[1985] 1 A.C. 809
House of Lords (only substantive judgment Lord Templeman)
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An agreement provided for exclusive residential occupation (of furnished premises) for a rent, but the interest given under the agreement was described as a personal licence, not a lease. On proceedings arising from an application by Wendy Mountford for a fair rent, the House of Lords held that the agreement created a tenancy.
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1. Exclusive occupation was conceded (since there was no intention that Wendy Mountford should share the premises with anybody else) - this case did not raise the same issues as the later cases of Antoniades v. Villiers and A.G. Securities v. Vaughan.
2. Lord Templeman said that:
"In the case of residential accommodation there is no difficulty in deciding whether the grant confers exclusive possession. An occupier of residential accommodation at a rent for a term is either a lodger or a tenant. The occupier is a 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. ... If on the other hand residential accommodation is granted for a term at a rent with exclusive possession, the landlord providing neither attendance nor services, the grant is a tenancy ..."
A lodger will not be a tenant, Abbeyfield (Harpenden) Society Ltd v Woods [1968] 1 All ER 352, [1968] 1 WLR 374 being cited as an example of a lodger case. It was however also conceded that Mrs Mountford was not a lodger, as Mr Street provided no attendances or services. The only issues were, given that Mrs Mountford had exclusive possession and was not a lodger, whether she necessarily had exclusive possession and was a tenant.
3. It is not clear whether the lodger test is the same as the test of exclusive possession. However, the following extract suggests that they are not the same, and that a lodger can enjoy exclusive possession (but not be a tenant):
"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 be a lodger or service occupier or fall within the other exceptional categories mentioned by Denning LJ in Errington v Errington."
However, when later discussing Marchant v Charters [1977] 3 All ER 918, [1977] 1 WLR 1181, where the agreement was held to create only a licence, Lord Templeman said:
"The decision in the case is sustainable on the grounds that the occupier was a lodger and did not enjoy exclusive possession."
He continued:
"... 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 on its true construction 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."
This suggests that the lodger test and test for exclusive possession (given exclusive occupation) are the same.
4. Only those who have exclusive occupation can have exclusive possession. Service tenancies do not create exclusive occupation since the occupation is regarded as being that of the master.
5. A tenancy will also only be created where there is an intention to create legal relations. An example given was Cobb v Lane [1952] 1 All ER 1199, where an owner allowed her brother to occupy a house rent free. Another example cited was Heslop v Burns [1974] 3 All ER 406, [1974] 1 WLR 1241, in which the owner of a cottage allowed a family to live in the cottage rent free.
6. There may also be other exceptional circumstances negativing the presumption that a tenancy is granted. Citing Errington v. Errington [1952] 1 K.B. 290, Lord Templeman gave as examples:
"if the parties did not intend to enter into legal relationships at all, or where the relationship between the parties was that of vendor and purchaser, master and service occupier, or where the owner, a requisitioning authority, had no power to grant a tenancy."
None of these exceptions was relevant to the case before him, however. The following statement of Denning LJ in Facchini v Bryson [1952] 1 TLR 1386 at 1389 was cited, apparently with approval:
"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."
7. The question whether a lease or licence has been created must be determined without regard to the effect of the Rent Acts.
8. Lord Templeman's remarks apply only (on their face at any rate) to residential premises.
9. The decision will tend to lead to fewer "sham" transactions, which describe one thing as another. In order to avoid sham transactions, it is necessary to look to the substance, and beyond the agreement itself. An example of a sham transaction was Somma v Hazelhurst [1978] 2 All ER 1011, [1978] 1 WLR 1014, where the Court of Appeal held (on the basis of the agreement) that there was no exclusive occupation (although in fact there was). This case was overruled in Street v. Mountford.
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1. In deciding whether exclusive occupation has been granted, to what extent is the agreement decisive?
2. If exclusive occupation has been granted, to what extent is the agreement decisive of the question whether there is exclusive possession?
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These notes were last updated on 10 Jun 97.
SLAPNT@cf.ac.uk