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An inconvenient problem

By Dave

There were lots of good intentions behind the SI making clear that 16/17 year olds are in priority need (The Homelessness (Priority Need for Accommodation) (England) Order 2002 (SI 2002 /2051)). But as a few have pointed out in recent years, there might be consequences because of the capacity requirements of property law. Well, in Alexander-David v LB Hammersmith & Fulham, those good intentions (and property law) have bitten back.

Ms Alexander-David, a 16 year old who was also pregnant, was provided with accommodation by Hammersmith and Fulham LBC under s 193(2). They granted and she took a standard form non-secure tenancy agreement terminable by four weeks notice to quit on either side. The agreement contained her name and age, and the usual covenants and provisions for rent payment. She breached the covenants (she has a dog, there are complaints about nuisance and rubbish, and there are arrears). H&F served a notice to quit on Ms Alexander-David.

So what’s wrong with that? Well, it may be inconvenient, but, Sullivan LJ rightly held that, as she’s under 18, she cannot take the grant of a tenancy at law (s 1(5) Law of Property Act 1925); and as it’s an attempt to grant a tenancy to a minor para 1(1), Sch 1, Trusts of Law and Appointment of Trustees Act 1996 kicks in which means that the purported grant operated as a declaration of trust by H&F for Ms Alexander-David. Any second year law student (who’s going to pass their property law exam) knows that. Kelvin Rutledge for H&F argued valiantly that four factors made it clear that, although this was a standard form agreement, Ms Alexander-David had taken an “equitable tenancy”. None of these factors, however, was sufficient “… to displace the obvious inference to be drawn from the fact that the agreement is in the Respondent’s standard form for creating legal tenancies with its adult tenants” ([26]).

In any event, the proposition that Ms Alexander-David had taken an equitable tenancy was, in itself, novel and pretty clever. As Sullivan LJ put it at [31]:

I am not persuaded that a landlord who has full capacity to grant a legal tenancy, and who grants a tenancy without any express qualification to the effect that something less than a legal tenancy is being granted can subsequently say that what he granted was not a legal tenancy, but an “equitable tenancy”. As Miss Bretherton put it in her submissions: a landlord does not elect to grant an equitable tenancy; such a tenancy arises in certain specified circumstances, recognised by equity.

There was a moment in the judgment (at [17]-[22]) when it looked like Sullivan LJ might have been persuaded to follow his own path to find that the council had no power to enter into an agreement under which they were to act as a trustee (on the basis of s 21 and 32(3), Housing Act 1985), but he pulled himself out of such a finding slightly unconvincingly (by saying that there had been no public law challenge in any event and making brief reference to s 44, 1985 Act). Neither counsel wished to proceed with that line in any event.

Slightly more inconveniently for H&F, however, this finding of a trust of land with themselves as trustee created a difficulty as regards the notice to quit. There were two issues with the notice to quit: (a) its service by the trustee (ie H&F) was a breach of trust; and (b) it was, in any event, served on the wrong person (it should have been served on the trustee, ie themselves, not Ms Alexander-David). H&F was “… in the absence of any other trustee, in the uncomfortable position of being both lessor and trustee, and in the former capacity of being not merely a party to the breach of trust, but the instigator of the breach” ([35]). Kelvin Rutledge, again rather valiantly, submitted an argument drawing on certain sentences from the judgments in Hammersmith & Fulham v Monk and Crawley BC v Ure but these cases involved joint tenants and were not relevant to this issue.

By way of conclusion, Sullivan LJ rather generously offered two possible alternative transaction types which the council could use for under 18s: (a) a non-exclusive possession licence which included the provision of services; or (b) an agreement to grant a tenancy until the occupier is 18, such agreement taking effect in equity only. But “Whatever course is adopted, it is important that the inability of a minor to hold a legal estate is expressly recognised, and that any agreement with a 16 or 17 year old expressly states that because the applicant is a minor the Respondent is not granting a legal estate but is instead securing that accommodation is available by granting something other than such an estate” ([38]).

1 Comment

  1. J

    Hardly a surprising result and, to be fair, local authorities had been expressly warned about this sort of problem since Emily Orme’s article in the NLJ in October 2005 (cited with approval at paras [33] and [38]).


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