by Delyth Williams
In the concluding half of this article Delyth Williams discusses the problems of, among other things, statutory succession and security of tenure, concluding with those cases concerned with the Leasehold Reform Act.
Statutory succession
Under section 2 of and Schedule 1 to the Rent Act 1977 a deceased’s spouse or a defined member of the deceased’s family may be entitled to succeed to the statutory tenancy of the deceased. In Swanbrae Ltd v Elliott [7] 1 EGLR 99; (1986) 281 EG 916 the claimant was the daughter of the deceased statutory tenant and the only question in dispute was whether she was residing with her mother at the time of, and for the period of six months before, her mother’s death. The claimant had a home of her own about 2 miles away from her mother’s house where she lived with her 21-year-old son. She visited her mother regularly when the mother became seriously ill and for more than six months before her mother’s death moved into a spare room in her mother’s house in order to look after her. She slept there about three to four nights per week, but throughout she retained the tenancy of her own house. The Court of Appeal held that the claimant did not satisfy the requirements of “residing with” her mother within the meaning of the provisions. The fact that the claimant had a permanent home in which she intended to live in the foreseeable future was not ipso factor fatal to her claim, but it was a matter to be taken into account in a case which was essentially one of fact and degree.
A minor’r right to a statutory succession was considered in Portman Registrars & Nominees v Mohammed Latif (unreported but noted in the Institute of Rent Officers’ Selected Case Law Guide). In this case the tenant of a dwelling-house died leaving her 16-year-old daughter in occupation. The daughter had lived in the property for 10 years prior to the death of her mother and claimed the right to a statutory succession, but this was disputed by the landlords on the grounds that she was a minor and had no legal capacity to succeed to a statutory tenancy. The county court judge held that while a minor was precluded from holding a legal estate in land a statutory tenancy did not create a legal estate, so that the daughter had capacity to succeed to the statutory tenancy.
Two other recent decisions in this area of law are also worthy of note. In Sefton Holdings v Cairns [8] 14 EG 58 the Court of Appeal held that for the purposes of succession to a statutory tenancy on death of the first successor of the original statutory or protected tenancy a person must be an actual member of the deceased’s family and not just be treated as such. Further, in Chios Property Investment Co Ltd v Lopez [1988] 05 EG 57 the Court of Appeal was of the opinion that an occupant is entitled to succeed to a protected or statutory tenancy on the death of the original tenant if the facts show that their relationship had arrived at a state of sufficient permanence for it to be said that the occupant was a member of the family.
Miscellaneous matters
Wife’s security of tenure
The question in Hall v King [7] 2 EGLR 121; (1987) 283 EG 1400 was whether a wife in the particular circumstances qualified for security of tenure. In this case the husband (whose marriage had broken down and who was living with another woman) took a Rent Act-protected cottage to provide accommodation for his wife, who had suffered from ill health, in the hope that the young son of the marriage might get used to living with his mother. For the first six or seven weeks the husband slept at the cottage four or five nights each week, but apart from this he continued to live with the other woman and there was no question of any reconciliation or resumption of married life with the wife. The arrangement for the son to live with his mother came to an end after seven weeks and thereafter the husband’s visits ceased and the wife lived alone at the cottage. Later, the landlord terminated the husband’s protected tenancy of the cottage and claimed possession against both the husband and wife. It was submitted that the wife had an entitlement to security of tenure under either the Matrimonial Homes Act 1983 or case law. The Court of Appeal held that the claim under the 1983 Act was clearly ruled out as the cottage had at no time been the matrimonial house of the spouses. Further, a wife’s right to occupy the matrimonial home depended on her status as a wife and not on any leave or licence of her husband. In any event the one factor common to all the cases was that the wife was in occupation of what was, or before the husband moved out had been, the matrimonial home and that was not the position here.
Demolition and closing orders
The interrelationship of the Rent Act 1977 and the Housing Act 1985 and the effects of demolition and closing orders and of the dwelling-house in question becoming a listed building were considered by the Court of Appeal in Beaney v Branchett [7] 2 EGLR 115; (1987) 283 EG 1063, where a demolition order had in fact been made in 1973 but no steps had been taken to carry out the order. The landlords had purchased the property in 1983, knowing of the demolition order and with a view to repairing the property. In 1984 the property became a listed building, but the local authority did not immediately determine the demolition order and replace it by a closing order as required by section 304 (2) of the Housing Act 1985. They did not take this action until after the landlord (having terminated the tenant’s contractual tenancy by a notice to quit) had commenced proceedings for possession. The county court judge granted possession on the ground that he was required to do so because section 276 of the Housing Act 1985 states that nothing in the Rent Acts prevents possession being obtained by the owner of premises “in respect of which a closing order is in force”. The Court of Appeal was of the opinion that the closing order was not in force or operative at the date of the trial, as the requirements of section 268 of the 1985 Act had not been complied with. The tenant’s appeal was allowed and the possession order was set aside.
Rent assessment committee decision
In R v Bristol Rent Assessment Committee ex p Dunworth [7] 1 EGLR 102; (1987) 282 EG 214 the decision of the rent assessment committee was challenged by the tenant by way of judicial review. In this case the rent officer had determined a rent of £1,068 per annum plus £168 for services and the committee subsequently fixed a rent of £2,000 per annum with the same amount of £168 for services. The communications from the tenant to the committee were ambiguous as to whether she wished to withdraw her objection or was merely stating that she did not wish to attend a hearing. The committee did not know that a letter from the tenant withdrawing her objection had been lost in the post and, having made arrangements to clarify the situation, notified her of the hearing. There was further confusion and the committee proceeded with the hearing in her absence. The crucial question was whether the committee’s decision to proceed to a determination in the absence of the tenant and without an inspection was one which no reasonable rent assessment committee could arrive at. McCullough J, having reviewed the correspondence, held that the committee had not acted unreasonably.
Protected shorthold tenancies
In Paterson v Aggio [7] 2 EGLR 127; (1987) 284 EG 508 the question before the Court of Appeal was whether a forfeiture clause in a lease purporting to grant a protected shorthold tenancy under section 52 of the Housing Act 1980 fell within the requirements of section 52(1)(a), which allowed a shorthold tenancy to contain “a provision for re-entry or forfeiture for non-payment of rent or breach of any other obligation of the tenancy”. It was contended by the tenants that the clause in the lease which provided in a fairly standard form for re-entry on non-performance of any agreement a stipulation “or if the tenant … shall become bankrupt or enter into any composition with his creditors or if the premises should be left vacant or unoccupied for more than twenty-one days” did not comply with section 52(1)(a). The Court of Appeal held that the county court judge was correct in construing the three requirements in the forfeiture clause in the lease as “obligations” imposed on the tenants, as the strict construction suggested by the tenants would defeat the plain intention of the legislature.
In Gent v de la Mare [8] 18 EG 63 the Court of Appeal broadly accepted the landlords’ submission that the tenancy for the first year was a shorthold tenancy (within section 52(1) of the Housing Act 1980) but at the end of that year a tenancy arose under the tenancy agreement which was a protected tenancy but not a protected shorthold tenancy.
Several changes have been made to the operation of the Rent Act 1977 and protected shorthold tenancies by the following statutory instruments.
(i) The Rent (Relief from Phasing) Order 1987 (SI 1987 no 264);
(ii) The Protected Shorthold Tenancies (Rent Registration) Order 1987 (SI 1987 no 265);
(iii) The Rent Act 1977 (Forms etc) (Amendment) Regulations 1987 (SI 1987 no 266);
(iv) The Protected Shorthold Tenancies (Notice to Tenant) Regulations 1987 (SI 1987 no 267).
Under section 52(1)(c), of the Housing Act 1980 the following conditions for a protected shorthold tenancy must, inter alia, also be satisfied, namely:
(c) either a rent for the dwelling-house is registered at the time the tenancy is granted or.-
(i) a certificate of fair rent has, before the grant, been issued under section 69 of the 1977 Act in respect of the dwelling-house and the rent payable under the tenancy, for any period before a rent is registered for the dwelling-house, does not exceed the rent specified in the certificate; and
(ii) an application for the registration of a rent for the dwelling-house is made not later than 28 days after the beginning of the term and is not withdrawn.
The Secretary of State for the Environment has power under section 52 to order that the provisions of subsection (1) shall have effect generally or in relation to any rent registration area as if the provisions of para (c) did not apply. The Protected Shorthold Tenancies (Rent Registration) Order 1981 (SI 1981 no 1578) removed this requirement for all registration areas outside Greater London and the Protected Shorthold Tenancies (Rent Registration) Order 1987 (SI 1987 no 265) has removed the requirement of section 52(1)(c) generally (ie all areas outside and within Greater London).
The practitioner should note that one of the conditions, under section 52(1)(b), is that, before the grant of a tenancy, the landlord has given the tenant a valid notice stating that the tenancy is to be a protected shorthold tenancy. Such a notice is not valid unless it complies with the regulations made by the Secretary of State for the Environment. The new forms of notice are contained in the Protected Shorthold Tenancies (Notice to Tenant) Regulations 1987.
Phasing of rent increases
Section 55 of the Rent Act 1977 provided for the phasing of rent increases in relation to regulated tenancies under the 1977 Act, but this section has now been repealed by the Rent (Relief from Phasing) Order 1987 (SI 1987 no 264), which removes the requirement to phase increases of registered rents for regulated tenancies. It is to be noted that the removal of the phasing of rent increases does not apply to registered rents for housing association tenancies under Part VI of the Rent Act 1977. The order does not affect the phasing of an increase in relation to an application for which a rent has been registered or confirmed on a determination by a rent officer before the new provisions came into force. All these new provisions came into force on May 4 1987.
Leasehold Reform Act
The last 12 months have also witnessed considerable litigation with regard to the provisions of the 1967 Act. In Rendall v Duke of Westminster [7] 1 EGLR 96; (1986) 281 EG 1197 the appellant was the tenant of a house and appealed from the decision of a county court judge that he was not entitled to acquire the freehold under the 1967 Act. The rateable value of the appellant’s house had been £1,597, but as a result of a claim under Schedule 8 to the Housing Act 1974 a reduction for appropriate improvements of £88 had been certified. The appellant unsuccessfully challenged the valuation officer’s certificate in R v Valuation Officer for Westminster ex p Rendall [1986] 1 EGLR 163; (1986) 278 EG 1090. However, this reduction still left the rateable value above the limit but, following a proposal on June 8 1984, the valuation list was further amended on January 14 1985 by the alteration of the description of “house” to “house and garage” and by a reduction of the rateable value from £1,597 to £1,547. The end result was that, if this reduction could be backdated to April 1 1973 then, in addition to the other reduction of £88, the value would be below £1,500. The Court of Appeal held that there was no provision that would enable the reduction to £1,547 to be backdated to April 1 1973. Further, under either section 79 of the General Rate Act 1967 or section 37(6) of the Leasehold Reform Act 1967, the alteration could only be related to April 1 1984. The decision in MacFarquhar v Phillimore [1986] 2 EGLR 89; (1986) 279 EG 584 was the correct approach to adopt.
In Hembry v Trustees of Henry Smith’s Charity [7] 2 EGLR 109; (1987) 284 EG 369 the appellant was a tenant of a terraced house let to C in 1946 for a term of 19.75 years from September 29 1946 at a rent of £220 per annum, it being a condition of the grant that C put the premises into a state of repair. In 1954 the lease was assigned to Mrs B P, who paid a premium of £1,050. In July 1957 the landlord granted Mrs B P a new lease for a term of 30 years from June 1957 at a rent of £240 per annum. When applying to the Charity Commissioners for consent to grant the lease a valuer concluded that the “net annual value of the property” was £240. This new lease was granted at a time when the landlord’s estate management policy was changing to a policy of offering existing new leases for terms exceeding 21 years containing stringent repairing covenants. In January 1958 the extended lease was assigned to H at a premium of £6,850, which was provided to H by the National Coal Board, of which H was a member. For the lease granted to Mrs B P to fall within the proviso to section 4(1) of the 1967 Act, the landlord had successfully to contend that the letting value of the premises in 1957-58 was not greater than £360 per annum, because, if it was not, the rent payable under the tenancy (namely £240 per annum) would exceed two-thirds of the letting value. The landlord had to satisfy the court that on a new letting at £240 per annum it could not have obtained a premium of £1,440 or more. The county court judge held that the tenant was not holding under a “low rent”. The Court of Appeal held that the county court judge’s conclusion was not correct in the light of (a) the landlord’s policy towards the sitting tenants at the material time; (b) the premium paid to Mrs B P; and (c) the fact that the sum was paid by the National Coal Board to H as its trustee. The landlord had not discharged the onus upon it of showing that the rent was more than two-thirds of the letting value. The burden was on the landlord to show that the premium, at best, did not amount to more than £120 pa.
In Gratton-Storey v Lewis [7] 2 EGLR 108; (1987) 283 EG 1562 the respondent was the tenant of a house and grounds held on a lease for 90 years from January 5 1957. On January 31 1963 the tenant granted an underlease for 82 years from June 24 1962 and that underlease was assigned to the appellants on May 11 1970. The appellants purchased the freehold in the premises (subject to the headlease) in January 1978.
On November 4 1985 the appellants served notices on themselves to acquire the freehold under the provisions of the 1967 Act and replied to themselves admitting the right to enfranchise. The county court recorded held that the appellants were not persons with the “right to acquire the freehold” within section 1 of the 1967 Act. In these circumstances the Court of Appeal held that a person who has acquired the fee simple absolute but subject to a lease and who is himself also the subtenant of the same premises is not a person with a “right to acquire the freehold” within section 1 of the 1967 Act. Further, the word “freehold” could not be given the extended meaning of any superior interest to that of the claimant as other superior interests could only be purchased with the fee simple.
What constituted a “house” for the purposes of the 1967 Act was considered in Sharpe v Duke Street Securities NV [7] 2 EGLR 106; (1987) 283 EG 1558, where the demised premises (nos 83 and 84) comprised a middle terrace building constructed on the ground and first floors as two maisonettes each having its own front door side by side in the front porch. S (now deceased) and his family moved into no 84 (the downstairs maisonette) in 1970, but subsequently, in 1979, acquired the lease of both nos 83 and 84 for the unexpired residue of the original term. S then opened up a connecting door between the two maisonettes in 1980. In 1984 S gave notice of desire to acquire the freehold under the 1967 Act. When S gave the notice nos 83 and 84 had been lived in by S and his family as a single residence for some years. In March 1965 nos 83 and 84 were separately rated at a rateable value of £216, but after 1980 the subject premises were shown on the valuation list as a house assessed at a gross value of £495. S died in February 1985 and the present applicants were his personal representatives and his son. The Court of Appeal held that a building which consisted of a maisonette on each floor but which had been used for several years as a single dwelling (with access between having been opened up) constituted a house for the purposes of the 1967 Act.
Finally, in Dixon v Allgood [7] 1 WLR 1689; [1988] 02 EG 59 the respondent was the tenant, for a term of 51 years from May 13 1964 at a rent of £52 per annum, of 6.11 acres of land which originally had two derelict cottages situated thereon. In the lease the tenant covenanted inter alia (i) within five years to rebuild the two derelict cottages to the reasonable satisfaction of the landlord and (ii) not to build on the said land any building other than the said two new cottages and domestic office used therewith. The tenant was advised by the landlord’s agents to submit plans for separate cottages as these would attract two improvement grants and the party wall was to be pierced in two places. The first cottage was entered on the valuation list on May 9 1966 and the tenant took up occupation but retained his principal home in Newcastle. The second cottage appeared on the valuation list on February 6 1967 and was sublet furnished. In 1970 the tenant relinquished his home in Newcastle and the first cottage became his home. By December 1971 a range of garages was completed and in 1977 the subtenancy was terminated, whereupon the tenant’s daughter and husband occupied the second cottage. At that stage the party door was unsealed and they lived together as a family unit. In or about 1974 a small part of the land was acquired by compulsory acquisition and the rent thereby marginally reduced. In 1981 the tenant served a notice of leaseholder’s claim to acquire the freehold under the 1967 Act, but the claim was resisted by the landlord on the following grounds: (i) the two cottages did not constitute a “house”; (ii) the tenancy was not a long tenancy at low rent; (iii) the tenant was not entitled to claim the freehold of the whole acreage leased to him. The county court judge reduced the area to which the tenant was entitled but otherwise rejected the landlord’s contentions. In so doing, the county court judge had assumed that the garages built on the land should be included in determining the rateable value on the appropriate day, thus arriving at a rateable value of £100 of which the rent of £52 was less than two-thirds. The House of Lords held that by virtue of section 4(1)(a) of the Leasehold Reform Act 1967 the “appropriate day” was to be determined under section 25(3) of the Rent Act 1977 in relation to “the house in question”, ie the cottages excluding the garages, there being a clear difference between section 1(1) of the Act of 1967 entitling the tenant to purchase “the house and premises” and those of section 4(1)(a) requiring the appropriate day to be determined in relation to a dwelling-house “consisting of the house in question”; further, that by section 4(1) the appropriate day was determined by reference to the first day on which the dwelling-house as a single hereditament or as two or more hereditaments had first appeared in the valuation list, ie in the present case February 6 1967, and that the tenant’s rent of £51.44 was more than two-thirds of the aggregate rateable value of the cottages at that date, viz £76, and, accordingly, he was not entitled to purchase under the 1967 Act.