
remain in the property, sought and was refused consent to the transfer of the
joint tenancy to the respondent as a sole tenant. On July 21 1996 H executed a
deed releasing all her beneficial interest in the joint tenancy to the
respondent. The council refused to accept the validity of the deed, relying
upon section 91(1) of the Housing Act 1985, which provides that a secure
tenancy is not capable of being assigned. The respondent commenced proceedings,
seeking a declaration that the deed was effective to vest the tenancy in the
respondent as sole tenant. The Court of Appeal decided that the deed was
effective and declared that the respondent was the sole tenant under the secure
tenancy. The council appealed.
distinct from a tenant in common, has nothing to assign to the other tenant,
because each already owns the whole, was an esoteric concept remote from the
realities of life. Apart from the effect of section 91 of the Housing Act 1985,
the interest of H could have been effectively transferred to the respondent
either by an assignment or by a release; it could not be that section 91 bites
or not according to which of these conveyancing modes
is used. Although there were differences between an assignment and a release,
there was nothing in the statutory context of the Housing Act 1985 to indicate
that ‘assign’ in section 91 should be given a more limited meaning and not
apply when one joint tenant drops out. The deed of release was ineffective to
achieve its object of vesting the tenancy in the respondent alone.
‘assignment’ is not a term of art; it denotes any conveyance, transfer,
assurance or other disposition of property from one party to another. The deed
of release could not have taken effect as an assignment of the joint tenancy as
the respondent did not join as assignor. Section 91(1) of the 1985 Act cannot
be made to include a release of the interest of a joint tenancy and did not
prohibit the release of the interest of a joint tenant. The deed of release was
valid and effective.
This was an appeal by Camden London Borough
Council from a decision of the Court of Appeal allowing an appeal by the
respondent, Susan Burton, from a decision of Mr Recorder Keane
making a declaration in proceedings brought by the respondent against the
council.
Bryan
McGuire (instructed by the solicitor to Camden London Borough Council) appeared
for the appellants; Sylvester Carrott (instructed by
Camden Community Law Centre) represented the respondent.
Giving his opinion, Lord Nicholls
of Birkenhead said: My lords, Miss Susan Burton lives at 49 Aborfield, Peckwater Street,
London NW5. This is a three-bedroom flat belonging to Camden London Borough
Council. In February 1994 she became a weekly tenant jointly with Miss Jan Hannawin. The two of them occupied the flat with Miss Hannawin’s son, then six years of age. The tenancy was a
secure tenancy, satisfying the requirements of Part IV of the Housing Act 1985.
Two years later, on 26 July 1996, Miss Hannawin
bought a property elsewhere and moved out.
This gave rise to a financial difficulty for Miss
Burton. She was in receipt of income support, and her housing benefit was
assessed at one-half of the rent payable for the flat. Miss Hannawin
was responsible for the other half of the rent. The Housing Benefit (General)
Regulations 1987 (SI 1987 No 1971) Regulation 10(1) and (5) provide for the
payment of housing benefit, in the form of a rent rebate or allowance, when a
person is liable to make payments of rent in respect of a dwelling he occupies
as his home. Where more than one person is liable to pay rent in respect of a
dwelling, the rent is apportioned appropriately for the purpose of calculating
the eligible rent for housing benefit purposes. Miss Burton feared that her
housing benefit would still be assessed at one-half of the rent for the flat
after Miss Hannawin had left because, as one of the
joint tenants, Miss Hannawin would remain liable to
pay rent. In practice, however, Miss Hannawin would
make no further payments of rent after she left the flat.
On 4 July 1996, in expectation of Miss Hannawin’s departure, Miss Burton wrote to Camden London
Borough Council. She explained her position and requested a review of her
housing benefit claim. If she were not paid housing benefit for the full rent
of the flat, she could not remain in her home there. She would be homeless and
have nowhere to go. Camden Community Law Centre also wrote on her behalf. On 18
July, after speaking to Miss Burton, the council replied to the law centre. The
council were not willing to grant her a sole tenancy of 49 Aborfield
because this was a three-bedroom flat. The council were desperately short of
larger units to house families waiting in temporary accommodation. The council
therefore wished to encourage Miss Burton to move to a one-bedroom flat. Until
Miss Hannawin served a notice to quit, which would
formally end the existing joint tenancy, Miss Burton would remain liable to pay
the whole rent. (I note, in passing, that a notice to determine the tenancy
served by Miss Hannawin alone would have been
effective to bring this tenancy to an end: see Hammersmith and Fulham London Borough Council v Monk [1992] 1 AC 478*. If such a notice
were served, the council would seek to offer Miss Burton a secure tenancy of a
suitable one-bedroom flat as soon as possible. If she refused a reasonable
offer of alternative accommodation, the council would consider taking legal
action to repossess 49 Aborfield.
* Editor’s note: Also reported at [1992] 1 EGLR
65; [1992] 09 EG 135
Miss Burton did not wish to move. She wished to
continue living at 49 Aborfield, but as the sole
tenant. As sole tenant, her housing benefit would be increased appropriately.
But there was a difficulty in simply transferring the tenancy from joint names
into her sole name. The council would not agree to such a transfer, and it was
far from clear that Miss Burton and Miss Hannawin
could go ahead without their landlords’ consent. This stemmed from the
provision in section 91(1) of the Housing Act 1985 that a periodic secure
tenancy ‘is not capable of being assigned’.
Miss Burton’s legal advisers then put forward a
means they hoped would solve Miss Burton’s problem. They prepared not a deed of
assignment, but a deed of release. The deed was made between Miss Hannawin and Miss Burton and was executed on 21 July 1996.
The deed recited the tenancy agreement, that the two of them were joint secure
tenants of the flat, and that Miss Hannawin would be
leaving the flat permanently on 26 July. The operative part of the deed
consisted of a single clause, in these terms:
Jan Theresa Hannawin
hereby releases her legal and beneficial interest under this joint secure
tenancy to Susan Patricia Burton who accepts the same to hold pursuant to this
deed of release as the sole secure tenant of the dwelling with effect from the
date hereof.
The council refused to accept that this deed was
effective to make Miss Burton sole tenant of the property. Miss Burton began
proceedings in Central London County Court, claiming a declaration that she was
the sole tenant and an order for the rectification of the council’s rent
account accordingly.
Mr Recorder Keane
dismissed the application. He held that the deed of release was, in substance,
an assignment of Miss Hannawin’s interest and was
ineffective. Miss Burton appealed. The Court of Appeal (Butler-Sloss LJ and Sir John Vinelott)
reached the opposite conclusion and made a declaration that Miss Burton was the
sole tenant. The council have now appealed to your lordships’ house against
that decision.
In order to succeed in her objective, Miss Burton
must surmount two hurdles. First, the deed of release must be effective in law
to vest the tenancy in her alone. This depends on whether the deed falls foul
of the non-assignability provision in section 91(1)
of the Act of 1985. Assuming Miss Burton succeeds on the first point, she must
also establish that Miss Hannawin ceased to be liable
for the rent falling due after the deed of release. When the tenancy was
granted, Miss Hannawin became jointly and severally
liable to pay the rent. The question that arises, and this is the second
hurdle, is whether Miss Hannawin continued to be
liable for rent after she had parted with all interest in the flat.
Other questions may also arise on the
interpretation of the housing benefit regulations. For instance, one issue
raised before your lordships was whether, following execution of the deed of
release, Miss Burton was under an obligation to indemnify Miss Hannawin against any continuing liability she might have to
pay rent, and, if so, whether Miss Hannawin was a
person liable to make a payment by way of rent for the purpose of Regulation
10. These questions are not before your lordships’ house.
I turn to the statutory scheme concerning secure
tenants. As is well known, the Housing Act 1980 introduced security of tenure
for tenants of local authorities. The purpose was to give public sector tenants
protection similar to that enjoyed by tenants in the private sector under the
Rent Acts. The relevant provisions are now contained in Part IV of the Housing
Act 1985. Stated shortly, and at the risk of over-simplification, a tenancy
under which a dwelling-house is let as a separate dwelling is a secure tenancy
at any time when conditions known as the landlord condition and the tenant
condition are satisfied. The landlord condition is that the landlords are a
local authority. The tenant condition is that the tenant is an individual and
occupies the dwelling-house as his only or principal home; or, where the
tenancy is a joint tenancy, that each of the joint tenants is an individual and
at least one of them occupies the dwelling-house as his only or principal home:
section 81. A secure tenancy that is a periodic tenancy cannot be brought to an
end by the landlord except by an order of the court, which may be made on
specified grounds.
Security of tenure is not confined to the original
tenant. In certain circumstances, a person may succeed a tenant on the tenant’s
death. Then the tenancy vests in the successor. A tenant is qualified to
succeed in this way if he occupies the property as his only or principal home
and he was the tenant’s spouse or was another member of the tenant’s family and
had lived with the tenant for the last 12 months: section 87. Succession can
take place only once. The succession provisions do not apply if the tenant was
himself a successor.
This scheme would be open to abuse if a tenant
were able to deal freely with his tenancy. Sections 91 to 95 are concerned to
prevent this mischief and to regulate a tenant’s rights in this regard. Some of
the provisions in these sections are enabling, some restrictive. Section 91
sets out the primary and most fundamental restriction. Although the statutory
scheme is grafted on to tenancies created at common law, an overriding
statutory restriction or limitation is that, with certain tightly-drawn
exceptions, a secure tenancy is, as a matter of law, incapable of being
assigned. Section 91(1) provides:
A secure tenancy which is —
(a) a periodic tenancy…
is not capable of being assigned except in the
cases mentioned in subsection (3).
The exceptions mentioned in subsection (3) are an
assignment by way of exchange, with the consent of the landlord; an assignment
in pursuance of property adjustment or similar court orders under the
matrimonial or children legislation; and an assignment to a person who would be
qualified to succeed the tenant if the tenant had died immediately before the
assignment. None of the exceptions is applicable in the present case.
The first issue before your lordships raises a
question of interpretation of the phrase ‘not capable of being assigned’ in
section 91(1). Miss Burton’s case is that the deed of release was not an
assignment. The foundation of her case is that where property is held by joint
tenants, each of them has an identical interest in the whole of the property.
If one joint tenant wishes to vest the entire interest in the property in the
other, the appropriate mode is by way of release, not assignment. As a matter
of conveyancing formality, the property may now be
conveyed by joint tenants to one of themselves, pursuant to the Law of Property
Act 1925, section 72(4), but the right of one joint tenant to release his
interest to the other is preserved by section 36(2).
I cannot accept the conclusion for which Miss
Burton contended. The difference between a release and an assignment is
familiar to property lawyers, although less so now than formerly. The
difference was important at a time when use of appropriate words of limitation
could be crucial. As your lordships were reminded, the distinction can be traced
at least as far back as the days of Coke
on Littleton. But this ancient distinction does not provide the answer to
the issue before your lordships’ house. The legal concept relied upon for Miss
Burton is that a joint tenant, as distinct from a tenant in common, has nothing
to transfer to the other tenant, because each already owns the whole. I have to
say that this esoteric concept is remote from the realities of life. It should
be handled with care, and applied with caution. In the present case, the transaction
sought to be carried through was that the tenancy should become vested in Miss
Burton alone, and that Miss Hannawin should give up
to Miss Burton her right to live in the flat. Whatever precise form of words
was chosen, this transaction would ordinarily be regarded as a transfer of Miss
Hannawin’s rights in the flat to Miss Burton. Miss Hannawin was passing over her interest to Miss Burton. As a
matter of conveyancing, this transfer could be
achieved by one of two means: either by a deed of assignment (‘Miss Burton and
Miss Hannawin hereby assign the tenancy to Miss
Burton’) or by a deed of release (‘Miss Hannawin
hereby releases her estate and interest in the property to Miss Burton’). Each
would achieve the same result. In each case, the legal estate in the tenancy,
formerly held by the two of them, would become vested in one of them. It cannot
be that section 91(1) bites or not according to which of these two conveyancing modes is used. That would make no sense.
Against this background, I approach the matter as
follows. The issue before your lordships is whether the deed of release was
effectual to vest the tenancy in Miss Burton alone. More precisely, before the
execution of the deed of release the legal estate in the tenancy was held by
Miss Burton and Miss Hannawin in trust for themselves
as joint tenants: see section 36(1) of the Law of Property Act 1925 as amended.
The issue is whether the deed of release was effectual to vest this legal
estate in Miss Burton alone. This was the object she sought to achieve.
Anything less would not assist her.
Having in mind that this is the issue, I turn to
the non-assignability provision in section 91. In the
context of a lease, ‘assign’ normally connotes the transfer of the lease from
one person to another. The simplest example is a transfer of a lease from A to
B. Another example is a transfer of a lease from A to A and B. The present case
is different because the transaction under consideration did not involve the
introduction of a new tenant. The present case concerned a transfer of the
legal estate from A and B to A alone. What was involved was that one of the
existing tenants should cease to be a tenant. This difference is not material.
Here also, as a matter of ordinary usage, such a transfer of a lease, changing
the identity of the tenants, would be regarded as an assignment. Consistently
with this, in Varley
v Coppard
(1872) LR 7 CP 505 one of two joint lessees assigned his estate and interest in
the leased property to the other lessee. The court (Willes
and Keating JJ) held that this was a breach of a
covenant not to assign the demised premises. The fact that the assignee was
already a tenant was not regarded by anyone as negativing
a breach of the covenant against assignment. In that case, the joint lessees
held the lease as tenants in common, not joint tenants. On the point now under
consideration, that difference is immaterial. In each case, the identity of the
lessees is changed.
I can see nothing in the statutory context to
indicate that ‘assign’ in section 91 should be given a more limited meaning and
not apply where one joint tenant drops out. If anything, the indications are to
the contrary. One of the permitted exceptions is ‘an assignment in pursuance of
an order made under… section 24 of the Matrimonial Causes Act 1973 (property
adjustment orders in connection with matrimonial proceedings)’: see section
91(3)(b)(i).
A common form of property adjustment order provides for the vesting of a joint
tenancy of the matrimonial home in one spouse, typically the wife. Section
91(3)(b)(i)
envisages that the document carrying the court order into effect would be an
assignment within the meaning of section 91. True, the narrower interpretation
of ‘assign’ propounded on behalf of Miss Burton would not deprive this
provision of all content. On the narrower interpretation, section 91(3)(b)(i) could
still apply in cases where the property was held by one spouse and ordered to
be transferred to the other. But I doubt whether the draftsman of this section
had this distinction in mind.
As already mentioned, the tenant condition in
section 81 is satisfied in the case of a joint tenancy if only one of them
occupies the property as his home. I recognise that it is difficult to see how
a landlord could be prejudiced if a joint tenant who was not living in the
property released his interest to the other joint tenant. However, this does
not warrant reading into section 91 a further, unexpressed exception. It is
possible to envisage other instances where an assignment might not prejudice
the landlord. But, subject to the permitted exceptions, section 91(1) precludes
all assignments, not only those that would or might prejudice the landlord.
Accordingly, the deed of release was ineffectual
to achieve its object of vesting the tenancy in Miss Burton alone. Although
expressed as a release (‘Jan Theresa Hannawin hereby
releases her legal… interest… to Susan Patricia Burton’), the object was to
transfer the legal estate in the tenancy from the two of them to Miss Burton
alone. By reason of section 91(1), that object was incapable of achievement.
This is so, whatever form of words was used: release, surrender, transfer,
assign, convey, grant. In colloquial terms, this tenancy bore a label ‘not
transferable’.
Since Miss Burton’s case fails on this issue, the
second issue does not arise for decision. I would allow this appeal, set aside
the order of the Court of Appeal, and restore the order of Mr Recorder Keane.
Lord Browne-Wilkinson and Lord Steyn agreed and did not
add anything.
Agreeing, Lord Hobhouse of Woodborough said: My lords, I agree that this
appeal should be allowed in accordance with the opinion of my noble and learned
friend Lord Nicholls of Birkenhead. I will only add a
further few words in view of the different opinion to be expressed by my noble
and learned friend Lord Millett.
The tenancy with which the present appeal is
concerned was a contractual tenancy entered into by three persons, the borough
council as landlords and Miss Burton and Miss Hannawin
as joint tenants. The contract was contained in or evidenced by the document
that they signed and the ‘Tenancy Conditions’ to which it referred. The
conditions, in their turn, referred to the Housing Act 1985. The obligation of
Miss Hannawin to pay rent to the council was contractual.
Each of the joint tenants were stated to be ‘jointly and individually liable to
pay the charges and for all the obligations under the tenancy’. Under clause
C1, tenants had an express obligation to pay the weekly rent and other charges
regularly and promptly in advance. Under clause C3, tenants were expressly
required to use the premises as their only or principal home and not to part
with the possession of the whole of the premises. There was also a contractual
prohibition of assigning the tenancy expressed in similar terms to section 91
of the Act.
The conditions provided that the tenants should
have security of tenure in accordance with the Act and that the council could
not take possession of the premises save by getting an order under the Act or
accepting a surrender of the tenancy by the tenant. Miss Burton and Miss Hannawin expressly agreed to accept these conditions of
tenancy.
The contention of the respondent is that, by means
of the deed of release that they executed, she and Miss Hannawin
have successfully brought to an end all Miss Hannawin’s
rights and obligations under the lease, including, specifically, her obligation
to continue to pay the contractual rent, and that they have achieved this
without having obtained the concurrence of the landlords and without
terminating the tenancy of the premises.
Lord Nicholls has
already discussed the statutory difficulties involved in accepting this
submission. There are also fundamental contractual objections to the
submission. Miss Hannawin accepted a joint and
several contractual obligation to pay the rent. She cannot escape from this
obligation (or any of her other obligations under the contract) by an act to
which the council, the landlords, are not a party and to which they have not
assented. The contract (and the general law of landlord and tenant) permits
Miss Hannawin to terminate her obligations and her
liability to pay the rent by serving a notice to quit (or its equivalent) on
the landlords. Such a notice will terminate the joint tenancy: see Hammersmith and Fulham London Borough
Council v Monk [1992] 1 AC 478.
A release by Miss Hannawin
of her interest in the joint tenancy to Miss Burton has a different character:
the deed was bilateral solely between Miss Burton and Miss Hannawin.
The council were not a party to the deed; they were unaware of its execution
and never consented to it. Unless the contract can be construed so as to permit
Miss Hannawin to terminate her contractual obligation
by such means and without serving a notice to quit, such an act is
contractually ineffective to limit the rights of the council under their
contract with her. For the sake of completeness, it should be mentioned that if
the deed of release was ineffective as between the council and Miss Hannawin to terminate Miss Hannawin’s
contractual obligations to the council, it was likewise ineffective without
more to deprive her of her contractual rights against the council.
The arguments against construing the contract so
as to permit a unilateral derogation are even stronger than those arising from
the statute. The respondent’s submission involves an inference or implication
that is contrary to the plain words of the contract. It is contrary to the
surrounding circumstances in which the contract was entered into. The flat was
suitable for occupation by two people and the contemplation (and agreement) was
that it would normally be occupied by both Miss Burton and Miss Hannawin. The rent payable to the council was secured by
the joint and several undertaking of both of them. Further, the construction
contended for by the respondent is not supported by the statute.
The opinion of Lord Millett,
which I have read in draft, deploys the undoubted distinctions between a
release by one joint tenant to another and an assignment. It is fundamental
that there is only one tenancy. The distinctions have persuasive weight in
relation to the breadth to be given to the prohibition in section 91 of the
Act, but not in relation to the contractual question. Similarly, section 81 is
persuasive in relation to the recognition by the Act that one of the joint
tenants may not, in fact, be occupying the premises as his or her home, but
does not detract from the contractual undertaking by both joint tenants,
jointly and severally, to pay the rent so long as the tenancy should subsist;
indeed, it could be thought to add force to the need for that undertaking.
I have joined your lordships in allowing this
appeal on what you have described as the first issue — the construction of the
statute — but, in my opinion, the ultimately critical question, in relation to
the continuing liability of Miss Hannawin for the
rent, is the contract. The contract permitted Miss Hannawin
to terminate her contractual liability to the council for rent by terminating
the tenancy. It did not permit her to do so by entering into some agreement or
transaction with Miss Burton alone and specifically preserving the tenancy.
Dissenting, Lord Millett
said: My lords, the word ‘assignment’ is not a term of art. It denotes any conveyance,
transfer, assurance or other disposition of property from one party to another.
The essence of an assignment is that it operates to transfer its subject-matter
from the ownership of the assignor to that of the assignee. A lease is not an
assignment, because it does not transfer any pre-existing property from the
lessor to the lessee, but creates a new interest and vests it for the first
time in the lessee. A purported assignment of the interest of one joint tenant
to the other joint tenant does not constitute an assignment, because each of
the joint tenants is already the owner of the whole. The so-called assignor has
no separate interest of his own that is capable of being transferred to the
other and that the other does not already own. None of this, of course, applies
to a tenant in common, because he has a separate and distinct interest of his
own, which he can assign either to a third party or to his co-owner.
Before 1926, therefore, one joint tenant could not
assign his interest to the other. But he could achieve much the same result by
releasing his interest. The release operated to extinguish his interest and not
to assign it. The difference, though technical, was not a formality. Since a
release did not operate by way of assignment or conveyance, it required no
words of limitation. Moreover, where there were three or more tenants, a
release by one joint tenant did not destroy the unity of title of the others
and so sever their interests, for they did not acquire any interest by the
release that they did not already own.
No particular form of words was required for a
release. Even if it were drafted as an assignment, it still took effect as a
release. The difference was one of substance, not form; it was not merely a
matter of language. The ability of one joint tenant to release his interest to
the other has been preserved by section 36(2) of the Law of Property Act 1925.
It is still not possible for one joint tenant to assign his interest to the
other. Since 1925, however, the two joint tenants in whom the legal estate is
vested have been able to join together to convey the estate to one of them.
This was not possible before 1926 because the same person could not be both
assignee and one of the assignors. Section 74(2) of the Act of 1925 has removed
this difficulty.
The subject-matter of the deed of release in the
present case is expressed to be Miss Hannawin’s
‘legal and beneficial interest’ in the secure tenancy, not the secure tenancy
itself, which, of course, did not belong to her. The deed was executed by both
parties, but Miss Burton executed it only to signify her acceptance. Miss Hannawin was the sole grantor. The wording of the document
follows the traditional form of release found in the precedent books. It is
beyond argument that it took effect as a release of Miss Hannawin’s
interest. It cannot have taken effect by way of assignment of the tenancy
itself. This would have required Miss Burton to join in the deed as assignor.
A covenant against assignment in a lease is
strictly construed. It does not prohibit subletting or parting with possession.
A covenant against subletting the demised premises does not prohibit a
subletting of part. A covenant against assignment of the tenancy does not
prohibit an assignment of the lessee’s beneficial interest in the tenancy. A fortiori a covenant against assignment
does not prohibit the release of the interest of one of two joint lessees. Such
a transaction is not only not within the words of the covenant; it is not
within the mischief that the covenant is designed to avoid. It does not foist a
new, and possibly unacceptable, tenant upon the landlord without his consent.
He has already accepted both joint lessees as his tenants, and has done so in
the knowledge that (unless there is a severance) on the death of one of them
the lease will devolve in its entirety on the other. By granting a lease to two
or more joint lessees in the knowledge that their number must eventually reduce
to one, the lessor has already signified his consent to any or either of them
becoming his sole lessee.
Before 1925 it had been held that an assignment of
a partner’s beneficial interest in a lease on the dissolution of the
partnership to his former partner was a breach of a covenant not to assign the
lease: see Varley
v Coppard (1872) LR 7 CP 505. I do not think that
the case is of any authority today. Although the partners were joint tenants at
law (though not in equity), the basis of the decision was that it would have
been a breach of the covenant for either of them to have severed the joint
tenancy and assign ‘his undivided moiety’ to a stranger. Quite apart from the
faulty logic involved in the extrapolation from a transaction that introduces a
new lessee to one that does not, since 1926 it has not been possible to sever a
joint tenancy at law.
This, however, only provides the starting point
for the question that now falls for decision, which is concerned with the
meaning of the word ‘assigned’ in section 91(1) of the Housing Act 1985. It is
necessary to examine the statutory context, both textual and in terms of
legislative policy, to see whether they require the word to be given an
extended meaning that it would not normally bear.
Part IV of the Act creates the concept of a secure
tenancy. Section 91(1) makes a secure tenancy incapable of assignment. A
purported assignment does not merely constitute a breach of statute. It does
not effect an assignment of the tenancy. The deed of release signed by Miss Hannawin, however, does not come within the statutory
language. The deed is not, and does not, purport to be an assignment of the
tenancy. Miss Hannawin was not the secure tenant. The
tenancy was not hers to assign. Even if the deed is treated as an assignment,
it cannot properly be treated as an assignment of the tenancy, but only of her
interest in it.
In my opinion, section 91(1) cannot be made to
include the release of the interest of a joint tenant without doing
considerable violence to the language. It is necessary not only to give the
word ‘assign’ a special meaning to include the execution of a document that
assigns nothing, but to treat the words ‘A secure tenancy’, with which the
subsection opens, as including an interest in a secure tenancy. This is very
difficult to do as a matter of language. It is impossible elsewhere in the
section (see for example subsection (2) where ‘tenancy’ plainly means the
tenancy itself) or in section 88(1), where the case of joint tenants is dealt
with in para (b)
but not elsewhere. Throughout Part IV the draftsman has been careful to distinguish
between the assignment or devolution of the tenancy itself and the case where a
joint tenant becomes the sole tenant, where the tenancy does not change hands.
Local authority housing is commonly let to two or
more joint tenants, usually, but not necessarily, husband and wife or persons
living together as husband and wife. Section 81 (‘the tenant condition’)
expressly contemplates the grant of a secure tenancy to joint tenants. Section
88(1)(b) makes specific provision for
this situation. It provides that a joint tenant who has become a sole tenant is
to be treated for the purpose of succession to the tenancy as if he were
himself a successor. The subsection is not limited to the more usual case,
where the successor has become sole tenant on the death of the other co-owner.
Its language is appropriate to include the tenant who becomes the sole tenant
on the release of the other’s interest.
It was submitted on behalf of the council that
section 91(3) (which permits the tenancy to be assigned in pursuance of a
property adjustment order in connection with matrimonial proceedings whether
here or abroad) shows that the prohibition on assignment covers the release of
the interest of one joint tenant to the other. This would be so if every such
assignment would necessarily be made by one joint tenant to the other, for
unless this was prohibited by subsection (1), there would be no need for
subsection (3). But that is obviously not the case. There must be a huge number
of tenancies of local authority housing where the occupiers are husband and
wife and yet the tenancy is in the name of only one of them. There must be many
cases where the sole tenant has married since he took the tenancy. Section
91(3) would be needed to cater for such cases whether or not section 91(1)
prohibited a joint tenant from releasing his interest.
My lords, Part IV of the Act is concerned with
security of tenure. It is not concerned with housing benefit or
under-occupation of local authority housing. It applies to tenants who are not
in receipt of housing benefit in like manner as it applies to tenants who are.
A reduction in the number of joint tenants, whether by death or by the release
of his interest to the other, may lead to under-occupation and the
under-provision of housing benefit, but any statutory resolution of these
problems lies outside the scope of Part IV.
In the case of a joint tenancy, the tenant
condition in section 81 is satisfied even if only one of the joint tenants
occupies the premises as his only or principal home. It permits one of the
joint tenants to vacate the property without jeopardising the security of
tenure enjoyed by the other. What possible reason can there be to prohibit a
joint tenant who is not in occupation of the property from releasing his
interest so as to constitute the only occupier the sole tenant?
Given the statutory context, I can find no reason
to do violence to the language of section 91(1) by extending it to include the
release of the interest of a joint tenant. I am unable to identify the mischief
that makes such an extension necessary. A release does not foist a new and
undesirable tenant on the council as an assignment may. The problem is not
under-occupation, or the tenant condition would be expressed differently. It
does not lie in the liability to pay rent, for this should be covered by the
tenancy agreement. If there is a problem with housing benefit, the solution
lies in amending the housing benefit rules, not in distorting the statutory
scheme providing security of tenure.
In my opinion, the deed of release was valid and
effective to constitute Miss Burton the sole tenant. It follows that Miss Hannawin is no longer liable for rent by virtue of privity of estate. Your lordships, however, take a
different view and are of opinion that the deed of release was ineffective to
divest Miss Hannawin of her interest. Accordingly, it
is not necessary to consider the effect that a valid deed of release would have
had on Miss Hannawin’s contractual liability to pay
rent. As at present advised, however, and subject to any argument to the
contrary (and to any possible effect of the Landlord and Tenant (Covenants) Act
1995), I incline to the view that the release or assignment of her interest in
favour of Miss Burton does not affect her contractual liability to the council,
but on ordinary principles entitles her to be indemnified by Miss Burton.
It is, to say the least, an open question of
whether, if the deed of release is ineffective to assign the tenancy, its
invalidity as against the council is something on which Miss Burton can rely as
against Miss Hannawin. We have heard no argument on
the point, but it is difficult to believe that Miss Hannawin
could invoke section 91(1) to insist on resuming possession against Miss
Burton’s wishes; or that, even if she did not do so, Miss Burton could call
upon her for her share of the rent. I think that the real question has not yet
been addressed in these proceedings. Miss Burton was always jointly and
severally liable for the whole of the rent. The question is: what is the extent
of her entitlement to housing benefit now that she is without recourse to Miss Hannawin?
Appeal allowed.
