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
tenancy to the respondent as a sole tenant. On 21 July 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.
tenant, as 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.
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.
The following cases are referred to in this report.
Hammersmith
and Fulham London Borough Council v Monk [1992] 1 AC 478; [1991] 3
WLR 1144; [1992] 1 EGLR 65; [1992] 09 EG 135, HL
Varley
v Coppard (1872) LR 7 CP 505
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
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
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
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.
