NOTTING HILL HOUSING TRUST v (1) FRANK BRACKLEY [2001] EWCA Civ 601

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE WEST LONDON COUNTY COURT
(His Honour Judge Cowell)
[2001] EWCA Civ 601Case No No. B2/2000/3597Venue Royal Courts of Justice, Strand, London WC2, Wednesday, 24th April 2001
Between
NOTTING HILL HOUSING TRUSTClaimant/Respondent(1) FRANK BRACKLEY(2) JULIE BRACKLEYDefendants/Appellants
Before
Lord Justice Peter GibsonLord Justice BuxtonLord Justice Jonathan ParkerMR JAN LUBA QC and MISS JOANNE HARRIS (Instructed by Hecht & Co, 39-41 Goldhawk Road, London W12 8QP)appeared on behalf of the Appellants.MR PAUL MORGAN QC and MR RANJIT BHOSE (Instructed by Prince Evans, 77 Uxbridge Road, London W5 5ST)appeared on behalf of the Respondent.Date 24 April 2001
[1]Wednesday, 24th April 2001 LORD JUSTICE PETER GIBSON: The defendant, Frank Brackley, appeals against the order made by His Honour Judge Cowell in the West London County Court on 16th November 2000. By that order the Judge ordered Mr Brackley to give the claimant, Notting Hill Housing Trust ("the Landlord"), possession of 2 Lansbury House, William Morris Way, London SW6 ("the Property") and to pay the costs of the Landlord and of the Part 20 Defendant, Julie Brackley. She is Mr Brackley's former wife. Permission to appeal was refused by the Judge but granted by this court (Mantell LJ) together with a stay of the order for possession.[2]The Judge made his order when determining certain preliminary issues which were not precisely defined. They were in substance the points of law raised in the Amended Defence of Mr Brackley. The Judge assumed the facts admitted or averred in the Amended Defence were correct for the purposes of his determination. On that assumption, and on other matters not in dispute, the facts were these. The Landlord on 25th November 1997 granted Mr and Mrs Brackley a joint weekly tenancy of the Property commencing on 1st December 1997. The tenancy was terminable on four weeks' notice. On 14th May 1999 Mrs Brackley left the Property together with four of her children. She sought an occupation order in family proceedings. That application was refused. In about July 1999 the Landlord advised Mrs Brackley to serve a notice to quit to determine the tenancy. On 28th July 1999 Mrs Brackley served on the Landlord a notice to quit to determine the tenancy on 30th August 1999. On 14th April 2000 the Landlord commenced proceedings against Mr Brackley for possession. In doing so it relied on the notice given by Mrs Brackley. Mr Brackley joined Mrs Brackley as a Part 20 defendant, claiming that she was in breach of section 11 of the Trusts of Land and Appointment of Trustees Act 1996 ("the 1996 Act").[3]It is not in dispute that Mr and Mrs Brackley held the tenancy for themselves on a trust of land. By section 11(1):
"The trustees of land shall in the exercise of any function relating to land subject to the trust- (a) so far as practicable, consult the beneficiaries of full age and beneficially entitled to an interest in possession in the land, and (b) so far as consistent with the general interest of the trust, give effect to the wishes of those beneficiaries, or (in case of dispute) of the majority (according to the value of their combined interests)."
[4]Mrs Brackley did not consult Mr Brackley before serving the notice to quit. Mr Brackley claimed that by reason of her breach of section 11 the notice to quit was void or voidable. By a late amendment Mr Brackley pleaded in his Amended Defence that the Landlord was a party to the breach of trust by procuring Mrs Brackley's breach of trust by advising her to serve the notice to quit. Mrs Brackley denied any breach of section 11, averred that in any event it was not practicable to consult Mr Brackley and denied that the notice to quit was void or voidable. Mr Brackley remains in occupation.[5]The first issue considered by the Judge was whether Mrs Brackley committed a breach of trust by serving the notice to quit without consulting Mr Brackley. The Judge referred to the decisions of this court in Hammersmith and Fulham London Borough Council v Monk [1990] 89 LGR 357 and, on appeal, of the House of Lords ( [1992] 1 AC 478 ), and of this court in Crawley Borough Council v Ure [1996] QB at 13. The Judge held that the giving by one joint tenant of a notice to quit to terminate a periodic joint tenancy caused the land to cease to be subject to the trust at the end of the period of the periodic tenancy, and that the giving of the notice to quit was not the exercise of a function of a trustee of land for the purposes of section 11 and that there was no breach of trust. If wrong on that, he held that there was no tort of procuring a breach of trust. He further held that even if there was a breach of trust, the notice to quit was not invalid. He therefore concluded that the Landlord was entitled to possession.[6]Before this court it is not in dispute that either of two joint tenants under a periodic tenancy may give a valid notice to quit to determine the tenancy and that the giving of a notice to quit by one joint tenant is not in itself a breach of trust. Three questions are, however, raised by this appeal: (1)Does the giving by one joint tenant of a notice to quit to determine the tenancy come within the words of section 11 "the exercise of any function relating to land subject to the trust" requiring the joint tenant trustee to consult the other beneficiaries or beneficiary? (2) If so, does the failure to consult in this case amount to a breach of trust? (3) If so, can a landlord obtain possession relying on a notice which it has procured from the trustee acting in breach of trust?[7]Unless Mr Brackley can obtain an affirmative answer from this court to each of the first two questions and a negative answer to the third question, his appeal cannot succeed. (1) Function[8]Mr Luba QC for Mr Brackley submits that the first question should be answered in the affirmative. He points out that the phrase "the exercise of any function relating to land subject to the trust" is not defined in the 1996 Act, but that the concept of a trustee having functions regulated by the 1996 Act runs through the Act. He points to section 6(1), which provides that: "For the purpose of exercising their functions as trustees the trustees of land have in relation to land subject to the trust all the powers of an absolute owner".[9]Again, by section 9(1), section 10(4) and section 14(2)(a), the draftsman has referred to "functions" of the trustees.[10]Mr Luba submits that the legislature must have intended the term "function" to have its ordinary meaning. He drew our attention to a dictionary definition and to judicial comments on the meaning of the word "function", but he accepted that the word "function" is a word which is apt to embrace a duty and a power in relation to a trustee, just as it has been held to be a portmanteau word apt to refer to a power or duty of a local authority: see Hazell v Hammersmith and Fulham London Borough Council [1992] 2 AC 1 at page 29 F per Lord Templeman.[11]Mr Luba referred us to the duty of consultation imposed by the predecessor of section 11, section 26(3) of the Law of Property Act 1925 ("the 1925 Act") as amended in 1926, and pointed to the width of the description of that duty given by Bennett J in Re Jones , Jones v Cusack-Smith [1931] 1 Ch 375 at page 378. Section 26(3) provided:
"Trustees for sale shall so far as practicable consult the persons of full age for the time being beneficially interested in the rents and profits of the land until sale, and shall, so far as consistent with the general interest of the trust, give effect to the wishes of such persons, or, in case of dispute, of the majority (according to the value of their combined interests) of such persons, that a purchaser shall not be concerned to see that the provisions of this subsection have been complied with. In the case of a trust for sale, not being a trust for sale created by or in pursuance of the powers conferred by this or any other Act, this subsection shall not apply unless the contrary intention appears in the disposition creating the trust."
[12]Bennett J said:
"... the trustees must consult the beneficiaries, not only in the exercise of the trust for sale, but also in the exercise of all other trusts and powers arising under the Settled Land Act, 1925, and the Law of Property Acts, and the additional or larger powers conferred by the settlement upon the trustees or otherwise."
[13]Mr Luba criticised the judge for following and applying Ure when the judge held that the giving of a notice is not a function relating to land subject to the trust because the trust expires at the end of the period of the tenancy. Mr Luba said that that was to misunderstand the imposition of the modern concept of the trust of land on the ordinary periodic tenancy of such land and that Ure was concerned with different wording in relation to a different concept, the trust for sale, which never properly reflected the interests of the occupying beneficiaries in a joint periodic tenancy of a dwelling house, especially as the trust property could not be sold. Mr Luba pointed out that the beneficiaries under the trust of land take an interest in the land itself, not in the notional proceeds of a theoretical sale. He argued that a periodic tenancy cannot escape from the provisions of the statute by the theoretical device that the trust property comes to an end when the period comes to an end. He submitted that his approach was consistent with a workable construction of the 1996 Act, which, he reminded us, applies to business as well as residential tenancies. On that approach a consulted beneficiary, whether in a business or in a dwelling house, might avoid eviction either by persuasion or by the means provided in the 1996 Act for the resolution of disputes by application to the court under section 14.[14]Attractively though Mr Luba made his submissions, I am wholly unpersuaded by them, essentially for the reasons given by the judge and elaborated in the helpful skeleton argument of Mr Morgan QC and Mr Bhose for the Landlord.[15]I accept that the word "function" is a wide one. But in my judgment it is quite clear that in relation to trustees such as Mr Brackley and Mrs Brackley what one has to consider is whether the action of each of them, if such action is called into question, is the exercise of a power or a duty, that is to say a function, such as to bring the duty under section 11 into operation. In Jones Bennett J in the passage which I have cited described the statutory duty to consult in relation to the exercise of powers and duties of trustees even though section 26(3) of the 1925 Act makes no mention of powers or duties or functions. Subject to one matter, there is nothing the 1996 Act, so far as I can see, nor in the report of the Law Commission, Transfer of Land: Trusts of Land Law Com. No.181 (1989), which contains the recommendations which were substantially implemented in the 1996 Act, to suggest that section 11(1) was intended to have some wider or different effect than section 26(3) which it substantially reproduces. That one matter was that, as recommended by the Law Commission (see paragraph 13.5 of the report), the provision in section 26(3) was to be extended to all trusts of land, whether for sale or not, unless expressly excluded by the trust instrument.[16]The main difficulty which I have with Mr Luba's submissions is that they seem to me to be inconsistent with the analyses made in the House of Lords in Monk and in this court in Ure of the effect of the service of a notice to quite by one joint tenant of a periodic tenancy.[17]In Monk one of two joint tenants of a periodic joint tenancy of a flat gave notice to quit without the knowledge or consent of the other joint tenant. The House of Lords, in agreement with this court, held that a contractual periodic joint tenancy continued only so long as all the joint tenants agreed in its continuation. Lord Bridge (at page 490 C) considered an argument that the 1925 Act, by requiring a legal estate in land vested in joint tenants to be held on trust for sale for the beneficiaries, prevented one of two joint tenants determining a periodic tenancy without the concurrence of the other. He said (at page 490 E):
"But where, as here, two joint tenants of a periodic tenancy hold both the legal and the beneficial interest, the existence of a trust for sale can make no difference to the principles applicable to the termination of the tenancy. At any given moment the extent of the interest to which the trust relates extends no further than the end of the period of the tenancy which will next expire on a date for which it is still possible to give notice to quit. If before 1925 the implied consent of both joint tenants, signified by the omission to give notice to quit, was necessary to extend the tenancy from one period to the next, precisely the same applies since 1925 to the extension by the joint trustee beneficiaries of the periodic tenancy which is the subject of the trust."
[18]Lord Bridge then considered (at page 490 G) an argument that positive acts or dealings with a joint tenancy which require the concurrence of all joint tenants if they are to be effective afford analogies with the service of a notice to quit, being likewise a positive act. Lord Bridge said (at page 490 H):
"But this is to confuse the form with the substance. The action of giving notice to determine a periodic tenancy is in form positive; but both on authority and on the principle so aptly summed up in the pithy Scottish phrase `tacit relocation' the substance of the matter is that it is by his omission to give notice of termination that each party signifies the necessary positive assent to the extension of the term for a further period."
[19]Ure was strikingly similar to the present case on its facts. The Council had granted a husband and his wife a joint periodic tenancy of a flat. The wife left the flat and on applying to the Council for assistance or accommodation as a homeless person the Council advised her that, as her interest in the flat disqualified her from being homeless, she could terminate the tenancy by serving notice to quit. She did so on a form provided by the Council without informing the husband. The Council sought and obtained an order for possession against the husband. It was argued for the husband in this court that the wife, in failing to consult him before giving notice to quit contrary to section 26(3) of the 1925 Act, acted in breach of trust and that the Council was party to that breach and could not take advantage of its own wrong by obtaining possession.[20]This court rejected those arguments. Glidewell LJ held, in reliance on the remarks of Lord Bridge in Monk at page 490 which I have cited, that section 26(3) only applied if there was a positive act by the trustees or trustee, and, on Lord Bridge's analysis of the effect of the service by one joint tenant of a notice to quit, said that there was no such positive act. Hobhouse LJ, agreeing, said that it was an essential step in the husband's argument that he should be able to categorise service of the notice as being "the exercise of a statutory or other power". Hobhouse LJ said that the matter was concluded by the decision in Monk , which identified and confirmed the character of a periodic joint tenancy. After citing the passages from Lord Bridge's speech which I have already quoted and from the judgment of Nicholls LJ in this court [1990] 89 LGR 357 at page 381 to the like effect, Hobhouse LJ said this (at page 26 G):
"Therefore the position in law is that the tenancy at any given time has no greater life than the period up to the time when the next notice can be given and would terminate. It requires an act of will to continue the tenancy beyond that date. It also follows, as is pointed out by Lord Bridge, that the trust inevitably expires if no act of will takes place. Lord Bridge, with the agreement of the other members of the House, characterised the service of the notice as merely an indication that that act of will was not going to occur and therefore the tenancy was not going to continue beyond the stated time."
[21]At page 27 D, having referred to Nicholls LJ's judgment, Hobhouse LJ said this:
"In the light of that analysis of the legal position, in my judgment it is not correct to say that the service of the notice was the exercise of a statutory or other power vested in the trustees for sale. It follows from that that the service of the notice does not fall within the subject matter of section 26(1) or of section 26(3). Therefore, the duty as trustee upon which the husband relies cannot be made out."
[22]The third member of this court, Aldous LJ, agreed with both Glidewell LJ and Hobhouse LJ.[23]In the light of that reasoning, which to my mind was in no way dependent upon the existence of the trust for sale imposed by the 1925 Act, the indication by one joint tenant by means of the notice to quit of his or her unwillingness that the joint tenancy should continue beyond the end of the period when the notice takes effect is not the exercise by the trustee as trustee of a power or duty of the trustees. It is no more than the exercise by the joint tenant of his or her right to withhold his or her consent to the continuation of the tenancy into a further period. That is not the exercise of a function of the trustees. It is idle for Mr Luba to protest that it is a theoretical device for the trust property to come to an end when the notice to quit takes effect because that it does come to an end is the effect of the authorities binding on this court.[24]I do not accept that the 1996 Act has affected the position which obtained prior to 1st January 1997 in any material way. Again there is nothing in the 1996 Act or in the Law Commission report which points to any intention on the part of the legislature to alter the law relating to the service by one joint tenant of a joint periodic tenancy of a notice to quit. There is no doubt that the conceptual basis on which land was held by joint owners was significantly altered by the 1996 Act. Prior to 1st January 1997 a trust for sale was imposed on the land, with a power to postpone sale in the absence of a contrary intention. But the reality was different. The courts recognised that most trusts for sale were created in circumstances in which the intention was that the land should be retained for specific purposes (for example when land was bought by or otherwise acquired by a husband and wife as a home for themselves and their family) and, even if a sale was sought by a beneficiary seeking implementation of the trust for sale, the courts took account of that intention and could refuse to order a sale (see Megarry & Wade : Real Property 6th Edition (2000) paragraph 8-111). The effect of the 1996 Act has been to remove the artificiality inherent in the conveyancing device of a trust for sale and by the trust of land to leave the trustees with a power of sale. Whereas prior to 1st January 1997 the courts recognised that the beneficial co-owners had a right to occupy the property pending sale (see City of London Building Society v Flegg [1988] AC 54 at page 71 per Lord Templeman and page 81 per Lord Oliver), since 1st January 1997 the circumstances in which a beneficiary has a right to occupy the property subject to the trust have now been spelt out. But none of these changes has affected the analysis in Monk of the way a periodic tenancy operates and of what happens when one joint tenant of a periodic tenancy serves a notice to quit, nor has anything in the 1996 Act undermined the reasoning of this court in Ure that the service by one joint tenant of a notice to quit is not the exercise of a trust or power of the trustees. I note that the editors of Lewin on Trusts 17th Edition (2000) paragraph 29-34 at note 90 also take the view that the reasoning in Ure relating to section 26(3) of the 1925 Act seems equally applicable to section 11, so that the giving of by one joint tenant of a notice to quit is not an act requiring consultation under section 11.[25]I have to say also that it seems to me that to treat one joint tenant, who is also a co-owner with another or others, as being under a duty to consult seems to me rather artificial; even more so if it is argued, as it is by Mr Luba, that the courts could be required to resolve a dispute relating to the giving by that joint tenant of an indication that that person no longer desires the continuation of the tenancy. Mr Luba frankly accepted that there could be no obligation on the joint tenant, unwilling to continue the tenancy and wishing to serve a notice to quit, to change his or her mind. It is possible that in family proceedings a different result may be obtained. We have not heard argument on this point fully. But, so far as the jurisdiction under the 1996 Act is concerned, it seems to me that it would be without point to require that one of two joint tenants should consult the other joint tenant, if a beneficiary, and that it is unlikely that Parliament intended that the court should have jurisdiction under section 14 to adjudicate on such a dispute.[26]In Monk Lord Bridge was well aware that the decision in that case affected periodic joint tenancies of premises other than residential premises (see [1992] 1 AC at page 482 F). As Lord Browne-Wilkinson pointed out in his speech in Monk , there were two possible approaches which the law could have adopted in relation to the problems posed by the service of a notice to quit by only one joint tenant: one which protected the property rights of the other joint tenant or tenants and the other approach which was based on the rights of the parties in contract. For nearly two centuries the contractual approach has found favour. While criticisms may be made of the present state of the law and the unfortunate effect of a notice to quit served by one joint tenant on the other joint tenant or tenants, if the law is to be changed, that is a matter for the legislature and not the courts. For the reasons which I have given I do not consider that the 1996 Act has in any way touched on that particular point.[27]For these reasons I am of the opinion that Mr Brackley's case founders on the first question. (2) and (3) Breach of trust and procuring breach of trust[28]It is therefore unnecessary to consider, and we have heard no argument on, the second and third questions.[29]I would dismiss this appeal and discharge the stay.

LORD JUSTICE BUXTON: I also would dismiss this appeal for the reasons given by my Lord.

LORD JUSTICE JONATHAN PARKER: I would also dismiss the appeal for the reasons which my Lord, Peter Gibson LJ, has given. A notice to quit in respect of a periodic tenancy given by only one of two joint tenants is effective to determine the tenancy because it is an expression of the unwillingness of the person giving the notice that the tenancy should continue beyond the end of the current period. Since, as Lord Bridge explained in Monk , the continuation of a periodic tenancy from one period to the next requires the consent of all parties, the unwillingness of one joint tenant that it should so continue means that the tenancy will inevitably determine at the end of the current period. Thus, as Hobhouse LJ put it in Ure , the notice is merely an indication that the act of will which is required on the part of all parties to achieve a continuation of the tenancy beyond the end of the current period is not going to occur.

[32]If the matter is viewed in that light, it becomes clear, in my judgment, that in serving such a notice a joint tenant is not acting as a trustee and that, in consequence, no duty to consult the other joint tenant pursuant to section 11 of the 1996 Act can arise. To put it another way, since the notice does no more in substance than express the personal wish and intention of the joint tenant who serves it that the periodic tenancy should not continue, there would be nothing to consult the other joint tenant about.

Order

Appeal dismissed. Application for permission to appeal to the House of Lords refused. We make an order for possession, not to be enforced before 22nd May; we order Mr Brackley to pay the costs of Notting Hill Housing Trust, but we assess his contribution as nil; and the usual order against the legal services commission will follow. Detailed assessment of the appellant's costs. (ORDER DOES NOT FORM PART OF APPROVED JUDGMENT)

Cited in 3 later judgments