Local housing authority – Homeless minor – Grant of tenancy – Notice to quit – Para 1(1) of Schedule 1 to Trusts of Land and Appointment of Trustees Act 1996 – Whether tenancy agreement constituting purported grant of legal tenancy to minor such that respondent landlords holding premises on trust for appellant tenant under para 1(1) – Whether creating equitable tenancy only – Whether service of notice to quit amounting to breach of trust – Possession granted – Appeal allowed
When the appellant was 16 years old and pregnant, she applied to the respondent council for accommodation under Part 7 of the Housing Act 1996 on the ground that she was homeless and had a priority need. The respondents accepted that they owed a her duty under section 193(2) of that Act and discharged it by providing accommodation under a tenancy agreement in a standard form. This created a weekly, non-secure periodic tenancy that was determinable by giving four weeks’ notice in writing by means, inter alia, of a notice placed through the letterbox of the dwelling to which it related.
The respondents received complaints about the appellant relating to nuisance, rubbish and the keeping of a dog. Letters from the housing officer and an interview with the appellant failed to resolve the problem. The respondents then served a notice to quit, which they addressed to the appellant and placed through the letterbox of the demised premises.
In subsequent possession proceedings, the appellant contended that: (i) when the agreement was made, she had been a minor and had therefore been unable to hold a legal estate by virtue of section 1(6) of the Law of Property Act 1925; (ii) by entering into their standard form tenancy agreement, the respondents had none the less purported to grant a legal estate; (iii) under para 1(1) of Schedule 1 to the Trusts of Land and Appointment of Trustees Act 1996, that purported grant took effect as a declaration by the respondents that they held the estate in trust for her; and (iv) the respondents could not, without committing a fundamental breach of trust, serve a notice to quit determining the subject matter of the trust. She also submitted that the notice had not been validly served since the respondents had served it only on the beneficiary of the trust, rather than on themselves as the trustees holding the legal estate on her behalf. By the time of the hearing, the appellant was no longer a minor.
The judge rejected the appellant’s submissions and held that the tenancy agreement should be construed as the grant of a lease in equity only, to which the 1996 Act did not apply. He accordingly allowed the possession claim. The appellant appealed.
Held: The appeal was allowed.
Local housing authorities could, in principle, grant tenancies to minors that were effective in equity. However, as a matter of construction, that was not what the respondents were purporting to do: Kingston upon Thames Royal London Borough Council v Prince (1999) 31 HLR 794 distinguished. The agreement had been in the respondents’ standard form for creating legal tenancies with their adult tenants. Were it not purporting to grant a legal tenancy, it would have been differently drafted. The 1925 Act did not prohibit the respondents from granting a legal estate to the appellant, but it prevented her from holding such an estate. A landlord that had full capacity to grant a legal tenancy, and which granted a tenancy without any express qualification that something less than a legal tenancy was being created, could not subsequently argue that what it had granted was not a legal tenancy but only an equitable tenancy. The absence of any reference to a trustee in the tenancy agreement did not count against the creation of a trust under the 1996 Act. On the contrary, any such reference would have been a clear indication that the respondents were not purporting to convey a legal estate; there would have been no need for the 1996 Act to provide for the agreement to operate as a declaration of trust because the agreement, in referring to a trustee, would have included such a declaration. The respondents had purported to grant a legal tenancy and para 1(1) of Schedule 1 to the 1996 Act therefore applied.
For so long as the respondents held the premises in trust for the appellant, they could not lawfully destroy the subject matter of the trust by serving notice to quit on her: Hammersmith and Fulham London Borough Council v Monk [1992] 1 EGLR 65; [1992] 02 EG 135 and Crawley Borough Council v Ure [1996] QB 13 distinguished.
The respondents, as lessors and trustees, were, in the former capacity, not merely a party to the breach of trust, but the instigator of the breach. In the circumstances of the case, the service of a notice to quit only on the minor beneficiary of the trust was not sufficient to terminate the tenancy that the respondents held as trustees on her behalf. Consequently, the possession order would be quashed.
Per curiam: Since the respondents did not contend otherwise, the court proceeded on the assumption that the Housing Act 1985 did not prevent them from lawfully entering into an agreement that would have the legal consequences set out in para 1(1) of Schedule 1 to the 1996 Act, either as an unlawful fetter on their powers of management under section 21 or an unlawful disposal under section 32.
Kerry Bretherton (instructed by Duncan Lewis & Co) appeared for the appellant; Kelvin Rutledge (instructed by the legal department of Hammersmith and Fulham London Borough Council) appeared for the respondents.
Sally Dobson, barrister
