Module Title: Land Law
Explain the circumstances that lead Lord Templeman to make this comment, the principles established in this case and how the law has developed subsequently.
The doctrine prior toStreet was laid out in several cases and in particular by Lord Denning. InAbbeyfield (Harpenden) Society Ltd v Woods, it was held that ‘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 used. The court must look at the agreement as a whole and see whether a tenancy really was intended.’
As will be seen, the confusion around dealing with the distinction between a lease and a license was intended by Lord Templeman to be halted by the judgment inStreet. This essay will evaluate the decision inStreet and assess the impact it has had on this subject matter and how it differs from previous case law.
Exclusive possession is a prerequisite to a lease but not a guarantee for one. However, special circumstances that show that there was no intention to create a lease are required since the courts do prima facie assume that there was an intention to create a lease when exclusive possession was granted in a residential contract. This was already outlined prior toStreet by Lord Denning ‘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…’.This was affirmed and elaborated by Lord Templeman inStreet that in a ‘simple case a grant of exclusive possession of residential accommodation for a weekly sum creates a tenancy.’
The issue facing Lord Templeman inStreet v Mountfordwas that ‘On behalf of Mr Street his counsel, Mr Goodhart QC, relies on recent authorities which, he submits, demonstrate that an occupier granted exclusive possession for a term at a rent may nevertheless be a licensee…’
Factors which lead to Lord Templeman’s renowned comparison of forks and spades, was that most previous cases, including the first case relied on by Mr Street’s counsel, were concerned primarily with the special circumstances that could negate intentions to create a tenancy with regards to the relationship or conduct of the parties. InBooker v. Palmer, Lord Greene M.R. stated that ‘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.’ This decision was distinguished by Lord Templeman on the grounds that ‘The observations of Lord Greene M. R. were not directed to the distinction between 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 light of what was stated by Lord Greene M.R the case of distinguishing between a license and a lease, the courts do at first instance assume that there is an intention to create a lease when there is exclusive possession in a residential contract.
In the present case, it was acknowledged by Mr Street that Mrs Mountford was entitled to exclusive possession, and therefore there was no need to focus on the special circumstances that had dominated previous decisions. It was held by Lord Templeman that ‘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 agreement by insisting that they only created a licence.’
This is one of the key principles established inStreet; the courts are to look at the actual effect of a housing contract in order to determine whether an occupant is a lodger or a tenant.
This decision was justified by examining a previous statement held by Lord Denning stating that ‘Words alone may not suffice. Parties cannot turn a tenancy into a licence merely by calling it one’. Lord Templeman applied this concept inStreetby stating that ‘If the observations of Denning LJ are applied to the facts of the present case it may fairly be said that the circumstances negative any intention to create a mere licence…the circumstances and the conduct of the parties show… the occupier should be granted exclusive possession at a rent for a term…which created a tenancy.’
Lord Templeman stated that ‘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’. This is to say that the actual phrasing and even clauses of a contract are not to be at the forefront of the courts decisions in situations where exclusive possession is established.
One of the four cases that were overruled inStreet wasMurray Bull & Co. Ltd. v Murray. In that case both parties had intended to create a license and not a controlled tenancy. Lord Templeman stated that ‘In my opinion this case was wrongly decided. McNair J. … he failed to distinguish between first, conduct which negatives an intention to create legal relationships, secondly, special circumstances which prevent exclusive occupation from creating a tenancy and thirdly, the professed intention of the parties. … the conduct of the parties showed an intention to contract and there were no relevant special circumstances. The tenant holding over continued by agreement to enjoy exclusive possession and to pay a rent for a term certain. In those circumstances he continued to be a tenant notwithstanding the professed intention of the parties to create a licence and their desire to avoid a controlled tenancy.’ This is the pragmatic approach that the courts were to take followingStreet.
Furthermore, an important factor which has greatly affected subsequent case law, was Lord Templeman’s opinion that the most crucial aspect of distinguishing a licence from a lease was exclusive possession by stating that ‘…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 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 led many landlords to attempt to form contracts where a court would not find exclusive possession. This involved various forms of contracts which had been created in order to avoid falling under the Rent Acts by creating licenses rather than leases. Many of these contracts are so called ‘sham’ contracts, since they do not portray the true intentions of the contracting parties and serve only to avoid statutory protection.
The modern case law has adopted the following definition of a sham as perDiplock LJ inSnook v London & West Riding Investments Ltd:…for acts or documents to be a ‘sham’, with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating.
This issue was clearly underlined by Lord Templeman inStreet, when he reviewed and overruledSomma v. Hazelhurst. This case involved an unmarried couple renting a room for a weekly rent. The landlord had two separate contracts with each of them and insisted that they had a licence because he had provisions which would enable him to nominate other people to reside in the premises and that there was no exclusive possession on the grounds that both occupiers had separate contracts. Lord Templeman stated that, ‘…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 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 inAldrington Garages Ltd. v. Fielder andSturolson & Co. v. Weniz .’
Attempts to avoid the rent acts after Street
typical devices included: the retention of a key by the landlady, coupled with the reservation of her right to enter the premises at any time (Aslan v Murphy (Nos. and 2) andDuke v Wynne, both reported at  1 WLR 766); the limitation of the hours at which the occipoer might use the property (use excluded between 10:30 a.m. and noon each day –Crancour Ltd v Da silvaesa  1 EGLR 80 andAslan v Murphy (Nos 1 and 2)  1 WLR 766); and provisions that the landlord himself might share ther premises with the occupier, or permit others to do so (Hadjiloucas v Crean  1 WLR 1006;Antoniades v Villiers  1 AC 417).
the courts followedStreet v Mountford in seeking to identify the true nature of the agreement between the parties and to disregard terms which the landlord had no real intention of enforcing but had inserted as a pretence to avoid statutory protection.
Look at Ag securities v Vaughan!
AlthoughStreet has had a significant impact on
Ok first state 2 of the 4 cases over ruled by street, somma and murray bull. Use quote, explain sham and current definition by diplock.
Then state what has happened since street, the ag securities v Vaughan and the attempts to avoid the Rent Acts cases and then ask following questions. 1. is it credible that street is not based on Rent Acts? 2. how strong is the argument that if one cannot prove exclusive possession, it is nearly impossible to distinct between a lease and a license? 3. were the earlier cases sufficiently distinguished by lord templeman?
Structure of essay: 1 Explain the question Lord Templeman was dealing with in the Street case, the difference between lease and license and the importance of the parties intentions. (use Lord denning cases which were used as precedence). + the actual meaning of quote.
2. state the law, the actual principle established in street (definition of a sham, actual possession, the intentions of the parties involved), and the developments that followed. i.e. HL decision in Vaughan (now puts more emphasis on the policy of the legislation protecting tenenants), and the application of the street principle to commercial tenancies (university of Reading v Johnson-Houghton  2 EGLR 113.) also take a look at the Rent Act 1977 and the post Street attempts to avoid circumventing the street principle.
There is however a certain limitation to the scope ofStreet, since there was no need to prove exclusive possession, therefore, in subsequent case law, Landlords have been very determined to show that an occupier does not enjoy exclusive possession.
This decision rendered the written intentions of the parties irrelevant, what mattered were their true intentions resulting from the effect of the contract. This was very important for two reasons. Primarily, this is the test which is still applied today, and differs significantly from previous case law in its approach, since the court now focuses primarily on the effect and not the intention of residential contracts.
Errington v Errington and Woods  1 KB 290