Licence — Service occupancy — Whether employee occupied accommodation as a licensee — Whether notice to determine licence to occupy required — Whether licence a ‘periodic licence’ within the meaning of section 5(1A) of the Protection from Eviction Act 1977 — Appeal from possession order granted by county court judge dismissed
defendant, who had previously worked for the plaintiff as a semi-skilled
mechanic, was allowed by the plaintiff to occupy a bungalow on condition that
he would be able to drive coaches for the latter’s business and that he would
apply for a public service vehicle licence for that purpose — Occupation of the
bungalow would in the plaintiff’s opinion make the defendant readily available
for urgent transport work — The defendant signed a document stating that
occupation of the premises was a condition of his employment and that on
termination of the employment the occupation would cease — £5 per week was to
be deducted from his salary for his occupation — The defendant did not tell the
plaintiff that he was disqualified from driving — When the plaintiff discovered
this fact he dismissed the defendant summarily and took proceedings for
possession — The county court judge granted the plaintiff a possession order
and the defendant appealed
licensee although his occupation is not necessary for the purpose of his
employment if he is genuinely required to occupy the premises for the better
performance of his duties — Lord Reid, in Glasgow Corporation v Johnstone,
went further and said that it was sufficient if the occupation was of ‘material
assistance’ to the employer — The judge was entitled to find that the defendant
was a licensee — When the defendant went into occupation he was not in
possession of a public service vehicle licence and there was no connection
between his occupation of the bungalow and his work as a semi-skilled mechanic
— Nevertheless, he had only been allowed into occupation on the basis that he
would obtain the necessary qualification and work as a coach driver — There was
sufficient factual nexus between the commencement of the occupation of the
premises and the employment which would benefit from the occupation to satisfy
the conditions of a service licence — It was proper to regard the defendant as
going into occupation as a licensee in order the better to perform his duties
when he became a coach driver
5(1A) of the Protection from Eviction Act 1977 (as amended by section 32 of the
Housing Act 1988) requires a four weeks’ notice in writing (containing
prescribed information) to determine a periodic licence to occupy premises as a
dwelling — The notice required by section 5(1A) did not apply to the present
case — First, no notice was required to terminate the licence, as the
employment could be ended summarily or on a week’s notice and when the
employment came to an end so did the licence — Second, the licence here was not
in any case a ‘periodic licence’; it was a licence for a single period, the
period of the employment — The subsection seemed to be aimed at licences which
continued for a series of periods, analogous to weekly, monthly or quarterly
tenancies — No notice was required to terminate the defendant’s licence
The following
cases are referred to in this report.
A G
Securities v Vaughan; Antoniades v Villiers
[1990] 1 AC 417; [1988] 3 WLR 1205; [1988] 3 All ER 1058; (1989) 57 P&CR
17; [1988] 2 EGLR 78; [1988] 47 EG 193, HL
Australian
Blue Metal Ltd v Hughes [1963] AC 74; [1962]
3 WLR 802; [1962] 3 All ER 335, PC
Glasgow
Corporation v Johnstone [1965] AC 609;
[1965] 2 WLR 657; [1965] 1 All ER 730; (1965) 63 LGR 171; [1965] RVR 111
Ivory v Palmer [1975] ICR 340, CA
Lace v Chantler [1944] KB 368
Smith v Seghill Overseers (1875) LR 10 QB 422
Street v Mountford [1985] AC 809; [1985] 2 WLR 877; [1985] 2 All ER
289; [1985] 1 EGLR 128; (1985) 274 EG 821, HL
This was an
appeal by Stephen Checksfield from the judgment of Judge Hammerton, at Hastings
County Court, ordering him to give up possession to his former employer, Jesse
William Norris (trading as J Davis & Son), of 2 Highfield Bungalow,
Hawkhurst, Kent.
Martin Seaward
(instructed by Holden & Co, of Hastings) appeared on behalf of the
appellant; Martyn Zeidman (instructed by Menneer, Idle & Brackett, of St
Leonards-on-Sea) represented the respondent.
Giving the
first judgment at the invitation of Balcombe LJ, WOOLF LJ said: This is
an appeal from a decision of His Honour Judge Hammerton at the Hastings County
Court given on April 24 1990 when he granted the plaintiff an order for
possession of 2 Highfield Bungalow, Highgate, Hawkhurst, Kent.
The appeal
raises two issues as to the occupation of premises belonging to his employer by
an employee. The first issue is whether an employee who has exclusive occupation
of the premises and pays rent can be a licensee if his existing work does not,
although his future anticipated work would, benefit as a result of his being in
occupation. The second issue is as to the application of the requirements as to
the giving of notice in section 5(1A) of the Protection from Eviction Act 1977
as amended by the Housing Act 1988 to a licence which is expressed to come to
an end with the employee’s employment.
The facts
For the
purposes of both issues I can summarise the facts quite briefly, basing myself
on the note of the judgment of Judge Hammerton. In 1988 the defendant worked
for the plaintiff as a semi-skilled mechanic. In 1989 he was invited to resume
that employment and started in July 1989. At that time he was living in
lodgings approximately one mile away. In August 1989 the defendant was seen by
the plaintiff and asked if he would like to reside at the bungalow which was
the subject of the proceedings, which had previously been occupied by another
employee. The defendant wanted to occupy the premises and he was allowed into
possession on two specific terms which the plaintiff made clear. The first was
not of
for the plaintiff’s business and would apply for a PSV licence for this
purpose. In the plaintiff’s opinion, for this work it was clearly desirable
that the defendant should be in the bungalow, since this would make him readily
available in an emergency or if there was urgent work. The judge found that it
was on ‘that condition’ that occupancy of the bungalow was granted to the
defendant.
Before the
defendant moved into the premises he was asked to, and did, sign a document
confirming the terms of his occupation. That document referred to the
defendant’s having a licence and so far as relevant provided:
It is a
condition of your employment that you shall occupy [the premises] or such other
alternative property the employer may provide and that on termination of your
employment your licence to occupy such property shall cease forthwith.
In addition it
was arranged that the defendant would have the sum of £5 per week deducted from
his salary in relation to his occupation.
At a later date,
October 13 1989, the defendant was given a statement of the main particulars of
his employment. These showed that he was to be employed as a semi-skilled
mechanic, his normal hours of work were eight to five, Monday to Friday,
Saturday if agreed. He was to give and receive one week’s notice to terminate
the employment but could be dismissed instantly for misconduct.
Possibly
because he was unaware of this until October 1989, as he contended, the
defendant did not tell the plaintiff that he was disqualified from driving.
About the same time the plaintiff learned from the police that this was the
situation and this, together with his no longer being a satisfactory employee,
caused the plaintiff to dismiss the defendant summarily. About 10 days later,
by letter delivered on December 11 1989, the plaintiff informed the defendant
that he was required to vacate the bungalow. The proceedings for possession
were instituted on December 18 1989.
First
issue
In relation to
the thorny issue as to when an employee is a licensee and not a tenant of
premises belonging to his employer which he is allowed to occupy, Mr Seaward,
who appears on behalf of the defendant, is prepared to accept Mr Zeidman’s
submission on behalf of the plaintiff. Mr Zeidman submitted that an employee
can be a licensee, although his occupation of the premises is not necessary
for the purposes of the employment, and if he is genuinely required to
occupy the premises for the better performance of his duties.
In my
judgment, this submission accurately reflects the law. We have been referred to
a number of authorities which set out different tests. The most helpful
decision is that of the House of Lords in Glasgow Corporation v Johnstone
[1965] AC 609. In that case Lord Reid (with whose speech Lord Wilberforce
agreed) at p 618A said:
So, if
necessity were the criterion, the appeal would succeed. But if it is sufficient
for the respondents to show that their servant is bound to reside there, and
that his residing there is of material assistance to them in the carrying out
of their activities, then the appellants must fail on this point.
Lord Reid then
went on to examine a number of English authorities and concluded this part of
his speech by saying at p 619:
In requiring
that the occupation should be necessary I think that Mellor J’s judgment is out
of line with the other authorities, and the authorities on this topic appear to
me to support the respondent’s contention in the present case.
Lord Reid was
therefore of the opinion that it would be sufficient if the employee’s
occupation was of ‘material assistance’ to his employment. It need not be ‘necessary’
for his employment. The same view was taken by Lord Evershed and Lord
Hodson. Lord Guest stated the position which must exist for there to be a
licence in the following terms, at p 629B:
The residence
must be ancillary to the duties which the servant has to perform (Smith
v Seghill Overseers) or, put in another way, the requirement must be
with a view to the more efficient performance of the servant’s duties (Fox
v Dalby).
As Mr Seaward
correctly submitted, it would not suffice if the occupation was a ‘fringe
benefit’ or merely an inducement to encourage the employee to work better.
Unless the
occupation fulfilled this test, the fact that the employee had exclusive
possession and paid rent would almost inevitably establish a service tenancy:
See generally Street v Mountford [1985] AC 809* and AG
Securities v Vaughan [1990] 1 C 417†
at p 459 per Lord Templeman.
*Editor’s
note: Also reported at [1985] 1 EGLR 128.
† Editor’s
note: Also reported at [1988] 2 EGLR 78.
If in this
case, as was contemplated, when the defendant went into occupation he had
obtained a PSV licence and had changed the nature of his job so that he became
a coach driver, the judge would undoubtedly have been entitled to regard the
defendant as a licensee. He would then have entered into occupation under a
document which described the relationship in terms of a licence and the
occupation would be beneficial to the defendant’s employment on the judge’s
findings. His occupation would enable him to assist his employer in cases of
emergency or on short notice.
However, Mr
Seaward submits that the employment situation which has to be considered is
that which existed in fact at the time the licence was entered into, not the
situation which might exist in the future. The situation which existed at the
time the licence was entered into was that the defendant’s occupation of the
premises was irrelevant to the defendant’s employment as a semi-skilled
mechanic. In that employment he was not required to assist with emergencies and
he could perform the work equally as well from the lodgings at which he was
previously living or indeed from any other address which was within travelling
distance to his place of work. Occupation was beneficial to the defendant but
not beneficial to his employment.
There is no
previous decision of the courts which directly conflicts with Mr Seaward’s
approach. However, I have no hesitation in coming to the conclusion that,
notwithstanding this argument, the judge was entitled to come to the conclusion
that the defendant was a licensee. Although the defendant was unable to obtain
the necessary PSV licence to drive coaches, he was, on the judge’s finding,
allowed into occupation only on the basis that he would obtain the necessary
qualifications and work as a coach driver. In my judgment, it would not be
sensible, unless compelled to do so, to restrict an employer’s ability to grant
a licence to situations where the employment which would be benefited by the
employee taking up occupation commenced simultaneously with or prior to the
occupation of the premises. There may be many circumstances where it would be
desirable for the employee to take up occupation before the relevant work
commenced. What is required is that there should be a sufficient factual nexus
between the commencement of the occupation of the premises and the employment
which would benefit from that occupation. If for some reason it becomes
apparent that the employee is not going to be able to fulfil the requirements
of that employment within a reasonable time, then the position may be
different. However, if the situation is one where it is contemplated, as was
the position here, that the employee would, within a reasonable time, be able
to take up the relevant employment, that will suffice. The fact that the
employee during the interval may be performing some other duties which are not
affected by the occupation of the premises does not prevent a licence coming
into existence.
On the facts
found by the judge in this case, this was, therefore, a case where it was
proper to regard the defendant as going into occupation as a licensee in order
better to perform his duties when he became a coach driver.
Second
issue
Section 5 of
the Protection from Eviction Act 1977, as amended, provides:
5. –(1)
Subject to subsection (1B) below, no notice by a landlord or a tenant to quit
any premises let (whether before or after the commencement of this Act) as a
dwelling shall be valid unless —
(a) it is in writing and contains such
information as may be prescribed, and
(b) it is given not less than 4 weeks before the
date on which it is to take effect.
(1A) Subject to subsection (1B) below, no notice
by a licensor or a licensee to determine a periodic licence to occupy premises
as a dwelling (whether the licence was granted before or after the passing of
this Act) shall be valid unless —
(a) it is in writing and contains such
information as may be prescribed, and
(b) it is given not less than 4 weeks before the
date on which it is to take effect.
(1B) Nothing in subsection (1) or subsection (1A)
above applies to —
(a) premises let on an excluded tenancy which is
entered into on or after the date on which the Housing Act 1988 came into force
unless it is entered into pursuant to a contract made before that date, or
(b) premises occupied under an excluded licence.
(2) In this section ‘prescribed’ means prescribed
by regulations made by the Secretary of State by statutory instrument, and a
statutory instrument containing any such regulations shall be subject to
annulment in pursuance of a resolution of either House of Parliament.
(3) Regulations under this section may make
different provision in relation to different descriptions of lettings and
different circumstances.
No notice was
given to the defendant which complies with subsection (1A). However, that
subsection is contravened only where a notice is given ‘to determine a periodic
licence’ which does not comply with the subsection. If no notice is required,
the subsection has no application. It is contended on behalf of the plaintiff
that the defendant’s licence was not of a periodic licence and that it did not
require a notice of termination but automatically came to an end as a result of
the cessation of the defendant’s employment. Although the document which the
defendant signed before entering into possession was not a complete record of
the terms on which he was allowed into occupation (for example, it did not
mention the rent), it clearly states that the licence was to cease forthwith on
termination of the defendant’s employment. The draftsman’s reference to a
‘periodic licence’ in subsection (1A) creates so far as I am aware a new
animal. ‘Periodic tenancies’ referred to in subsection (1) are well known but I
am not aware of any previous reference to ‘a periodic licence to occupy
premises’. Clearly the draftsman in subsection (1A) was creating a parallel
situation to that in subsection (1) but wished to restrict it not only to
licences which were required to be determined by notice but also to those
licences which could be properly described as periodic.
There is no
definition of a periodic licence in either the 1977 Act or the amending Housing
Act of 1988. However, in section 45(1) of the Housing Act 1988 a ‘fixed term
tenancy’ is defined as meaning any tenancy other than a periodic tenancy. Mr
Seaward draws attention to the contrast between a fixed term tenancy and a
periodic tenancy which this interpretation provision identifies. He also
referred the court to the case of Lace v Chantler [1944] KB 368
where this court held that a tenancy for the duration of the war does not
create a leasehold interest because it is impossible to say at the outset how
long the tenancy would last and therefore it was not of a sufficiently certain
duration. Although Staughton LJ, with his intimate knowledge of the arcane
areas of landlord and tenant law, was able to point out that Lace v Chantler
has been overtaken by subsequent statutory intervention (Validation of War Time
Leases Act 1944), Mr Seaward submits that the decision in that case should
still be applied in this case because the date on which the defendant’s
employment would cease was equally incapable of identification at the
commencment of the occupation in this case as it was in Lace v Chantler.
He submits that
it is desirable in the case of a service occupancy that the statutory
restriction on the period of notice required to determine the licence should
apply, so as to protect the position of a former employee. He also submits that
for the statutory requirement to apply in this sort of case would be beneficial
because the prescribed particulars which are required to be given by section
5(2) of the 1977 Act would provide a valuable safeguard for the employee. (The
prescribed information which has to be given includes a reference to the
desirability of obtaining advice from a solicitor and the ability to obtain
legal advice and assistance under the Legal Aid Scheme.) While I recognise the benefits which could
follow for former employees if Mr Seaward is correct, I am unable to accept his
argument and see real disadvantage in practice if he were correct.
Before the Act
of 1977 was amended, a licence which was expressed to be terminable on an
employee’s employment coming to an end would come to an end without the
requirement of any notice. That this is the position is supported by the
decision of this court in Ivory v Palmer [1975] ICR 340. In that
case it was held that a contractual licence which was ancillary to a contract
of employment came to an end when the contract of employment was terminated
even though the termination was wrongful. It was argued that that case can be
distinguished from the situation here because no rent was payable for the
occupation and the contractual licence was interwoven with the contract of
employment. I cannot see why the fact that there is only one contract instead
of two should make any difference to the situation as long as the contract
dealing with the right to occupation makes it clear that it is to come to an
end with the employment. The fact that rent is payable with reference to a
period of time such as a week would be of significance only if there were no
other express or implied event which terminated the licence. In that situation
the period in relation to which the rent is payable may provide guidance as to
the length of notice which would be reasonable before the licence could be
terminated. If no notice is required, then the fact that the rent was payable
periodically is of no relevance to when the licence terminates.
The question
whether a requirement of reasonable notice is to be implied in a licence has to
be answered in the light of the circumstances existing when the licence is
created: see Australian Blue Metal Ltd v Hughes [1963] AC 74, at
p 99, per Lord Devlin. In this case, therefore, in my judgment, no
notice was required to terminate the licence. The employment could be ended
summarily if appropriate or on a week’s notice and when the employment came to
an end so did the licence. That being the position, section 5(1A) of the 1977
Act can have no application. There is no notice which is needed which is
relevant for the purposes of that subsection. Further, even if that approach is
not correct, the question remains as to whether or not this was a ‘periodic
licence’. In my judgment it was not. This was a licence for a single period,
namely, the period of employment. The subsection in referring to a periodic
licence confines its operation to those licences which continue for a series of
periods until terminated by a notice. The analogy is with weekly, monthly or
quarterly tenancies. Having regard to the document which the defendant signed
before he went into occupation, the fact that a weekly deduction was made from
his wages by way of rent is not sufficient to turn this licence into a periodic
licence.
The approach
adopted above means that section 5 of the 1977 Act, as amended, will not apply
to the great majority of, but not necessarily all, employment licences. Those
licences will usually end with the employment. This appears to me to make good
sense. If the premises are required to be occupied by an employee for the
better performance of his employment, it is sensible that the premises should
be required to be vacated as soon as the employment comes to an end so that
they can be occupied by another employee. It is not difficult to envisage
circumstances where great inconvenience could be caused even by a delay of four
weeks after the end of a period of employment. A degree of support for this approach
is provided by section 8(2) of the 1977 Act. That subsection provides:
For the
purposes of Part I of this Act a person who, under the terms of his employment,
had exclusive possession of any premises other than as a tenant shall be deemed
to have been a tenant and the expressions ‘let’ and ‘tenancy’ shall be
construed accordingly.
This
subsection does not apply to section 5 because that section is in Part II and
not in Part I of the 1977 Act. As section 8 has been amended by the 1988 Act,
if the arguments advanced on behalf of the defendant are correct and Parliament
intended section 5, as amended, to apply to the situation here under
consideration, then that object could have been achieved by amending subsection
(2) so that it applied to Part II of the Act as well. Section 5 is the only
section in Part II of the 1977 Act. In fact, Parliament did not amend
subsection (2).
No notice
being required to terminate the defendant’s licence, I would dismiss this
appeal.
Agreeing, STAUGHTON
LJ said: I was at one time troubled by a single sentence in the judgment of
Lush J in the case of Smith v Seghill Overseers (1875) LR 10 QB
422 at p 431. In that case Smith was a mineworker and lived in a house which
belonged to his employers. His occupation was to cease at the time when his
employment ceased. Lush J said: ‘It is true that the holding is not for any
fixed term’. If one reads that with section 45(1) of the Housing Act 1988, one
finds there that ‘fixed term tenancy’ means any tenancy other than a periodic
tenancy. It would follow that if the definition given by Lush J also applies,
then a tenancy which is to expire when the employment expires is a periodic
tenancy. However, it seems to me that in the Housing Act 1988 Parliament
provided a different rule to that which had found favour with Lush J in 1875.
Parliament decided that any tenancy which was not a periodic tenancy was a
fixed term tenancy, although Lush J in 1875 thought that a tenancy for the
duration of employment was not of that description. That has allayed my doubts
on that aspect of the case and I agree that the appeal must be dismissed.
BALCOMBE LJ also agreed and did not add anything.
The appeal
was dismissed with costs, not to be enforced without the leave of the court;
application for costs to be paid by Legal Aid Fund adjourned to registrar;
application for leave to appeal to the House of Lords was refused.
