Panton & Ors v Brophy & Anor

An unincorporated association cannot hold a legal estate in leasehold land, but it may have a beneficial interest through trustees. Where the parties objectively intended an association and a company to become joint tenants, the grant may take effect through the company as legal tenant, holding the leasehold interest on trust for the association’s members. The court must assess the whole transaction, including assignments, licences, variations and the parties’ contractual arrangements. If the documents do not create a legal lease, occupation and payment of rent may nevertheless establish an agreement for a tenancy, or a periodic tenancy, on materially equivalent terms. The court may join a freeholder as a defendant where the vesting order would determine the existence of the leasehold interest and directly affect the freeholder’s rights.

The claimants were officers and members of an unincorporated rowing club which had occupied a boathouse owned by the London Borough of Hounslow. The club originally held a lease, but the parties later intended the lease to be assigned jointly to the club and a company operating a sports-centre joint venture. The company was subsequently dissolved, and the Crown disclaimed its interest.

The claimants applied under the Trustee Act 1925 for appointment as trustees and for a vesting order. The Council applied to be joined, contending that no leasehold interest had ever existed and opposing the relief. The issues were whether the 1996 documents created a leasehold interest, whether the company held it on trust for the club, and whether the Council should be joined.

1. The Council was joined as a defendant under Civil Procedure Rules 1998, r 19.2(2)(a). The vesting order sought was predicated on the existence of the leasehold interest and would establish that existence for purposes of the proposed re-entry proceedings. The Council, as freeholder and party affected by the lease, therefore had an unanswerable case for joinder. The decision in The Council of the Borough of Milton Keynes v Viridor (Community Recycling MK) Ltd [2016] EWHC 2764 (TCC) did not assist because it concerned a different proposed joinder and different issues.

2. The Assignment alone could not grant a lease to the Company because the original lease conferred no leasehold estate on the unincorporated Club and the Council was not party to the Assignment. However, the Licence, Assignment and Deed of Variation, read together, constituted an agreement by all three parties to grant a lease on the varied terms.

3. Applying the objective-intention approach in Rabiu v Marlbray Ltd [2016] 1 WLR 5147, the grant took effect in favour of the Company. The parties intended the Club and Company to be joint tenants and intended their liabilities to be joint and several. There was nothing to make the grant conditional on the Club taking legal title, which it could not do.

4. An unincorporated association cannot hold the legal estate, but it can hold a beneficial interest through trustees, subject to its contractual constitution and rules. That analysis was supported by Crawley BC v Ure [1996] QB 13, Wise v Perpetual Trustee [1903] AC 139 (PC) and Re Recher’s Will Trusts [1972] Ch 526. The Club Rules did not prevent the contractual-membership analysis in Neville Estates v Madden [1962] Ch 832.

5. Alternatively, the documents and subsequent conduct created an agreement for a tenancy from year to year, or at least a quarterly periodic tenancy, on the terms of the Lease as varied. The Company would hold that interest on trust for itself and the Club. The interest was also a business tenancy within Part II of the Landlord and Tenant Act 1954.

6. A vesting order was made in the terms sought under the Trustee Act 1925.

This was a first-instance decision. The claim had been issued on 12 October 2018. The Council’s joinder application was made on 20 March 2019 and determined at the adjourned hearing before the vesting order was made.