Alexander-David v London Borough of Hammersmith & Fulham

A local housing authority that grants its standard tenancy to a minor purports to grant a legal estate unless the agreement clearly indicates otherwise. Under paragraph 1(1) of Schedule 1 to the Trusts of Land and Appointment of Trustees Act 1996, the ineffective grant operates as a declaration that the land is held on trust for the minor. While it remains trustee, the authority cannot terminate the tenancy by serving notice to quit only on the minor beneficiary. An equitable tenancy may be granted to a minor, but a landlord with capacity to grant a legal tenancy cannot retrospectively characterise an unqualified grant as equitable. Future arrangements may instead use a genuine licence or an agreement for a lease, with the minor’s incapacity expressly recognised.

The respondent local housing authority accepted a duty under Part 7 of the Housing Act 1996 to accommodate a homeless applicant who was aged 16 and pregnant. It used its standard weekly tenancy agreement. After complaints, it served notice to quit only on the applicant and obtained a possession order from District Judge Steel on 11 February 2008.

HH Judge Powles QC dismissed the applicant’s appeal on 4 July 2008, construing the agreement as an equitable tenancy outside TOLATA. The central questions were whether the agreement purported to grant a legal estate, thereby engaging paragraph 1(1) of Schedule 1 to TOLATA, and whether the notice to quit terminated the resulting trust tenancy.

1. Appeal allowed. The Court of Appeal quashed the possession order made by District Judge Steel.
2. The agreement had to be construed in its factual and statutory context, with a presumption that the authority had acted lawfully. Nevertheless, its standard form was designed to create legal tenancies. The absence of a trustee, the temporary and non-secure nature of the accommodation, the termination clause and the reference to the applicant’s age did not displace the inference that a legal tenancy was purportedly granted. The agreement’s form was decisive: paras [16], [24]–[28] and [39].
3. A local housing authority may in principle grant a tenancy to a minor which is effective in equity: Kingston upon Thames Royal Borough Council v Prince (1993) 31 HLR 794. An equitable tenancy is shorthand for a tenancy effective in equity though ineffective as a legal estate, such as where a trustee holds the legal estate for a minor or there is merely an agreement for a lease. A landlord with capacity to grant a legal tenancy cannot later recharacterise an unqualified grant as equitable: paras [22], [29]–[30].
4. Section 1(6) of the Law of Property Act 1925 prevented the minor from holding the legal estate. Paragraph 1(1) of Schedule 1 to TOLATA therefore applied: the purported grant did not pass the legal estate but operated as a declaration that the authority held the premises on trust for the applicant.
5. Although the notice to quit complied with the contractual notice provision, it was ineffective. The distinction between a positive act terminating the tenancy and a refusal to assent to its continuation made no difference to the authority’s duties as trustee. It could not destroy the trust property by serving notice only on the beneficiary. Hammersmith and Fulham London Borough Council v Monk (1992) 1 AC 478 and Crawley Borough Council v Ure (1996) IQB 13 concerned joint tenants who were also trustees and beneficiaries, and were distinguishable: paras [31]–[35].
6. The court added guidance for future cases. Calling an arrangement a licence will not prevent a tenancy arising where the occupier has exclusive possession for a term without attention or services: Street v Mountford [1985] AC 809. A genuine licence, or an agreement for a lease until the applicant turns 18, may be used where appropriate. The agreement should expressly recognise the minor’s inability to hold a legal estate: paras [36]–[39].

• Court of Appeal (Civil Division) — [2009] EWCA Civ 259; appeal allowed and the possession order quashed.
• Willesden County Court — HH Judge Powles QC, 4 July 2008; dismissed the applicant’s appeal and construed the agreement as an equitable tenancy outside TOLATA.
• Willesden County Court — District Judge Steel, 11 February 2008; struck out the Defence and ordered possession.