Case analysis of Panton v Brody: trustees of an unincorporated association granted vesting order of a lease of the Chiswick Boathouse

Panton and others v Brophy and another [2019] EWHC 1534 (Ch), [2019] All ER (D) 138 (Jun)

In 1987, a local authority (Hounslow) granted a 30-year lease of the Chiswick Boathouse to the Thames Tradesmen’s Rowing Club (TTRC). In the early 1990s, Hounslow helped fund an allweather hockey pitch next to the boathouse and encouraged TTRC to enter into a joint venture agreement with the Hounslow Hockey Club Limited (HHCL). In 1996, the lease was subsequently assigned to TTRC and HHCL, and a deed of variation was granted to extend the term to July 2033. HHCL was later dissolved and following a disclaimer of the lease by the Crown as bona vacantia, the local authority evicted TTRC on the basis that it was an unincorporated association which could not hold legal title. The court had to consider what interest TTRC held in the land.

In this article, Andy Creer comments on what lessons can be learned from this case for property and property disputes practitioners.

What are the practical implications of this case?

The law isn’t about fairness, but it is reassuring that the courts will intervene to prevent heavy-handed tactics where it can find a proper legal basis for so doing. Hounslow had acted on the basis that the rowing club was its tenant for more than 30 years but—when the arrangement no longer suited the local authority—it evicted TTRC. As is so often the way, the key to unravelling this property case was to go back to the beginning and work through the effect of each event. Here, there were practical and technical difficulties in running any form of estoppel case, and it was important to find a legal solution which would work for an unincorporated association. It is a useful reminder that the disclaimer of a lease does not affect derivative interests—under lessee, mortgagee or, as here, a beneficial interest. Hounslow were entitled to be joined to the application, as they wanted to dispute the existence of any leasehold interest in the premises and their reversion would be directly affected if a vesting order were made.

What was the background?

The crux of the background, which is not evident from the judgment, was that the Chiswick Boathouse was in need of repair, for which Hounslow had responsibility under the lease. Hounslow’s plan was, apparently, to redevelop the site and build a new facility, but it wanted TTRC to give up its lease (which had 15 years still to run) in return for a rolling six-month licence, with no agreement in respect of the new premises once completed.

The original lease had been drafted by the borough solicitor and Hounslow had treated TTRC as its tenant since the mid-1980s, accepting rent and so on. No one had appreciated that an unincorporated association does not have a legal personality and could not hold title to land.

In 1992, a joint venture agreement was formalised between TTRC and HHCL, which provided that they would share the demised facilities. In 1993, Hounslow granted a licence to assign and in May 1996, the lease was assigned to TTRC and HHCL as joint tenants (albeit this was not possible at law).  The next day Hounslow, TTRC and HHCL entered into a deed of variation which, among other things, increased the rent payable under the lease and extended the term to expire on 30 July 2033.

HHCL was dissolved in May 2009, but TTRC remained in occupation paying rent and observing the lease covenants. Hounslow took legal advice in the summer of 2018. They then procured the disclaimer of the HHCL’s interest (if any) in the lease by the Crown and then gave four weeks’ notice to the rowing club to leave the premises.

This meant that TTRC, a sporting association with a 120-year heritage, was facing a very real prospect of being disbanded without premises from which it could operate. Indeed, after Hounslow peaceably evicted TTRC in August 2018, finding temporary accommodation for 62ft rowing eights had not been the easiest of tasks.

The rowing club accepted that the lease could not have vested any legal interest in the land in it (following Camden LBC v Shortlife Community Housing [1992] 90 LGR 358, 25 HLR 330. It was argued that the disclaimer by the Crown  would only have been of the legal and beneficial interest vested in HHCL and would not have affected the TTRC’s beneficial interest in the lease (applying sections 1012 and 1015 of the Companies Act 2006).

TTRC sought to establish that the arrangements in the 1990s had the effect of conferring a lease of the premises on HHCL to be held on trust for itself and the rowing club members (following Neville Estates Ltd v Madden [1962] Ch 832, [1961] 3 All ER 769). It invited the court to make orders appointing new trustees and vesting the remainder of the term of the lease in them.

Hounslow argued that objectively there had been no document which granted a leasehold interest to TTRC and HHCL, or to HCCL alone. Further, the parties had not intended there to be a trust, the relationship between the two sporting clubs was not a trust relationship and, in any event, a beneficial interest could not vest in TTRC for the same reasons a legal estate could not.

What did the court decide?

The court made a vesting order in favour of the claimants, as newly appointed trustees.

The original lease could not have created an interest in land and the assignment was void. However, the effect of the licence to assign and the deed of variation was that Hounslow granted a lease on terms to HHCL.

The court accepted that a deed of variation signed by only one of two joint parties could still take effect between those who had agreed to be legally bound. Applying Laditi and another v Marlbray Ltd [2016] EWCA Civ 476, [2016] All ER (D) 202 (May), there was nothing to justify the inference that the grant to HHCL was conditional upon TTRC also holding legal title (which was impossible).

The trust relationship arose because TTRC and HHCL had intended there to be a joint tenancy, which is a trust of land. They intended to be beneficial joint tenants, which was evidenced by the terms of the joint venture agreement and the set of draft rules produced for the management of the boathouse.

Master Clark held that the trust would be for the members of TTRC from time to time subject to their contractual rights and liabilities to each other as members of the unincorporated association (applying Wise v Perpetual Trustee Co [1903] AC 139 and the second category of analysis in Neville Estates). This was consistent with the club rules, which sought to apply the income and property of TTRC to the promotion of its objects and was not to be transferred to the members.

This article first appeared in LexisNexis PSL.  Andy was interviewed by David Bowden.