B e f o r e :
LORD JUSTICE SOMERVELL
LORD JUSTICE DENNING and
LORD JUSTICE ROMER
Between
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Between:
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(Transcript of the Shorthand Notes of The Association of Official Shorthandwriters Ltd.,
Room 392, Royal Courts of Justice, and 2, New Square, Lincoln's Inn, London, W.C.2.)
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MR. R. E. MEGARRY (instructed by Messrs. Elwell & Binford Hole, agents for Messrs. A. N. & S. I. Levinson, West Hartlepool)
appeared on behalf of the Appellant.
THE RESPONDENT did not appear and was not represented.
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HTML VERSION OF JUDGMENT
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Crown Copyright ©
LORD JUSTICE SOMERVELL: This is an appeal from a decision of His Honour Judge Gamon, and it turns on the construction of an agreement. It involves one of these problems which parties sometimes set the Court when they use words in some of the paragraphs of the agreement indicating one relationship, and use words in other paragraphs of the agreement which would indicate another. The Court has to construe the agreement as a whole. The question is whether the document here is a lease or a licence to occupy the premises with which it deals. The learned Judge, who gave a reserved Judgment, appended a memorandum when he heard, no doubt, that there would be an appeal, in which he said there were no material facts in dispute, and the substantial issue was whether the agreement to which I shall shortly refer operated as a tenancy agreement or merely as a licence. The learned County Court Judge held that it was a lease, and from that decision the landlord appeals. Mr Megarry appeared for the owner, and the licenses or lesses was not represented; but Mr Megarry drew out attention to any authorities which could have any possible application, and put the argument and issue clearly before us.
There were a number of causes, as I have said, referred to, and the learned Judge himself referred to an unreported decision of this Court, to one passage in which I will refer later. As a rule these agreements are in somewhat different terms and deal with different matters in different ways; and what one has to do is to construe the agreement which is before the Court. The agreement was made on the 7th August 1948, between Mr. Domenico Facchini and Mr. Bryson as employer and employee. The agreement recites
"This agreement is made the 7th day of August, 1948, between Domenico Facchini of Front Street Wingate in the County of Durham Ice-cream manufacturer (hereinafter called 'the employer'), of the one part and George Bryson of Front Street Wingate aforesaid (hereinafter called 'the assistant'), of the other part, whereby it is agreed between the parties as follows: 1. The assistant will faithfully serve the employer in his business of an ice-cream manufacturer confectioner and tobacconist and will during the continuance of this agreement give his whole time to the conduct of the business performing all such acts matters and things in about or relating thereto as the employer shall from time to time direct".
Mr. Megarry referred to this as a service agreement, and that clause and a later clause I shall come to deal with the service relationship. It would not on the face of it appear to be a complete setting out of the terms of the agreement, because it says nothing as to the remuneration.
"2. The employer will permit the assistant during the continuance of this agreement and by virtue of his appointment to occupy the dwelling house and premises situate and being in Front Street Wingate aforesaid but nothing in this agreement shall be construed to create a tenancy between the employer and the assistant."
It is on those last few lines that Mr. Megarry in the main relies in support of his argument that this should be treated as a licence.
"3. The assistant will (a) Keep the interior and fixtures of the said premises in clean condition and in such condition to yield up the same at the end of the tenancy and make good any damage to the premises or the windows sanitary arrangements fittings or fixtures thereof caused by the wilful or negligent act or omission of the assistant or any member of his family or household and that in default the employer may make good such damage and recover the cost thereof from the assistant".
It will be observed that that clause refers to "the tenancy".
"(b) Permit the employer or his agent at all reasonable times and where necessary with workmen and appliances to enter the premises to examine the condition thereof and to take inventories of the fixtures. (c) Not assign underlet or part with the possession of the premises or any part thereof and not take in at any time any lodgers. (d) Pay to the employer the weekly sum of 11s. 0d on the Saturday of each week for the use and occupation of the said dwelling house and premises".
Then
"The employer will keep the premises in tenantable repair damage by fire and such repairs as are to be done by the assistant under clause 3 (a) hereof excepted".
Then there is a provision that
"Either party may terminate this agreement at the end of the second or any subsequent week by giving to the other party one week's previous notice in writing such notice if given by the employer to be left addressed to the assistant at the said premises and if given by the assistant to be left addressed to the employer at his principal place of business. Provided always that if the assistant shall break this agreement in any particular or so misconduct himself as in the opinion of the employer to be likely to injure the employer's business the employer may dismiss the assistant without notice and without making any payment in lieu of notice".
I have referred to the reference to "the tenancy" in clause 3 (a). Clause 3 (b) in very similar terms was in the agreement which came before the Court in the unreported case to which I have referred, The Three D's Company Ltd. v. Barrow. I quite agree with Mr. Megarry that the agreement was not this agreement, and there are material differences between the two, but that I said about the similar clause in that agreement is, I think, applicable here. I said
"That provision is a provision which is only appropriate and relevant if the document is giving to the party who is going to live in the house exclusive possession. I should have thought that it was quite unnecessary if a servant was merely occupying the house that the landlord should stipulate that he should be allowed to go in and see the condition of it."
I think that is equally applicable in the present dispute as to whether this was a lease or a licence. Mr Megarry asked us to treat it like a declaratory section in an Act of Parliament, that is to say merely declaring a right and not giving one. I think the words are not apt to be considered in that way but are apt in the same sense in which I thought they were apt in the other case, namely, they assume a right to keep the landlord out, if I may so put it, and state the circumstances and conditions on which he may enter. Then in clause 3(c) there is an express prohibition of underletting, which obviously implies the existence of a lease. These seem to me to be the main and operative clauses in which one would seek what the rights as between the two parties are. It is quite true that the clause with reference to the payment does not use the word "rent", and the earlier part of clause 2 refers to occupation and use. But taking the agreement as a whole for the moment, apart from the last two lines of clause 2, I would have to come to the conclusion that this was a lease. The last two lines of clause 2 are in a somewhat curious form. They do not purport to set out the actual rights quoad possession and so on of the parties, but they are an agreement that nothing in this agreement shall be construed to create a tenancy between the employer and the assistant. In these days, of course as is well known, the question whether an agreement amounts to an agreement for a lease or is only a licence has become of great importance since the Rent Acts became a part of the Statute law of this country. It has been said more than once that it is not a mere question of words. If, looking at the operative clauses in the agreement, one comes to the conclusion that the right of the occupier, to use a neutral word, are those of a lessee, the parties cannot turn it into a licence by saying at the end "This is deemed to be a licence", nor could they, if the operative paragraphs showed it was merely a licence, say it should be deemed to be a lease. The words in question seem to me precisely to attempt to do that which this Court has said more than once cannot be done. I, therefore, come to the same conclusion as the learned Judge, and, as I read it, for substantially the same reasons which are set out in the careful judgment in which he refers to and deals with all the issues. For these reasons I think the appeal should be dismissed.
LORD JUSTICE DENNING: I agree. We have had many cases lately where an occupier has been held to be a licensee and not a tenant. In addition to those I mentioned in Errington v. Errington we have in the last few weeks had three more, Gorham (Contractors) Ltd. v. Field, Forman v. Rudd, and Cobb v. Lane. In all the cases where an occupier has been held to be a licensee there ahs been something in the circumstances to negative any intention to create a tenancy, such as a family arrangement, and act of friendship or generosity, or such like. In such circumstances it would be obviously unjust to saddle the owner with a tenancy with all the momentous consequences that that entails nowadays when there was no intention to create a tenancy at all. In the present case, however, there are no special circumstances at all. It is a simple case where employers let a man into occupation of a house in consequence of his employment at a weekly sum payable by him. The occupation has all the features of a service tenancy, and the parties cannot by the mere words of their contract turn it into something else. Their relationship is determined by the law and not by the label which they choose to put upon it. (See Commissioners of Customs and Excise v. Pools Finance, 1952, 1 Times Law Reports at page 797). It is not necessary to go so far as to find the document a sham. It is simply a matter of finding the true relationship of the parties. It is most important that we should adhere to this principle, else we should find all landlords granting licences and not tenancies; and we should make a hole in the Rent Acts through which you could drive – I will not in these days say a coach and four – but an articulated vehicle.
In this case the document was not a licence but a service tenancy. It contains words saying it is not a tenancy, but they must be ignored. The landlord is not entitled to possession except in accordance with the Rent Acts.
LORD JUSTICE ROMER: I also agree. My brethren have so fully covered the ground that there is nothing I can usefully add.
(Appeal dismissed).
