Lease or licence

Citation

(1999), "Lease or licence", Property Management, Vol. 17 No. 1. https://doi.org/10.1108/pm.1999.11317aab.003

Lease or licence

Lease or licence

Parkins v. Westminster City Council [1998] 13 EG 145

Cases which turn on the question of whether the occupier is a tenant or a licensee are relatively rare these days, since the coming into effect of the Housing Act 1988 has made it possible for the landlord to avoid conferring security of tenure on a private sector residential tenant by the grant of an assured shorthold tenancy, and in the case of a business tenancy it is possible for the parties to contract out of the provisions of Part II of the Landlord and Tenant Act 1954 with the prior consent of the court. In the case of public sector residential tenancies again there has been a dearth of cases since the Housing Act 1985 effectively draws no distinction between a tenancy and a licence as such.

However, there are still occasionally cases where the question of whether the arrangements in question gave rise to a lease or a licence, and this is one such.

In this case the respondent, Mr Parkins, was a teacher who had been allowed the opportunity to occupy shared accommodation under a scheme run by the council to provide affordable housing for teachers employed within the City of Westminster. Mr Parkins entered into an agreement which stated as follows:

The Corporation [i.e. the council] hereby grants to the Licensee licence to occupy Flat 1, Canal Buildings, Gatliff Road (hereinafter called "the Premises") the occupancy of the premises to be shared with other persons also similarly authorised by the Corporation together with the right to use (in common with all others entitled to the like right) the furniture and equipment furnished by the Corporation (a list of which is set out in the Schedule annexed hereto) together also with the right to use during the subsistence of this licence (in common with all others entitled to the like right) for the purpose of passage to and from the Premises, the entrance hall stairs passages and landings leading to the Premises from the 16th day of August 1991, until the licence hereby granted is determined in manner hereinafter provided . ..

The agreement then went on to provide for the payment by Mr Parkins of a "licence fee" of £173.33 per month, to provide that the agreement could be terminated (inter alia) by either side giving one month's notice, and to provide an inventory of furnishings, etc. The premises in question was a three-bedroom flat. As things turned out, Mr Parkins chose (or was allocated) bedroom No. 3, another teacher, a Miss Mukasa, occupied bedroom No. 1, and bedroom No. 2 remained unoccupied, being used either by casual visitors or as a study. After a little under a year, Miss Mukasa left and very shortly afterwards the council gave Mr Parkins notice to quit, his employment as a teacher having come to an end. Mr Parkins claimed that he had the benefit of a secure tenancy under the Housing Act 1985, a claim which succeeded in the county court. The council appealed.

In the Court of Appeal, the case turned essentially on two points: first, was Mr Parkins a tenant or a licensee; second, if he was a licensee was the nature of his licence such that it could nevertheless amount to a secure tenancy as defined in and protected under the Housing Act 1985?

The Court of Appeal held that he was a licensee and that the licence was not protected by the 1985 Act. The court considered earlier decisions including: Baker v. Turner [1950] AC 401, A.G. Securities v. Vaughan [1990] 1 AC 417; [1988] 2 EGLR 78; [1988] 47 EG 193 and Westminster City Council v. Clarke [1992] 2 AC 288.

In the words of Chadwick LJ:

. . . the council puts their case in the alternative. First, it is said that on the true construction of the licence agreement of August 16 1991, Mr Parkins was granted exclusive possession of room 3 with associated rights to share the use of the common room, kitchen, bathroom and separate wc. Room 3 cannot be treated as a dwelling- house let as a separate dwelling because it does not satisfy the requirement of essential living facilities. In the alternative, if, on its true construction, the effect of the licence was to grant Mr Parkins a right to share occupation of the whole of the flat, then the flat cannot be treated as a dwelling-house let as a separate dwelling for the purposes of the Act, because neither Mr Parkins nor anyone else has a right to exclusive possession of the flat.

In my view, those contentions are unanswerable. It is impossible to identify any property, whether the flat or a part of the flat, in respect of which both the conditions of essential living facilities and exclusive possession are satisfied.

On that basis, said the court, the licence agreement was not subject to the 1985 Act, and the council was entitled to possession.