Mansukhani v Sharkey

Order for possession — Construction — Mortgaged property — Expiration of tenancy of flat — Tenant becoming statutory tenant — Transfer of flat by parents to child — Transferee undertaking to pay mortgage — Transferee seeking possession of flat — Whether transferee reasonably requiring accommodation for himself — Whether transferee becoming landlord when taking over flat — Whether transferee “purchasing” flat — First instance decision that transferee acting as purchaser — Transferee’s appeal allowedThe plaintiff sought possession of Flat 3, 41-49 Broadwick Street, London W1, which had been acquired by the plaintiff’s parents in 1984. In 1985 his parents had let the flat to the defendant and others for a term expiring on October 1 1986. On that date the defendant became a statutory tenant of the flat. By a transfer of July 3 1989 the parents transferred the flat to the plaintiff absolutely, but subject to a charge of September 21 1984 to the Bolton Building Society. The transfer was not expressed to be as a sale although the plaintiff covenanted with his parents to discharge the liabilities under the charge. He also agreed with the building society direct to make the payments from time to time due to the society under the charge. The amount owing under the mortgage was about £14,000. Section 1 of the Rent Act 1977 rendered the tenant of any dwelling-house (subject to certain exceptions) a protected tenant. Section 2 provided that when a protected tenancy came to an end, the tenant should become a statutory tenant so long as he occupied the dwelling-house as his residence. Section 98 provided that no order for possession should be made against a statutory tenant unless one of the grounds set out in Schedule 15 was applicable or unless suitable alternative accommodation was provided and, in any event, that it was reasonable to make an order for possession. Case 9 in Part I of Schedule 15 granted possession where the dwelling-house was reasonably required by the landlord for occupation as a residence by himself and the landlord did not become landlord by purchasing the dwelling-house or any interest in it. The question in this case was whether the plaintiff became the landlord by purchasing the flat. Judge Harris in Westminster County Court held that he did because it was transferred to him in consideration of his discharging the sum of £14,000 secured by the charge. The plaintiff appealed. Held The appeal was allowed. 1. In construing the meaning of “purchasing” in the relevant provisions of the Rent Act 1977, the court was concerned with an ordinary English word and its ordinary meaning. There were two matters to have in mind. First, this was a transaction between parents and their son, who was a student — it was a family matter. Second, the subject-matter of the disposition was mortgaged property. 2. The transfer was not expressed to be a transfer or a sale. No reference was made to any sale or purchase. It simply recited that the disposition was in consideration of mutual love and affection and the covenants thereinafter contained. Consideration by way of love and affection was a familiar recital in deeds of gift and voluntary settlements. It was difficult to imagine it normally having any place in a sale document. 3. There was no evidence to suggest that the parties negotiated the transfer as a sale in consideration of the covenant. There was no reference to a sale in the instrument itself, nor was there anything which suggested that the transaction was dressed up in some way to hide its true nature. 4. The covenants were perfectly consistent with a gift of mortgaged property. The crucial matter was the nature of the property disposed of. Because it was mortgaged, some arrangement had to be reached as to who was to bear the burden of the obligation under the mortgage. The arrangement was that the plaintiff should bear the obligation under the mortgage. However, that only meant that the parents had said in effect that they would give the flat to their son and he would have to take the burden as well as the benefit. That was in no way inconsistent with a gift of mortgaged property. It merely followed from the nature of the property given. 5. There was no evidence that the parents were striking a commercial bargain or doing anything but conferring a benefit on their son. The transaction was a gift and not a purchase. Accordingly, the plaintiff did not become the landlord by purchasing the flat. Jonathan Gaunt QC and Harry Trusted (instructed by Brian Hillman Trivedi & Co) appeared for the appellant landlord; and Kim Lewison QC and Martin Westgate (instructed by the Central London Law Centre) appeared for the respondent tenant.