The ‘Mesne Profits’ Scandal!

Charities are not meant to profit from their beneficiaries – right? Well, we have a case where an erstwhile almshouse resident has been sued for ‘Mesne Profits’. (The root word is demesne, a feudal term which connotes a landlord’s disposable estate. The premise of an action for mesne profits is that a defaulting occupier has profited from the value inherent in the rent which should have been paid.)

Here’s our take on the issue:

We contend that suit for mesne profits cannot lie against a beneficiary of an almshouse charity by reason that the charity expressly abjures rent. Furthermore, that a petition for violation of human rights lies latent in the case under consideration.

A former almshouse resident who had accrued arrears of maintenance contributions has been pursued for mesne profits to the extent that commensurate charges have been registered against their previous accommodation, a freehold property currently on the market.

We contend that mesne profits is exclusively the prerogative of commercial landlords. The clue is in the word ‘profit’. In logic, in equity and surely in law, an almshouse charity cannot profit from its beneficiaries.

It may be derived from the letter of appointment that the charity expressly abjures the prerogatives of a commercial landlord in favour of the more constrained prerogatives of a grantor (licensor) under charity law. In particular, it expressly abjures rent and instead purports to levy a periodic maintenance contribution.

The levying of a maintenance contribution implies that the dwelling needs to be maintained, whether occupied or not. Clearly a current occupier is merely an incidental defrayer of expenses rather than a source of net income. Such expenses will accrue regardless of occupancy. (Furthermore, in the majority of cases, the grantor will be garnering the commensurate Housing Benefit, via the occupant.) Mesne profits derive from rent; they cannot derive from maintenance.

It has been held that the grantee of an almshouse tenure accrues no legal interest in his domicile, vide Gray v Taylor [1998] and Watts v Stewart [2016] EWCA Civ 1247. In Watts at §31 et seq it is held that there can be a hierarchical difference between exclusive possession and exclusive occupation, the latter not necessarily conferring tenancy. In the present case we perceive the erstwhile occupant – and putative appellant – to have been held to be in exclusive occupation only and thus at a further remove from liability for mesne profits.

Again, in the present case, that demotion is further degraded in the letter of appointment which states that the grantee stands to be decanted into other accommodation at the whim or behest of the grantor. A grantee purposefully held to such extreme degrees of tenuousness cannot be held liable for mesne profits. Almshouse charities cannot have it both ways; arrears of maintenance stand to be written off.

In the present case, those charges levied upon a private dwelling house deriving from a suit for mesne profits against an erstwhile beneficiary stand to be voided. Furthermore, in the context of human rights, such a suit is rendered discriminatory and thereby unsustainable, viz.:

If we may selectively quote Lord Templeman in Street v Mountford [1985] 1 AC 809 at p.817: an occupier in lawful exclusive possession of residential accommodation at a rent for a term may be one of three things; a tenant, a lodger – or an object of charity.

Which raises the question: In England and Wales can a natural person, an erstwhile subject, nowadays a citizen, be an object? The terms are grammatically transposable but are otherwise mutually exclusive.

But we are not just opportunistic grammarians or players with words here. In the greater dimension, consider the distillate of a submission (UN Human Rights Council, 37th session, 26 February–23 March 2018, Agenda item 3, Document A/HRC/37/53) by Ms. Leilani Farha, the UN Special Rapporteur on Adequate Housing. It is that those viewed by the English courts as objects of charitable organisations (rather than as rights holders and active subjects[sic], empowered to engage and be involved in decisions affecting their lives and the enjoyment of their rights) are, when viewed through the lens of the human rights obligations imposing upon those courts, inadequately housed. Articles 6, 7, 8, 10, 12, 22, 25, 28 and 30 of the Universal Declaration of Human Rights are perceived violated, and mutatis mutandis those of the concomitant European Convention (and, residually, the UK Human Rights Act 1998); and an aspiring plaintiff may petition for remedy direct to the European Court accordingly.

Reverting to the present case, might is right and you will be unsurprised to learn that the purporting charity has prevailed, our correspondent, the putative appellant, being stalled for want of legal aid. We’ll be more than happy to forward any pro bono offers …

Our contentions put into adverse perspective the prevailing judgements in Gray v Taylor and Watts v Stewart. Those thus being held to the denigratory status of objects of charitable organisations should be immune to the legalistic machinations of landlords in mercenary pursuit of mesne profits (come the day when we wrest defensible tenancies from the dead hand of English judicature – most probably via the ECtHR – we’ll be content to review our stance!). June, 2019