London Borough of Islington v Green & Anor

A tenancy created by a head tenant is contractual and may exist between the immediate parties even where the grantor has no estate in land. That does not give the occupier a proprietary estate binding on the superior owner. A sub-tenancy derived from a head tenancy ends automatically when the head tenancy ends, subject to statutory qualifications and the surrender or merger exception. Permission for a licensee to provide temporary accommodation is not, without more, consent to create a tenancy binding the freeholder. Nor does allowing the licensee to manage property alone confer ostensible authority to grant occupation tenancies on the owner’s behalf.

Islington granted Patchwork a licence in 1987 to use a dwelling as temporary housing accommodation. The licence required the property to be returned vacant when terminated. Patchwork allowed Green and O’Shea to occupy the property. O’Shea asserted that Patchwork had granted a tenancy and that the tenancy bound Islington through actual or ostensible authority, or through Islington’s consent to the arrangement.

Islington terminated the licence and sought possession. Deputy District Judge Samuels made a possession order. His Honour Judge Marr-Johnson dismissed O’Shea’s appeal, holding that his interest fell away when Patchwork ceased to be entitled to occupy. The central issue before the Court of Appeal was whether the licence or Islington’s conduct preserved a tenancy or proprietary interest against the freeholder.

Appeal dismissed. Mr Justice Blackburne gave the leading judgment. Lord Justice Longmore and Lord Justice Peter Gibson agreed.

1. The court distinguished the contractual relationship of landlord and tenant from the creation of an estate or other proprietary interest binding third parties. A tenancy may therefore exist between the immediate parties even where the grantor has no estate in the land.
2. When a head tenancy ends by effluxion of time, forfeiture or notice, any sub-tenancy derived from it ends automatically and simultaneously. The exception is where the head tenancy ends by surrender or merger. The fact that the sub-tenancy was lawfully created, including compliance with any relevant restriction, does not alter that result. The court referred to Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 and Barrett v Morgan [2000] 2 AC 264.
3. Patchwork held only a licence and had no estate in the property. It could not confer an estate binding on Islington. The Court of Appeal’s decision in Kay v Lambeth London Borough Council [2004] EWCA Civ 926, reported at [2004] 3 WLR 1396, supported that conclusion. The House of Lords decision in Bruton had left open whether a tenancy granted by a licensee bound the licensor; Kay had answered that issue against the occupiers.
4. The licence contemplated the provision of temporary accommodation but did not appoint Patchwork as Islington’s agent or authorise it to create tenancies binding on Islington. The defendants’ assertion that they were Patchwork’s tenants was also inconsistent with an argument that Patchwork had contracted as Islington’s agent. Islington’s decision to allow Patchwork to manage its properties did not, without more, confer ostensible authority.
5. The licence’s requirement that the property be returned vacant on termination was inconsistent with consent to create interests extending beyond the licence. The mortgage analogy failed because a mortgagor has an equity of redemption, whereas Patchwork had no estate or interest from which to grant a tenancy. There was therefore no defence to possession. The appeal was dismissed with costs to be assessed.

• Court of Appeal (Civil Division) — [2005] EWCA Civ 56. Dismissed the second appeal with costs to be assessed.
• County Court — His Honour Judge Marr-Johnson, sitting in the Mayor’s and City of London Court, dismissed O’Shea’s appeal against the possession order.
• Deputy District Judge Samuels — Made an order for possession of the property within 14 days and gave O’Shea permission to appeal.