by Delyth W Williams
It is frequently the case that while the attention of practitioners is drawn to the very recent and latest developments in, say, rent review or business tenancy law the continued flow of litigation concerning residential tenancies goes unnoticed. This article analyses the recent developments with the Rent Acts and the significant cases on the Leasehold Reform Act 1967 over the last 12 months or so.
Does the Rent Act apply?
One of the main issues of concern to the busy practitioner is whether the Rent Act 1977 applies to the “occupation” in question. Following the decision of the House of Lords in Street v Mountford [5] 1 EGLR 128; (1984) 274 EG 821, several cases have reached the law reports concerning the interpretation on the House’s ruling. In Brooker Settled Estates Ltd v Ayers [1987] 1 EGLR 50; (1987) 282 EG 325 the respondent occupied a double bed-sitting room in a flat which consisted of this room, two single bed-sitting rooms, a kitchen-dining room, bathroom and lavatory. The two other rooms were each occupied by another woman. The respondent entered under an oral agreement and subsequently signed a written agreement which was described as a licence. The written agreement purported to license each occupier of a room to occupy the entire flat and repeatedly stated that no one had exclusive possession of anything. The agreement also reserved a right to put another person in the respondent occupier’s room. The county court judge held that there was no evidence that attendance or services were provided and that under the ruling in Street she was a tenant. The Court of Appeal held that where it was found as a fact that the occupier of property was not a lodger in that the landlord did not provide attendance or services, it did not necessarily follow that there was exclusive possession giving rise to a tenancy. Exclusive possession was a question of fact in each case and had to be decided by reviewing the evidence.
The lease-licence question was also raised in Hadjiloucas v Crean [7] 2 EGLR 60; (1987) 284 EG 927. In this case the appellant and another lady friend each signed an agreement, called a licence, to share a flat with one other person, with the licensee not to have exclusive possession. The term was for six months and the “licence rental” was £260 per month, with a provision that the overall total from “all” licensees should not exceed £260 per month. After about two months the other lady sharing the flat with the appellant left, but her place was taken by someone else, who remained in the flat until the expiry of the term. The appellant continued to stay in the flat, refusing to sign a new licence agreement at a higher figure, and she subsequently obtained a registered fair rent from the rent officer of £130 per month. The Court of Appeal was of the opinion that the correct approach in the “non-sham” cases was to consider the factual matrix, inquire into the true contractual effect of the agreement, eliminate any artificial provisions and be astute to prevent the protection of the Rent Act from being excluded by an artificial device even if it is not a sham. In the case of multiple occupancy the facts must be analysed to see whether a joint tenancy has been created. The Court of Appeal held that there were not sufficient findings by the county court judge to decide the matter.
While it is to be noted that the facts of Ashburn Anstalt v Arnold [7] 2 EGLR 71; (1987) 284 EG 1375 are very complex and too lengthy to summarise for an article of this type, the decision of the Court of Appeal in the case is of some interest. The Court of Appeal held that the reservation of rent is not an essential prerequisite for the existence of a tenancy. In the case of unregistered land a contractual licensee had no right capable of enforcement against a purchaser for value of the freehold even though the purchaser had actual notice of the licence. Mere notice by a vendor to a purchaser of a freehold that the land was conveyed “subject to” a contractual licence was not sufficient by itself to impose a constructive trust on the purchaser to give effect to the contract.
In Otter v Norman [7] 2 EGLR 125; (1987) 284 EG 372 the Court of Appeal had to consider the meaning of “board” under section 7(1) of the 1977 Act, which provides that a tenancy is not a protected tenancy if under the tenancy the dwelling-house is bona fide let at a rent which includes payments in respect of board. In this case a room was let to the tenant in consideration of a rent of £50 per week which included a “continental breakfast”, but no other meals were provided. The Court of Appeal considered the decision in Wilkes v Goodwin [1923] 2 KB 86, where Scrutton LJ had posed three questions (in the context of determining the meaning of a “furnished house”) as follows:
(1) Is part of the subject of the letting what can properly be called “furniture”? (2) Did the parties agree in the rent to include payment for the use of that “furniture”? (3) Is there a bona fide contract to that effect, or is such a term only a pretended agreement inserted to take the case out of the Act, without involving any real transaction of tenancy or hire of furniture?
In the instant case the Court of Appeal adopted the three questions posed by Scrutton LJ (appropriately amended) and held that there was here a bona fide contract for the rent to include payment for board.
The question of the exclusion from Rent Act protection where the rent payable is less than two-thirds of the rateable value of the dwelling-house on the appropriate day was considered by His Honour Judge Paul Baker QC in Investment & Freehold English Estates Ltd v Casement [7] 2 EGLR 112; (1987) 283 EG 748. The provision in question was contained in section 80(2) of the Housing Act 1969 (now in section 5(4) of the 1977 Act) and was to the effect that in determining whether a long tenancy is a tenancy at a low rent sums payable, inter alia, in respect of services are to be disregarded (to prevent a long tenancy being brought into the Rent Act sphere by an increase in service charge). In the instant case the tenancy was granted in 1972 but the lease contained certain provisions which created difficulty, namely (i) a proviso designed to ensure that the fixed rent together with the variable portion which included the service charge should never exceed two-thirds of the rateable value and (ii) an agreement that if in future the law “shall have been amended” (so that the service charge did not have the effect of bringing the rent above two-thirds of the rateable value) the above proviso would have no effect and the landlord would be at liberty to demand a full contribution towards his expenditure. The learned judge held that these provisions had no operative effect but that the sums payable in respect of the service charge had by statute to be disregarded in relation to the two-thirds of the rateable value rule. The landlords were entitled to demand a full contribution towards their relevant expenditure.
The Court of Appeal [8] 15 EG 99 dismissed the tenant’s appeal and held that the draftsman of the lease had provided for a contingency if the Leasehold Reform Act 1967 should be amended and it mattered not that the event of amendment had already taken place. The parties anticipated that the rent and service charge might exceed two-thirds of the rateable value and the payment of a premium would be restricted. The parties also intended that if the law changed the landlord would be able to recover the service charge and the landlord was so entitled.
In R v London Rent Assessment Panel ex p Mota [8] 02 EG 66 Schiemann J had to consider the provisions of section 70(1)(a), (b) of the 1977 Act. The tenant had a protected tenancy of a flat which the landlord wished to renovate. She entered into an agreement for rehousing during the renovations and the agreement provided that the tenant could use her own furniture on a day-to-day basis in lieu of that of the landlord (which was to be removed and retained by the landlord and reinstalled at the end of the tenancy). In 1985 the tenant was moved to a new flat and the landlord supplied only the carpets and cooker and the tenant used her own furniture. In August 1985 the landlord applied for registration of the rent as a fully furnished flat and the rent officer determined an annual rent. Schiemann J held that where a landlord has an obligation to provide furniture if asked by the tenant to do so, the tenancy may be a furnished tenancy for the purposes of rent assessment even if, at the tenant’s request, none of the landlord’s furniture is physically on the premises (and all the furniture which is on the premises was provided by the tenant).
A significantly important decision was reached in Appleton v Aspin [8] 04 EG 123 where Mr and Mrs A purchased no 12 and Mrs P (Mrs A’s mother) purchased no 7. Mrs P conveyed no 7 to Mrs A but continued to live there pursuant to an oral agreement. Mr and Mrs A agreed to sell nos 7 and 12 to the plaintiff with vacant possession. As regards no 7 the plaintiff insisted on the insertion of a special clause in the contract whereby Mrs P undertook to assert no right of possession or occupation against the plaintiff “whether arising by statute by reason of any equitable interest or otherwise”. Mrs P signed the contract which contained this clause. When Mr and Mrs A failed to complete the sale, the plaintiff commenced proceedings for specific performance. The Court of Appeal held that section 98(1) of the Rent Act 1977 rendered the agreement unenforceable; such an agreement was against the policy of the Rent Act.
Obtaining possession
Even when the tenant’s occupation is protected by the operation of the Rent Act, a landlord may still obtain possession of the dwelling-house. To obtain possession, the landlord must either prove one of the mandatory grounds of possession in Part II of Schedule 15 to the 1977 Act or bring himself within one of the discretionary grounds of possession in Part I of the same schedule or offer suitable alternative accommodation to the tenant. Under Case 9 of Schedule 15 a court may make an order for possession if the dwelling-house is reasonably required by the landlord for occupation as a residence for:
(i) himself; or
(ii) any son or daughter of his over 18 years of age; or
(iii) his father or mother; or
(iv) the father or mother of his wife or husband.
However, the court must not make an order if it is satisfied that greater hardship would be caused by granting the order than by refusing to grant it.
In Bostock v Tacher de la Pagerie [7] 1 EGLR 104; (1987) 282 EG 999 the landlord was the owner of the flat in question but he held it under a declaration of trust as trustee for himself and a daughter as joint tenants in equity in equal shares (with an undertaking to transfer the property into their joint names when the daughter attained the age of 18). The landlord claimed possession under Case 9 on the ground that the flat was reasonably required by him as a residence for his daughter, who had attained the age of 18 before the commencement of proceedings for possession. The Court of Appeal held that there was evidence that the flat was reasonably required for occupation by the daughter, who had been medically advised to have her own flat. Further, it had been amply shown that the greater hardship was on the side of the landlord’s daughter, so that in all the circumstances it was reasonable to make the order.
The landlord claimed possession under Case 9 also in Coombs v Parry (1987) 19 HLR 384, where the defendant was the tenant of a three-bedroomed house with no bathroom and the landlord, his wife and two children (one of whom was epileptic) lived in a mobile home next to a busy caravan site. It was common ground that the mobile home was unsuitable for the landlord and his family, but the landlord’s father had died leaving him a considerable estate, a large part of which was tied up in a farm. There were two cottages on the farm each with a protected tenant in occupation and each cottage was worth about £16,000 without vacant possession and about twice as much with vacant possession. There was also evidence that the landlord was in debt and could not buy himself a home unless the cottages were sold. The county court judge found that the landlord reasonably required the house for his occupation but that it would not be reasonable to make the order in part because the landlord would in the reasonably near future have more money. In the week before the appeal hearing one of the cottages became vacant. The Court of Appeal held that it was not possible on all the evidence to deduce that any immediate benefit was likely to accrue to the landlord from his father’s estate, but the case was remitted for rehearing having regard to the fact that one of the cottages was sold.
The issue of “greater hardship” in Case 9 in Schedule 15 was considered by the Court of Appeal in Hodges v Blee [7] 2 EGLR 119; (1987) 283 EG 1215. In this case the landlord reasonably required the dwelling-house as a residence for his two sons who had unsatisfactory accommodation but who between them earned £165 per week. The tenant was a man aged 57 years and in poor circumstances who was drawing housing benefit of about £20 per week and living on supplementary benefit of about £31 per week. The tenant, who had been in the subject premises for 15 years, had two dogs to which he was attached and once he was evicted he would not be able to claim to be rehoused by the local authority as a matter of right. The county court judge decided against the tenant. The Court of Appeal held that, while the court might themselves have come to a different conclusion on the case from that of the judge, unless the judge had gone wrong in law his decision on the balance of hardship was conclusive.
The landlord sought possession both under Case 11 in Schedule 15 and on the ground that suitable alternative accommodation was being offered in Roberts v Macilwraith-Christie [7] 1 EGLR 224. In this case the owners of a large house, valued at £850,000 to £1m, wished to sell the property for financial and medical reasons. The basement was occupied by an elderly lady who was a statutory tenant and by another lady who was found to be a subtenant. The county court judge decided in favour of the landlords under Case 11 and as to suitable alternative accommodation. The criticism of the county court judge’s decision was rejected by the Court of Appeal, but more substantial issues arose with regard to the question of alternative accommodation, where the judge had not separated clearly the matters relating to the suitability of the accommodation from the general question of reasonableness. The alternative accommodation had various advantages together with some disadvantages, but the county court judge had not made it clear whether he had taken into account the issue of reasonableness as well as the extent and character of the alternative accommodation. Despite various other errors, the Court of Appeal upheld the judge’s decision and decided that it was reasonable to make the order.
In Fowler v Minchin [7] 1 EGLR 108; (1987) 282 EG 1534 the landlord sought possession of a cottage occupied by the tenant which had formerly been occupied by the landlord’s cowman and which the landlord now required for a person to be employed by him in agriculture under Case 16 in Schedule 15 to the 1977 Act. The conditions required by paras (a) and (c) of Case 16 were satisfied but there was an issue as to para (b) under which it was necessary for the tenant to be given “notice in writing that possession might be recovered under this Case”. Until the actual hearing in the county court the case had proceeded on the basis that no such notice had been given, but in the court evidence was given that a written agreement (unfortunately since destroyed) had been entered into under which the tenant undertook to vacate the cottage on being given 28 days’ notice if the landlord required it for a farm worker. The Court of Appeal held that even if a written agreement in the terms mentioned had come into existence it did not satisfy the requirements of para (b) of Case 16.
Whether an order for possession should be made was the matter in question in Chrisdell Ltd v Johnson [7] 2 EGLR 123; (1987) 283 EG 1553. In this case the tenant of a maisonette was an American citizen engaged in the film industry whose work necessitated absences from the United Kingdom and, in fact, he went to the United States in 1977 and had not returned since then. He was refused consent to assign his tenancy, but documents purporting to be an agreement between the tenant and a lady who was engaged as a housekeeper at the premises recorded the payment by her of £3,000 for unspecified items and an undertaking to pay £35 per month “for the use … of the furniture, fittings, domestic appliances etc”. The landlords were suspicious as to the nature of the occupation (thinking that an unlawful assignment might have been made). The tenant claimed the landlords had waived the breach of covenant. The Court of Appeal upheld the decision at first instance that the landlords had not waived the breach of covenant and the failure to take proceedings was because the landlords feared that the tenant’s explanation of the sham might well be accepted by a judge.
In Bryant v Best [7] 2 EGLR 113; (1987) 283 EG 843 the landlord was a resident landlord within section 12 of the Rent Act 1977 and had obtained an order for possession in 28 days against the tenant. The order had been suspended upon the conditions of the tenant’s paying the current rent plus a payment in reduction of the accumulated arrears. The resident landlord complained that under section 106A(3) of the 1977 Act where a court makes a possession order in the case of a dwelling-house which is subject to a restricted contract the giving up of possession cannot be postponed later than three months from the making of the order. The Court of Appeal held that the county court judge had erred and made an order for possession to take effect within 28 days.