Tenancies & Licences
UK Cases
Street v Montford
(House of Lords)
[1985] A.C. 809; [1985)2 W.L.R. 877; [1985) 2 All E.R. 289; (1985) 50 P.& C.R. 258
Lord Templeman: In the case of residential accommodation there is no difficulty in deciding whether the grant confers exclusive possession. An occupier of residential accommodation ata rent for a term is either a lodger ora tenant. The occupier isa lodger if the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises.A lodger is entitled to live in the premises but cannot call the place his own. In Allan v. Liverpool Overseers (1874) LR. 9 Q.B. 180, 191-192 Blackburn J. said:
A lodger ina house, although he has the exclusive use of rooms in the house, in the sense that nobody else is to be there, and though his goods are stowed there, yet he is not in exclusive occupation in that sense, becaµse the landlord is there for the purpose of being able, as landlords commonly do in the case of lodgings, to have his own servants to look
after the house and the furniture, and has retained to himself the occupation, though he has agreed to give the exclusive enjoyment of the occupation to the lodger.
If on the other hand residential accpmmodation is granted fora term ata rent with exclusive possession, the landlord providing neither attendance nor services, the grant isa tenancy; any express reservation to the landlord of limited rights to enter and view the state of the premises and to repair and maintain the premises only serves to emphasise the fact that the grantee is entitled to exclusive possession and isa tenant. In the present case it is conceded that Mrs Mountford is entitled to exclusive possession and is not a lodger. Mr Street provided neither attendance nor services and only reserved the limited rights of inspection and maintenance and the
like set forth in clause3 of the agreement. On the traditional view of the matter, Mrs Mountford not being a lodger must bea tenant
There can be no tenancy unless the occupier enjoys exclusive possession; but an occupier who enjoys exclusive possession is not necessarilya tenant. He may be owner in fee simple,a trespasser, a mortgagee in possession, an object of charity or a service occupier. To constitute a tenancy the occupier must be granted exclusive possession fora fixed or periodic term certain in consideration ofa premium or periodical payments. The grant may be express, or may be inferred where the owner accepts weekly or other periodical payments from the occupier.
Occupation by service occupier may be eliminated. A service occupier isa servant who occupies his master’s premises in order to perform his duties asa servant. In those circumstances the possession and occupation of the servant is treated as the possession and occupation of the master and the relationship of landlord and tenant is not created; see Mayhew v. Suttle (1854) 4 El. & Bl. 347. The test is whether the asesravasnetrvreaqnut:ires the premises he occupies in order the better to perform his duties
Where the occupation is necessary for the performance of services, and the occupier is re quired to reside in the house in order to perform those services, the occupation being strictly iasntchilalat royf tao stheervpaenrtformance of the duties which the occupier has to perform, the occupation
per Mellor J. in Smith v. Seghi/1 Overseers (1875) LR. 1 O 0.8. 422, 428.
The cases on which Mr Goodhart relies begin with Booker v. Palmer (1942)2 All
E.R. 674. The owner ofa cottage agreed to allow a friend to install an evacuee in the cottage rent free for the duration of the war. The Court of Appeal held that there was no intention on the part of the owner to enter into legal relationships with the evacuee. Lord Greene M.R., said, at p. 677:
To suggest there is an intention there to create a relationship of landlord and tenant appears to me to be quite impossible. There is one golden rule which is of very general application, namely, that the law does not impute intention to enter into legal relationships where the circumstances and the conduct of the parties negative any intention of the kind. It seems to me that this is a clear example of the application of that rule.
The observations of Lord Greene M.R. were not directed to the distinction be tween a contractual tenancy and a contractual licence. The conduct of the parties (not their professed intentions) indicated that they did not intend to contract at all.
In the present case, the agreement dated 7 March 1983 professed an intention by both parties to create a licence and their belief that they had in fact created a licence. It was submitted on behalf of Mr Street that the court cannot in these circumstances decide that the agreement created a tenancy without interfering with the freedom of contract enjoyed by both parties. My Lords, Mr Street enjoyed freedom to offer Mrs Mountford the right to occupy the rooms comprised in the agreement on such lawful terms as Mr Street pleased. Mrs Mountford enjoyed freedom to negotiate with Mr Street to obtain different terms. Both parties enjoyed freedom to contract or not to contract and both parties exercised that freedom by contracting on the terms set forth in the written agreement and on no other terms. But the consequences in law of the agreement, once concluded, can only be determined by consideration of the effect of the agreement. If the agreement satisfied all the requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agree ment by insisting that they only created a licence. The manufacture of a five-pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.
It was also submitted that in deciding whether the agreement created a tenancy or a licence, the court should ignore the Rent Acts. If Mr Street has succeeded, where owners have failed these past 70 years, in driving a coach and horses through the Rent Acts, he must be left to enjoy the benefit of his ingenuity unless and until Parliament intervenes. I accept that the Rent Acts are irrelevant to the problem of determining the legal effect of the rights granted by the agreement. Like the professed intention of the parties, the Rent Acts cannot alter the effect of the agreement.
In Marcroft Wagons Ltd v. Smith [1951) 2 K.B. 496 the daughter of a deceased
tenant who lived with her mother claimed to be a statutory tenant by succession and the landlords asserted that the daughter had no rights under the Rent Acts and was a trespasser. The landlords expressly refused to accept the daughter’s claims but accepted rent from her while they were considering the position. If the landlords had decided not to apply to the court for possession but to accept the daughter as a tenant, the moneys paid by the daughter would have been treated as rent. If the landlords decided, as they did decide, to apply for possession and to prove, as they did prove, that the daughter was not a statutory tenant, the moneys paid by the daughter were treated as mesne profits. The Court of Appeal held with some hesita tion that the landlords never accepted the daughter as tenant and never intended to contract with her although the landlords delayed for some six months before applying
to the court for possession. Roxburgh J. said, at p. 507:
Generally speaking, when a person, having a sufficient estate in land, lets another into exclusive possession, a tenancy results, and there is no question of a licence. But the in ference of a tenancy is not necessarily to be drawn where a person succeeds on a death to occupation of rent-controlled premises and a landlord accepts some rent while he or the occupant, or both of them, is or are considering his or their position. If this is all that hap pened in this case, then no tenancy would result.
In that case, as in Booker v. Palmer the court deduced from the conduct of the parties that they did not intend to contract at all.
In Errington v. Errington and Woods [1952] 1 K.B. 290 and in the cases cited by Denning L.J. at p. 297 there were exceptional circumstances which negatived the prima facie intention to create a tenancy, notwithstanding that the occupier enjoyed exclusive occupation. The intention to create a tenancy was negatived if the parties did not intend to enter into legal relationships at all, or where the relationship be tween the parties was that of vendor and purchaser, master and service occupier, or where the owner,a requisitioning authority, had no power to granta tenancy. These exceptional circumstances are not to be found in the present case where there has abteeanrethnet. lawful, independent and voluntary grant of exclusive possession fora term
If the observations of Denning L.J. are applied to the facts of the present case it may fairly be said that the circumstances negative any intention to createa mere licence. Words alone do not suffice. Parties cannot turna tenancy intoa licence merely by calling it one. The circumstances and the conduct of the parties show that what was intended was that the occupier should be granted exclusive pos asetsesniaoncayt.a rent fora term with a corresponding interest in the land which created.
In Addiscombe Garden Estates ;Ltd v. Crabbe [1958] 1 Q.B. 513 the Court of Appeal considered an agreement relating to a tennis club carried on in the grounds of a hotel. The agreement was:
described by the parties asa licence … the draftsman has studiously and successfully avoided the use either of the word “landlord” or the word “tenant” throughout the document
per Jenkins L.J. at p. 522.
On analysis of the whole of the agreement the Court of Appeal came to the con
clusion that the agreement conferred exclusive possession and thus createda tenancy. Jenkins L.J. said, at p. 522:
The whole of the document must be looked at; and if, after it has been examined, the right conclusion appears to be that, whatever label may have been attached to it, it in fact con ferred and imposed on the grantee in substance the rights and obligations ofa tenant, and on the grantor in substance the rights and obligations of a landlord, then it must be given ftrhoemaappmroeprreialticeeenfcfe. t, that is to say, it must be treated asa tenancy agreement as distinct
In the agreement in the Addiscombe case it was by no means clear until the whole of the document had been narrowly examined that exclusive possession was granted by the agreement. In the present case it is clear that exclusive possession was granted and so much is conceded. In these circumstances it is unnecessary to analyse minutely the detailed rights and obligations contained in the agreement.
In the Addiscombe case Jenkins L.J. referred, at p. 528, to the observations of Denning L.J. in Errington v. Errington and Woods to the effect that “The test of exclusive possession is by no means decisive.” Jenkins L.J. continued:
I think that wide statement must be treated as qualified by his observations in Facchini v. Bryson [1952] 1 T.L.R. 1386, 1389; and it seems to me that, save in exceptional cases of the kind mentioned by Denning L.J. in that case, the law remains that the fact of exclusive
possession, if not decisive against the view that there is a mere licence, as distinct froma tenancy, is at all events a consideration of the first importance.
Exclusive possession is of first importance in considering whether an occupier is a tenant; exclusive possession is not decisive because an occupier who enjoys exclusive possession is not necessarily a tenant. The occupier may bea lodger or service occupier or fall within the other exceptional categories mentioned by Denning L.J. in Errington v. Errington and Woods [1952] 1 K.B. 290.
In Abbeyfield (Harpenden) Society Ltd v. Woods [1968] 1 W.L.R. 374 the occupier Of I room in an old people’s home was held to be a licensee and not a tenant. Lord Denning M.R. said, at p. 376:
The modern cases show that a man may be a licensee even though he has exclusive possession, even though the word ‘rent’ is used, and even though the word ‘tenancy’ is uaed. The court must look at the agreement as a whole and see whether a tenancy really was Intended. In this case there is, besides the one room, the provision of services, meals, a resident housekeeper, and such like. The whole arrangement was so personal in nature that the proper inference is that he was a licensee.
As I understand the decision in the Abbeyfield case the court came to the con olualon that the occupier was a lodger and was therefore a licensee, not a tenant.
In Shell-Mex and B.P. Ltd v. Manchester Garages Ltd [1971] 1 W.L.R. 612 the Court of Appeal after carefully examining an agreement whereby the defendant was allowed to use a petrol company’s filling station for the purposes of selling petrol, came to the conclusion that the agreement did not grant exclusive possession to the defendant who was therefore a licensee. At p. 615 Lord Denning M.R. in considering whether the transaction was a licence or a tenancy said:
Broadly speaking, we have to see whether it is a personal privilege given to a person (in which case it is a licence), or whether it grants an interest in land (in which case it is a tenancy). At one time it used to be thought that exclusive possession was a decisive factor. But that is not so. It depends on broader considerations altogether. Primarily on whether it is personal in its nature or not: see Errington v. Errington and Woods [1952] 1 K.B. 290.
In my opinion the agreement was only “personal in its nature” and created “a personal privilege” if the agreement did not confer the right to exclusive possession of the filling station. No other test for distinguishing between a contractual tenancy and a contractual licence appears to be understandable or workable.
Heslop v. Burns [1974] 1 W.L.R. 1241 was another case in which the owner of a cottage allowed a family to live in the cottage rent free and it was held that no tenancy at will had been created on the ground that the parties did not intend any legal relationship. Scarman L.J. cited with approval, at p. 1252, the statement by Denning L.J. in Facchini v. Bryson [1952] 1 T.L.R. 1386, 1389:
In all the cases where an occupier has been held to be a licensee there has been something in the circumstances, such as a family arrangement, an act of friendship or generosity, or such like, to negative any intention to create a tenancy.
In Marchant v. Charters [1977] 1 W.L.R. 1181 a bedsitting room was occupied on terms that the landlord cleaned the rooms daily and provided clean linen each week. It was held by the Court of Appeal that the occupier was a licensee and not a tenant. The decision in the case is sustainable on the grounds that the occupier was a lodger and did not enjoy exclusive possession. But Lord Denning M.R. said, at p. 1185:
What is the test to see whether the occupier of one room in a house is a tenant or a licensee? It does not depend on whether he or she has exclusive possession or not. It does not depend on whether the room is furnished or not. It does not depend on whether the occupation is permanent or temporary. It does not depend on the label which the parties put upon it. All these are factors which may influence the decision but none of them is con· elusive. All the circumstances have to be worked out. Eventually the answer depends on the nature and quality of the occupancy. Was it intended that the occupier should have a stake in the room or did he have only permission for himself personally to occupy the room, whether under a contract or not? In which case he is a licensee.
But in my opinion in order to ascertain the nature and quality of the occupancy and to see whether the occupier has or has not a stake in the room or only permission for himself personally to occupy, the court must decide whether upon its true con struction the agreement confers on the occupier exclusive possession. If exclusive possession at a rent for a term does not constitute a tenancy then the distinction between a contractual tenancy and a contractual licence of land becomes wholly unidentifiable.
In Somma v. Hazelhurst[1978] 1 W.L.R. 1014, a young unmarried couple H. and S. occupied a double bedsitting room for which they paid a weekly rent. The landlord did not provide services or attendance and the couple were not lodgers but tenants enjoying exclusive possession. But the Court of Appeal did not ask themselves whether H. and S. were lodgers or tenants and did not draw the correct conclusion from the fact that H. and S. enjoyed exclusive possession. The Court of Appeal were diverted from the correct inquiries by the fact that the landlord obliged H. and S. to enter into separate agreements and reserved power to determine each agreement separately. The landlord also insisted that the room should not in form be let to either
H. or S. or to both H. and S. but that each should sign an agreement to share the room in common with such other persons as the landlord might from time to time nominate. The sham nature of this obligation would have been only slightly more obvious if H. and S. had been married or if the room had been furnished with a double bed instead of two single beds. If the landlord had served notice on H. to leave and had required S. to share the room with a strange man, the notice would only have been a disguised notice to quit on both H. and S. The room was let and taken as residential accommodation wii,, exclusive possession in order that H. and
S. might live together in undisturbed quasi-connubial bliss making weekly payments. The agreements signed by H. and S. constituted the grant to H. and S. jointly of exclusive possession at a rent for a term for the purposes for which the room was taken and the agreement therefore cr!:)ated a tenancy. Although the Rent Acts must not be allowed to alter or influence the construction of an agreement, the court should, in my opinion, be astute to detect and frustrate sham devices and artificial transactions whose only object is to disguise the grant of a tenancy and to evade the Rent Acts. I would disapprove of the decision in this case that H. and S. were only licensees and for the same reason would disapprove of the decision in Aldrington Garages Ltd v. Fielder(1978) 37 P. & C.R. 461 and Sturolson & Co. v. Weniz(1984) 272 E.G. 326.
In the present case the Court of Appeal, 49 P. & C.R. 324 held that the agreement dated 7 March 1983 only created a licence. Slade L.J., at p. 329 accepted that the agreement and in particular clause 3 of the agreement “shows that the right to occupy the premises conferred on the defendant was intended as an exclusive right of occupation, in that it was thought necessary to give a special and express power to the plaintiff to enter … ” Before your Lordships it was conceded that the agreement conferred the right of exclusive possession on Mrs Mountford. Even without clause 3 the result would have been the same. By the agreement Mrs Mountford was granted the right to occupy residential accommodation. The landlord did not provide any services or attendance. It was plain that Mrs Mountford was not a lodger. Slade L.J. proceeded to analyse all the provisions of the agreement, not for the purpose of deciding whether his finding of exclusive possession was correct, but for the purpose of assigning some of the provisions of the agreement to the category of terms which he thought are usually to be found in a tenancy agreement and of assigning other provisions to the category of terms which he thought are usually to be found in a licence. Slade L.J. may or may not have been right that in a letting of a furnished room it was “most unusual to find a provision in a tenancy agreement obliging the tenant to keep his rooms in a ‘tidy condition'” (p. 329). If Slade L.J. was right about this and other provisions there is still no logical method of evaluating the results of his survey. Slade L.J. reached the conclusion that “the agreement bears all the hallmarks of a licence rather than a tenancy save for the one important feature of exclusive occupation”: p. 329. But in addition to the hallmark of exclusive occupation of residential accommodation there were the hallmarks of weekly payments for a periodical term. Unless these three hallmarks are decisive, it really becomes impossible to distinguisha contractual tenancy froma contractual licence save by reference to the professed intention of the parties or by the judge awarding marks for dratting. Slade L.J. was finally impressed by the statement at the foot of the agree ment by Mrs Mountford “I understand and accept thata licence in the above form does not and is not intended to give me a tenancy protected under the Rent Acts.”
Slade L.J. said, at p. 330:
It seems to me that, if the defendant is to displace the express statement of intention
embodied in the declaration, she must show that the declaration was eithera deliberate sham or at least an inaccurate statement of what was the true substance of the real
transaction agreed between the parties …
My Lords, the only intention which is relevant is the intention demonstrated by the agreement to grant exclusive possession for a term ata rent. Sometimes it may be difficult to discover whether, on the true construction of an agreement, exclusive possession is conferred. Sometimes it may appear from the surrounding circum- 1tances that there was no intention to create legal relationships. Sometimes it may appear from the surrounding circumstances that the right to exclusive possession is referable toa legal relationship other than a tenancy. Legal relationships to which the grant of exclusive possession might be referable and which would or might negative the grant of an estate or interest in the land include occupancy undera contract for the sale of the land, occupancy pursuant to a contract of employment or occupancy referable to the holding of an office. But where as in the present case the only cir cumstances are that residential accommodation is offered and accepted with exclu-
sive possession for a term at a rent, the result isa tenancy.
The position was well summarised by Windeyer J. sitting in the High Court of
Australia in Radaich v. Smith (1959) 101 C.L.R. 209, 222, where he said:
What then is the fundamental right which a tenant has that distinguishes his position from that ofa licensee? It is an interest in land as distinct from a personal permission to enter the land and use it for some stipulated purpose or purposes. And how is it to be ascertained whether such an interest in land has been given? By seeing whether the grantee was given a legal right of exclusive possession of the land for a term or from year to year or fora life or lives. If he was, he isa tenant. And he cannot be other thana tenant, becausea legal right of exclusive possession is a tenancy and the creation of sucha right isa demise. To say thata man who has, by agreement with a landlord, a right of exclusive possession of land fora term is nota tenant is simply to contradict the first proposition by the second.A right of exclusive possession is secured by the right of a lessee to maintain ejectment and, after
his entry, trespass.A reservation to the landlord, either by contract or statute, ofa limited right of entry, as for example to view or repair, is, of course, not inconsistent with the grant of exclusive possession. Subject to such reservations, a tenant fora term or from year to year or fora life or lives can exclude his landlord as well as strangers from the demised premises. All this is long established law: see Cole on Ejectment(1857) pp. 72, 73,287,458.
My Lords,I gratefully adopt the logic and the language of Windeyer J. Henceforth the courts which deal with these problems will, save in exceptional circumstances, only be concerned to inquire whether as a result of an agreement relating to residential accommodation the occupier is a lodger ora tenant. In the present case I am satisfied that Mrs Mountford is a tenant, that the appeal should be allowed, that the order of the Court of Appeal should be set aside and that the respondent should be ordered to pay the costs of the appellant here and below.
Addiscombe Garden Estates Ltd v Crabbe
(Court of Appeal)
[1958] 1 Q.B. 513; [1957] 3 W.L.R. 980; [1957] 3 All E.R. 563
Jenkins L.J.: As to the first question – whether the so-called licence of April 12, 1954, in fact amounted to a tenancy agreement under which the premises were let to the trustees – the principles applicable in resolving a question of this sort are, I apprehend, these. It does not necessarily follow that a document described as a licence is, merely on that account, to be regarded as amounting only to a licence in law. The whole of the document must be looked at; and if, after it has been examined, the right conclusion appears to be that, whatever label may have been attached to it, it in fact conferred and imposed on the grantee in substance the rights and obligations of a tenant, and on the grantor in substance the rights and obliga tions of a landlord, then it must be given the appropriate effect, that is to say, it must be treated as a tenancy agreement as distinct from a mere licence.
First, one must observe that the document is described by the parties as a licence. Secondly, one must observe that the draftsman has studiously and successfully avoided the use either of the word “landlord” or the word ”tenant” throughout the document. The nearest to the use of the word “tenant” is the reference to “tenantable repair” in clause 4, subclause (iii); so that if the question depended on the label attached to the document, one would be constrained to say that this, in accordance with its label, was a licence. But if it is right (as I have no doubt it is) to look at the substance of the matter, I think that a different conclusion inevitably ensues.
I might mention, as regards the character of the premises, that we have been supplied with an agreed plan which shows that, although the whole of the premises are not completely enclosed, as it were, in a ring fence, the greater part of them appear to occupy a particular enclave in the extensive grounds of the Shirley Park Hotel, though there are two outlying rectangular portions, one, I think, consisting of tennis courts, and the other containing some other appurtenances. There is nothing in the character of the premises as shown on the plan to make them an unfit subject of a tenancy agreement as distinct from a licence.
Looking at the substance of the matter, what do the grantees get? By clause 1
they are licensed and authorized “to enter upon use and enjoy” the items mentioned; It seems to me that those words, taken together, are apt to give to the tenant something in the nature of an interest in the land. I would next observe that in a1u1e2 provision is made for the licence, as it is called, extending for the fixed 1t1rlod of two years from May 1, 1954. There is thusa term certain which would be appropriate to the grant of a tenancy. Then in clause 3 it is provided that: “The grantees shall have the use and enjoyment of the premises in consideration” ofa payment. The payment is described as a payment of “court fees”; it is fixed at the sum of £371 Os. per month, and it has to be paid in advance on the first day of each month. In all but name, that appears to me to be a rent or reddendum in consideration of the right to “enter upon use and enjoy” the premises which is
graSnotefdarb,yitcslaeuesmes1t.o me that the rights expressed to be conferred on the grantees ire, in substance, the rights of a tenant as distinct from the rights ofa mere licensee; 1nd, as I have said, there is the correlative obligation of making monthly payments which, although not so called, are in fact, as it seems to me, in the nature of rent.
Then there are the various agreements by the grantees with the grantors in clause 4, beginning with the agreement to make the monthly payment of the court fees very much like the agreement to pay the rent which is always to be found ina tenancy agreement. There isa significant provision in subclause (iii) under which the grantees agree “to repair and maintain the club house”. It seems inappropriate thata mere licensee should be saddled with an obligation to repair. Then one finds as to repairs that the items mentioned are to be maintained “in good tenantable repair”, an ex pression to whichI have already called attention. That, one cannot help thinking, to some extent supports the view that the grantees are tenants, althoughI do not attach very much weight to it, asI am impressed by the argument of Mr Blundell that “good tenantable repair” isa phrase which might have been adopted as givinga standard of repair to serve as the measure of the grantees’ repairing obligation. But, for what it is worth, that is,I think, if anything, an indication in favour of tenancy rather than licence. Then under subclause (iv) there is the obligation to maintain the tennis courts. In subclause (v) there isa provision which, I think, is not without significance. That is the provision under which the grantees shall not without the granters’ previously written consent cut down or injure any plants trees bushes or hedges or remove from the said property any soil clay sand or other materials and not make any excavations thereon except for the purpose of maintaining the [tennis courts] in
accordance with the agreement and conditions hereinbefore contained.
The significance of that is that it should have been thought necessary expressly to prohibit the grantees from doing certain things which quite plainly, if they were mere licensees, they would have no right or power to do. What business coulda licensee have to cut down or injure plants, trees, bushes or hedges, or to do any other of these things, including the removal of “soil clay sand or other materials”? Ina similar sense one may note the provision in subclause (vi):
not to erect any building or other structures upon the said property except such as shall be approved by the grantors. Then there is the provision which Mr Blundell called in aid, which is the restrictive
provision in subclause (vii):
to use the said premises asa private lawn tennis club and club house for the convenience of members of the club their guests and their staff only,
and so on; and in subclause (viii):
not to allow any persons except members guests and servants of the club to use the said premises for any purpose but this clause shall not prevent the club inviting or allowinga reasonable number of members of the general public to enter thereon for the purpose of attending functions specially organized for those interested in the game of lawn tennis.
In my view, those provisions afford no real assistance to Mr Blundell, for they are just what one would expect to find in a tenancy agreement of premises intended for use as a lawn tennis club. I do not think that anything turns on subclause (ix), which is the one by which the grantees were to “cause the chairman for the time being of the granters or his nominee to be an ex-officio member of the general committee.” That does not seem to me to carry the matter further one way or the other, though it appears to be a provision to which it was difficult to give effect having regard to the rules of the incorporated body, Shirley Park Lawn Tennis Club Ltd. Subclause (x), under which residents of the hotel who should make application were to be elected honorary members of the club, in my view, is simply a privilege reserved to the granters, and I do not think that it really throws any light on the character of the grantees’ interest.
The next provision of importance is the agreement to permit “the grantors and their agents at all reasonable times to enter the said premises to inspect the condition thereof and for all other reasonable purposes.” The importance of that is that it shows that the right to occupy the premises conferred on the grantees was intended as an exclusive right of occupation, in that it was thought necessary to give a special and express power to the grantors to enter. The exclusive character of the occupation granted by a document such as this has always been regarded, if not as a decisive indication, at all events as a very important indication to the effect that a tenancy, as distinct from a licence, is the real subject-matter of a document such as this.
In subclause (xii) there is provision “to deliver up the said premises at the termination of this licence in a conditiQn consistent with the foregoing provisions.” “To deliver up” seems to me to be an expression more appropriate to a tenant with an interest in the land than to a person who has a mere contractual right be on the land; it is an expression universally used, 1 think, in all tenancy agreements and leases. The provision as to insurance points in the same direction; it would, I think, be curious if a mere licensee, with no interest in the premises, was made liable for insurance. Then in clause 5, subclause (ii), there is what is practically a common form covenant for quiet enjoyment such as is found in every tenancy agreement or lease; and it seems to me that this clause points strongly in the direction of a tenancy agreement here. In clause 6, subclause (i), t/lere is the provision:
that the grantors may re-enter and determine the licence in the event of non-payment of any of the said payments of court fees for fourteen days (whether formally demanded or not) or on breach of any of the grantees’ stipulations.
Those references to re-entry and “non-payment of any of the said payments of court fees for fourteen days (whether formally demanded or not)” are provisions wholly appropriate to a tenancy agreement; and I should have thought that a reference to re-entry was really inappropriate to the case of a licence; the conception of re-entry is the resumption of possession by the landlord, and the determination of the interest of the tenant.
Taking all those considerations together, I am of opinion that the judge was perfectly right in holding, as he did, that this was a tenancy. He was particularly impressed by the express provision entitling the grantors to enter the premises ”to inspect the condition thereof and for all other reasonable purposes”; and he held that to be an indication that the right to occupy the premises granted to the grantees was intended to be an exclusive right of occupation, that circumstance, as I have said, being at lowest a strong circumstance in favour of the view that there is a tenancy as opposed to a licence.
Shell-Max BP Ltd v Manchester Garages
SHELL-MEX AND B.P. LTD V. MANCHESTER GARAGES
(Court of Appeal)
[1971] 1 W.L.R. 612; [1971] 1 All E.R. 841
Lord Denning M.A.:I turn, therefore, to the point: was this transactiona licence or a tenancy? This does not depend on the label which is put on it. It depends on the nature of the transaction itself: see Addiscombe Garden Estates Ltd v. Crabbe [1958] 1 Q.B. 513. Broadly speaking, we have to see whether it is a personal privilege given toa person (in which case it is a licence), or whether it grants an interest in land (in which case it is a tenancy). At one time it used to be thought that exclusive possession wasa decisive factor. But that is not so. It depends on broader considerations altogether. Primarily on whether it is personal in its nature or not; see
Errington v. Errington and Woods [1952] 1 K.B. 290.
Applying this principle, I turn first to the document itself. It is calleda licence. By the first clause the Shell-Mex company
grants to the licensee licence and permission to use upon the terms and conditions and solely for the purpose hereinafter specified the land and buildings situate at and known as
Greyhound Filling Station ….
By the second clause:
The purposes for which this licence is granted are to enable the licensee to carry on upon the premises: (1) the business of selling such grades of the brand or brands of motor fuel
as the company may from time to time nominate ….
and also rendering such services as are commonly supplied at service stations. By the conditions the licensee agrees to use every endeavour and due diligence to sell and foster the sale of the company’s motor fuel and other petroleum products in such manner as the company may from time to time direct.
And the company agree … to supply or cause to be supplied to the licensee at the premises such quantities of the company’s motor fuel and other petroleum products as the licensee may from time to
time reasonably require and order from the company at the wholesale schedule price ruling
at the date and place of delivery ….
The provisions seem to me to be personal in their nature. There isa personal tie between the parties whereby the licensees are to deal in Shell petrol only and are to take all their supplies from Shell, who are to supply them.
It is noticed also that there is no proviso for a right to re-enter. There isa special stipulation which seems to me to connote that the Shell-Mex company remain in Gpoasrsaegses oangrtehe:mselves. It is clause 19 of the first schedule under which Manchester
Not to impede in any way the officers servants or agents of the company in the exercise by them of the company’s rights of possession and control of the premises and in particular to give all reasonable assistance and facilities to such officers servants or agents for the alteration at any time of the layout decorations or equipment of the premises.
That shows that the Shell-Mex company’s men can go and visit the premises when aerveertothgeivyelikthee. mThaesMsisatnacnhcees.ter Garages Ltd are not to impede them in any way, but
Those provisions point toa licence and not a tenancy. But Mr Dillon says that Manchester Garages Ltd have exclusive possession, and that that carries with ita tenancy. That is old law which is now gone. As I have said many times, exclusive
possession is no longer decisive. We have to look at the nature of the transaction to see whether it is a personal privilege, or not.
Next Mr Dillon says that all these clauses are just what you would find in an ordinary tenancy ofa filling station. He suggests that, if this case were to go for trial and he was to have discovery, he would find many a tenancy agreement ofa filling station in which there were parallel cl.auses. He refers to Little Park Service Station sLttadtiov.nRaengdennot tOaHliCceon. cLetd. [1967] 2 Q.B. 655, where there wasa tenancy ofa filling
It seems to me that when the parties are making arrangements fora filling station, they can agree either ona licence or a tenancy. If they agree ona licence, it is easy enough for their agreement to be put into writing, in which case the licensee has no lit and uninterrupted enjoyment by the grantee – a covenant appropriate to a
u• but inappropriate, I think, to a licence where the licensor had a right of
/f0111aslon in respect of the subject-matter; and, perhaps most cogent of all, there WII a term for re-entry upon breach of covenant, which is a term of a kind quite Inappropriate, in my judgment, to a licence. Nothing of that kind is to be found in the rt aent case. The only clause which points one way or the other, I think, is clause 19
n the first schedule which Lord Denning M.R. has already read and clearly
f’IOOgnlses that and notwithstanding the bargain between the parties, the plaintiff OOmpany retained rights of possession and control over the property in question. That seems to me to be consistent only with the fact that this transaction was in truth I licence transaction and not a tenancy under which the grantee would obtain an 1110lusive right to possession of the property during the term of the tenancy, subject, of course, to any rights reserved by the granters. But the way in which this document II framed is not such as to contain any reservation of rights by the granters to enter on the property or to exercise any rights over it: it is assumed that they retain the right to possess and enter on the property notwithstanding the transaction; and that is a 1tate of affairs which, in my judgment, clearly indicates that this should be regarded 11 a licence and not a transaction giving rise to the relationship of landlord and t1nant. It may be that this is a device which has been adopted by the plaintiff company to avoid possible consequences of the Landlord and Tenant Act 1954, which would have affected a transaction being one of landlord and tenant; but, in my
judgment, one cannot take that into account in the process of construing such a document to find out what the true nature of the transaction is. One has first to find out what is the true nature of the transaction and then see how the Act operates upon that state of affairs, if it bites at all. One should not approach the problem with a tendency to attempt to find a tenancy because unless there is a tenancy the case will escape the effects of the statute.
AG Securites v Vaughan
A.G. SECURITIES v. VAUGHAN AND OTHERS ANTONIADES V. VILLIERS AND ANOTHER
(House of Lords)
[1990]1 A.C. 417; [1988]3 W.L.R. 1205; (1988] 3 All E.R. 1058; (1988) 47 E.G. 193;
(1989) 57 P. & C.R. 17
A.G. Securities v.Vaughan and Others
Lord Templeman: Parties to an agreement cannot contract out of the Rent Acts; if they were able to do so the Acts would be a dead letter because ina state of housing shortagea person seeking residential accommodation may agree to anything to obtain shelter. The Rent Acts protect a tenant but they do not protecta licensee. Since parties to an agreement cannot contract out of the Rent Acts,a document which expresses the intention, genuine or bogus, of both parties or of one party to createa licence will nevertheless create a tenancy if the rights and obligations enjoyed and imposed satisfy the legal requirements ofa tenancy.A person seeking residential accommodation may concur in any expression of intention in order to obtain shelter. Since parties to an agreement cannot contract out of the Rent Acts, a document expressed in the language of a licence must nevertheless be examined and construed by the court in order to decide whether the rights and obligations enjoyed and imposed createa licence or a tenancy. A person seeking residential accommodation may signa document couched in any language in order to obtain shelter. Since parties to an agreement cannot contract out of the Rent Acts, the grant ofa tenancy to two persons jointly cannot be concealed, accidentally or by design, by the creation of two documents in the form of licences. Two persons seeking residential accommodation may sign any number of documents in order to obtain joint shelter. In considering one or more documents for the purpose of deciding whether a tenancy has been created, the court must consider the surrounding circumstances including any relationship between the prospective occupiers, the
course of negotiations and the nature and extent of the accommodation and the intended and actual mode of occupation of the accommodation.
In the first appeal under consideration the company entered into four separate agreements with four separate persons between 1982 and 1985. The agreements were in the same form save that the periodical sum payable under one agreement did not correspond to the sum payable pursuant to any other agreement. The com pany was not bound to make agreements in the same form or to require any payment. The agreement signed by Mr Vaughan in 1982 did not and could not entitle or compel Mr Vaughan to become a joint tenant of the whole of the flat with Mr Cook in 1985 on the terms of Mr Vaughan’s-agreement or on the terms of Mr Cook’s agreement or on the terms of any other agreement either alone with Mr Cook or together with any other persons. In 1986 Mr Vaughan did not agree to becomea joint tenant of the flat with Mr Cook or anybody else. In 1985, in the events which had happened, the company possessed the right reserved to the company by clause 2(3) of Mr Vaughan’s agreement to authorise Mr Cook to share the use of the flat in common with Mr Vaughan. In 1985 Mr Vaughan orally agreed with Mr Cook that if the company authorised Mr Cook to use the flat in common with Mr Vaughan, then Mr Vaughan would allow Mr Cook to occupy a specified bedroom in the flat and share the occupation of the other parts of the flat excluding the other three bedrooms. Mr Vaughan’s agreement with the .company did not prevent him from entering into this oral agreement with Mr Cook. Under the standard form agreement
the company did not retain power to allocate the four bedrooms but delegated this power to the occupiers for the time being. If the occupiers had failed to allocate the bedrooms the company would have been obliged to terminate one or more of the agreements. The respondents claim that they are joint tenants of the flat. No single respondent claims to be a tenant ofa bedroom.
The Court of Appeal, ante p. 422c, (Fox and Mustill L.JJ., Sir George Waller dis senting), concluded that the four respondents were jointly entitled to exclusive occupation of the flat.I am unable to agree. If a landlord who ownsa three-bedroom flat enters into three separate independent tenancies with three independent tenants each of whom is entitled to one bedroom and to share the common parts, then the three tenants, if they agree, can exclude anyone else from the flat. But they do not enjoy exclusive occupation of the flat jointly under the terms of their tenancies. In the present case, if the four respondents had been jointly entitled to exclusive occupa tion of the flat then, on the death of one of the respondents, the remaining three would be entitled to joint and exclusive occupation. But, in fact, on the death of one respondent the remaining three would not be entitled to joint and exclusive occupa wtioonulodf athlloewflatht.eTahpepyecaol.uld not exclude a fourth person nominated by the company. I
In the first appeal the four agreements were independent of one another. In the second appeal the two agreements were interdependent. Both would have been signed or neither. The two agreements must therefore be read together. Mr Villiers and Miss Bridger applied to rent the flat jointly and sought and enjoyed joint and txclusive occupation of the whole of the flat. They shared the rights and the obligations imposed by the terms of their occupation. They acquired joint and exclu- 1lve occupation of the flat in consideration of periodical payments and they therefore acquired a tenancy jointly. Mr Antoniades required each of them, Mr Villiers and Miss Bridger, to agree to pay one half of each aggregate periodical payment, but this circumstance cannot convert a tenancy into a licence. A tenancy remains a tenancy even though the landlord may choose to require each of two joint tenants to agree expressly to pay one half of the rent. The tenancy conferred on Mr Villiers and Miss Bridger the right to occupy the whole flat as their dwelling. Clause 16 reserved to Mr Antoniades the power at any time to go into occupation of the flat jointly with Mr VIiiiers and Miss Bridger. The exercise of that power would at common law put an end to the exclusive occupation of the flat by Mr Villiers and Miss Bridger, terminate the tenancy of Mr Villiers and Miss Bridger, and convert Mr Villiers and Miss Bridger Into licensees. But the powers reserved by Mr Antoniades by clause 16 cannot be lawfully exercised because they are inconsistent with the provisions of the Rent Acts. When Mr Antoniades entered into the agreements dated 9 February 1985 with Mr Villiers and Miss Bridger and when Mr Antoniades allowed Mr Villiers and Miss Bridger to occupy the flat, it is clear from the negotiations which had taken place, from the surrounding circumstances, and from subsequent events, that Mr Antoniades did not intend in February 1985, immediately or contemporaneously, to share occupation or to authorise any other person to deprive Mr Villiers and Miss Bridger of exclusive occupation of the flat. Clause 16, if genuine, was a reservation by a landlord of a power at some time during the currency of the tenancy to share occupation with the tenant. The exclusive occupation of the tenant coupled with the payment of rent created a tenancy which at common law could be terminated and converted into a licence as soon as the landlord exercised his power to share occupation. But under the Rent Acts, if a contractual tenancy is terminated, the Acts protect the occupiers from eviction.
Where a landlord creates a tenancy of a flat and reserves the right to go into exclusive occupation at any time of the whole or part of the flat with or without notice, that reservation is inconsistent with the provisions of the Rent Acts and cannot be enforced without an order of the court under section 98. Where a landlord creates a tenancy of a flat and reserves the right to go into occupation of the whole or part of the flat with or without notice, jointly with the existing tenants, that reservation also is inconsistent with the provisions of the Acts. Were it otherwise every tenancy agreement would be labelled a licence and would contract out of the Rent Acts by reserving power to the landlord to share possession with the tenant at any time after the commencement of the term.
Clause 16 is a reservation to Mr Antoniades of the right to go into occupation or to nominate others to enjoy occupation of the whole of the flat jointly with Mr Villiers and Miss Bridger. Until that power is exercised Mr Villiers and Miss Bridger are jointly in exclusive occupation of the whole of the flat making periodical payments and they are therefore tenants. The Rent Acts prevent the exercise of a power which would destroy the tenancy of Mr Villiers and Miss Bridger and would deprive them of the exclusive occupation of the flat which they are now enjoying. Clause 16 is in consistent with the provisions of the Rent Acts.
There is a separate and alternative reason why clause 16 must be ignored. Clause 16 was not a genuine reservation to Mr Antoniades of a power to share the flat and a power to authorise other persons to share the flat. Mr Antoniades did not genuinely intend to exercise the powers save possibly to bring pressure to bear to obtain possession. Clause 16 was only intended to deprive Mr Villiers and Miss Bridger of the protection of the Rent Acts. Mr Villiers and Miss Bridger had no choice in the matter.
In the notes of Judge Macnair, Mr Villiers is reported as saying that: “He [Mr Antoniades] kept going on about it being a licence and not in the Rent Act. I didn’t
know either but was pleased to have a place after three or four months of chasing.”
…..
In Somma v. Hazelhurst [1978] 1 W.L.R. 1014 and other cases considered in Street
v. Mountford, the owner wished to let residential accommodation but to avoid the Rent Acts. The occupiers wished to t& e a letting of residential accommodatfon. The owner stipulated for the execution of agreements which pretended that exclusive possession was not to be enjoyed by:the occupiers. The occupiers were obliged to acquiesce with this pretence in order t obtain the accommodation. In my opinion the occupiers either did not understand the language of the agreements or assumed, justifiably, that in practice the owner would not violate their privacy. The owner’s real intention was to rely on the language of the agreement to escape the Rent Acts. The owner allowed the occupiers to enjoy•jointly exclusive occupation and accepted rent. A tenancy was created. Street v. Mountford reasserted three principles. First, parties
In Aldrington Garages Ltd v. Fielder (1978) 37 . Maxwell applied to take a self-contained flat in ore.,,
Each signed an agreement to pay £54.17 per month tl,
one other person. The coupled moved into the flat and enJ’-
ln terms if the couple parted and Mr Fielder moved out, the o. Maxwell to share her living and sleeping quarters with a strange, Mr Fielder and Miss Maxwell enjoyed exclusive occupation unle&.
their agreements was terminated. The right reserved to the owne.r Maxwell to share with a third party if Mr Fielder’s agreement was term1i require Mr Fielder to share with a third party if Miss Maxwell’s agree
to an agreement cannot contract out of the Rent Acts. Secondly, in the absence of
special circumstances, not here relevant, the enjoyment of exclusive occupation for a term in consideration of periodic payments creates a tenancy. Thirdly, where the language of licence contradicts the reality of lease, the facts must prevail. The facts must prevail over the language in order that”the parties may not contract out of the Rent Acts. In the present case clause 16 was a pretence.
The fact that clause 16 was a pretence appears from its terms and from the negotiations. Clause 16 in terms conferred on Mr Antoniades and other persons the right to share the bedroom occupied by Mr Villiers and Miss Bridger. Clause 16 conferred power on Mr Antoniades to convert the sitting-room occupied by Mr Villiers and Miss Bridger into a bedroom which could be jointly occupied by Mr Villiers, Miss Bridger, Mr Antoniades and any person or persons nominated by Mr Antoniades. The facilities in the flat were not suitable for sharing between strangers. The flat, situated in an attic with a sloping roof, was too small for sharing between strangers. If clause 16 had been genuine there would have been some discussion between Mr Antoniades, Mr Villiers and Miss Bridger as to how clause 16 might be operated in practice and in whose favour it was likely to be operated. The addendum imposed on Mr Villiers and Miss Bridger sought to add plausibility to the pretence of sharing by forfeiting the right of Mr Villiers and Miss Bridger to continue to occupy the flat if their double-bedded romahce blossomed into wedding bells. Finally and signifi cantly, Mr Antoniades never made any attempt to obtain increased income from the flat by exercising the powers which clause 16 purported to reserve to him. Clause 16 was only designed to disguise the grant of a tenancy and to contract out of the Rent Acts. In this case in the Court of Appeal, ante, p. 446c-o, Bingham L.J. said:
The written agreements cannot possibly be construed as giving the occupants, jointly or severally, exclusive possession of the fiat or any part of it. They stipulate with reiterated emphasis that the occupants shafl not have exclusive possession.
terminated was contrary to the provisions of the Rent Acts and in addition wa&, circumstances, a pretence intended only to get round the Rent Acts.
In Sturolson and Co. v. Weniz (1984) 17 H.L.R. 140, the defendant anda friend applied to take a self-contained flat for the occupation of the defendant, his wife and the friend. The defendant and his friend signed agreements to pay £100 per month to share the flat with such other persons as might be nominated or approved by the owner from time to time. The defendant, his wife and the friend, moved into the flat and enjoyed exclusive occupation. In terms the defendant and the friend paid between them £200 per month for a flat which could be invaded by one or more strangers at any time. The owner’s agent gave the game away by saying that the owner was happy so long as he received £200 per month from the flat. The defendant and the friend enjoyed exclusive occupation. The right reserved to the owner to require them to share with others was contrary to the provisions of the Rent Acts and was in any event a pretence intended only to get round the Rent Acts.
In Street v. Mountford [1985] A.C. 809, 825, this House disapproved of the decisions of the Court of Appeal in Somma v. Hazelhurst [1978] 1 W.L.R. 1014, Aldrington Garages Ltd v. Fielder, 37 P. & C.R. 461 and Sturolson and Co. v. Weniz, 17 H.L.R. 140, which held that the occupiers were only licensees and not tenants.
In Crancour Ltd v. Da Si/vaesa (1986) 18 H.L.R. 265, 276 in which leave was given to defend proceedings under R.S.C., Ord. 113, Ralph Gibson L.J. referring to the disapproval by this House in Street v. Mountford [1985] A.C. 809, 825, of the decision of the Court of Appeal in Somma v. Hazelhurst, said:
AsI understand the reference to the ‘sham nature of the obligation,’ namely that of sharing the room in common with other persons nominated by the landlord, the House of Lords is there saying, first, that the agreement in that case constituted the grant of exclusive possession; secondly, that the written obligation to share the room was not effective to alter
In the notes of Judge Macnair, Mr Villiers is reported as saying that: “He [Mr Antoniades] kept going on about it being a licence and not in the Rent Act. I didn’t know either but was pleased to have a place after three or four months of chasing.” The notes of Miss Bridger’s evidence include this passage: “I didn’t understand what was meant by exclusive possession or licence. Signed because so glad to move in. Had been looking for three months.”
In Street v. Mountford [1985] A.C. 809, 825, I said:
Although the Rent Acts must not be allowed to alter or influence the construction of an agreement, the court should, in my opinion, be astute to detect and frustrate sham devices and artificial transactions whose only object is to disguise the grant of a tenancy and to evade the Rent Acts.
It would have been more accurate and less liable to give rise to misunderstandings if I had substituted the word “pretence” for the references to “sham devices” and “artificial transactions”. Street v. Mountford was not a case which involved a pre tence concerning exclusive possession. The agreement did not mention exclusive possession and the owner conceded that the occupier enjoyed exclusive possession. In Somma v. Hazelhurst [1978] 1 W.L.R. 1014 and other cases considered in Street
v. Mountford, the owner wished to let residential accommodation but to avoid the
Rent Acts. The occupiers wished to t ke a letting of residential accommodation. The owner stipulated for the execution qf agreements which pretended that exclusive possession was not to be enjoyed by the occupiers. The occupiers were obliged to acquiesce with this pretence in order to obtain the accommodation. In my opinion the occupiers either did not understan9 :the language of the agreements or assumed, justifiably, that in practice the owner would not violate their privacy. The owner’s real intention was to rely on the language of the agreement to escape the Rent Acts. The owner allowed the occupiers to enjoy jointly exclusive occupation and accepted rent. A tenancy was created. Street v. Mountford reasserted three principles. First, parties to an agreement cannot contract out of the Rent Acts. Secondly, in the absence of special circumstances, not here relevant, the enjoyment of exclusive occupation for a term in consideration of periodic payments creates a tenancy. Thirdly, where the language of licence contradicts the reality of lease, the facts must prevail. The facts must prevail over the language in order that the parties may not contract out of the Rent Acts. In the present case clause 16 was a pretence.
The fact that clause 16 was a pretence appears from its terms and from the negotiations. Clause 16 in terms conferred on Mr Antoniades and other persons the right to share the bedroom occupied by Mr Villiers and Miss Bridger. Clause 16 conferred power on Mr Antoniades to convert the sitting-room occupied by Mr Villiers and Miss Bridger into a bedroom which could be jointly occupied by Mr Villiers, Miss Bridger, Mr Antoniades and any person or persons nominated by Mr Antoniades. The facilities in the flat were not suitable for sharing between strangers. The flat, situated in an attic with a sloping roof, was too small for sharing between strangers. If clause 16 had been genuine there would have been some discussion between Mr Antoniades, Mr Villiers and Miss Bridger as to how clause 16 might be operated in practice and in whose favour it was likely to be operated. The addendum imposed on Mr Villiers and Miss Bridger sought to add plausibility to the pretence of sharing by forfeiting the right of Mr Villiers and Miss Bridger to continue to occupy the flat if their double-bedded romance blossomed into wedding bells. Finally and signifi cantly, Mr Antoniades never made any attempt to obtain increased income from the flat by exercising the powers which clause 16 purported to reserve to him. Clause 16 was only designed to disguise the grant of a tenancy and to contract out of the Rent Acts. In this case in the Court of Appeal, ante, p. 446c-o, Bingham L.J. said:
The written agreements cannot possibly be construed as giving the occupants, jointly or severally, exclusive possession of the flat or any part of it. They stipulate with reiterated emphasis that the occupants shall not have exclusive possession.
My Lords, in Street v. Mountford [1985] A.C. 809, this House stipulated with rated emphasis that an express statement of intention is not decisive and that court must pay attention to the facts and surrounding circumstances and to what
,pie do as well as to what people say.
Somma v. Haze/hurst[1978] 1 WLR. 1014, a young unmarried couple applied
takea double bedsitting-room in order that they might live together. Each signed agreement to pay £38.80 per month to share the use of the room with the owner with not more than one other person at any one time. The couple moved into the
__ 1lttlng-room and enjoyed exclusive occupation. In terms the owner reserved the fltht to share living and sleeping quarters with the two applicants. If the couple 11rted and the youth moved out, the owner could require the damsel to share her living and sleeping quarters with the owner and with a stranger or with one of them
or move out herself. The couple enjoyed exclusive occupation until the owner
decided to live with them or until one of their agreements was terminated. The right r111rved to the owner to require the applicants or one of the applicants to share with tht owner or some other third party was contrary to the provisions of the Rent Acts and, In addition was, in the circumstances, a pretence intended only to get round the
AtInnt AAlcdtrsin. gton Garages Ltd v. Fielder (1978) 37 P. & C.R. 461, Mr Fielder and Miss Maxwell applied to takea self-contained flat in order that they might live together. Each signed an agreement to pay £54.17 per month to share the use of the flat with one other person. The coupled moved into the flat and enjoyed exclusive occupation. In terms if the couple parted and Mr Fielder moved out, the owner could require Miss Maxwell to share her living and sleeping quarters with a stranger or move out herself. Mr Fielder and Miss Maxwell enjoyed exclusive occupation unless and until one of their agreements was terminated. The right reserved to the owner to require Miss Maxwell to share witha third party if Mr Fielder’s agreement was terminated and to require Mr Fielder to share with a third party if Miss Maxwell’s agreement was terminated was contrary to the provisions of the Rent Acts and in addition was, in the
circumstances, a pretence intended only to get round the Rent Acts.
In Sturo/son and Co. v. Weniz (1984) 17 H.L.R. 140, the defendant anda friend
applied to takea self-contained flat for the occupation of the defendant, his wife and the friend. The defendant and his friend signed agreements to pay £100 per month to share the flat with such other persons as might be nominated or approved by the owner from time to time. The defendant, his wife and the friend, moved into the flat and enjoyed exclusive occupation. In terms the defendant and the friend paid between them £200 per month for a flat which could be invaded by one or more strangers at any time. The owner’s agent gave the game away by saying that the owner was happy so long as he received £200 per month from the flat. The defendant and the friend enjoyed exclusive occupation. The right reserved to the owner to require them to share with others was contrary to the provisions of the Rent Acts and was in any event a pretence intended only to get round the Rent Acts.
In Street v. Mountford [1985] A.C. 809, 825, this House disapproved of the
decisions of the Court of Appeal in Somma v. Hazelhurst [1978] 1 W.L.R. 1014, Aldrington Garages Ltd v. Fielder, 37 P. & C.R. 461 and Sturofson and Co. v. Weniz, 17 H.L.R. 140, which held that the occupiers were only licensees and not tenants.
In Crancour Ltd v. Da Silvaesa (1986) 18 H.L.R. 265, 276 in which leave was given to defend proceedings under R.S.C., Ord. 113, Ralph Gibson L.J. referring to the disapproval by this House in Street v. Mountford [1985] A.C. 809, 825, of the decision of the Court of Appeal in Somma v. Hazelhurst, said:
AsI understand the reference to the ‘sham nature of the obligation,’ namely that of sharing the room in common with other persons nominated by the landlord, the House of Lords is there saying, first, that the agreement in that case constituted the grant of exclusive possession; secondly, that the written obligation to share the room was not effective to alter the true nature of the grant; and, thirdly, that, on the facts of the case, it should have been clear to the Court of Appeal that the landlord cannot have intended the term as to sharing occupation to be a true statement of the nature of the possession intended to be enjoyed by the “licensees”.
I agree with this analysis.
In Hadjiloucas v. Crean [1988] 1 W.L.R. 1006, two single ladies applied to take a two-roomed flat with kitchen and bathroom. Each signed an agreement to pay £260 per month to share the use of the flat with one other person. The two ladies moved into the flat and enjoyed exclusive occupation. In terms, if the agreement of one lady was terminated, the owner could require the other to share the flat with a stranger. The judge in the county court decided that the agreements only created licences. The Court of Appeal ordered a retrial in order that all the facts might be investigated. Since, however, the two ladies applied for and enjoyed exclusive occupation unless and until one of their agreements was terminated, the ladies acquired a tenancy protected by the Rent Acts. The reservation to the owner of the right at common law to require one of the ladies to share the flat with a stranger was a pretence.
My Lords, in each of the cases which were disapproved by this House in Street v. Mountford [1985] A.G. 809, and in the second appeal now under consideration, there was, in my opinion, the grant of a joint tenancy for the following reasons. (1) The applicants for the flat applied to rent the flat jointly and to enjoy exclusive occupation.
(2) The landlord allowed the applicants jointly to enjoy exclusive occupation and accepted rent. A tenancy was created. (3) The power reserved to the landlord to deprive the applicants of exclusive occupation was inconsistent with the provisions of the Rent Acts. (4) Moreover in all the circumstances the power which the landlord insisted upon to deprive the applicants of exclusive occupation was a pretence only intended to deprive the applicants of he protection of the Rent Acts.
Aslan v Murphy
ASLAN V. MURPHY (NO. 1) ASLAN V. MURPHY (NO. 2) DUKE V. WYNNE AND ANOTHER
(Court of Appeal)
[1990] 1 W.L.R. 766; [1989] 3 All E.R. 130;
(1990) 59 P. & C.R. 389; (1989) 38 E.G. 109
Asian v. Murphy (No. 1)
Lord Donaldson of Lymington M.R.:
GTheenesrtaaltupsrinocfaipletsenant is essentially different from that ofa lodger and owners of property are free to make accommodation available on either basis. Which basis applies in any particular case depends upon what was the true bargain between the parties. It is the ascertainment of that true bargain which lies at the heart of the problem.
Quite apart from labelling, parties may succumb to the temptation to agree to pretend to have particular rights and duties which are not in fact any part of the true bargain. Prima facie, the parties must be taken to mean what they say, but given the pressures on both parties to pretend, albeit for different reasons, the courts would be acting unrealistically if they did not keep a weather eye open for pretences, taking due account of how the parties have acted in performance of their apparent bargain. This identification and exposure of such pretences does not necessarily lead to the conclusion that their agreement is a sham, but only to the conclusion that the terms of the true bargain are not wholly the same as those of the bargain appearing on the
face of the agreement. It is the true rather than the apparent bargain which determines the question “tenant or lodger?”
The effect of the Rent Acts :
If an occupier would otherwise be protected by the Rent Acts, he does not lose that protection by agreeing that he will surrender it either immediately or in the future and whether directly and in terms or indire9tly, e.g. by agreeing to substitutea shared for [a1n99e0x]clAus.Civ.e41rig7h,4t 6o1f .occupation should the owner so require: Antoniades v. Villiers
Asian v. Murphy (No. 1) ,
The judge was, of course, quite right to approach the matter on this basis that it is nota crime, nor is it contrary to public policy, fora property owner to license occupiers to occupya property on terms which do not give rise toa tenancy. Where he went wrong was in considering whether the whole agreement wasa sham and, having concluded that it was not, giving effect to its terms, i.e. taking it throughout at face value. What he should have done, and I am sure would have done if he had known of the House of Lords approach to the problem, was to consider whether the whole agreement wasa sham and, if it was not, whether in the light of the factual situation the provisions for sharing the room and those depriving the defendant of the right to occupy it for 90 minutes out of each 24 hours were part of the true bargain wbeetrweecelenatrhlyeppraertteiensceosr. were pretences. Both provisions were wholly unrealistic and
In this court an attempt to uphold the judge’s decision was made upona different absapseisc,tnoafmtheelya, gthreeelmanednltoardr’es: right to retain the keys. The provisions relevant to this
1 The licensor will retain the keys to the room and has absolute right of entry at all times
for the purpose of exercising such control and (without prejudice to the generality of the foregoing) for the purpose of effecting any repairs or cleaning to the room or building or for the purpose of providing the attendance mentioned in clause4 hereof or for the purpose of removing or substituting such articles of furniture from the room as the licensor might see fit. The said right of entry is exercisable by the licensor or his servants or agents with or without any other persons (including prospective future licensees of the room) 4.The
licensor will provide the following attendance for the licensee: (1) housekeeping (2) lighting
of common parts (3) cleaning of common parts (4) window cleaning (5) intercom (6) tele
phone coin box (7) cleaning of room (8) collection of rubbish (9) provision and laundering of bed linen( 10) hot water (11) provision of household supplies.
Provisions as to keys are often relied upon in support of the contention that an occupier isa lodger rather than a tenant. Thus in Duke v. Wynne, to which we turn next, the agreement required the occupier “not to interfere with or change the locks on any part of the premises, [or] give the key to any other than an authorised oocupler of the premises.” Provisions as to keys, if not a pretence which they often
lrt, do not have any magic in themselves. It is not a requirement of a tenancy that th• occupier shall have exclusive possession of the keys to the property. What matters is what underlies the provisions as to keys. Why does the owner want a key, want to prevent keys being issued to the friends of the occupier or want to prevent th• lock being changed?
A landlord may well need a key in order that he may be able to enter quickly in tht event of emergency: fire, burst pipes or whatever. He may need a key to enable him or those authorised by him to read meters or to do repairs which are his rt1ponsibility. None of these underlying reasons would of themselves indicate that
thl true bargain between the parties was such that the occupier was in law a lodger.
On the other hand, if the true bargain is that the owner will provide genuine services
which can only be provided by having keys, such as frequent cleaning, daily bed making, the provision of clean linen at regular intervals and the like, there are materials from which it is possible to infer that the occupier is a lodger rather than a tenant. But the inference arises not from the provisions as to keys, but from the reason why those provisions formed part of the bargain. On the facts of this case, the argument based upon the provisions as to keys must and does fail for the judge found that “during the currency of the present agreement virtually ‘no services’ had been provided.” These provisions may or may not have been pretences, but they are without significance in the context of the question which we had to decide.
Duke v. Wynne
Tenants or lodgers?
Were the defendants tenants or lodgers? Unlike the facts in Asian v. Murphy (No. 1) It would have been possible for them to have shared the house with another occupant. There were three bedrooms. One could have been used by the defendants, one by the children and the third, which was a very small room, by a lodger. However, the evidence did not disclose any immediate intention on the part of the plaintiff to make such an arrangement and she never in fact did so. Meanwhile, the defendants in fact occupied the whole house. In cases such as this the court has to determine whether the true bargain is that the occupiers are entitled to exclusive possession of the premises, unless and until the owner requires them to share, or whether the true bargain is that their entitlement is only to their share in the right to occupy, although, as there is currently no other occupant, it will be impracticable and unreasonable to seek to prevent their de facto occupation of the whole premises. If the former is the case and, for the time being, they have an entitlement to exclusive occupation, they are tenants and their status cannot at some future date be unilaterally converted into that of lodgers by the owner requiring them to share their occupation: Antoniades v. Villiers [1990] A.C. 417. If the latter is the case, they never achieve the status of tenants.
In the instant appeal it is quite clear that the true bargain was that the defendants should be entitled to exclusive occupation unless and until the plaintiff wanted to exercise her right to authorise someone else to move in as a lodger and she never suggested that this was a serious possibility. The provision about the key was no pretence in the sense that the plaintiff retained a key and no doubt did not wish the defendants to change the locks without at least giving her new keys. But her wish to have a key was not dictated by any obligation to provide services or anything else from which it could be inferred that she was herself occupying the house as well as the defendants.
But the situation could have been different. If the plaintiff had determined to have two couples as lodgers, she might not have been able to find them simultaneously. The first couple might have de facto occupation of the whole house meanwhile, but could not have claimed to be tenants since the plaintiff would de jure herself have been a co-occupier until the second pair of lodgers arrived. Applying the test of what was the true bargain between the parties, the court would have wanted to know what steps (if any) were being taken by the owner to fill the vacancy. If the owner was not actively seeking another occupant, it would be inherently more likely that the first couple were entitled to exclude possession of the whole in the meanwhile and so were tenants.
Asian v. Murphy (No. 2)
In our judgment, before the plaintiff can claim possession she must determine the contractual tenancy. There is nothing in section 276 or section 277 of the Act which either directly or indirectly has this effect. It must be done by service of a notice to quit. If the tenant wishes to continue to be liable for the rent, notwithstanding that he cannot live in the room, he is entitled to maintain that his tenancy has never been determined. In this case it has suited him to do so, so that he can require the local authority to rehouse him.
Family Housing Association v Jones
FAMILY HOUSING ASSOCIATION V. JONES
(Court of Appeal)
[1990]1 W.L.R. 779; [1990]1 All E.R. 385; [1990] 22 E.G. 118; (1990) 60 P.& C.R. 27
Balcombe L.J.: This was a self-contained flat, and it is clear that Mrs Jones and Nicolas were to be its only occupants. Mrs Jones paid a weekly charge for her right to occupy the flat. Thus the agreement fulfils all the requirements which Lords Templeman, Oliver of Aylmerton and Donaldson of Lymington M.A. in the several passages quoted above indicate as being appropriate for the creation of a tenancy: the only possible contra-indications are the retention of a key by the housing association and the purposes for which the key was retained. (I leave out of account the judge’s reliance on the temporary nature of the accommodation granted: a weekly tenancy, provided it is not a secure tenancy and can be determined on a week’s notice, is just as consistent with the provision of temporary accommodation as is a licence.) So I return to the question of the retention of the key and the purposes for which it was retained.
The retention of a key by itself cannot be decisive; a landlord under an undoubted tenancy may retain a key to enable him to exercise a right reserved to him by the tenancy to enter the demised premises to inspect the state of repair. As Lord Donaldson of Lymington M.A. said in Asian v. Murphy [1990) 1 W.L.R. 776 there is a spectrum ranging from tenant at the one end to lodger at the other. Whilst the rights retained by the housing association in the present case may be slightly greater than those usually retained by a landlord under a lease, I entertain no doubt that they fall at the “tenant” end of the spectrum,:not the “lodger” end.
Slade L.J.: The judge found as a fact that the housing association retained a key to the premises “not as a matter of convenience but as a means of free entry to the relevant premises.” This might :probably have sufficed to negative exclusive possession on the part of Mrs Jones if the evidence had shown that, to the knowledge of both parties, the housing association had retained the key as a means of free entry so that it could, if it chose, impose some third party on Mrs Jones and her son as co-occupants of the flat. However, it has not been suggested that the parties ever contemplated that the housing association would have the right during the currency of the agreement to do so. The flat would not have been suitable to accommodate a third party, consisting as it did of only two rooms with the usual offices. The circumstances show that Mrs Jones and her son were the only
contemplated occupiers; indeed clause 1 ot the agreement expressly said so.
The proper inference from the judge’s findings and Mrs Lucas’ evidence appears to be that the housing association retained the key as a means of free entry to the premises merely for the purpose of inspecting their state of repair and offering the sup port and discussion of housing problems, which would be appropriate to offer the occupant of accommodation intended as temporary housing for homeless people. I do not think that the retention of the key by the housing association for these limited purposes could suffice to enable it to sustain an assertion that Mrs Jones had not been granted exclusive possession, or indeed that she was a mere lodger, when all the other circumstances pointed towards her actually enjoying exclusive possession.