The Weekly Law Reports 1 June 1990

766
[1990]
[COURT OF APPEAL] A
*ASLAN v. MURPHY (Nos. 1 and 2)
DUK E v. WY NNE AND ANOTHER
I
Housing Act 1985, s. 266: A local housing authority may under sections 264 and 265
take the like proceedings in relation to(a) any part of a building which is used, or is
suitable for use, as a dwelling, or (b) an underground room which is deemed to be unfit
for the purposes of this section in accordance with section 282, as they are empowered to
take in relation to a house, subject, however, to the qualification that instead of a
demolition order they shall make a closing order.
B
1989 J une 19; 27; Lord Donaldson of Lymington M.R.,
J uly 25 Butler-Sloss and Stuart-Smith L.J J .
Licence or TenancyExclusive occupationFurnished accomm-
odationOccupiers in possession of premises under agreements
granting licences and expressly excluding exclusive possession
Whether agreements having effect according to their terms
Whether occupiers licensees or tenants
HousingUnfit for human habitationClosing orderLocal authority
serving closing orderOccupation of premises for human C
habitation to be discontinuedNo notice to quit served on
tenantWhether tenancy determinedWhether landlord entitled
to possessionHousing Act 1985 (c. 68), s. 266
In the first case, the plaintiff was the owner of a small
basement room occupied exclusively by the defendant under a
written agreement which provided, inter alia, that the defendant
was not granted exclusive possession of any part of the room D
but had a licence to use the room in common with other
licensees, that he was to vacate the room for 90 minutes each
day, and that the plaintiff would retain the keys to the room.
The judge held that the agreement was not a sham but had
effect, according to its terms, as a licence, not a tenancy, and
therefore that the plaintiff was entitled to an order for
possession. p
In the second case, the same plaintiff claimed against the
same defendant an order for possession, on the ground that a
closing order which had been served in respect of the room
under section 266 of the Housing Act 1985', effectively
determined any tenancy which might be established on his
appeal. The judge made the order for possession, although no
notice to quit had been served on the defendant.
In the third case, the plaintiff was the owner of a three- F
bedroom house occupied exclusively by the defendants and their
children under a written agreement which provided, inter alia,
that the defendants had no right of exclusive occupation in any
part of the premises but would have to share occupation with
other persons as directed by the plaintiff, that the plaintiff was
to retain a key of the premises and that she reserved the right
to enter the premises at any time. The judge, again by reference
to the express terms of the agreement, held that the defendants ^
were licensees of the premises and that the plaintiff was entitled
to an order for possession.
On appeal by the defendants:
Held, allowing the appeals, (1) that in considering whether
the defendants occupied the premises as tenants or licensees the
court, having concluded that each agreement was not a sham
concealing the grant of a tenancy, had to have regard to the H
true rather than the apparent bargain made by the parties; that
if the true bargain was that the defendants were entitled to
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767
1 W.L.R. Asian v. Murphy (C.A.)
yY excl usi ve possessi on of the premi ses unl ess and unti l the plaintiffs
required them to share their occupation, the defendants were
tenants and their status could not be unilaterally converted into
that of licensees by the plaintiffs requiring them to share the
occupation; that, on the facts, the defendants had been granted
exclusive possession and, therefore, were tenants; and that,
accordingly, the provisions in the agreements relating to shared
or discontinuous occupation and retention of keys by the
B plaintiffs were to be disregarded as being mere pretences in the
former case and ineffective in the latter (post, pp. 772H773A,
775G-H, H776A).
Antoniades v. Villiers [1990] A.C. 417, H.L.(E.) applied.
(2) That, notwithstanding the service of a closing order in
respect of premises, the landlord could not recover possession
from a tenant except by determining the tenancy by serving a
P notice to quit (post, p. 777G).
The following cases are referred to in the judgment of the court:
A.G. Securities v. Vaughan [1990] A.C. 417; [1988] 3 W.L.R. 1205; [1988] 3
All E.R. 1058, H.L.(E.)
Antoniades v. Villiers [1990] A.C. 417; [1988] 3 W.L.R. 139; [1988] 2 All
E.R. 309, C.A.; [1990] A.C. 417; [1988] 3 W.L.R. 1205; [1988] 3 All
D E.R. 1058, H.L.(E.)
Buswell v. Goodwin [1971] 1 W.L.R. 92; [1971] 1 All E.R. 418, C.A.
Practice Direction (Court of Appeal: Presentation of Argument) [1989] 1
W.L.R. 281; [1989] 1 All E.R. 891, C.A.
Street v. Mountford [1985] A.C. 809; [1985] 2 W.L.R. 877; [1985] 2 All
E.R. 289, H.L.(E.)
k The following additional cases were cited in argument:
Crancour Ltd. v. Da Silvaesa (1986) 18 H.L.R. 265, C.A.
National Carriers Ltd. v. Panalpina (Northern) Ltd. [1981] A.C. 675; [1981]
2 W.L.R. 45; [1981] 1 All E.R. 161, H.L.(E.)
Rear don Smith Line Ltd. v. Yngvar Hansen-Tangen (trading as H.E.
Hansen-Tangen) [1976] 1 W.L.R. 989; [1976] 3 All E.R. 570, H.L.(E.)
P Stribling v. Wickham, The Times, 27 March 1989; Court of Appeal (Civil
r
Division) Transcript No. 280 of 1989, C.A.
ASLAN v. MURPHY
APPEAL from J udge McDonnell sitting at West London County
Court.
^ By amended particulars of claim the plaintiff, Gila Asian, by her
father Samuel Asian acting under a power of attorney, claimed recovery
of possession of premises at room 2A, 54, Redcliffe Gardens, London
S.W.10 under the terms of a licence entered into by a written agreement
dated 15 August 1988 between herself and the defendant, J ohn Murphy.
The defendant by his defence denied the plaintiffs entitlement to
possession on the ground that the written agreement was a sham not
H intended by the parties to form the basis of a legal relationship between
them in so far as it purported thereby to license the defendant to use the
premises. The defendant claimed that at all material times he was a
protected tenant under the provisions of the Rent Act 1977.
On 18 October 1988 J udge McDonnell made the order for possession
as sought on the ground that the written agreement plainly intended to
exclude the defendant from exclusive possession of the premises and
that accordingly he occupied the room as a licensee. On 31 October
768
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Asian v. Murphy (C.A.) [1990]
1988 J udge Oddie granted a stay of execution of the possession order A
pending the defendant's appeal.
By a notice of appeal dated 28 October 1988 the defendant appealed
on the grounds that the judge had erred in law and fact in holding that
the defendant occupied the premises as the plaintiff's licensee; and no
reasonable tribunal could have concluded that the purported agreement
between the parties was other than a sham not intended by them to
form the basis of legal relations between them.
The facts are stated in the judgment of the court.
ASLAN v. MURPHY (No. 2)
APPEAL from Mr. Brian Leech sitting as an assistant recorder at West
London County Court.
By particulars of claim dated 1 February 1989 the plaintiff, Gila C
Asian, claimed possession of premises occupied by the defendant, John
Murphy, at room 2A, 54, Redcliffe Gardens, London, S.W.10 on the
ground that a closing order served on the plaintiff on or about 9
November 1988 in respect of the premises by the Kensington and
Chelsea (Royal) London Borough Council entitled her to possession. By
his defence and counterclaim dated 13 March 1989 the defendant denied rj>
the plaintiff's claim to possession on the ground, inter alia, that he held
the premises under a weekly tenancy which had not been determined by
service of a notice to quit. He sought by way of counterclaim, inter alia,
damages for breach of covenant and unlawful eviction. On 28 March
1989 the assistant recorder adjourned the proceedings in respect of the
counterclaim and ordered that the plaintiff recover possession of the
premises. E
By a notice of appeal dated 18 April 1989 the defendant appealed on
the grounds, inter alia, that the judge misdirected himself in holding that
the plaintiff was entitled to possession of the property by reason of the
closing order served on the plaintiff in respect of the premises on or
about 9 November 1988; the judge misdirected himself in making an
order for possession in the face of the stay granted by Judge Oddie on p
31 October 1988 pending the defendant's appeal against the order for
possession made by Judge McDonnell; the judge misdirected himself in
holding that the plaintiff was not required to serve a notice to quit
and/or show that she was entitled to immediate possession of the
premises; and the judge erred in that he placed too great an emphasis
on the peremptory nature of a closing order; and he failed to take into
account the fact that the defendant was no longer sleeping at the G
premises and no offence under the Housing Act 1985 was being
committed.
The facts are stated in the judgment of the court.
DUKE V. WYNNE AND ANOTHER
APPEAL from Judge Hunter sitting on Croydon County Court. H
By points of claim dated 3 August 1988 the plaintiff, J anette Rebecca
Duke, began proceedings against the defendants, Joyce Wynne and
James Wynne, to recover possession of premises at 9, Dunkeld Road,
South Norwood, London S.E.25 on the ground that pursuant to a
written agreement between them the defendants occupied the premises
as licensees. By their defence the defendants denied that they were
licensees and asserted that the true nature of the agreement gave rise to
The Weekly Law Reports 1 J une 1990
769
1 W.L.R. Asian v. Murphy (C.A.)
A a tenancy which was protected under the Rent Act 1977. On 4 November
1988 J udge Hunter found that the defendants occupied the premises as
licensees, and he ordered that the plaintiff recover possession.
By a notice of appeal dated 22 November 1988 the defendants
appealed on the grounds, inter alia, that the judge was wrong in law to
hold that the defendants had been granted a licence and not a weekly
tenancy of the premises; in determining whether the alleged licence
agreement was a sham the judge, in holding that the provisions for
retention of keys was "the clinching factor" took into account a matter
which was of no relevance in determining the issue of whether the
agreement was a sham but rather went to the issue of whether the
agreement constituted a licence rather than a tenancy in the event of a
finding that the agreement was not a sham, and in the alternative the
Q judge placed undue weight on that factor; the judge was wrong in law to
hold that the alleged licence agreement was not a sham and/or in the
alternative such a finding was against the weight of the evidence; the
judge misdirected himself in holding that the description "shared
premises" did not constitute a sham in particular having regard to the
evidence that the plaintiff had no intention of requiring the defendants
to share the premises.
D The facts are stated in the judgment of the court.
At the conclusion of the hearing Lord Donaldson of Lymington
M.R. announced that the appeals would be allowed for reasons to be
given later.
Linda Pearce for the defendant in the first and second actions.
E Ashe Lincoln Q.C. for the plaintiff in the first and second actions.
Bruce Coleman for the defendants in the third action.
J.W. Haines for the plaintiff in the third action.
Cur. adv. vult.
P 27 J une. The following judgment of the court was handed down.
LORD DONALDSON OF LYMINGTON M.R. Secure tenant or insecure
lodger? This is a problem which vexes large numbers of citizens who
require living accommodation or who have accommodation available for
occupation. It also vexes large numbers of lawyers who have to advise
and county court judges who have to decide. In the hope of assisting all
G these groups we decided to put into writing our reasons for holding that
the defendants in these three appeals were tenants. We also decided to
give those reasons in a single judgment to which we have all contributed
in order to reduce the scope for argument as to whether we all mean the
same thingwhich in fact we do.
J J Summary
In Asian v. Murphy (No. 1) and Duke v. Wynne the plaintiffs sought
possession upon the ground that the defendants were insecure lodgers
and obtained orders for possession. In Asian v. Murphy (No. 2), which
was heard by a different judge whilst Asian v. Murphy (No. 1) was
under appeal, the plaintiff sought a further order for possession of the
same room on the ground that the local authority had by then made a
closing order. She succeeded in obtaining a further possession order.
770
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Asian v. Murphy (C.A.) [1990]
Having held in Asian v. Murphy (No. 1) that the defendant was a A
tenant, we concluded in Asian v. Murphy (No. 2) that, in the light of
the closing order, he did not enjoy the protection or the Rent Acts.
However, we also concluded that, in the absence of an effective notice
to quit, he remained a contractual tenant of his room, a situation which
would no doubt be changed as soon as a notice to quit was served and
had run its course. We granted the defendant an immediate declaration
as to his status in order to facilitate and expedite the local authority's ^
consideration of his entitlement to be rehoused.
General principles
The status of a tenant is essentially different from that of a lodger
and owners of property are free to make accommodation available on
either basis. Which basis applies in any particular case depends upon C
what was the true bargain between the parties. It is the ascertainment of
that true bargain which lies at the heart of the problem.
Labelling
The labels which parties agree to attach to themselves or to their
agreements are never conclusive and in this particular field, in which D
there is enormous pressure on the homeless to agree to any label which
will facilitate the obtaining of accommodation, they give no guidance at
all. As Lord Templeman said in Street v. Mountford [1985] A.C. 809,
819:
"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."
Exclusive or non-exclusive occupation
This is the touchstone by which the "spade" of tenancy falls to be
distinguished from the "fork" of lodging. In this context it is necessary p
to consider the rights and duties of the person making the accommodation
available ("the owner") and the rights of other occupiers. The occupier
has in the end to be a tenant or a lodger. He cannot be both. But there
is a spectrum of exclusivity ranging from the occupier of a detached
property under a full repairing lease, who is without doubt a tenant, to
the overnight occupier of a hotel bedroom who, however up-market the
hotel, is without doubt a lodger. The dividing linethe sorting of the G
forks from the spadeswill not necessarily or even usually depend upon
a single factor, but upon a combination of factors.
Pretences
Quite apart from labelling, parties may succumb to the temptation to
agree to pretend to have particular rights and duties which are not in H
fact any part of the true bargain. Prima facie, the parties must be taken
to mean what they say, but given the pressures on both parties to
pretend, albeit for different reasons, the courts would be acting
unrealistically if they did not keep a weather eye open for pretences,
taking due account of how the parties have acted in performance of
their apparent bargain. This identification and exposure of such pretences
does not necessarily lead to the conclusion that their agreement is a
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771
1 W.L.R. Asian v. Murphy (C.A.)
A sham, but only to the conclusion that the terms of the true bargain are
not wholly the same as those of the bargain appearing on the face of the
agreement. It is the true rather than the apparent bargain which
determines the question "tenant or lodger?"
The effect of the Rent Acts
g If an occupier would otherwise be protected by the Rent Acts, he
does not lose that protection by agreeing that he will surrender it either
immediately or in the future and whether directly and in terms or
indirectly, e.g. by agreeing to substitute a shared for an exclusive right
of occupation should the owner so require: Antoniades v. Villiers [1990]
A.C. 417, 461.
C Asian v. Murphy (No. 1)
The defendant was the occupier of room 2A at 54, Redcliffe
Gardens, London, S.W.10. It is a basement room measuring 4'3" by
12'6". He occupied this room under an agreement which recited:
"the licensor is not willing to grant the licensee exclusive possession
of any part of the room hereinafter referred to [and] the licensee is
^ anxious to secure the use of the room notwithstanding that such use
be in common with the licensor and such other licensees or invitees
as the licensor may permit from time to time to use the said room
. . . this licence is entered into by the licensor and the licensee
solely upon the above basis."
The introduction to the operative part of the agreement provided:
E
"By this licence the licensor licences the licensee to use (but not
exclusively) all the furnished room known as room no. 2A
(hereinafter referred to as 'the room') on the basement floor of the
building situate and known as 54, Redcliffe Gardens (hereinafter
referred to as 'the building') on each day between the hours of
midnight and 10.30 a.m. and between noon and midnight, but at no
F other times, for the purpose of temporary accommodation for the
licensee's personal use only and for no other purposes whatsoever,
and the licensee shall also be entitled to use, in common with all
other persons having the like right, the common parts of the
building. The licensee shall pay the licensor a licence fee of 25 per
week for the use of the room commencing on 15 May 1988."
G Other clauses reflected the shared nature of the occupancy. Thus:
"1. The licensor shall at all times have the right to decide the use
and occupancy of the room and each part of the room together with
the positioning of the furniture in the room . . . 3(a) The licensee
shall be personally liable for and shall pay for all services such as
electricity, gas, telephone or whatever use by the licensee in the
H room and will indemnify the licensor against all such expenses.
(b) The licensee agrees to share the expense of such services (apart
from those services provided by the licensor under clause 4 of this
licence) as are used jointly with any other person occupying or
using the room or using the common parts of the building, (c) The
licensee shall use his best endeavour amicably and peaceably to
share the use of the room with the licensor and/or with such other
licensees or invitees whom the licensor shall from time to time
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Asian v. Murphy (C.A.) [1990]
permit to use the room and shall not interfere with or otherwise A
obstruct such shared accommodation in any way whatsoever."
In holding that the defendant was a licensee, Judge McDonnell said:
"The submission that the written agreement in the present case was
a sham designed to conceal the grant of exclusive possession and
therefore the creation of a tenancy rested upon (i) the size of the
R
room which made it impracticable for the landlord or anyone else to
share occupation with the defendant, and (ii) the fact that the
plaintiff said that he (sic) did not intend to put anyone else into the
room or to object to the defendant using it between 10.30 a.m. and
noon. In my judgment the first submission fails because the plaintiff
made it quite plain that he (sic) never intended to grant the
defendant exclusive possession of the room for the very good reason C
that he had been advised that to do so might lead to the creation of
a tenancy protected by the Rent Act and the defendant never
suggested that there was any other agreement expressed or implied
than that to which he had put his signature. As to the second
submission 'the Rent Acts must not be allowed to alter or influence
the construction of an agreement:' Street v. Mountford [1985] A.C.
809, 825. 'It is not a crime, nor is it contrary to public policy, for a
u
property owner to license occupiers to occupy property on terms
which do not give rise to a tenancy . . . Where a written agreement
is not held to be a sham, the task of the court, as with any other
agreement, is to construe it and give fair effect to its terms in the
context of all relevant surrounding circumstances:' see Antoniades
v. Villiers [1988] 3 W.L.R. 139, 147-148, per Bingham L.J . In this
case the written agreement made it quite plain that exclusive
possession was not to be granted and there are no surrounding
circumstances to suggest that effect should not be given to it
according to its terms. I am fortified in the conclusion because it is
clear that the plaintiff was not prepared to grant any legal or
enforceable right to exclusive possession or any right at all to
occupy the room between 10.30 a.m. and noon and the defendant ^
realised this."
In fairness to the judge, it should be said that he gave judgment before
the House of Lords reversed the decision of this court in Antoniades v.
Villiers [1990] A.C. 417, and therefore without the benefit of the
guidance contained in the speeches. In the light of that guidance, the ^
judge's decision is unsupportable on this ground and no attempt was
made to support it.
The judge was, of course, quite right to approach the matter on this
basis that it is not a crime, nor is it contrary to public policy, for a
property owner to license occupiers to occupy a property on terms which
do not give rise to a tenancy. Where he went wrong was in considering
whether the whole agreement was a sham and, having concluded that it H
was not, giving effect to its terms, i.e. taking it throughout at face value.
What he should have done, and I am sure would have done if he had
known of the House of Lords approach to the problem, was to consider
whether the whole agreement was a sham and, if it was not, whether in
the light of the factual situation the provisions for sharing the room and
those depriving the defendant of the right to occupy it for 90 minutes
out of each 24 hours were part of the true bargain between the parties
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773
I W.L.R. Asian v. Murphy (C.A.)
A or were pretences. Both provisions were wholly unrealistic and were
clearly pretences.
In this court an attempt to uphold the judge's decision was made
upon a different basis, namely, the landlord's right to retain the keys.
The provisions relevant to this aspect of the agreement are:
"1. . . . The licensor will retain the keys to the room and has
D absolute right of entry at all times for the purpose of excercising
such control and (without prejudice to the generality of the
foregoing) for the purpose of effecting any repairs or cleaning to the
room or building or for the purpose of providing the attendance
mentioned in clause 4 hereof or for the purpose of removing or
substituting such articles of furniture from the room as the licensor
might see fit. The said right of entry is exercisable by the licensor or
C his servants or agents with or without any other persons (including
prospective future licensee of the room). . . . 4. The licensor will
provide the following attendance for the licensee: (1) housekeeping
(2) lighting of common parts (3) cleaning of common parts
(4) window cleaning (5) intercom (6) telephone coin box (7) cleaning
of room (8) collection of rubbish (9) provision and laundering of
n
bed linen (10) hot water (11) provision of household supplies."
Provisions as to keys are often relied upon in support of the contention
that an occupier is a lodger rather than a tenant. Thus in Duke v.
Wynne, to which we turn next, the agreement required the occupier
"not to interfere with or change the locks on any part of the premises,
[or] give the key to any other than an authorised occupier of the
p
premises." Provisions as to keys, if not a pretence which they often are,
do not have any magic in themselves. It is not a requirement of a
tenancy that the occupier shall have exclusive possession of the keys to
the property. What matters is what underlies the provisions as to keys.
Why does the owner want a key, want to prevent keys being issued to
the friends of the occupier or want to prevent the lock being changed?
A landlord may well need a key in order that he may be able to
F enter quickly in the event of emergency: fire, burst pipes or whatever.
He may need a key to enable him or those authorised by him to read
meters or to do repairs which are his responsibility. None of these
underlying reasons would of themselves indicate that the true bargain
between the parties was such that the occupier was in law a lodger. On
the other hand, if the true bargain is that the owner will provide genuine
services which can only be provided by having keys, such as frequent
" cleaning, daily bed-making, the provision of clean linen at regular
intervals and the like, there are materials from which it is possible to
infer that the occupier is a lodger rather than a tenant. But the inference
arises not from the provisions as to keys, but from the reason why those
provisions formed part of the bargain. On the facts of this case, the
argument based upon the provisions as to keys must and does fail for
H the judge found that "during the currency of the present agreement
virtually 'no services' had been provided." These provisions may or may
not have been pretences, but they are without significance in the context
of the question which we had to decide.
Duke v. Wynne
Here the facts were very different from those in Asian v. Murphy
(No. 1). The accommodation comprised a house with three bedrooms,
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774
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Asian v. Murphy (C.A.) [1990]
two reception rooms, a kitchen and a bathroom. The owner, the A
plaintiff, had previously lived in it as the matrimonial home with her
husband and four children of the marriage. Following various changes in
her matrimonial and domestic circumstances, which it is unnecessary to
particularise, neither she nor her husband or children continued to live
there. The plaintiff determined to refurbish it and did so, but then
wanted to wait for about two years before reaching any decision on
whether to dispose of it. In those circumstances the plaintiff was "
adamant that any occupation of the house by others must be on terms
that would enable her to obtain possession of the house at or about the
end of the two-year period. The defendants needed accommodation for
themselves and their two sons. They had been living in other
accommodation on the terms of an agreement which they believed,
rightly or wrongly, did not give them security of tenure and they were Q
willing to take the house without any such security. The plaintiff now
wishes to emigrate to Canada and to sell the house with vacant
possession, but the defendants are unwilling to give up occupation as
they have nowhere else to go. No complaint is made about them, save
this reluctance to leave which is understandable. Negotiations did take
place with a view to the defendants buying the house, but agreement
could not be reached upon price and it is therefore necessary to D
determine their rights and status.
The agreement
Here again the agreement under which the defendants entered into
occupation contained recitals designed to affirm that they had no security
of tenure: E
"Whereas 1. The owner wishes to obtain vacant possession on very
short notice and the occupier accepts as a fundamental term and
condition of the agreement that no tenancy is created but there is a
mere right to occupy the premises as a bare licensee. 2. The
occupier wishes to take occupation on the terms set out which are
understood and accepted. 3. This agreement is not extended to F
provide security of tenure as set out in the Rent Act 1977 or any
similar enactment. 4. There is no right of exclusive occupation in
the premises or any part thereof."
This was buttressed by clauses 1, 2(8), 2(16), 3, 4 and 7:
"1. The owner shall permit the occupier to have the non-exclusive ~
occupation of the premises and reserves the right to place other
person or persons in the premises. . . . 2 The occupier shall . . .
(8) Not to (sic) interfere with or change the locks on any part of the
premises, give the key to any other than an authorised occupier of
the premises. . . . 2(16) Visitors shall leave the premises by 12.00
p.m. . . . 3. The premises shall not be occupied by any person or
persons other than the occupier or other person or persons selected H
by the owner as hereinafter set out. The owners reserve the right to
place other occupiers in the premises at their discretion at any time
and the occupier shall raise no objection thereto. 4. It is further
agreed that the occupancy permitted by this agreement is an
exclusive right to share the premises and confers upon the occupier
no greater right, than a mere right to occupy the premises in
conjunction with such other occupiers as is hereby provided and the
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775
1 W.L.R. Asian v. Murphy (C.A.)
A absence of other occupiers whether permanent or otherwise shall in
no circumstances be construed as the grant or creation of an
exclusive right of occupation nor shall their presence in any
circumstances whatsoever be so interpreted as to create the
presumption of a tenancy and it is hereby particularly agreed and
declared that such construction and interpretation is directly contrary
to the intentions of the parties hereto. . . . 7. The owner retains full
" control over the use of the premises at all times and reserves the
right in particular to enter the premises with cleaners for the
purpose of providing a cleaning service for the occupier at the
discretion of the owner. For the avoidance of doubt it is declared
that the occupier being a mere licensee, the owner has the right to
enter the premises at any time and for any purpose and to authorise
Q its agent or servants to do so on its behalf. The owner also has the
right to amend or add to the regulations set out in clause 2 at its
discretion on 7 days notice in writing to the occupier."
There were other clauses, such as clause 2(7), which prohibited the
carrying on of any profession, trade or business on the premises, which
would be equally appropriate whether the defendants were tenants or
> lodgers and to them we need not refer. There was also a clause (clause
2(6)) which prohibited allowing children to share or use the premises.
Since the intention of all concerned was that the defendants' children
should live in the house, this was a nonsense, as the plaintiff readily
accepted. It was not, however, a pretence. It was simply that an
inappropriate standard form of agreement was used and no one thought
to amend it.
E Once again, the judge, in this case Judge Hunter, was led astray by
the judgment of this court in Antoniades v. Villiers [1990] A.C. 417.
Tenants or lodgers?
Were the defendants tenants or lodgers? Unlike the facts in Asian v.
Murphy (No. 1) it would have been possible for them to have shared the
F house with another occupant. There were three bedrooms. One could
have been used by the defendants, one by the children and the third,
which was a very small room, by a lodger. However, the evidence did
not disclose any immediate intention on the part of the plaintiff to make
such an arrangement and she never in fact did so. Meanwhile, the
defendants in fact occupied the whole house. In cases such as this the
Q court has to determine whether the true bargain is that the occupiers are
entitled to exclusive possession of the premises, unless and until the
owner requires them to share, or whether the true bargain is that their
entitlement is only to their share in the right to occupy, although, as
there is currently no other occupant, it will be impracticable and
unreasonable to seek to prevent their de facto occupation of the whole
premises. If the former is the case and, for the time being, they have an
H entitlement to exclusive occupation, they are tenants and their status
cannot at some future date be unilaterally converted into that of lodgers
by the owner requiring them to share their occupation: Antoniades v.
Villiers [1990] A.C. 417. If the latter is the case, they never achieve the
status of tenants.
In the instant appeal it is quite clear that the true bargain was that
the defendants should be entitled to exclusive occupation unless and
until the plaintiff wanted to exercise her right to authorise someone else
776
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Asian v. Murphy (C.A.) [1990]
to move in as a lodger and she never suggested that this was a serious A
possibility. The provision about the key was no pretence in the sense
that the plaintiff retained a key and no doubt did not wish the
defendants to change the locks without at least giving her new keys. But
her wish to have a key was not dictated by any obligation to provide
services or anything else from which it could be inferred that she was
herself occupying the house as well as the defendants.
But the situation could have been different. If the plaintiff had ^
determined to have two couples as lodgers, she might not have been
able to find them simultaneously. The first couple might have de facto
occupation of the whole house meanwhile, but could not have claimed
to be tenants since the plaintiff would de jure herself have been a co-
occupier until the second pair of lodgers arrived. Applying the test of
what was the true bargain between the parties, the court would have Q
wanted to know what steps (if any) were being taken by the owner to
fill the vacancy. If the owner was not actively seeking another occupant,
it would be inherently more likely that the first couple were entitled to
exclude possession of the whole in the meanwhile and so were tenants.
On the facts of this case and the law as now declared by the House
of Lords, the defendants are clearly to be regarded as tenants, their
appeal must be allowed and the order for possession set aside. D
Asian v. Murphy (No. 2)
Following the order for possession made by Judge McDonnell, the
service of notice of appeal to this court and an order for stay of
execution of the order for possession pending determination by this
court of the appeal, the local authority, Kensington and Chelsea (Royal) E
London Borough Council, on 9 November 1988 served a closing order
on the plaintiff relating to the room occupied by the defendant under
the provisions of section 266 of the Housing Act 1985, on the ground
that the room was not fit for human habitation and was not capable of
being rendered fit at reasonable expense. The order prohibited use of
the room for any purpose other than a purpose approved by the council.
That notice came to the attention of the defendant.
Without serving a notice to quit to terminate such contractual
tenancy if any as might exist, on the basis that this court would hold, as
in the event it has done, that the relationship between the parties was
that of landlord and tenant, the plaintiff issued further proceedings in
the West London County Court claiming possession of the room. The
grounds for recovering possession were said to be the closing order, Q
Before the judge in the county court it was contended on her behalf that
the combined effect of sections 276 and 277 of the Housing Act 1985
conferred upon her the right to possession. The defendant contended
that this was not the effect and that the contractual tenancy had to be
determined before an order for possession could be made. Section 276
provides:
"Nothing in the Rent Acts prevents possession being obtained by
the owner of premises in respect of which a closing order is in
force."
Quite clearly, that section does not afford a ground of possession; it
merely removes the statutory security of tenure which would otherwise
protect the tenant from an order for possession being made. Section 277
provides:
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777
1 W.L.R. Asian v. Murphy (C.A.)
A "If a person, knowing that a closing order has become operative
and applies to premises, uses the premises in contravention of the
order, or permits them to be so used, he commits a summary
offence and is liable on conviction to a fine not exceeding level 5 of
the standard scale and to a further fine not exceeding 20 for every
day or part of a day on which he so uses them or permits them to
be so used after conviction."
B
Mr. Lincoln submitted on behalf of the plaintiff that, once the closing
order became operative, which unless there is an appeal is 21 days after
service, both parties commit a criminal offence if the room was occupied
by the defendant; since a notice to quit has to be not less than 28 days,
he submitted that Parliament must have intended a landlord to obtain
Q possession without need of serving a notice to quit, otherwise he would
be committing an offence, at least after the expiry of the 21 days from
service of the notice.
In our judgment this contention is fallacious. First, the landlord only
commits an offence under section 277 if he permits the tenant to occupy
the premises. If he has served a notice to quit he does not permit the
tenant to occupy the premises after the 28 days' expiry of the notice and
D before that time he does not permit occupation, if he does his best to
persuade the tenant to leave, but is unsuccessful, since he has no power
to evict him without an order of the court. Moreover, the tenant only
commits an offence if he continues to occupy the premises as a place in
which he lives; he may use it for other purposes, such as storing
furniture, which would not involve the commission of a criminal offence.
P And in the present case the defendant has ceased to live in the room.
Secondly, there is nothing in section 277 which expressly provides for
the termination of a tenancy; and, unless this occurs by operation of
law, it will not do so. It was not suggested by Mr. Lincoln that the mere
fact that the landlord and tenant might both be committing a criminal
offence if the one permitted the premises to be used, and the other
occupied the premises, for living purposes frustrated the contract.
F Mr. Lincoln sought to rely on Buswell v. Goodwin [1971] 1 W.L.R.
92. In that case it was held that the fact that the closing order had come
about because the landlord was in breach of his repairing agreement did
not prevent an order for possession being made. The local authority had
a public interest and duty to see that premises that were not fit for
habitation were not occupied for such purposes and the court would give
effect to that interest irrespective of where the blame lay for the state of
affairs that existed. That case does not assist; and it is to be noted that
the landlord had served the appropriate notice to quit.
In our judgment, before the plaintiff can claim possession she must
determine the contractual tenancy. There is nothing in section 276 or
section 277 of the Act which either directly or indirectly has this effect.
It must be done by service of a notice to quit. If the tenant wishes to
H continue to be liable for the rent, notwithstanding that he cannot live in
the room, he is entitled to maintain that his tenancy has never been
determined. In this case it has suited him to do so, so that he can
require the local authority to rehouse him.
In conclusion, we shall like to pay a special tribute to the assistance
which we received from Miss Pearce, counsel for the defendant, in the
context of the Asian v. Murphy (No. 2) appeal. It is in the nature of the
new procedure, under which the court has had an opportunity of reading
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778
Asian v. Murphy (C.A.) [1990]
the papers and skeleton arguments in advance, that counsel will be A
confronted with questions from the court of which he or she has had
little or no notice: see Practice Direction (Court of Appeal: Presentation
of Argument) [1989] 1 W.L.R. 281. Accordingly, counsel has to be
prepared to answer a wide variety of questions as to the facts and the
law, many of which will not be asked in the event. Miss Pearce showed
a complete mastery both of the facts and the law, including in the case
of the law somewhat peripheral questions relating to the defendant's *>
entitlement to be rehoused which, we learnt, arose under section 39 of
the Land Compensation Act 1973. We are indebited to her for the
assistance bred of her industry.
Appeals allowed with costs.
Costs on Scale 2 below. Q
Legal aid taxation.
25 July. After consideration of written submissions by counsel, for
the parties in Asian v. Murphy (No. 1) and Asian v. Murphy (No. 2)
appeals, the court ordered that the appeals be allowed with costs.
Solicitors: Brocklesby & Co.; Silverman Sherliker & Co.; Goodridge D
Partnership, Thornton Heath; Cotton Gumersall & Palmer, Epsom.
D. E. C. P.
F