Street v Mountford, United Kingdom House of Lords, Judgment, Law, casemine.com

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LORD BRIDGE
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Street v. Mountford

Smart Summary

Factual and Procedural Background

On 7 March 1983 the Respondent executed a written agreement granting the Appellant the right to occupy two furnished rooms in a boarding house for £37 per week, terminable on 14 days’ notice. The document, repeatedly described as a “licence,” included rules on conduct, payment, and a clause stating that it conferred no tenancy protected by the Rent Acts. After serving notice, the Respondent sued for possession. A Recorder in the county court held that the arrangement constituted a tenancy protected by the Rent Acts and dismissed the claim. The Court of Appeal reversed, characterising the arrangement as a licence and ordering possession. The Appellant obtained leave to appeal to the House of Lords, which heard argument in March 1985 and delivered judgment on 2 May 1985.

Legal Issues Presented

Whether the 7 March 1983 agreement, despite being labelled a “licence,” in fact created a tenancy by granting exclusive possession for a term at a weekly rent.
If a tenancy was created, whether the Appellant consequently enjoyed statutory protection under the Rent Acts.
Whether the parties’ express declaration that the agreement was a licence could override the legal effect of the rights actually granted.

Arguments of the Parties

Appellant's Arguments

Reaffirmed the traditional rule that exclusive possession for a term at a rent presumptively creates a tenancy.
Conceded that the Appellant enjoyed exclusive possession; therefore the arrangement must be a tenancy regardless of labels.
The disclaimer at the foot of the agreement could not change the legal character of the rights granted.

Respondent's Arguments

Relied on recent authorities suggesting that even with exclusive possession the court may find a licence if the parties’ “clear intention” was to confer only personal, non-proprietary rights.
Pointed to several contractual clauses (e.g., the right of re-entry on short notice, personal nature of occupation, prohibition on assignment) and to the express declaration that no tenancy was intended.
Contended that to treat the agreement as a tenancy would interfere with freedom of contract and defeat the parties’ expressed wishes.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Glenwood Lumber Co Ltd v Phillips [1904] AC 405	Grant of exclusive possession for a term at a rent constitutes a tenancy.	Cited as authority that substance, not label, determines whether a demise occurs.
Taylor v Caldwell (1863) 3 B & S 826	An agreement conferring only limited use without exclusive possession is a licence.	Used to contrast situations where exclusive possession is absent.
Allan v Liverpool Overseers (1874) LR 9 QB 180	A lodger remains a licensee because the landlord retains unrestricted access for services.	Illustrated difference between lodgers and tenants.
Mayhew v Suttle (1854) 4 El.& Bl. 347	Service occupiers are not tenants; occupation is ancillary to employment.	Identified as an “exceptional category” negating tenancy despite exclusive possession.
Smith v Seghill Overseers (1875) LR 10 QB 422	Test for service occupancy—whether residence is necessary for duties.	Cited to exclude service-occupier situations from the tenancy presumption.
Booker v Palmer [1942] 2 All ER 674	No tenancy arises where parties never intended legal relations.	Distinguished because both parties here plainly intended to contract.
Marcroft Wagons Ltd v Smith [1951] 2 KB 496	Payment of money while parties consider their position need not create a tenancy.	Used as another example of lack of contractual intent.
Errington v Errington and Woods [1952] 1 KB 290	Exclusive possession is only prima facie evidence; circumstances can negate tenancy.	Court accepted principle but held no negating circumstances existed here.
Cobb v Lane [1952] 1 TLR 1037	Family arrangements may indicate no intention to create legal relations.	Distinguished on factual grounds.
Facchini v Bryson [1952] 1 TLR 1386	Label cannot convert a tenancy into a licence; look at operative clauses.	Strongly followed; applied directly to disregard the “licence” label.
Murray Bull & Co Ltd v Murray [1953] 1 QB 211	Parties’ professed wish to avoid control may suggest a licence.	Criticised as wrongly decided; rejected as precedent.
Addiscombe Garden Estates Ltd v Crabbe [1958] 1 QB 513	Whole document must be examined; exclusive possession usually decisive.	Relied on to emphasise primacy of exclusive possession.
Isaac v Hotel de Paris Ltd [1960] 1 WLR 239	No tenancy where occupation was pending completion of “subject to contract” negotiations.	Example of parties not intending binding relations; distinguished.
Abbeyfield (Harpenden) Society Ltd v Woods [1968] 1 WLR 374	Provision of extensive resident services indicates lodger status.	Used to show that lodgers differ because they lack exclusive possession.
Shell-Mex & BP Ltd v Manchester Garages Ltd [1971] 1 WLR 612	Personal privilege without exclusive possession equals licence.	Cited but court held exclusive possession present here, so distinguishable.
Heslop v Burns [1974] 1 WLR 1241	No tenancy where occupation is purely generous and rent-free.	Classed as another “exceptional circumstance” case.
Marchant v Charters [1977] 1 WLR 1181	Regular cleaning and linen services indicate lodger-licence arrangement.	Distinguished; no such services here.
Somma v Hazlehurst [1978] 1 WLR 1014	Separate “sharing” licences can disguise actual tenancy.	Disapproved as encouraging sham devices; contrasted with present facts.
Aldrington Garages Ltd v Fielder (1978) 37 P&CR 461	Similar approach to Somma.	Likewise disapproved.
Sturolson & Co v Weniz (1984) 272 EG 326	Followed Somma approach.	Also disapproved.
Radaich v Smith (1959) 101 CLR 209 (High Court of Australia)	Exclusive possession for a term equals tenancy; labels irrelevant.	Quoted with approval; adopted as statement of principle.

Court's Reasoning and Analysis

The House of Lords, through the leading speech of Judge Templeman, applied the traditional common-law test: exclusive possession for a fixed or periodic term at a rent ordinarily creates a tenancy unless exceptional circumstances negate that intent (e.g., service occupancy, family arrangements, or absence of contractual intent).

The Respondent conceded that the Appellant enjoyed exclusive possession and that no services were provided; therefore the Appellant was not a lodger.
The Court rejected the argument that the parties’ express statement of intention could override the legal consequences of the rights granted, likening the attempt to call a fork a “spade.”
Surveying earlier authorities, the Court distinguished cases where either no contractual relationship existed or special categories (lodger, service occupier, charity, vendor–purchaser) applied.
The Court criticised modern decisions (e.g., Somma v Hazlehurst) that allowed form to defeat substance and encouraged devices to circumvent the Rent Acts.
Applying the orthodox rule, it held that the agreement, properly construed, granted the Appellant a tenancy protected by the Rent Acts.
Consequently, the Court of Appeal’s reliance on the parties’ “manifest intention” was misplaced.

Holding and Implications

ORDER OF THE COURT OF APPEAL REVERSED; COUNTY COURT ORDER RESTORED. The Appellant is declared a statutory tenant and is entitled to costs in all courts, to be assessed in accordance with the Legal Aid Act 1974.

Implications: The judgment re-establishes that, save in clearly defined exceptional cases, a grant of exclusive possession for a term at rent creates a tenancy irrespective of the labels used. It warns landlords that “sham” licence agreements will not defeat statutory tenant protections, but announces no new doctrinal test beyond reaffirming established principles.