Social Welfare Update: Occupation agreement with homeless applicant did not attract security of tenure

Tuesday 23 April 2019

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In 2016 the appellant, Ms Mohamed, was accommodated together with her daughter by Barnet LBC, pursuant to its duties under the Children Act 1989. The property where Ms Mohamed was accommodated was owned by a private individual named Mr Kumar. However, Mr Kumar acting through his agent, Rent Connect, had granted Barnet a licence to use the property for the purposes of providing temporary accommodation. The licence agreement between Rent Connect and Barnet, which had commenced in 2015, was for an initial fixed term of 12-months and thereafter from month to month.

In February 2018, Barnet served a notice to quit (NTQ) on Ms Mohamed and subsequently issued possession proceedings. The possession claim was dismissed by HHJ Luba QC on the ground that there had been a failure to serve the NTQ. However, the judge rejected an argument advanced on behalf of Ms Mohamed that she had security of tenure under the Housing Act 1985. Barnet then served a new NTQ and Ms Mohamed sought to appeal against the finding that she lacked security of tenure, since the effectiveness of the new NTQ turned on that issue.

The issue arose because the licence agreement between Rent Connect and Barnet provided that the licence was for ‘an initial period of 12 months from and including Licence Rent Commencement Date and thereafter from month to month until determined in accordance with Clause 5’ of the agreement which, in turn, provided that ‘’Either Party may terminate this Licence by giving the other not less than 14 days' notice in writing of its intention’.

The question for the court was whether this clause meant that the licence fell within the exemption from security of tenure contained in para 6, Sch 1 Housing Act 1985:

"A tenancy is not a secure tenancy if –
(a) the dwelling-house has been leased to the landlord with vacant possession for use as temporary housing accommodation,
(b) the terms on which it has been leased include provision for the lessor to obtain vacant possession from the landlord on the expiry of a specified period or when required by the lessor,
(c) the lessor is not a body which is capable of granting secure tenancies, and
(d) the landlord has no interest in the dwelling-house other than under the lease in question or as a mortgagee"

Specifically, the issue was whether or not the clause satisfied para 6(b). This required consideration of what appeared to be an inconsistency in the case law as to whether, in order to satisfy para 6(b), the terms of the head-lease or licence between the owner of the property and the local authority had to contain a ‘single twin-track provision for possession on expiry of a specified period or when required is required’, or whether a provision allowing solely for vacant possession when required would suffice.

In London Borough of Tower Hamlets v Abdi (1993) 25 HLR 80 the Court of Appeal had held that a clause in a head licence agreement allowing the licensor to terminate the licence on the giving of not less than seven days’ notice in writing, allowed the licensor to ‘obtain possession when he required’ and that this was sufficient to satisfy para 6(b) meaning the sub-licence did not attract security of tenure.

Whereas in Haringey LBC v Hickey [2006] EWCA Civ 373 the Court of Appeal had held that para 6(b) required one single provision within a lease for obtaining vacant possession either on the expiry of a specified period or when required by the lessor. The head lease in that case contained a provision which allowed for the lessor to obtain vacant possession at the expiry of the fixed-term. But it did not also allow him to obtain vacant possession ‘when required’. Accordingly, para 6(b) was not satisfied and the sub-lease attracted security of tenure.

Thornton J dismissed Ms Mohamed’s appeal. The judge below had been correct to hold that, despite first appearances, there was no inconsistency between the decisions in Abdi and Hickey. The former decision was in the context of an indeterminate agreement. The latter was in the context of a fixed-term agreement. Where an agreement is for a ‘specified period’ (i.e. a fixed term), it will automatically terminate at the end of that specified period, meaning that for para 6(b) to be satisfied there must be a supplementary provision within the agreement allowing for termination by the lessor whenever he or she requires, even if that is before the fixed-term has ended. In contrast, where an agreement is indeterminate (i.e. a periodic arrangement) it need only provide for termination when the lessor requires. 

In this case, the arrangement between Rent Connect and Barnet was for an initial fixed term, followed by occupation on a monthly periodic basis. By the time Ms Mohamed took up occupation the agreement had entered the periodic phase. That brought it within the ambit of the decision in Abdi. Meaning that the clause allowing for termination on 14 days’ notice was sufficient to satisfy para 6(b) and that Ms Mohamed’s occupation agreement did not attract security of tenure.

Read the full judgment here: Mohamed v Barnet LBC [2019] EWHC 1012 (QB), 17 April 2019

Connor Johnston is a member of the Garden Court Chambers Housing team.

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