Clore v Macnicol [2004] EWCA Civ 1055

Case No B2/2004/0115[2004] EWCA Civ 1055
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
(HIS HONOUR JUDGE HALLGARTEN QC)
Venue Royal Courts of JusticeDate Tuesday, 13th July 2004
Strand
London, WC2
B E F O R E:
LORD JUSTICE BROOKE
(Vice President of the Court of Appeal, Civil Division)
LORD JUSTICE CHADWICK
LORD JUSTICE WALL
Between
CLORERespondent-v-
Between
MACNICOLAppellant
(Computer-Aided Transcript of the Stenograph Notes ofSmith Bernal Wordwave Limited190 Fleet Street, London EC4A 2AGTel No: 020 7404 1400 Fax No: 020 7831 8838Official Shorthand Writers to the Court)
MR J SMART appeared for AppellantMR D BROUNGER appeared for Defendant
J U D G M E N T

LORD JUSTICE CHADWICK:

[1]This is an appeal from an order made on 19th December 2003 by HHJ Hallgarten QC sitting in the Central London County Court in proceedings for possession of a dwelling house at 2B Ravenscroft Avenue, London, NW11. The issue raised on the appeal is whether the appellant, Mrs Anita Macnicol, occupied that property as an assured tenant, as she contends; or occupied the property as an assured shorthold tenant, as the respondent landlord contends.[2]It is accepted that if Mrs Macnicol was an assured shorthold tenant, as the judge found, the shorthold tenancy has been brought to an end and the order for possession was rightly made. It is also common ground that if she was already an assured tenant on 26th October 2001 -- the date when she accepted what would otherwise have been an assured shorthold tenancy -- she remained an assured tenant and did not become an assured shorthold tenant under that new tenancy. So, on that hypothesis, the tenancy subsists.[3]It is accepted for the purposes of this appeal that the appellant's late mother, Mrs Shirdokht Khawaja, was at her death on 22 February 1999 a statutory tenant of the property at 2B Ravenscroft Avenue under the provisions of section 2(1)(a) of the Rent Act 1997. On the death of a statutory tenant a person who was a member of that original tenant's family and was residing with him or her in the dwelling house at the time of and for the period of two years immediately before the death, becomes entitled to an assured tenancy by succession, by virtue of the provisions of section 2(1)(b) of the Rent Act 1977 and paragraph 3 in part 1 of Schedule 1 to that Act, as amended by section 39 of and schedule 4.2 to the Housing Act 1988.[4]Mrs Shirdokht Khawaja was survived by her four children. Two of those children, the appellant and her brother, Mr Amanullah Khawaja, claimed to have been residing with their mother at 2B Ravenscroft Avenue at the time of, and for the period of two years immediately preceding, her death in February 1999. In circumstances where there is more than one person qualified under paragraph 3 of schedule 1 to the Rent Act 1977 to take an assured tenancy by succession, that paragraph provides that the person entitled to the assured tenancy shall be decided by agreement between them or, in default of agreement, by the county court.[5]Section 39(5) of the Housing Act 1988 provides that where, by virtue of those provisions in the Rent Act to which I have referred, a person becomes entitled to an assured tenancy of a dwelling house by succession, that tenancy should be a periodic tenancy arising by virtue of section 39. Section 39(6) provides that where a successor becomes entitled to an assured periodic tenancy, that tenancy takes effect in possession immediately after the death of the statutory tenant on whose death the successor became so entitled and upon the same terms as the previous statutory tenancy.[6]In order to avoid a situation in which a person who has become entitled to an assured tenancy by succession can transfer that tenancy to a third party who would not have been so entitled, section 15 of the Housing Act 1988 provides that it shall be an implied term of every assured tenancy which is a periodic tenancy that, except with the consent of the landlord, the tenant shall not assign the tenancy in whole or in part, and shall not sub-let or part with possession of the whole or any part of the dwelling house let on the tenancy. So the scheme of the Act provides for the successor to be determined either by agreement, or by the court in default of agreement where there is more than one claimant; and, once determined, to have an assured periodic tenancy which is not to be assigned to another. There is no provision in the Act which permits a joint tenancy to be acquired under those provisions.[7]That was the statutory frame work within which the events which have occurred in this case have to be placed.[8]In the present case the judge found on the facts(i) that the appellant had no claim to an assured tenancy by succession because she could not establish that she had been residing at 2B Ravenscroft Avenue for the period of two years immediately preceding her mother's death; but(ii) that even if she had been a person qualified to take an assured tenancy by succession, she had agreed with her brother in March 1999, shortly after their mother's death, that, as between the two of them, he would be the person who would be entitled to take the tenancy of the property under the provisions of the 1977 Act.[9]The landlords at that time, that is to say in 1999, were the trustees of the Sir Charles Clore 1955 Discretionary Settlement. They were three partners in Titmuss Sainer Dechert solicitors. Their agents were RD & D Associates, chartered surveyors. The principal of that firm was Mr Rudy Fattal.[10]On 13th March 1999, Mr Fattal wrote to Mr Silas Krendel, one of the trustees, explaining in broad but accurate terms the provisions as to succession following the death of a statutory tenant. Mr Fattal expressed the view that Mr Amanullah Khawaja had not been living with his mother for the two years prior to her death and so would not be entitled by succession for either a statutory tenancy or an assured tenancy. He suggested that the trustees might wish to grant Mr Khawaja an assured shorthold tenancy.[11]On 23rd March 1999, Mr Amanullah Khawaja wrote to Mr Krendel expressing interest:
"...in taking over my deceased mother's lease at the same rent..."
[12]But he asked for a lease of 25 years. Mr Krendel replied on 9th April 1999 indicating that the trustees were willing in principle to grant Mr Khawaja a tenancy, but that that tenancy would have to be at a market rent. Mr Krendel suggested a tenancy of three years determinable on six months' notice by either party at the expiration of that period or at any time thereafter. That proposal was not acceptable to Mr Khawaja, who wrote on 21st April 1999 that he cannot agree to a market rent but would accept to continue the rent as agreed with his mother:
"...as I am a statutory tenant having lived in this flat for so many years."
[13]No agreement was reached between the trustees and Mr Amanullah Khawaja as to the terms of a new tenancy on which Mr Khawaja was to continue to occupy the property. But on 12th October 1999 Mr Fattal wrote to Mr Khawaja a letter which contained this paragraph:
"Mr Krendel has advised me that you have claimed that you were living with your mother for at least two years prior to her death. In such a case you would be considered to be an Assured Tenant and accordingly I have been instructed to seek an increase in rent to £17,160 per annum as from 24th November 1999. A formal notice under the Housing Act is enclosed herewith."
[14]From that date, as it seems to me, the landlords must be taken to have accepted that Mr Amanullah Khawaja was entitled to be treated as an assured tenant. They must be taken to have accepted that because there is no other basis upon which they could have been seeking an increase in rent under the provisions of the Housing Act. But there is nothing to suggest that at that stage the trustees, as landlords, were aware of any potential claim by the appellant, Mrs Macnicol, to be also entitled to an assured tenancy by succession.[15]The trustees first learned of her claim by a letter from solicitors, Avadis and Co, acting for her, dated 18th January 2000. They wrote:
"Our client has resided in the above-mentioned property throughout her life. She is currently resident there with her brother. We note that there was an intention to transfer the tenancy of the property to our client's brother after the death of her mother but this has not formally taken place. It would be more sensible to transfer the tenancy to both Mr Khawaja and our client and await your comments."
[16]The response to that was a letter from Mr Krendel dated 27th March 2000. He wrote:
"I have since been supplied with copies of Mr Fattal's letter of 2nd March addressed to Mr A Khawaja, your letter of 21st March to Mr Fattal and his reply of the same date. However, I am in some difficulty in dealing with your original letter in which you state you represent Mrs Anita Macnicol because I am not aware that she has any legal interest in the property. Mrs S Khawaja who had been the tenant for many years died on 25th February 1999. I was informed that her son Mr A Khawaja who claimed to have been living with her since 1981 would like to have a tenancy for a term of years. Some correspondence passed between us but we were unable to agree terms. He made no mention of Mrs A Macnicol. "
On the assumption that he had been living with his mother for two years immediately preceding her death, he became entitled to an Assured Tenancy at a market rent. The previous rent paid by the late Mrs Khawaja was no longer applicable and Mr Fattal took steps to have the rent increased to a market rent as set out in his letter to Mr A Khawaja of 2nd March 2000."[17]Shortly after that, the appellant parted company with Avadis and Co. On 11th April 2000, she herself wrote to Mr Krendel asserting:
"I have been living with my late mother Mrs Khawaja since 1981 and my brother as well..."
That was clearly notice, if correct, that she was a person whose rights to an assured tenancy by succession had to be taken into account. She repeated that assertion in a letter of 23rd May 2000 to Mr Fattal:
"I am not sure if you are aware that I have lived with my mother and brother in this property for over 20 years."
[18]Following that exchange of correspondence, Mr Fattal and Mrs Macnicol met on 20th June 2000. Mr Fattal reported that meeting to Mr Krendel. He wrote:
"With regards the tenancy, I informed Mrs Macnicol that the Trustees were not willing to recognise her as a joint tenant because the evidence suggests that she has not been living at the property as her principal home during the period before her mother's death. Mrs Macnicol said that she was living there, but only occasionally and only as a visit to see her mother -- I think that in effect she was agreeing with us, although she would not openly admit this. Mrs Macnicol is now clearly living at the flat full time, although there was no sign of Mr Khawaja. Even though she assured me that he was living there as well, I got the feeling that he was not. I cannot however prove this."
[19]It was against that background that on 4th July 2000, Mr Amanullah Khawaja wrote to Mr Krendel the letter on which the issue on this appeal turns. In the form in which it was sent, the letter is in these terms:
"Ref: 2B Ravenscroft Avenue. NW11. "
I have been advised by my sister Anita Macnicol, after a discussion that took place with Mr Fattal, that in order for her to remain resident at 2B Ravenscroft Avenue I need to relinquish my tenancy. I understand that you will not accept a joint tenancy agreement. "Therefore in order for Anita Macnicol to remain at the above address I hereby give up all rights to the tenancy to my sister Anita Macnicol for 2B Ravenscroft Avenue."[20]The appellant contended before the judge, and contends on this appeal, that that letter of 4th July 2000 effected a transfer of the assured periodic tenancy which, as she says, was vested in her brother, Mr Amanullah Khawaja, immediately before and on 4th July 2000. So, she asserts, she became the tenant under that assured periodic tenancy by assignment; notwithstanding that, if there were an assignment, it was plainly in breach of section 15 of the Housing Act 1988 -- the landlord's consent not having been obtained.[21]The judge dealt with that submission shortly at page 28 in the transcript of his judgment which is before us. Under the heading "Issue D, the alleged assignment", the judge said this:
"Was there an assignment? There is no doubt that the Defendant and her brother reached an agreement reflected in the letter sent to Mr Krendel on 4th July 2000, but neither the word 'assignment', nor, indeed, 'transfer' was used. "
Is it possible to deduce an assignment, or to say that the underlying agreement which is evidenced by the letter of 4th July 2000 is to be characterised as an assignment? "In this matter my mind has fluctuated continuously. In the end I have come to the conclusion that there was no assignment. As I see it, the letter should be read as a whole against the background of the Defendant and Mr Khawaja claiming to have equal rights: see the passage, 'Indeed, I understand you will not accept a joint tenancy agreement'. As I see it Mr Khawaja was not saying he was transferring his rights to the Defendant. He was saying he was giving up those rights, i.e. he was accepting that the Defendant's rival claim was the one which he was happy should now prevail. "For those reasons, in the end I find myself in agreement with Mr Brownger [counsel for the landlord]'s submission that this represented a purported surrender rather than a transfer of rights."[22]There was further correspondence between the appellant and the landlord thereafter, which led eventually to the grant to her of an assured shorthold tenancy on 26th October 2001. That was followed, almost immediately, by a notice to terminate the tenancy and so bring the arrangement to an end. As I have said, if she were already an assured tenant by virtue of the purported assignment, then the grant of an assured shorthold tenancy did not affect her status; but if she were indeed an assured shorthold tenant by virtue of the grant, then there is no doubt that that tenancy was brought to an end in the appropriate way. The question turns, therefore, on the effect of the letter dated 4th July 2000.[23]It may be observed that her contention that the letter operated as an assignment is founded, as it has to be, on the premise that Mr Amanullah Khawaja was an assured tenant by succession immediately before that notice. Although Mr Khawaja's assured tenancy was admitted in the pleadings, that proviso is, of course, quite inconsistent with Mrs Macnicol's assertion before the judge that she, as well as her brother, was a person who was entitled to an assured tenancy by succession under the provisions of the Rent Act. It is inconsistent with that premise because, until the identity of the person who is to succeed to an assured tenancy by succession is determined, there will be no assured tenancy by succession in being; so that, while there are rival claimants, there is no tenancy which can be assigned. But that does not seem to have deterred Mrs Macnicol from advancing her argument; and, as I have said, the judge found that in fact she had already agreed back in 1999 that she would not be the claimant, even if she had otherwise qualified to be the claimant.[24]But the letter of 4th July 2000 has to be construed against the background that, at that time, both she and her brother were claiming to be persons entitled to succeed under the provisions in part 1 of Schedule 1 to the 1977 Act. The issue is, therefore, a short one. When that letter was written, was it written in order to surrender the brother's claim to succession rights in favour of his sister so that she would be the only person entitled to the tenancy by succession under the Act; or was it written on the basis that he had a tenancy and she did not so that he was transferring his tenancy to her notwithstanding that that was something which would immediately involve a breach of the implied term in section 15 of the 1988 Act? For my part, I have no doubt that the judge was correct to reach the conclusion that he did.[25]Two features of the letter are striking. The first is that it is not written or addressed to the supposed assignee, Mrs Macnicol. It is in the form of a notice given to the landlord. That does not suggest an assignment. On the contrary, it is consistent with a surrender of rights. Second, the letter talks of "giving up all rights to the tenancy"; a phrase consistent with the writer having rights under the Act rather than with the writer claiming that he is the person who is the tenant.[26]Given that the statutory position was such that if Mrs Macnicol's claim -- as it was being advanced in July 2000 -- was of substance, the only proper way in which the tenancy could become vested in her was by Mr Amanullah Khawaja giving up his rights to have the tenancy by succession vested in him. To seek to construe this letter as effecting the transfer of an existing tenancy involves, first, that he (and not she) is the only person entitled to a tenancy and, second, that what he was doing was in breach of the term of that tenancy. To my mind, the letter should be construed in a way which fits within the statutory framework rather than in a way which ignores it.[27]For those reasons, I would dismiss this appeal.[28]It is unnecessary to consider the further point raised by the respondent, namely that an assignment of an assured periodic tenancy would have to be by deed. That is a point on which I express no view.

LORD JUSTICE WALL: I entirely agree and have nothing else to add.

LORD JUSTICE BROOKE: I also agree and the appeal is therefore dismissed.

Order

Appeal Dismissed