Possession claim — Exclusive possession — Local authority making available flats intended for redevelopment — Unincorporated short-term housing association taking flats for members — Agreement expressed to be by “licence” — Local authority seeking possession — Housing association incorporated in 1983 — Whether disposals outside authority’s powers — Whether professed intention to grant licences reflecting parties’ true intentions — Declaration in favour of local authority
The plaintiffs, Camden London Borough Council, sought a declaration from the court that they were entitled to possession of three blocks of flats at 4, 5 and 6 Gray’s Inn Buildings, Gray’s Inn Road, London WC2. The blocks contained a total of 65 mostly single-bedroom flats and the first defendant, Shortlife Community Housing Ltd (SCH), held 63 of the flats under purported licences granted to it by the council between 1978 and 1985. The remaining 62 defendants claimed to be in occupation of their flats as tenants of SCH, while SCH claimed to be in possession under one or more tenancies. The blocks were originally used to house council tenants whom the council decided to rehouse and to undertake major works of improvement to the premises. As flats became vacant they were made available to SCH for use as short-life housing until possession might be required. SCH, a tenants’ co-operative, had been formed originally as an unincorporated association and registered as a charity. It paid the council a concessionary rent in respect of each property. At Gray’s Inn Buildings each flat was entirely self-contained with exclusive possession. Each flat was made the subject of a licence between the council and SCH, described as the licensee. The licensee was permitted to use and occupy the premises from week to week until such time as they would be required by the council. Persons taking up residence became members of SCH and signed a document that SCH “holds a licence from the council (which is simply a permission to occupy and is not a tenancy)”. In 1983 SCH was incorporated as a company limited by guarantee. In 1985, the council served SCH with one month’s notice to quit. It was common ground that the notice would be insufficient to determine any tenancy under which SCH enjoyed the protection of Part II of the Landlord and Tenant Act 1954. SCH refused to give up possession on the ground that the council were unable to honour an alleged commitment to provide alternative accommodation. It was not suggested that the council were under any legal obligation to do so. In the present action, the council no longer sought orders for possession, the scheme for major works having been abandoned, but sought declaratory relief against SCH.
Held Declaration in favour of the council.
1. In the absence of some other legal relationship to which it could be attributed, the grant of a legal right of exclusive possession by a body with power to grant it to a body with power to take it created the relationship of landlord and tenant: see Street v Mountford [1985] 1 EGLR 128. Examples of exceptional circumstances where the grant of exclusive possession did not have that effect were: (i) where the circumstances negatived any intention to create legal relations at all; (ii) where the possession was referable to some other legal relationship such as vendor and purchaser or master and servant; or (iii) where the grantor had no legal power to create a tenancy.
2. It was common ground in the present case that each licence of a flat was intended to create legal relations. The licence fee (if any) was intended to be legally due and payable for the right to possession whether exclusive or not. The case, therefore, did not fall within the first category of exceptional circumstances; nor did it fall within the second, as each of the licences was the consequence of a wider and continuing relationship between the parties which existed between a local authority with housing responsibilities and a housing organisation.
3. The questions for determination were therefore: (a) whether, in the light of all the evidence, the parties intended SCH to have a legal right to exclusive possession of any of the flats; and (b) if so, whether at the material time the council had legal power to carry such intention into effect: see category (iii) above.
4. A tenancy could not be granted to an unincorporated association as such a body had no legal status; nor could it be granted to the members of the association from time to time, since a tenancy was a legal estate in land and such an estate could not be vested in a fluctuating body of persons: see Jarrot v Ackerley (1915) 113 LT 371. However, in the instant case there was a novation in 1983 when the council accepted the company in place of the association. Thus every tenancy or licence of a flat, whenever originally granted, must be taken to have been granted or regranted to the company on or after July 1983.
5. The statutory powers of the council varied from time to time. Under the Housing Act 1957, the local authority had the power to grant and determine tenancies without ministerial consent: see section 111, Part V of the 1957 Act and Bristol District Council v Clark [1975] 1 WLR 1443. However, under the Housing Act 1980, section 91, a local authority had the power, but not otherwise, to dispose of any land which they had acquired for the purposes of the 1980 Act. Any disposal without the consent of the Secretary of State was ultra vires except where there was the letting of any land under a secure tenancy. Under section 28(2) the tenant condition specified that a secure tenancy applied to an individual occupying the dwelling-house as his only or principal home or, where there were joint tenants, one was an individual. Once incorporated, SCH could not satisfy that condition. Further the word “dispose” in the section was apt to and did include the grant of a weekly tenancy. The word was one of the widest import and plainly included the grant of a lease (though not of a licence). Section 137 of the 1980 Act provided that any disposal of a house after 1980 which required the consent of the Secretary of State but was made without that consent was void unless the disposal was to an individual or to two or more individuals. Thus any purported grant of a tenancy to the company, taken to have been made after July 1980, was ultra vires and void.
6. By their professed intention, plainly demonstrated by the terms of the documents, the parties intended to exclude, clearly and unequivocally, exclusive possession. Unless the parties’ professed intention differed from their true intention or did not reflect “the true substance of the real transaction”, that was conclusive. The court was satisfied by the evidence and by considering the terms of the documents, the purpose of the transactions, and the surrounding circumstances, that the parties’ professed intentions represented their true intention. SCH was never intended to be granted, and never believed that it had been granted, exclusive possession of any of the flats.
Anthony Mann (instructed by Winkworths & Pemberton) appeared for the plaintiffs, Camden London Borough Council; Terence Gallivan (instructed by Alan Edwards & Co) appeared for the first defendant, the housing association, Shortlife Community Housing Ltd; and David Watkinson (instructed by Bindman & Partners) appeared for the second to 63rd defendants.