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Street v Mountford
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.
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