Lynch v Kirby

An assured tenancy may arise where the parties’ objective conduct demonstrates an agreement for exclusive possession at a rent. A landlord’s uncommunicated or subjective intention not to create legal relations is irrelevant where the objective indicia of a tenancy are present. Allowing occupation before housing benefit is paid may represent a commercial risk rather than a charitable or conditional licence. A reservation of rent is not essential to the creation of a tenancy.

The applicant appealed against an order for possession concerning his occupation of accommodation owned by the respondent. He had entered exclusive possession of a room, signed a pre-tenancy determination form and applied for housing benefit on the same day. The first-instance judge held that he was initially a licensee and that the tenancy began only after housing benefit was awarded.

The appeal concerned whether an assured tenancy had been created on 20 February 1997 and whether the respondent’s intention to await confirmation of housing benefit prevented the creation of legal relations. The court also considered the effect of the statutory changes introduced by the Housing Act 1996.

1. The appeal was allowed on the first ground. An assured tenancy of Room 5 was created on 20 February 1997. The claim for possession was dismissed. It was unnecessary to determine the second ground.

2. The relevant question was whether the parties’ objective conduct demonstrated an agreement for a tenancy. The signed pre-tenancy determination form and the grant of exclusive possession showed an intention to create legal relations. The agreed weekly rent was £85, and the form indicated a weekly periodic tenancy.

3. The court applied the objective contractual approach stated in Pagnan SpA v Feed Products Limited [1987] 2 Ll R 601. The task was to review what the parties said and did and infer whether they intended to enter into a mutually binding contract. The first-instance judge therefore erred by relying on the respondent’s subjective intention that the applicant would become a tenant only if housing benefit was awarded.

4. The circumstances did not negative the intention to create legal relations. The respondent was taking a commercial risk by permitting occupation before payment, rather than acting wholly or mainly out of charity. The authorities concerning charitable occupation did not govern these facts. The absence of an immediate rent payment did not prevent a tenancy, consistently with Ashburn Anstalt v Arnold [1989] Ch 1 and [1988] 2 WLR 706.

5. Accordingly, the agreement fell within the definition of a tenancy in section 45 of the Housing Act 1988, and the applicant had an assured tenancy under section 1. The section 21 possession route was therefore unavailable on the basis advanced.

1. High Court (Queen’s Bench Division): the appeal from the possession order made by His Honour Judge Matheson QC on 17 September 2009 was allowed on the first ground. The claim for possession was dismissed.