R v Tower Hamlets London Borough Council, Ex parte Von Goetz (Von Goetz, Ex parte)

For the purposes of eligibility for a housing grant, an owner's interest is not confined to a legal estate. The statutory reference to a term of years absolute can include an equitable term of years absolute arising under a specifically enforceable agreement for a lease. The Law of Property Act 1925 identifies the estates capable of existing at law; it does not prevent corresponding equitable interests from existing. A local housing authority must nevertheless be satisfied that the applicant has, or proposes to acquire, the requisite interest. Where the existence of an equitable interest is genuinely disputed, the authority may require the dispute to be resolved by agreement or court order before being satisfied.

The applicant held a ten-year assured shorthold tenancy granted without a deed. The arrangement therefore did not create a legal estate, but the Council accepted that the applicant had a specifically enforceable contract and an equitable interest for the term.

She applied for a renovation grant under Part VIII of the Local Government and Housing Act 1989. The Council rejected the application on the ground that she lacked an owner's interest under section 104(2). Carnwath J quashed that decision, holding that the provision included an equitable interest. The Council appealed, raising the question whether a term of years absolute in section 104(2)(b) meant only a legal estate.

1. Appeal dismissed with costs. The Council had misconstrued section 104(2)(b) by treating an owner's interest as necessarily a legal estate.
2. Under Walsh v Lonsdale (1882) 21 Ch D 9, a specifically enforceable agreement for a lease gives the claimant an equitable interest for the term. Equity treats the specifically enforceable lease as equivalent, in substance, to the legal lease.
3. Section 1(1) of the Law of Property Act 1925 provides only that a fee simple absolute in possession and a term of years absolute are capable of subsisting at law. It does not exclude equitable interests corresponding to those estates. Section 205(1)(xxvii) and section 149(2) likewise support the existence of equitable terms of years absolute.
4. The statutory language of section 104 does not incorporate the narrower definition of estate owner in section 1(4) of the 1925 Act. Nor does section 104(3), concerning a person who proposes to acquire the necessary interest, show that Parliament intended to exclude an equitable interest already acquired through agreement.
5. On the accepted facts, the applicant's equitable interest was specifically enforceable and sufficiently enduring and ascertainable. In a more difficult case, section 104 requires the authority to make its own judgment on whether it is satisfied that the applicant has the defined interest. It may reasonably require a disputed equitable interest to be resolved before approving a grant.

• Court of Appeal: Appeal from the decision of Carnwath J dismissing the Council's position and quashing its decision of 24 March 1997. Appeal dismissed with costs.