Private landlord as council lessee — Business premises — Landlord converting part of premises into residential flat — Landlord acting in breach of covenant — Subletting flat to defendant — Surrender of lease of main premises to council — Whether defendant enjoying secure tenancy — Court of first instance finding for council — Appeal allowed — Defendant secure tenant
In 1984 the council demised garage premises at Coronation Road, Basingstoke, to H for a term of 15 years at a rent of £6,000 pa. There was a covenant that H was not to underlet the premises and to use them only for business purposes. In breach of that covenant, H converted part of the main office premises into a flat which he rented to the appellant defendant, P, on a weekly rental basis. In 1990, H surrendered the unexpired part of the lease to the council, which by then had become aware of P’s occupation. They served a notice on the mesne landlord relying on an unlawful subletting, but they did not in the end take any steps to forfeit the lease. Instead they decided to negotiate a termination of the lease by way of surrender. Once that had been effected they sought to treat P as a trespasser. They then brought possession proceedings and served a notice to quit on P. The council argued, inter alia, that the flat was not a dwelling-house “let as a separate dwelling” under section 79 of the Housing Act 1985. They submitted that at the moment of surrender, the flat formed an integral part of the main premises which were held as a whole under the lease. In any event, those were business premises and incapable of attracting secure tenancy status. The judge found for the council, stating that one had to look at the larger picture: see Bromley Park Gardens v George [1991] 2 EGLR 95. He then went on to grant the declaration that P did not have a secure tenancy within the meaning of the 1985 Act. Section 79 of the Housing Act 1985, provided by subsection that: “A tenancy under which a dwelling house is let is a secure tenancy at any time when the conditions described … as the landlord condition and the tenant condition are satisfied”.
Held The appeal was allowed.
1. Section 79 referred a secure tenancy “at any time” when the landlord and tenant conditions were satisfied. That showed that the section was to have an ambulatory effect. Occupiers might be liable to pass in and out of secure tenant status — depending on whether their landlord for the time being was or was not a local authority; or upon changes in the tenant’s own circumstances taking him in and out of the tenant condition.
2. The role of local authorities as statutory providers of housing for public occupation (and purchase by occupiers) was not threatened or diminished by operation of law as a result of their acceptance of surrenders of commercial leases of which they happened to be reversioners.
3. Local authorities who engaged in the leasing of commercial premises should be careful when negotiating a surrender of the mesne lease to ensure that, before surrender took effect, notices to quit had been served to terminate the contractual tenancy rights of any occupying periodic subtenants of residential parts of the property.
Stanley Widdup (instructed by the solicitor to Basingstoke and Deane Borough Council) appeared for the local housing authority; Keith Wylie (instructed by Doggett Hawke Wright) appeared for the appellant tenant.
