Take No Notice

Hertfordshire County Council v Davies [2017] EWHC 1488 (QB)

Summary

The question of whether a residential occupier has a lease, a licence or a service occupancy comes up a great deal in practice. The answer is important as it affects not only timing and cost, but even the ability of the property owner to regain possession.

The High Court has now considered the position of service occupiers where the employment has ended and the property owner is seeking possession. Whilst the Claimant in this case was a local authority, and so some of the arguments will not apply to private property owners, the case is nonetheless a useful exploration of the nature and termination of a service occupancy.

The Court’s conclusion, despite a raft of different arguments raised by the Defendant, was that the Claimant was entitled to possession.

The facts

In 2003, the Defendant was employed by the Claimant as the “resident caretaker” at Sheredes School. In order to facilitate the performance of his duties, the Defendant was required to occupy a bungalow in the school grounds.

Initially the Defendant’s employment contract stipulated that he must live on site because this was essential for security. However, in 2014, the contract was varied and occupation of the bungalow became optional.

The Defendant also had a property contract. This document called itself a “service occupancy lease”. The key provision was the link with the employment contract, specifying that the purpose of the occupancy was to enable the better performance of the Defendant’s employment duties.

During the term of the tenancy, the Defendant had taken extended periods off work and was eventually deemed to be disabled. On 16 June 2015 the Claimant notified him that he had been dismissed for gross misconduct. The Claimant also served notice requiring the Defendant to vacate the bungalow.

In August 2015 the Claimant advertised the caretaker position and did not require the new applicant to live on site. The Defendant later seized upon this to argue that he had not been a service occupier since the similar change in his contract in 2014.

When the Defendant refused to vacate, the Claimant issued possession proceedings. The Defendant disputed this on the grounds that he was not a service occupier, so the notice was invalid, and that the Claimant had given him insufficient notice in any event.

The issues

The Court had to answer the following questions:

  • Did the Defendant have a lease or a licence immediately before he was dismissed?
  • Did the Protection from Eviction Act 1977 apply?
  • Was the Claimant entitled to rely on the exception in Schedule 1 Housing Act 1985?
  • Did any public law issues affect the Claimant’s ability to regain possession?
  • Was this analysis affected by the Defendant’s discrimination claim or the Human Rights Act 1998?

Whilst the final 3 questions are not likely to arise in cases where properties are owned privately, the Court gave some useful insight and guidance on the first two points.

The decision

  • There are three hallmarks of a tenancy, namely exclusive possession; payment of rent; and an agreement for a term certain. If the agreement lacks one or more of these, it may well be a licence. The status of the occupancy can also change if there is a change in circumstances.

The test that the Courts apply is: “whether the servant requires the premises he occupies in order to better perform his duties as a servant.”

In this case, the Defendant’s occupancy had all these hallmarks, but there were some exceptions that only applied because the Claimant was a local authority.

Taking everything into account, the Court found that the agreement had created a service occupancy, not a lease. The requirement for the Defendant to live in the bungalow was indeed the key, as this made it clear that the requirement was for the better performance of his duties.

Even after 2014, when the contract was varied, there were still occasions when the Defendant was needed on site outside normal working hours. Nothing had changed since the Defendant was dismissed and the Claimant had in no way indicated that it wished to create a new tenancy. Rather it had actively pursued possession.

Consequently the Defendant had only a service occupancy that hinged upon his being employed by the Claimant, and did not have the additional protection of a lease, despite apparently meeting the three criteria.

  • In turn this raised the very important question of whether the Protection from Eviction Act 1977 applied to the agreement as a service occupancy. In order not to breach this Act, the party giving notice must comply with the requirement to give a minimum notice period. There are severe penalties for failing to comply with this statute.

In a case of this nature, however, the Court had to consider whether this still applied where the licence could be terminated without notice to quit. The Court held that there is a distinction under the 1977 Act between a notice to quit any premises “let as a dwelling” and a notice to determine a “periodic licence”.

Here, the Court found that no notice was necessary, as the licence had terminated automatically on its own terms when the Claimant dismissed the Defendant. Consequently neither of the above provisions applied and therefore the Claimant had not breached the 1977 Act.

  • A detailed analysis of these questions is outside the scope of this article, although they are a useful reminder of defences that might be run against a local authority seeking possession. In brief, however, the Court found that:
    • The Defendant did not have exclusive possession because the Claimant could rely on the statutory exception for local authorities;
    • Even if the Claimant had breached any of its public law duties, this would not have given the Defendant a defence to the possession claim because no private law rights would have arisen from the breaches;
    • The Defendant’s human rights were not breached as a consequence of the statutory exception and there was no unlawful discrimination.

Consequently the Court found that the Claimant was entitled to possession.

Our comments

Questions over the nature of an occupier’s status are very common and it is not always clear from the face of the documents what status the agreement has. Indeed in this case, a document describing itself as a lease was not ultimately a lease.

Careful consideration must therefore be given to the terms on which the occupier will be allowed into occupation, and particularly any wording linking it to the performance of the job if it is intended to be a service occupancy.

Where parties are acquiring property that is subject to this type of arrangement, as much information as possible must be sought in terms of how the arrangement came to be in place, and how it works in practice.

The fact that the status of the occupancy can change should not be forgotten when the parties are making any changes to the circumstances. Ideally any such changes should be documented carefully.

Notwithstanding the decision here in respect of the 1977 Act, given the serious risk of falling foul of this statute, land owners should always seek legal advice before taking any action to repossess the property.