Licence or tenancy: Is that still a problem?

In Watts v Stewart and others [2016] EWCA Civ 1247 a resident of an almshouse claimed she was not a licensee but a tenant with security of tenure.

The owner of the premises was an almshouse charity owning 14 residential units. There are some 1,700 such charities, members of the National Almshouses Association (NAA), and 35,000 almshouse residents. To qualify as a beneficiary under the charitable trust and a resident a person had to be a poor, single woman, over 50, local, and preferably from domestic service.

By letter of appointment, following an NAA model document, the almsperson claimant moved into one of the residential units and lived there as her home. She fell into arrears with her periodical payments and was guilty of anti-social behaviour. The charity claimed to be entitled to evict her ‘for good cause’. She sought a declaration that she was a tenant and not a licensee.

The claimant claimed to have been at least a tenant at will and then to have morphed into a periodic tenant. She had exclusive occupation and possession. The premises were her home. The documentation, the letter of appointment, spoke of ‘rent’ and ‘conditions of tenancy’. She was entitled to the legal protection afforded to a tenant.

The charity claimed that she was a licensee. Under the terms of the letter of appointment the charity could move her to another unit at any time, and she was not allowed overnight visitors. The charity had to reserve the right to evict not only for non-payment and anti-social behaviour but also because she might become ineligible (e.g. if she came into a lot of money), and then the charity would be in breach of trust to allow her to remain. The charity, as almshouse charity, was not permitted to grant assured shorthold tenancies.

The Court of Appeal found that the arrangement was a personal revocable licence. The charity was restricted in its powers; it could not grant a lease. True, she was in exclusive occupation and exclusive possession as her home, but those concepts are both factual and legal.

True, the documentation used tenancy language, but the court will look behind the veil, look at the substance and reality of the arrangement, the circumstances, and the intentions of the parties. In this instance there was no attempt by the charity at any sort of sham or disguise for the arrangement (see Street v Mountford [1985] AC 809).

Unlike lawyers, laymen sometimes use imprecise, inappropriate, sloppy language. Had the charity taken legal advice and assistance at the beginning for the drafting of the arrangement the problem would not have arisen. For trustees, including charitable trustees, managing property to ‘do it themselves’ or through their non-legal staff or even through volunteers is to run an unnecessary risk.

The almsperson claimant also relied upon the human right to privacy and family life under article 8 and discrimination under article 14, but the charity was not a public body (see McDonald v McDonald [2016] UKSC 28), and anyway within the margin of appreciation the charity had acted in accordance with the law and in a proportionate and balanced manner.

Alec Samuels is a barrister and former reader at Southampton University