LORD HOFFMANN
My Lords,
1. This appeal raises a short point on the construction of a provision of Part IV of the Housing Act 1985, which consolidates the law on secure tenancies originally introduced by Chapter II of Part I of the Housing Act 1980. Mrs Betty Walker was a secure tenant of a house in Birmingham belonging to the local authority. When she died in February 2004, her son Paul was living with her in the house. Section 89 of the 1985 Act provides that where a secure tenant dies and there is a person "qualified to succeed" her, "the tenancy vests by virtue of this section in that person". By section 87, a member of the tenant's family occupying the house at the time of her death is qualified to succeed. But there is a proviso which excludes any succession to a tenant who was herself a "successor" as defined in section 88(1). That definition includes the case (paragraph (b)) in which the tenant "was a joint tenant and has become the sole tenant". In this case, Mrs Betty Walker was once a joint tenant. She and her husband were granted a joint tenancy of the house in 1965. When he died in 1969, she became the sole tenant. But that was long before the 1980 Act came into force and her tenancy became a secure tenancy. So the question is whether "has become the sole tenant" refers to any time in the past or is limited to a case in which she became the sole tenant under a secure tenancy, that is to say, after the 1980 Act came into force. Judge Hamilton thought it meant the former but the Court of Appeal (Mummery and Rix LJJ, Peter Smith J) said it meant the latter ([2006] 1 WLR 2641).
2. Until the passing of the 1980 Act, tenants of local authorities and similar public sector landlords had no security of tenure. They were excluded from protection under the Rent Act 1977: see sections 14-16. Part I of the 1980 Act conferred two benefits upon public sector tenants. Chapter I gave them the right to buy the freehold (if it was a house) or a long lease (if it was a flat) of their dwelling at a discounted price to be left outstanding on mortgage. Chapter II introduced the concept of a secure tenancy for public sector tenants.
3. The secure tenancy, like the statutory tenancy in the private sector, can be terminated only by an order of a county court made on one of a list of specified grounds. But the technique by which secure tenancies are integrated into the ordinary law of landlord and tenant is very different from that which was used in the Rent Acts more than 60 years earlier. The old legislation had left untouched the landlord's right to determine a contractual tenancy by notice or otherwise in accordance with its terms and the general law. It provided that, on such termination, the tenant acquired a new interest which is now called a statutory tenancy. The 1980 Act, on the other hand, preserved the contractual tenancy. It merely added statutory incidents to that tenancy which overrode some of the contractual terms. These overriding provisions include the provisions which prevent it from being terminated except by an order of the court on the statutory grounds.
4. From their earliest days, the Rent Acts provided that when a tenant died, his security of tenure could be transmitted to his widow or another member of his family: see the definition of "tenant" in section 12(1)(g) of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920. The original provision for transmission could operate only once: see Whitmore v Lambert [1955] 1 WLR 495, 498-499. But section 13 of the Rent Act 1965, passed immediately after the election of a Labour government, provided for a second transmission and that remains the position today: see Part I, Schedule I of the Rent Act 1977. A person to whom the tenancy is transmitted becomes a statutory tenant. Under this system, the provisions which limit the number of times which the mechanism of transmission can operate are extremely simple. The 1977 Act says that they shall only operate twice. This obviously makes it irrelevant to consider anything which happened before the provisions for transmission came into force.
5. The method adopted by the 1980 Act to deal with transmissions is different. It reflects the fact that a secure tenancy is different in nature from a statutory tenancy. Whereas the statutory tenancy is unassignable, not an estate in land but a mere "personal right of occupation" (see Lord Greene MR in Carter v SU Carburetter Co [1942] 2 KB 288, 291), a secure tenancy is an orthodox estate in land which, subject to specific restrictions in the 1980 Act, can be assigned, held in joint names, pass by survivorship and be disposed of by will on death. Thus, while a statutory tenancy can pass from one person to another only in very limited circumstances (such as the statutory transmission on death or by a court order on divorce) a secure tenancy can in principle pass in any way permissible at common law.
6. The 1980 Act was introduced by a newly elected Conservative government and its policy was to allow transmissions of secure tenancies only once. But this policy could not be given effect, as in the case of the Rent Act, simply by providing that the transmission mechanism could operate only once. The fact that a secure tenancy is an estate in land means that such a restriction could be easily avoided by using other methods of passing the tenancy from one person to another. For example, section 91 of the 1985 Act provides that, with certain exceptions, a secure tenancy may not be assigned. But one of the exceptions, in subsection (3)(c), is an assignment to a person "who would be qualified to succeed the tenant if the tenant died immediately before the assignment". Unless such an assignment also counted as a transmission, a rule that one could have only one transmission could be avoided by assigning the tenancy to a resident member of the family while the tenant is alive rather than waiting for a statutory transmission on death.
7. That, I think, is the reason for the inclusion, in the definition of a "successor", of various common law methods for the passing of a leasehold interest in addition to the statutory transmission:
"88. - (1) The tenant is himself a successor if —
(a) the tenancy vested in him by virtue of section 89 (succession to a periodic tenancy), or
(b) he was a joint tenant and has become the sole tenant, or
(c) the tenancy arose by virtue of section 86 (periodic tenancy arising on the ending of term certain) and the first tenancy there mentioned was granted to another person or jointly to him and another person, or
(d) he became the tenant on the tenancy being assigned to him (but subject to subsections (2) and (3)) or
(e) he became the tenant on the tenancy being vested in him on the death of the previous tenant or
(f) the tenancy was previously an introductory tenancy and he was a successor to the introductory tenancy."
8. For the reasons which I have explained, it is easy to see why the legislature thought it necessary to add paragraphs (b) to (f) to the straightforward statutory transmission falling within (a). They are to close possible loopholes in the single succession rule, preventing it from being avoided by the use of other methods of transmission.
9. But this policy does not in my opinion require that these paragraphs should apply to events which occurred before the 1980 Act came into force. If the policy is to allow only one succession to a secure tenancy, it can hardly be relevant to consider the history of the tenancy before it became a secure tenancy. Take, for example, a case in which, say in 1969, someone bought the unexpired residue of a 20 year lease of a house granted in 1966. In 1975 the reversion was acquired by a local authority. When the 1980 Act came into force it became a secure tenancy. When the lease expired in1986, the effect of section 86(1) of the 1985 Act was that a periodic tenancy of the same house came into existence:
"Where a secure tenancy ('the first tenancy') is a tenancy for a term certain and comes to an end…by effluxion of time…a periodic tenancy of the same dwelling-house arises by virtue of this section…"
10. Suppose the original 1969 purchaser, now a secure tenant under a periodic tenancy, died in 2004. Was his widow qualified to succeed him? If there is no temporal limit on the operation of section 88(1)(c), she was not, because her husband was himself a successor. His periodic tenancy arose under section 86(1) and the "first tenancy" there mentioned was granted to another person, namely the purchaser who bought the original long lease in 1966. But this would be a very arbitrary result. Why should it make a difference to rights of succession in 2004 to ask whether the tenant took an assignment of an existing lease in 1969 or was the original grantee of a new lease? Why does it matter how someone acquired the lease in 1969? No sensible policy seems to be served by making such a distinction. Mr Underwood QC, who appeared for the local authority, said that it might seem a bit hard but was balanced by the advantages of the right to buy in Chapter I of Part I of the 1980 Act, which (for the purposes of calculating the discount) took into account past occupation before the tenancy became a secure tenancy. I can quite see that Parliament might adopt a scheme which balanced advantages and disadvantages. It is also true that Parliament in 1980 did not particularly want public sector tenants to rely on security of tenure. Mrs Thatcher's policy was to encourage them to exercise the right to buy and become home owners. But I would expect both the advantages and disadvantages to each serve some purpose. It is easy to see why length of occupation should be considered relevant to the discount, even if it was before the Act came into force. But distinctions based on the past conveyancing history of the tenancy seem to me quite irrational.
11. In my opinion, therefore, the events to which section 88(1) refers are events in relation to tenancies which have become secure tenancies and not to events which happened earlier. In support of this construction, I would rely on three indications. First, the general presumption against retrospectivity. One does not expect rights conferred by the statute to be destroyed by events which took place before it was passed. Secondly, the word "successor" most naturally means successor to a secure tenancy. Although successor is a defined expression, the ordinary meaning of the word is part of the material which can be used to construe the definition. Thirdly, as I have said, there is the absence of any rational purpose in giving the definitions a retrospective effect. It follows that "he was a joint tenant and has become the sole tenant" in section 88(1)(b) means that he was a joint tenant under a secure tenancy and has become the sole tenant under a secure tenancy. When Mrs Betty Walker became sole tenant, it was not of a secure tenancy and she was therefore not a successor. I would therefore dismiss the appeal.
LORD HOPE OF CRAIGHEAD
My Lords,
12. I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hoffmann. I agree with it, and for the reasons he gives I too would dismiss the appeal.
LORD SCOTT OF FOSCOTE
My Lords,
13. I have had the advantage of reading in advance the opinion of my noble and learned friend Lord Hoffmann and am in full agreement with the reasons he has given for dismissing this appeal.
LORD WALKER OF GESTINGTHORPE
My Lords,
14. For the reasons given by my noble and learned friend Lord Hoffmann, whose opinion I have had the advantage of reading in draft, I too would dismiss this appeal.
LORD MANCE
My Lords,
15. For the reasons given by my noble and learned friend Lord Hoffmann, whose opinion I have had the advantage of reading in draft, I too would dismiss this appeal.