United Kingdom House of Lords Decisions

Newlon Housing Trust v. Alsulaimen and Another [1998] UKHL 35; [1999] 1 AC 313; [1998] 4 All ER 1; [1998] 3 WLR 451 (29th July, 1998)

LORD GOFF OF CHIEVELEY

My Lords,

    I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hoffmann. For the reasons he gives I would allow the appeal.

LORD LLOYD OF BERWICK

My Lords,

    I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hoffmann. I agree with it, and for the reasons which he has given I too would allow the appeal.

LORD HOFFMANN

My Lords,

    The respondents, whom I shall call the husband and the wife, held a joint assured weekly tenancy of a flat in Edmonton owned by the appellant, the Newlon Housing Trust ("the Trust"). In April 1995 the wife left the husband. On 1 November 1995 she gave the Trust notice to quit the premises expiring on 4 December 1995. The effect of the notice was to bring the tenancy to an end on that date: see Hammersmith and Fulham London Borough Council v. Monk [1992] 1 AC 478. On 28 March 1996 the Trust commenced proceedings for possession against the husband, who had continued to live in the flat. At the hearing before his Honour Judge Tibber in the Edmonton County Court on 6 June 1996, the husband asked for an adjournment on the ground that he proposed to make an application under section 24 of the Matrimonial Causes Act 1973 for a property adjustment order, transferring the joint tenancy into his sole name. The judge refused an adjournment on the ground that the application was made too late. But the Court of Appeal reversed his decision, saying that the husband had a good prospect of obtaining a transfer of the tenancy and that justice required that he should be given an opportunity to pursue his application.

    The joint tenancy had terminated by the expiry of the notice to quit six months before the matter came before Judge Tibber. An application for its transfer into the name of the husband could succeed only if it could somehow be revived. Before the Court of Appeal it was conceded that this could be done by means of an order under section 37(2)(b) of the Act. óKóóK Section 37(2) reads as follows:

 "Where proceedings for financial relief are brought by one person against another, the court may, on the application of the first-mentioned person -      (a) if it is satisfied that the other party to the proceedings is, with the intention of defeating the claim for financial relief, about to make any disposition or to transfer out of the jurisdiction or otherwise deal with any property, make such order as it thinks fit for restraining the other party from so doing or otherwise for protecting the claim;      (b) if it is satisfied that the other party has, with that intention, made a reviewable disposition and that if the disposition were set aside financial relief or different financial relief would be granted to the applicant, make an order setting aside the disposition;      (c) . . .      and an application for the purposes of (b) above shall be made in the proceedings for the financial relief in question.

Subsection (4) defines a "reviewable disposition" as any disposition otherwise than for valuable consideration to a person who takes in good faith and does not have notice of the intention to defeat the applicant's claim for financial relief. Subsection (6) provides that "disposition" does not include any provision contained in a will or codicil:

 "but, with that exception, includes any conveyance, assurance or gift of property of any description, whether made by an instrument or otherwise."

    The concession before the Court of Appeal was that the court could make an order setting aside the termination of the tenancy on the ground that it was a "disposition" of property by the wife made with the intention of defeating the husband's claim for a property adjustment order. Your Lordships gave Mr. Andrew Arden Q.C., who appeared for the Trust, leave to withdraw this concession and he submitted that the termination of a tenancy by the effluxion of a notice to quit was not a disposition of property at all. It followed that the Court had no power to resurrect the joint tenancy and accordingly there was no property in respect of which an adjustment order could be made. In those circumstances, there could be no defence to the claim for possession.

    The question is therefore whether the termination of a tenancy can be a disposition of property. "Disposition" is a familiar enough word in the law of property and ordinarily means an act by which someone ceases to be the owner of that property in law or in equity: see the formulation by Mr. R.O. Wilberforce Q.C. in Grey v. Inland Revenue Commissioners [1960] AC 1,18. In some contexts it may include the case in which the property ceases to exist. It is unnecessary to decide whether it has such an extended meaning in this case. There are contrary indications, namely that section 37 contemplates, first, that the disposition will be capable of being set aside and secondly, that the beneficiary of the disposition may be able to show that he took in good faith and without notice. On the other hand, I feel sure that "disposition" was intended to include the surrender of a subsisting proprietary interest, such as a tenancy for years or for life, so as to merge in the reversion or remainder: see Inland Revenue Commissioners v. Buchanan [1958] Ch. 289 per Lord Goddard C.J. at p. 296. But, be that all as it may, I think it is essential to the notion of a disposition of property in this context that there is property of which the disponor disposes, whether to someone else or not. It is this property which the court can restore to his estate by setting aside the disposition.

    One asks, then, whether the effect of the termination of the tenancy by notice was to dispose of any property belonging to the wife. What property did she hold at the time she gave the notice? The answer is: a joint interest in a weekly tenancy of the flat. In considering the nature of that interest, it is important to bear in mind that, in English law, rights of property in land are four-dimensional. They are defined not only by reference to the physical boundaries of the property but also by reference to the time for which the interest will endure. Thus a life interest in a property is an item of property with a temporal dimension, ceasing to exist on the death of the tenant for life. When that event happens, no property passes from the tenant for life to the remainderman. The latter's interest falls into possession but he becomes entitled to possession by virtue of his own interest and not by having acquired that of the tenant for life. The same is true when a lease for a term of years terminates by effluxion of time. The tenant does not dispose of his interest. At the moment when it expires, he has no property of which he can dispose. It ceases to exist and the landlord's reversion falls into possession.

    The analysis of a periodic tenancy by Lord Bridge of Harwich in Hammersmith and Fulham London Borough Council v. Monk [1992] 1 AC 478 demonstrates that what I have said of a tenancy for a term of years is equally true of a periodic tenancy. It also comes to an end by effluxion of time, namely the expiry of the last period for which the tenant or tenants have been willing for it to continue. The respondents invite your Lordships to treat the notice to quit as an act which is dispositive, or at any rate destructive, of the tenancy. But this, as Lord Bridge said (at p. 490) is to "confuse the form with the substance." The notice merely signifies that the tenant is not willing to consent to the continuation of the tenancy beyond the date at which it could otherwise expire. In the absence of such consent, it terminates by effluxion of time in the same way as a tenancy for a term of years.

    Mr. Buckhaven, who appeared for the respondents, invited your Lordships to give a purposive construction to section 37. It was, he said, intended to give the court power to undo any dissipation of assets by one of the parties to the marriage. In many cases, a periodic tenancy would be one of the most important assets. Although in legal theory the tenancy might be said to have ceased to exist, the flat was still there. There was no physical problem about ordering a reinstatement of the tenancy and the courts should not let mere conceptual difficulties stand in their way.

    I would certainly not wish to give section 37(2) a construction which defeats its evident purpose, but I am far from confident that the legislation was meant to have the broad effect for which Mr. Buckhaven contends. The difference in section 37(2) between the language of paragraph (a), which confers the power to grant restraining orders in advance, and paragraph (b), which deals with past transactions, is very striking. The restraining power applies not only when a party is about to make "any disposition" but also to transfer out of the jurisdiction or "otherwise deal with" any property. Paragraph (b), on the other hand, deals only with dispositions.

    To explain this difference in language, Mr. Buckhaven drew attention to the fact that the 1973 Act was a consolidating Act and took your Lordships to its legislative history. Paragraph (b) was derived from section 2 of the Matrimonial Causes (Property and Maintenance) Act 1958, which gave effect to the recommendations of the Royal Commission on Marriage and Divorce (1951-1955) (Cmd. 9678) at para. 534. Paragraph (a), on the other hand, derived from section 6 of the Matrimonial Causes Act 1963, which, although recommended by the 1912 Royal Commission on Divorce (Cd 6478) at para. 441, had been rejected by later Commission. This explanation seemed to me inconclusive. No doubt there are reasons of history and policy for why Parliament used wider language in paragraph (a) than it did in paragraph (b), but that does not demonstrate that the word "disposition", defined as it is in the language of traditional concepts of property, was to be given a similarly wide meaning.

    Mr. Buckhaven's research provoked a counter-attack by Mr. Arden, who looked into the various Law Commission proposals for the reform of matrimonial property law since 1967 and demonstrated that the work of the Commission had distinguished between rights in the matrimonial home and other forms of property which might be the subject of property adjustment orders between the spouses. The views of the Commission on the former subject had been given effect in the Matrimonial Homes Act 1967 and subsequent legislation now consolidated in the Matrimonial Homes Act 1983, while the power to make property adjustment orders was now contained in Part II of the Act of 1973 as amended by Schedule 2 to the Family Law Act 1996. On the basis of this history, Mr. Arden submitted that "property" in section 24 of the Act of 1973 (before the 1996 amendments) should be construed to exclude an interest in a periodic tenancy of the matrimonial home and should therefore not be capable of being the subject of a property adjustment order at all. It belonged to a different statutory regime.

    Although this argument was put forward with enthusiasm, I cannot accept it. It would require a great deal to persuade me that the general word "property" in section 24 should be construed to exclude an interest in a tenancy merely because it is capable of being dealt with under a different set of statutory provisions. It is true that the Matrimonial Homes Act 1983 makes provision for the landlord to be heard before any transfer of the tenancy whereas the Act of 1973 does not. It may even be that Parliament did not contemplate the practical likelihood of property adjustment orders in respect of periodic tenancies. Such tenancies, if terminable by notice from the landlord, are of little or no value and the form of statutory protection available at that time involved the creation of a "statutory tenancy," which was regarded as being a "status of irremovability" rather than an interest in property. It seems to me, however, that the language of the section is clear beyond argument. Mr. Arden's submissions were in substance advanced to the Court of Appeal in Thompson v. Thompson [1976] Fam. 25 and in Hale v. Hale [1975] 1 W.L.R. 931. These cases have since been followed in more than one which has been reported and no doubt in many which have not. In my view they were rightly decided. I therefore think that if the periodic tenancy had still been in existence, the court would have had power to order its transfer to the husband. I express no view on whether the giving of notice would be a "dealing" with the tenancy which could be restrained under section 37(2)(a). But since it has duly expired, I do not think that it can be revived and the husband therefore has no answer to the claim for possession. I would allow the appeal.

LORD HOPE OF CRAIGHEAD

My Lords,

    I have had the advantage of reading in draft the speech which has been prepared by my noble and learned friend, Lord Hoffmann. I agree with it, and for the reasons which he has given I too would allow the appeal.

LORD SAVILLE OF NEWDIGATE

My Lords,

    I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hoffmann. I agree with it, and for the reasons he has given I too would allow the appeal.