When a licence is really a tenancy
The document signed by the occupier stated that she understood that she had been given a licence, and that she understood that she had not been granted a tenancy protected under the Rent Acts. Exclusive occupation was in fact granted.
Held: This was a tenancy not a licence. Generally speaking, exclusive possession for a fixed or periodic term at a stated rent creates a tenancy. It was for the parties to set out the terms of their agreement, but for the court to evaluate the legal effect. Three categories of case might negative the creation of a tenancy: the absence of an intention to create legal relations; some additional independent relationship which can give an alternate explanation; or the absence of a power to create a tenancy.
Lord Templeman said: ‘My Lords, Mr. Street enjoyed freedom to offer Mrs. Mountford the right to occupy rooms in the agreement on such lawful terms as Mr. Street pleased. Mrs. Mountford 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 agreement by insisting 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.’
He continued: ‘The tenant possessing exclusive possession is able to exercise the rights of an owner of land, which is in the real sense his land albeit temporarily and subject to certain restrictions. A tenant armed with exclusive possession can keep out strangers and keep out the landlord unless the landlord is exercising limited rights reserved to him by the tenancy agreement to enter and view and repair’
‘My Lords, the only intention which is relevant is the intention demonstrated by the agreement to grant exclusive possession for a term at a 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 circumstances that there was no intention to create legal relationships. Sometimes it may appear from the surrounding circumstances that the right to exclusive possession is referrable to a 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 under a 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 circumstances are that residential accommodation is offered and accepted with exclusive possession for a term at a rent, the result is a tenancy.’
Lord Templeman, Lord Scarman, Lord Keith of Kinkel, Lord Bridge of Harwich, Lord Brightman
[1985] 1 EGLR 128, [1985] 2 All ER 289, [1985] 2 WLR 877, [1985] AC 809, [1985] UKHL 4
Bailii
England and Wales
Citing:
Appeal from – Street v Mountford CA 1985
An occupier who has been granted exclusive possession, may nevertheless be a licensee if, in the agreement: ‘there is mentioned the clear intention of both parties that the rights granted are to be merely those of of a personal right of occupation . .
Cited – Glenwood Lumber Co Ltd v Phillips PC 1904
The Crown had granted licenses to cut timber from an area over a period of years.
Held: It was well established that possession is good as against a wrong doer, who may not set up as a defence a jus tertii unless his claim is derived from that . .
Cited – Allan v Liverpool Overseers 1874
The court was asked whether a steamship company was liable to be rated in respect of its occupation of sheds which it occupied under a licence from the Mersey Docks and Harbour Board. The court noted that liability for rates fell only on a person . .
Cited – Errington v Errington and Woods CA 19-Dec-1951
There was a contract by a father to allow his son to buy the father’s house on payment of the instalments of the father’s Building Society loan.
Held: Denning LJ reviewed the cases and said: ‘The result of all these cases is that, although a . .
Approved – Radaich v Smith 7-Sep-1959
(High Court of Australia) Justice Windeyer said: ‘What then is the fundamental right which a tenant has that distinguishes his position from that of a licensee? It is an interest in land as distinct from a personal permission to enter the land and . .
Cited by:
Considered – PW and Co v Milton Gate Investments Ltd (BT Property Ltd and another, Part 20 defendants) ChD 8-Aug-2003
The parties, head lessor and sub-lessess, had assumed that following Brown -v- Wilson the sub-lease would continue upon the determination of the head lease, and had overlooked Pennell which overruled Brown v Wilson. However the lease made express . .
Cited – Agnew and Kevin James Bearsley v The Commissioner of Inland Revenue, and Official Assignee for the Estate In Bankruptcy of Bruce William Birtwhistle and Mark Leslie Birtwhistle PC 5-Jun-2001
(New Zealand) A charge had been given by a company over its book debts. The charge was expressed to create a fixed charge over debts uncollected when a receiver was appointed, so that on collection they became payable to the bank. Until the receiver . .
Cited – National Westminster Bank Plc v Spectrum Plus Ltd and others ChD 15-Jan-2004
The company granted a debenture to the claimant purporting to secure its book debts. The company went into liquidation. The liquidator challenged the bank’s charge.
Held: Siebe was wrongly decided. The charge was ineffective over the book . .
Cited – Brennan v London Borough of Lambeth CA 3-Jun-1997
The appellant sought to resist his eviction from temporary hostel accomodation provided to him by the local authority, saying that the provisions of the 1977 Act protected him.
Held: The agreement was a licence excluded from protection by the . .
Cited – Hunter and Others v Canary Wharf Ltd HL 25-Apr-1997
The claimant, in a representative action complained that the works involved in the erection of the Canary Wharf tower constituted a nuisance in that the works created substantial clouds of dust and the building blocked her TV signals, so as to limit . .
Cited – Bruton v London and Quadrant Housing Trust HL 24-Jun-1999
The claimant sought to oblige the respondent to repair his flat under the 1988 Act. The respondent replied that the arrangement was a licence only, and not protected under the Act.
Held: The housing association had a temporary licence to . .
Applied – Family Association v Jones CA 1990
The association as licensee of a local authority granted what was described as a licence to the defendant to occupy premises on a temporary basis. They sought possession.
Held: A tenancy had been granted. As to the argument that there were . .
Cited – National Car Parks Ltd, Regina (on the Application of) v Trinity Development Company (Banbury) Ltd CA 18-Oct-2001
The land owner appealed a decision that the claimant was a tenant of its premises. It had granted what was described as a licence to the claimant, but stated explicitly that the claimant’s servants should not in any way impeach the land-owner’s . .
Cited – Moore and others v Care Standards Tribunal and Another CA 24-May-2005
The claimants were residents of care homes. The homes were owned by charitable companies providing housing and support for persons with mental disorders. The company’s had altered the agreements so that the claimants became assured tenants. The . .
Cited – London Borough of Newham v Hawkins and others CA 22-Apr-2005
The landlord had obtained a possession order, but the tenant continued in occupation as a tolerated trespasser, claiming entitlement as successors in title. Rent arrears had accrued, but even if the tenant had paid thenm the council would have . .
Cited – London Borough of Lambeth and Hyde Southbank Ltd v O’Kane, Helena Housing Ltd CA 28-Jul-2005
In each case the authority had obtained an order for possession of the tenanted properties, but the court had suspended the possession orders. The tenants had therefore now become ‘tolerated trespassers’. They now claimed that they had again become . .
Cited – Clear Channel UK Ltd v Manchester City Council CA 9-Nov-2005
The claimant sought a declaration that it occupied land on which it had erected advertising hoardings under a tenancy rather than as licensee.
Held: The draft agreement which had been proposed and acted upon with legal advice contradicted any . .
Cited – Ali v Khosla and Khosla and others IHCS 16-May-2003
. .
Cited – Harmon CFEM Facades (UK) Ltd v The Corporate Officer of the House of Commons TCC 29-Jun-2000
The company began a claim for damages for the failure to complete an award of a contract, but then went into voluntary liquidation. The defendant refused payment claiming that it would be used only for payment of the insolvency practitioner’s costs. . .
Cited – Bruton v London and Quadrant Housing Trust CA 31-Jul-1997
A person with no sufficient title to land cannot create a tenancy of the land which would be binding by an estoppel if that tenancy would exclude his own possible claim for possession. . .
Cited – William Watson Stirling v Leadenhall Residential 2 Ltd CA 29-Jun-2001
Held. A tenant who continued to stay in property after a possession order was granted, but who paid a sum equivalent to rent as it fell due, and something off the arrears, did not necessarily thereby become a tenant again, but could be viewed as a . .
Cited – Bruton v London and Quadrant Housing Trust CA 3-Dec-1996
. .
Cited – Gray and others v Taylor CA 2-Apr-1998
A right of occupation given by an almshouse under a charitable trust was an occupation under a licence without right of possession, not an assured tenancy. The plaintiff’s conditions of occupancy stated: ‘Residents are licensees and pay a . .
Cited – Mattey Securities Limited v Ervin, Sutton, Mitchell CA 3-Apr-1998
After the insolvency of an assignee of a lease, the landlord talked with possible new tenants, and the original lessee now said that the landlord had impliedly accepted a surrender of the original lease, thus releasing him from continuing liability. . .
Cited – Bankway Properties Ltd v Penfold-Dunsford and Another CA 24-Apr-2001
A grant of an assured tenancy included a clause under which the rent would be increased from pounds 4,680, to pounds 25,000 per year. It was expected that the tenant would be reliant upon Housing Benefit to pay the rent, and that Housing Benefit . .
Cited – Pankhania v The London Borough of Hackney ChD 2002
A brochure listing properties to be sold at auction decribed the property as being subject to a terminable licence. In fact it was a secure tenancy. The question arose as to whether a misrepresentation of law could found a cause of action.
Cited – Clear Channel United Kingdom Ltd, Regina (on the Application of) v First Secretary of State and Another Admn 14-Oct-2004
The claimant sought a declaration that it had a tenancy for its occupation by an advertising station, and that it had protection under the 1954 Act. The defendant council said that only a licence had been granted.
Held: The grants included the . .
Cited – Save and Prosper Securities Ltd v Inland Revenue SCIT 9-Aug-2000
SCIT STAMP DUTY RESERVE TAX – amalgamation of two unit trust schemes – whether an agreement to transfer chargeable securities – appeal allowed – FA 1986 s 87(1) . .
Cited – In re Claims Direct Test Cases CA 19-Mar-2002
The applicants sought to appeal on two matters where they had questions of practice in the conduct of personal injury claims. These were as to whether after-the-event cover purchased under section 29 amounted to insurance premiums, and the setting . .
Cited – In re Claims Direct Test Cases CA 12-Feb-2003
The parties sought repayment as part of their costs of insurance premiums paid by claimants undertaking litigation.
Held: The underwriters charged andpound;140.00 for each case. Claims Direct charged a premium of andpound;1,250.00 for each . .
Mentioned – Elitestone Ltd v Morris and Another HL 1-May-1997
The plaintiff acquired land on which 27 chalets were erected. They served notice to quit so that the site could be developed. The defendants argued that they had residential tenancies with protection under the Rent Act 1977.
Held: The tenants’ . .
Cited – Manchester Airport Plc v Dutton and others CA 23-Feb-1999
The claimant sought an order requiring delivery of possession of land occupied by the respondent objectors. They needed to remove trees from the land in order to construct a runway on their own adjacent land. The claimant had been granted a licence . .
Cited – Vesely v Levy and others CA 27-Apr-2007
The tenant appealed against a finding that her tenancy was a statutory shorthold tenancy following termination of an assured shorthold tenancy, or an assured tenancy. She moved in as a carer for the tenant of the trustee defendants. That arrangement . .
Cited – White v Knowsley Housing Trust and Another CA 2-May-2007
The tenant was an assured tenant. She fell into arrears of rent and a possession order was made, but suspended on terms. The court considered whether she continued to be an assured tenant, and could assert a right to buy the property as an assured . .
Cited – Aslan v Murphy (No 1 and 2); Duke v Wynne CA 27-Jun-1989
Occupiers claimed that they had secure tenancies. The owner said that they were mere lodgers. In Murphy (1), the landlord said that the occupier must share possession with other occupiers if required. He now said that he had retained a key and that . .
Cited – Crancour Ltd v Da Silvaesa and Another CA 26-Feb-1986
The plaintiff sought possession of two rooms in a house occupied by the defendants separately. The agreements stated that they were licences. The agreements excluded the occupiers between 10:30am and noon on each day. The occupiers claimed to be . .
Cited – Essex Plan Ltd v Broadminster ChD 1988
The defendant with the benefit of an option to take a lease was allowed into the premises pursuant to what was described as, and purported to be, a licence. He then claimed a tenancy.
Held: The agreement was indeed a licence. Referring to . .
Cited – Cameron Ltd v Rolls-Royce Plc ChD 12-Mar-2007
His lease had expired, but the defendant continued in occupation under a licence. The parties agreed for new leases on terms fixed, but conditional on the lease being allowed to be contracted out. The tenant now asserted that it occupied the . .
Cited – Clarence House Ltd v National Westminster Bank Plc ChD 23-Jan-2009
The claimant landlord alleged that the defendant tenant had transferred the lease under a ‘virtual assignment’ and that this was in breach of its lease.
Held: The Abbey National case was not helpful. However, the arrangement was not a breach . .
Cited – Alexander-David v London Borough of Hammersmith and Fulham CA 1-Apr-2009
The authority was required to provide housing to the minor applicant, but she was too young to hold a legal estate. An equitable lease had been created, and she now appealed against an order for possession having broken the terms of the agreement, . .
Cited – Autoclenz Ltd v Belcher and Others CA 13-Oct-2009
Car Valeters contracts misdescribed their Duties
The claimants worked cleaning cars for the appellants. They said that as workers they were entitled to holiday pay. The appellant said they were self-employed.
Held: The contract purported to give rights which were not genuine, and the . .
Cited – Autoclenz Ltd v Belcher and Others SC 27-Jul-2011
Car Cleaning nil-hours Contractors were Workers
The company contracted with the claimants to work cleaning cars. The company appealed against a finding that contrary to the explicit provisions of the contracts, they were workers within the Regulations and entitled to holiday pay and associated . .
Cited – Mann Aviation Group (Engineering) Ltd v Longmint Aviation Ltd and Another ChD 19-Aug-2011
Administrators of the claimant company asserted that the company had held informal leases of two hangars owned by the defendant, and also complained of their transfer at an undervalue. The first defendant said that the occupations were under license . .
Applied – London and Associated Investment Trust Plc v Calow 1986
The defendants had sought premises for a consulting business. A licence was initially given to allow the premises to be prepared for occupation, but then a head lease was granted. An underlease for the defendant was prepared, but not executed. On . .
Cited – Berrisford v Mexfield Housing Co-Operative Ltd SC 9-Nov-2011
The tenant appealed against an order granting possession. The tenancy, being held of a mutual housing co-operative did not have security but was in a form restricting the landlord’s right to recover possession, and the tenant resisted saying that it . .
Cited – IDC Group Ltd v Clark CA 2-Jul-1992
The court was asked: ‘whether a deed made between adjoining owners and expressed to ‘grant licence’ to the owners and occupiers for the time being of one property to pass over parts of the other in case of fire operated as the grant of an easement . .
Cited – Norris (t/a J Davis and Son) v Checksfield CA 17-Apr-1991
The employee occupied the property under a licence granted by his employer for the better performance of his employment duties. At first he had been taken on as a semi-skilled mechanic, but he was later offered occupation of the employer’s bungalow . .
Applied – Royal Philanthropic Society v County CA 1985
The defendant was employed by the local authority as a house-master at a school run by the plaintiff. He held a service licence of a furnished flat at the school expressed to be ‘for the better performance of his duties’. Later he married, and on . .
Cited – Cavendish Square Holding Bv v Talal El Makdessi; ParkingEye Ltd v Beavis SC 4-Nov-2015
The court reconsidered the law relating to penalty clauses in contracts. The first appeal, Cavendish Square Holding BV v Talal El Makdessi, raised the issue in relation to two clauses in a substantial commercial contract. The second appeal, . .
Cited – Watts v Stewart and Others CA 8-Dec-2016
The court considered the status of residents of almshouses, and in particular whether they were licensees or tenants with associated security.
Held: The occupier’s appeal failed: ‘We do not accept the proposition that, if and insofar as Mrs . .
Lists of cited by and citing cases may be incomplete.
Housing, Landlord and Tenant
Leading Case
Updated: 09 November 2021; Ref: scu.190577