England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE CCRTF 97/1514 CMS2

Royal Courts of Justice

Strand, London WC2

Thursday, 2nd April 1998

B e f o r e :

LORD JUSTICE NOURSE

LORD JUSTICE MUMMERY and

SIR JOHN VINELOTT

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CONSTANCE MARGARET GRAY

and Others Plaintiffs (Respondents)

-v-

MRS DOROTHY TAYLOR Defendant (Appellant)

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MR D WATKINSON and MISS M JONES (instructed by Legal Services, Shelter, London EC1) appeared on behalf of the Appellant Defendant.

MR C McCALL QC and MISS F QUINT (instructed by Messrs Greenwoods, Peterborough) appeared on behalf of the Respondent Plaintiffs.

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J U D G M E N T

(As Approved by the Court)

Crown Copyright

Thursday, 2nd April 1998

LORD JUSTICE NOURSE: Sir John Vinelott will deliver the first judgment.

SIR JOHN VINELOTT: This is an appeal from a decision of His Honour Judge Morrell, sitting in the Peterborough County Court. The respondents, the plaintiffs in the court below, are the trustees of a charity, the Peterborough Almshouses and Relief in Need Charity ("the charity"). The appellant, Mrs Dorothy Taylor, the defendant in the court below, currently occupies a flat in one of the almshouses administered by the trustees.

On 20th February 1997 the trustees decided to terminate her appointment as an almsperson entitled under the trust of the charity to occupy accommodation in the almshouse on the ground that her behaviour had been vexatious and had disturbed the quiet enjoyment of the almshouse. On 3rd March they gave her notice to vacate the flat. She refused to leave, and on 4th April 1997 the trustees instituted proceedings in the County Court for possession.

In her defence the appellant claimed that she was an assured tenant within the meaning of section 1 of the Housing Act 1988, with the consequence that her tenancy could not be brought to an end except by an order of the court, and that the trustees had not established any of the grounds on which they would have been entitled to an order for possession. She claimed, in the alternative, that she was a licensee and that the trustees were only entitled to repossess the flat if they could show that she had persistently and without reasonable excuse disregarded the trustees' regulations, or had behaved offensively, or had become disqualified from retaining her appointment as an almsperson.

On 18th July 1997 a District Judge ordered that the first of these contentions should be tried as a preliminary issue. That issue came before His Honour Judge Morrell on 9th September. He decided that the appellant did not occupy the flat as an assured tenant within the meaning of section 1 of the 1988 Act.

The charity, which is an amalgam of three older charities, was established as a new charity by a scheme established by order of the Charity Commissioners which was sealed on 25th November 1974. It is only necessary for the purposes of this judgment to refer to a few of the provisions of the scheme. The relevant clauses are as follows.

Clause 22, which is part of a series of clauses headed "Management of Lands", provides that:

"The Trustees are to let and otherwise manage all the lands belonging to the Charity not required to be retained or occupied for the purposes thereof. ..."

I shall refer to land within the exceptions (that is, land required to be retained or occupied for the purposes of the charity) as "functional land".

Clauses 27 to 33 are headed "Application of Income". By these clauses the trustees are given power to apply income in meeting the costs of repairs and other outgoings, to establish a reserve fund for extraordinary repairs or for rebuilding, and to make certain charitable payments for the benefit of local churches or for the relief of exceptional need of local residents. Clause 33 provides that:

"Subject to the payments aforesaid the Trustees shall apply the income of the Charity for the benefit of the almspeople of the Charity or any of them in such manner as the Trustees think fit from time to time."

Clauses 34 to 38 are headed "Almshouses and Almspeople". Clause 34 provides:

"The almshouses belonging to the Charity and the property occupied therewith shall be appropriated and used for the residence of almspeople in conformity with the provisions of this Scheme."

Clause 36 provides that the almspeople should be:

"... poor persons of good character who (except in special cases to be approved by the Commissioners) are not less than 60 years of age and have resided in the area of the former City of Peterborough for not less than five years next preceding the time of appointment."

Clause 37 gives the trustees power to:

"... make it a condition of appointing or permitting any person to be or remain an almsperson that he or she ... contribute ... a weekly sum towards the cost of maintaining the almshouses and essential services therein but so that the amount of the weekly sum shall not -

(1) be such as to cause hardship to him or her;

(2) be more than £2.50 or other the amount approved from time to time by the Commissioners."

There follow detailed provisions as to the selection and appointment of almspersons, and there is a specific provision in clause 44 that no almsperson is to let, part with possession of or share the occupation of the rooms occupied by him or her except with the special permission of the trustees.

Clause 46 is the clause which provides for the setting aside of an appointment. It reads:

"(1) The Trustees may set aside the appointment as an almsperson of any almsperson who in their opinion -

(a) persistently or without reasonable excuse either disregards the regulations for the almspeople or disturbs the quiet occupation of the almshouses or otherwise behaves vexatiously or offensively; or

(b) no longer has the required qualifications; or

(c) has been appointed without having the required qualifications; or

(d) is suffering from mental or other disease or infirmity rendering him or her unsuited to remain an almsperson.

(2) Upon setting aside the appointment of an almsperson the Trustees shall require and take possession of the room or rooms occupied by him or her. ..."

By clause 47 the trustees are given power to make:

"... reasonable regulations as they consider expedient for the government of the almshouses ...."

Finally, clause 51 provides that:

"Any question as to the construction of this Scheme or as to the regularity or the validity of any acts done or about to be done under this Scheme shall be determined by the Commissioners upon such application made to them for the purpose as they think sufficient."

That is all I need say about the scheme.

Almspersons who are selected and allocated rooms in the almshouse are supplied with a document entitled "Conditions of Occupancy". New editions have been brought out from time to time to replace the old. Paragraph 1.3 of the current conditions provides:

"Residents are licensees and pay a contribution towards the cost of providing accommodation at the Court: residents are not tenants and do not pay rent."

It is unnecessary to read any of the subsequent paragraphs, which relate to the administration of the almshouse and rules and restrictions to be observed by the almspersons. The appellant signed the most recent edition of these rules on 1st October 1996.

On 20th February 1997, at a meeting of the trustees, a resolution was passed that "the appointment of Dorothy Taylor be set aside on the grounds that her behaviour at Stephenson Court was vexatious and disturbed the quiet enjoyment of the almshouse".

The case for the appellant can be simply stated. It is that the appellant became entitled, when she was appointed an almsperson and allowed to occupy rooms in the almshouse, to exclusive possession of the rooms for a term, at a rent, and that the necessary legal consequence that was that she became in law a tenant.

Mr Watkinson, who appeared for her, relied upon a well known passage in the speech of Lord Templeman in Street v. Mountford [1985] 1 AC 809 at p.817, where he said:

"In the case of residential accommodation there is no difficulty in deciding whether the grant confers exclusive possession. An occupier of residential accommodation at a rent for a term is either a lodger or a tenant. The occupier is a lodger if the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises. A lodger is entitled to live in the premises but cannot call the place his own."

Having cited a passage in the judgment of Blackburn J in Allan v. Liverpool Overseers (1874) LR 9 QB 180 at 191, where the position of a lodger is more fully described, Lord Templeman continued:

"If on the other hand residential accommodation is granted for a term at a rent with exclusive possession, the landlord providing neither attendance nor services, the grant is a tenancy; any express reservation to the landlord of limited rights to enter and view the state of the premises and to repair and maintain the premises only serves to emphasise the fact that the grantee is entitled to exclusive possession and is a tenant."

It is of course well settled that if on its true construction an agreement constitutes a tenancy, the fact that it may be described as a licence is simply neither here nor there.

However, it is important to bear in mind a subsequent observation which comes almost immediately after the passage I have cited, where Lord Templeman said:

"There can be no tenancy unless the occupier enjoys exclusive possession; but an occupier who enjoys exclusive possession is not necessarily a tenant. He may be owner in fee simple, a trespasser, a mortgagee in possession, an object of charity or a service occupier."

That observation is elaborated towards the end of his judgment at the foot of p.826, where he said:

"Sometimes it may appear from the surrounding circumstances that the right to exclusive possession is referable to a legal relationship other than a tenancy. Legal relationships to which the grant of exclusive possession might be referable and which would or might negative the grant of an estate or interest in the land include occupancy under a contract for the sale of the land, occupancy pursuant to a contract of employment or occupancy referable to the holding of an office."

That passage reflects an observation of Denning LJ in Errington v. Errington and Woods [1952] 1 KB 290, which is cited with approval by Lord Templeman at pp.820-821, where Denning LJ said:

"Parties cannot turn a tenancy into a licence merely by calling it one. But if the circumstances and the conduct of the parties show that all that was intended was that the occupier should be granted a personal privilege, with no interest in the land, he will be held to be a licensee only."

In my judgment, on the facts of this case, the position of the appellant falls precisely into the position described by Denning LJ and in the passage at the end of the judgment of Lord Templeman which I have cited.

A person who is selected as an almsperson becomes a beneficiary under the trusts of the charity and enjoys the privilege of occupation of rooms in the almshouses as a beneficiary. It is, in my judgment, wholly immaterial that, in this case, the appellant pays a weekly sum towards the cost of maintaining the almshouses and the essential services therein. An example may make this clear. Suppose that trustees hold a fund on trust to pay the income to A, but with power to apply the fund in the purchase of a residence for him or her. A asks the trustees to buy a flat at a price which would absorb the whole of the fund. The trustees agree to do so, but on terms that A pays them a quarterly sum sufficient to discharge the ground rent and any service charge. These sums are not rent and the agreement to pay them does not convert A's occupation of the flat from occupation as a beneficiary to occupation as a tenant.

Here, the weekly contribution paid by the almsperson goes towards the discharge of costs falling on the trustees, thereby liberating income of the charity for other purposes, including the maintenance of a reserve fund and the improvement and extension of the almshouses. The weekly charge is not rent payable under a tenancy. Indeed, it is historically the case that, until comparatively recently, almspersons were not required to pay any weekly sum. The introduction of a weekly sum came with the introduction of housing benefit, to which almspersons would normally be entitled; payment of a weekly sum not exceeding the housing benefit would not result in any net loss to the almsperson and in effect the housing benefit would be available to the charity.

That was the conclusion reached by the learned County Court Judge. He pointed out that the trustees' powers to let land does not extend to functional land. The creation of a tenancy of functional land would be inconsistent with the performance by the trustees of their duties as trustees of a charity, for the tenancy would impose a burden which might make it impossible for the trustees to ensure that occupation of an almshouse was restricted to almspersons who satisfied the qualifications set out in clause 36. For instance, an almsperson who inherited a substantial legacy or won a prize in a national lottery would no longer be a poor person and a proper object of charity.

Lord Justice Mummery, in the course of the argument, put forward a more extreme example, where all the residents of an almshouse joined together to buy a ticket in a lottery, transforming their fortunes when the ticket came up. They might all decide to stay where they were, amongst familiar surroundings and with familiar neighbours. Lottery winners often announce that they do not intend that their good fortune should be allowed to change their pattern of life. The almshouse would then become something like a rich persons' club. It cannot be seriously suggested that the change from being a poor to being a rich person would be a ground falling within Part I of Schedule 2 of the Housing Act 1985 on which the court could make an order for possession.

Mr Watkinson submitted that the learned County Court Judge committed the cardinal error of taking the statutory consequences of creating an assured tenancy into account in reaching his conclusion that the arrangement between the trustees and the appellant did not constitute a tenancy. I do not think that criticism is justified. What the learned judge had in mind is that it is permissible to look at the powers which the trustees had in order to ascertain the nature and consequences of the arrangement they had entered into. The trustees have power to permit - indeed, are under a duty to permit - a selected almsperson to occupy rooms in the almshouse. There is no need to resort to a tenancy to explain the almsperson's right to exclusive possession of the rooms; and, inasmuch as the grant of a tenancy might obstruct or fetter the performance by the trustees of their duty to provide accommodation for deserving persons, it would be wrong for them to grant a tenancy.

In my judgment, therefore, the learned County Court Judge reached the right conclusion.

I should add that it is for the trustees to decide whether any of the circumstances set out in clause 46, justifying the setting aside of the appointment of an almsperson, has arisen. If any question arises as to the regularity or the validity of any decision made by the trustees, then, under clause 51, that question falls to be decided by the Charity Commissioners and not by the court.

LORD JUSTICE MUMMERY: I agree that this appeal should be dismissed for the reasons given by my Lord.

LORD JUSTICE NOURSE: I also agree with the judgment of Sir John Vinelott.

At the time when the trustees grant an almsperson a right of occupation there exists between them the relationship of trustee and beneficiary. It is only by reason of that relationship that the trustees have the power to grant the right. But the power does not allow them to grant a right which would or might infringe the objects of the charity by permitting the grantee to remain in occupation after he or she has ceased to qualify as a beneficiary. On this analysis, it is clear that the almsperson's occupation and his or her right to exclusive possession are referable to a legal relationship other than a tenancy. Therefore the case falls outside the general category identified in Street v. Mountford [1985] AC 809.

In my view the decision of Judge Morrell was entirely correct and I too would dismiss this appeal.

Order: appeal dismissed with costs; the appellant's liability under that order being assessed at nil, order nisi made against the Legal Aid Board pursuant to section 18 of the Legal Aid Act 1988 and adjourned to the Registrar; legal aid taxation of the appellant's costs; leave to appeal to the House of Lords refused.