Burton v Camden London Borough Council

I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Nicholls of Birkenhead. For the reasons which he gives, I would allow this appeal and restore the order of Mr. Recorder Keane.

Miss Susan Burton lives at 49 Aborfield, Peckwater Street, London N.W.5. This is a three-bedroom flat, belonging to Camden London Borough Council. In February 1994 she became a weekly tenant jointly with Miss Jan Hannawin. The two of them occupied the flat with Miss Hannawin's son, then six years of age. The tenancy was a secure tenancy, satisfying the requirements of Part IV of the Housing Act 1985. Two years later, on 26 July 1996, Miss Hannawin bought a property elsewhere and moved out.

This gave rise to a financial difficulty for Miss Burton. She was in receipt of income support, and her housing benefit was assessed at one-half of the rent payable for the flat. Miss Hannawin was responsible for the other half of the rent. The Housing Benefit (General) Regulations 1987 (S.I. 1987 No. 1971), regulation 10 (1) and (5), provide for the payment of housing benefit, in the form of a rent rebate or allowance, when a person is liable to make payments of rent in respect of a dwelling he occupies as his home. Where more than one person is liable to pay rent in respect of a dwelling, the rent is apportioned appropriately for the purpose of calculating the eligible rent for housing benefit purposes. Miss Burton feared that her housing benefit would still be assessed at one-half of the rent for the flat after Miss Hannawin had left because, as one of the joint tenants, Miss Hannawin would remain liable to pay rent. In practice, however, Miss Hannawin would make no further payments of rent after she left the flat.

On 4 July 1996, in expectation of Miss Hannawin's departure, Miss Burton wrote to Camden council. She explained her position and requested a review of her housing benefit claim. If she were not paid housing benefit for the full rent of the flat, she could not remain in her home there. She would be homeless and have nowhere to go. Camden Community Law Centre also wrote on her behalf. On 18 July, after speaking to Miss Burton, the council replied to the law centre. The council was not willing to grant her a sole tenancy of 49 Aborfield because this was a three-bedroom flat. The council was desperately short of larger units to house families waiting in temporary accommodation. The council therefore wished to encourage Miss Burton to move to a one-bedroom flat. Until Miss Hannawin served a notice to quit, which would formally end the existing joint tenancy, Miss Burton would remain liable to pay the whole rent. (I note, in passing, that a notice to determine the tenancy served by Miss Hannawin alone would have been effective to bring this tenancy to an end: see Hammersmith and Fulham London Borough Council v. Monk [1992] 1 A.C. 478.) If such a notice were served, the council would seek to offer Miss Burton a secure tenancy of a suitable one-bedroom flat as soon as possible. If she refused a reasonable offer of alternative accommodation, the council would consider taking legal action to repossess 49 Aborfield.

Miss Burton did not wish to move. She wished to continue living at 49 Aborfield, but as the sole tenant. As sole tenant her housing benefit would be increased appropriately. But there was a difficulty in simply transferring the tenancy from joint names into her sole name. The council would not agree to such a transfer, and it was far from clear that Miss Burton and Miss Hannawin could go ahead without their landlord's consent. This stemmed from the provision in section 91(1) of the Housing Act 1985 that a periodic secure tenancy 'is not capable of being assigned'.

Miss Burton's legal advisers then put forward a means they hoped would solve Miss Burton's problem. They prepared, not a deed of assignment, but a deed of release. The deed was made between Miss Hannawin and Miss Burton, and was executed on 21 July 1996. The deed recited the tenancy agreement, that the two of them were joint secure tenants of the flat, and that Miss Hannawin would be leaving the flat permanently on 26 July. The operative part of the deed consisted of a single clause, in these terms:

'Jan Theresa Hannawin hereby releases her legal and beneficial interest under this joint secure tenancy to Susan Patricia Burton who accepts the same to hold pursuant to this deed of release as the sole secure tenant of the dwelling with effect from the date hereof.'

The council refused to accept that this deed was effective to make Miss Burton sole tenant of the property. Miss Burton began proceedings in the Central London County Court claiming a declaration that she was the sole tenant and an order for the rectification of the council's rent account accordingly.

Mr. Recorder Keane dismissed the application. He held that the deed of release was, in substance, an assignment of Miss Hannawin's interest and was ineffective. Miss Burton appealed. The Court of Appeal (Butler-Sloss L.J. and Sir John Vinelott) reached the opposite conclusion, and made a declaration that Miss Burton was the sole tenant. The council has now appealed to your Lordships' House against that decision.

In order to succeed in her objective Miss Burton must surmount two hurdles. First, the deed of release must be effective in law to vest the tenancy in her alone. This depends on whether the deed falls foul of the non-assignability provision in section 91(1) of the Act of 1985. Assuming Miss Burton succeeds on the first point, she must also establish that Miss Hannawin ceased to be liable for the rent falling due after the deed of release. When the tenancy was granted, Miss Hannawin became jointly and severally liable to pay the rent. The question which arises, and this is the second hurdle, is whether Miss Hannawin continued to be liable for rent after she had parted with all interest in the flat.

Other questions may also arise on the interpretation of the housing benefit regulations. For instance, one issue raised before your Lordships was whether, following execution of the deed of release, Miss Burton was under an obligation to indemnify Miss Hannawin against any continuing liability she might have to pay rent and, if so, whether Miss Hannawin was a person liable to make a payment by way of rent for the purpose of regulation 10. These questions are not before your Lordships' House.

I turn to the statutory scheme concerning secure tenants. As is well known, the Housing Act 1980 introduced security of tenure for tenants of local authorities. The purpose was to give public sector tenants protection similar to that enjoyed by tenants in the private sector under the Rent Acts. The relevant provisions are now contained in Part IV of the Housing Act 1985. Stated shortly, and at the risk of over-simplification, a tenancy under which a dwelling-house is let as a separate dwelling is a secure tenancy at any time when conditions known as the landlord condition and the tenant condition are satisfied. The landlord condition is that the landlord is a local authority. The tenant condition is that the tenant is an individual and occupies the dwelling-house as his only or principal home; or, where the tenancy is a joint tenancy, that each of the joint tenants is an individual and at least one of them occupies the dwelling-house as his only or principal home (section 81). A secure tenancy which is a periodic tenancy cannot be brought to an end by the landlord except by an order of the court, which may be made on specified grounds.

Security of tenure is not confined to the original tenant. In certain circumstances a person may succeed a tenant on the tenant's death. Then the tenancy vests in the successor. A tenant is qualified to succeed in this way if he occupies the property as his only or principal home and he was the tenant's spouse or was another member of the tenant's family and had lived with the tenant for the last twelve months (section 87). Succession can take place only once. The succession provisions do not apply if the tenant was himself a successor.

This scheme would be open to abuse if a tenant were able to deal freely with his tenancy. Sections 91 to 95 are concerned to prevent this mischief and to regulate a tenant's rights in this regard. Some of the provisions in these sections are enabling, some restrictive. Section 91 sets out the primary and most fundamental restriction. Although the statutory scheme is grafted onto tenancies created at common law, an overriding statutory restriction or limitation is that, with certain tightly-drawn exceptions, a secure tenancy is, as a matter of law, incapable of being assigned. Section 91(1) provides:

'A secure tenancy which is -

(a) periodic tenancy …

is not capable of being assigned except in the circumstances mentioned in subsection (3).'

The exceptions mentioned in subsection (3) are an assignment by way of exchange, with the consent of the landlord; an assignment in pursuance of property adjustment or similar court orders under the matrimonial or children legislation; and an assignment to a person who would be qualified to succeed the tenant if the tenant had died immediately before the assignment. None of the exceptions is applicable in the present case.

The first issue before your Lordships raises a question of interpretation of the phrase 'not capable of being assigned' in section 91(1). Miss Burton's case is that the deed of release was not an...