B e f o r e :
LORD JUSTICE PETER GIBSON
LORD JUSTICE SCHIEMANN
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WALTER RENE HUWYLER |
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Plaintiff/Respondent |
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JOHN RUDDY |
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Defendant/Appellant |
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(Computer Aided Transcript of the Palantype Notes of
John Larking Verbatim Reporters, Chancery House, Chancery Lane
London WC2 Tel: 0171 404 7464
Official Shorthand Writers to the Court)
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MR. S CARROTT (Instructed by Ms Cathrine Gardner, Camden Community Law Centre, NW5 3LG) appeared on behalf of the Appellant
MS. M STEVENS-HOARE (Instructed by Messrs. Chalker Smalley, N64 EL) appeared on behalf of the Respondent
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HTML VERSION OF JUDGMENT
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Crown Copyright ©
Thursday 18 January 1996
LORD JUSTICE PETER GIBSON: The primary question to which this appeal gives rise requires this Court to revisit yet again the familiar, if at times difficult, boundary between a tenancy and a licence in order to determine whether a claim for possession of residential accommodation can be resisted. If the Plaintiff seeking possession is right, the Defendant only has a licence to occupy the premises and that licence has been terminated. If the Defendant is right, he has a tenancy but in that event a second question arises: because the rent payable by the Defendant includes payments in respect of attendance, is the amount of the rent that is fairly attributable to attendance, having regard to the value of the attendance to the tenant, a substantial part of the whole rent? If it is a substantial part, then the tenancy is not a protected tenancy by reason of section 7 of the Rent Act 1977 and the claim to possession will succeed. If it is not a substantial part, then the Defendant is entitled to remain in possession. Mr. Assistant Recorder Huskinson determined the primary question in favour of the Plaintiff, but, in case he was wrong on that, he went on to consider the second question, again determining it in favour of the Plaintiff. Accordingly, he gave possession to the Plaintiff. The Defendant, with the leave of Russell LJ and Hale J, now appeals.
The Plaintiff owns a long lease of flat 7, 67 Fairfax Road, Swiss Cottage, London NW6. In 1985 the flat consisted of four bedrooms, a bathroom, WC and kitchen. On 4 October 1985, the Plaintiff and the Defendant entered into a written agreement which was headed "Licence Agreement" and the material parts read as follows:
"THIS LICENCE is made the 4th day of October 1985
BETWEEN (1) the Landlord MR. WALTER R. HUWYLER [the Plaintiff] and
(2) the Tenant ("the Licensee"), MR. J. RUDDY [the Defendant]
WHEREBY IT IS AGREED as follows:
1. The Licensee shall have the right to occupy the room in the flat known as FLAT 7 67 FAIRFAX ROAD SWISS COTTAGE LONDON NW6 4EF.
2. The Landlord intends to retain the legal possession control and management of the flat and does not grant any tenancy to the licensee or any other person who might from time to time be licenced to share the occupation of the flat with others.
3. THIS LICENCE IS ENTERED INTO BY THE LANDLORD OR HIS AGENT AND LICENSEE SOLELY UPON THE ABOVE BASIS.
4. By this Licence the Licensee [is licenced] to use the flat together with the use of the furniture and effects now in the flat which are more particularly set out in the Schedule of Contents annexed hereto."
(There was no such schedule)
"5. The Licence is for 6 months and is renewable....."
Clause 6 provides for the consideration to be £50 per week.
"8. Included in the Rent is GENERAL RATE - WATER RATE - ELECTRICITY - HEATING - SERVICE - LAUNDRY - CLEANING.
9. Nothing herein contained shall create the relationship of Landlord and tenant between the parties hereto and the benefit of this Licence shall be personal to the Licensee."
Clause 10 contains a provision entitling the landlord to terminate the licence.
It will be noted that the agreement was in respect of "the room" in flat 7. The judge found that a room had been identified within the flat and agreed upon when the agreement was entered into. At the trial the room was referred to as "room A". It had no separate cooking facilities. The Defendant was allowed to use the kitchen, the bathroom and the WC together with the other occupiers of the other rooms in the flat. All those occupiers had agreements similar to that into which the Defendant entered. Services were provided in the form of laundry of bed linen and cleaning the room. An estimate was given of the time occupied in performing the cleaning service, and that was found to be 20 minutes per week. The Plaintiff's brother who at one time had a room in the flat was the person who performed that service. He would clean the room at a time which was not inconvenient to the Defendant and would remove the rubbish and produce the clean linen. All the rooms had locks on the door and we were told that the Defendant had a key right from the start for his room, but so did the Plaintiff's brother who was, therefore, able to enter the room to perform the cleaning services which I have indicated.
In 1988 the flat was redecorated. The kitchen was converted into a further bedroom containing a single electric ring for cooking, an electric point for a kettle and a basin for washing-up. The Defendant was asked to move out temporarily from room A while it was redecorated and went into another room for a while. After the kitchen had been transformed into another bedroom the Defendant went into that room (room C). He continued to have the right to use the bathroom and the WC (as did the other occupiers of the flat) but, of course, there was no separate kitchen thereafter. The altered arrangements were made informally.
The judge found that the services which had been provided wound down gradually. In 1990 the Defendant wrote a letter to Camden Council complaining of the rent that he was required to pay. By then, the rent had been increased to £65 per week, apparently because of the Community Charge, and the Defendant pointed out that he was no longer obtaining services that he had originally obtained from the Plaintiff. The judge found that subsequently there was a discussion between the Defendant and the Plaintiff's brother and what the judge called a "modus vivendi" was reached between them that the Defendant would do his own cleaning.
On 4 August 1994 the Plaintiff gave written notice to the Defendant to terminate the agreement on 7 September 1994. The Defendant resisted that claimed right to terminate the agreement. Proceedings for possession were commenced by the Plaintiff in November 1994, and so it was that the matter came on for trial before the judge. The judge's approach was to examine the nature of the contract between the Plaintiff and the Defendant in relation to room A and then to go on to consider the differences in the arrangements when the Defendant moved to room C. The judge found that the services which the Plaintiff was obliged to provide to the Defendant and the consequent need to have access to the Defendant's room caused the true position between the Plaintiff and the Defendant to be that of licensor and licensee, in relation to room A. When the judge turned to the question whether the arrangements changed when room C was occupied by the Defendant, he looked at the circumstances and held that the occupation was on the same terms as that in relation to room A, save, of course, that there was no sharing of a kitchen. He held that, as a matter of contractual entitlement, the Defendant was still entitled to the services that had been provided for by the agreement, and that nothing had happened since to alter that arrangement. Therefore, he held that the Plaintiff was entitled to succeed on the primary question. When he looked at the second question relating to section 7 of the Rent Act, he found that the value of the attendance to the Defendant did amount to a substantial part of the rent, though he described it as very much a borderline matter. Accordingly he held that the Plaintiff was entitled to possession, and so ordered.
Before us Mr. Carrott, for the Defendant, submitted that the judgment was fatally flawed. His first submission was that the provision of cleaning and linen once a week for 20 minutes could not, as a matter of law, turn what was otherwise a tenancy into a licence.
Prior to the decision of House of Lords in Street v Mountford [1985] AC 809, the law on the distinction between a licence and a tenancy underwent a number of changes. In the nineteenth century the crucial test was recognised to be whether the occupier had exclusive possession. During the present century, when the Rent Acts conferred security of tenure on a tenant but not on a licensee, a more flexible test was applied, that of the intention of the parties, which was to be inferred from all the circumstances. But in Street v Mountford the House of Lords rejected the more flexible test. Save for exceptional circumstances, for example, occupation under a contract of sale, where residential accommodation is offered and accepted with exclusive possession for a term at a rent, the result is a tenancy.
Mr. Carrott drew attention to one sentence in the speech of Lord Templeman at page 818A where this was said:
"The occupier is a lodger if the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises."
Mr. Carrott submitted that the judge should have made an express finding as to unrestricted access. I do not agree. For my part I do not regard that statement by Lord Templeman as meaning that it is only where the landlord provides attendance or services requiring the landlord to exercise unrestricted access that the occupier is a lodger, though Ralph Gibson LJ in Crancour Ltd. v Da Silvaesa [1986] 18 HLR 265 at page 279 and 280 indicated his opinion, in tentative terms, that Street v Mountford laid down a rule that:
"...premises made available for a term at a rent for residential accommodation must imply a grant of exclusive possession, whatever the terms and circumstances of the agreement, unless the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises."
But Ralph Gibson LJ also gave guidance as to the meaning of the word "unrestricted" in this context, which I respectfully adopt. At page 273 he said:
"I take the meaning of the word 'unrestricted' in this context to be primarily concerned with the landlord's need to go into and out of the lodger's rooms at the convenience of the landlord and without the lodger being there to let the landlord in."
In the present case, if one looks at the rights and obligations of the Defendant and the Plaintiff in relation to room A, it seems to me that, as the judge said about the obligation to provide services to the Defendant, the Plaintiff was obliged to be able to get into room A as and when necessary, although obviously he respected the privacy of the Defendant. In my judgment the Plaintiff, by his obligation to provide service in the form of cleaning, did have unrestricted access in the sense indicated. Of course, if the purpose of the access was so trivial as to make the obligation a sham, then the Court could disregard such right and obligation. But I cannot see how that could be said of the obligation in the present case.
Mr. Carrott also relied on section 7 of the Rent Act 1977. He said that the statutory provision proceeded on the assumption that there could be a tenancy notwithstanding that the obligation of the landlord was to provide attendance of an insubstantial nature. I accept that, but I do not see how it helps him in the present case. At this stage we are considering whether or not there is a tenancy or a licence. That is the preliminary question to be answered also in relation to section 7, which only bites if there is a tenancy. The particular terms of the tenancy may govern the question of the provision of attendance (which may not give the landlord unrestricted access) and there is nothing, in my view, inconsistent with a tenancy in an attendance of a value to the Defendant of an insubstantial part of the rent.
As is stated in Woodfall on Landlord and Tenant, paragraph 1.028:
"Where the householder provides attendance for the lodger, such as the cleaning of the room, the provision of clean linen and the like, the occupier will not normally be held to have exclusive possession of the accommodation."
In my judgment, the judge cannot be criticised for reaching the conclusion that he did on the particular facts of this case, that the occupation of room A was under a licence and not under a tenancy.
Did the contractual position alter when room C was occupied by the Defendant in 1988? Mr. Carrott submitted that it did. He pointed out that there was no new agreement, the previous agreement having related to "the room" which had been identified as room A. He also relied on the fact that the kitchen was no longer there to be shared; it had become the room occupied by the Defendant. In particular, he relied on the fact that services had ceased to be provided from about that time. But for my part, I cannot fault the judge's approach to this particular question. The judge said at page 14 of the transcript:
"In my judgment, nothing was said regarding the terms of occupation of room C but that these terms were understood by both parties to be on the same basis as the occupation of room A, save, of course, that there could not be any sharing of the kitchen. As regards the services, I conclude that Mr. Ruddy was still entitled, as a matter of contractual arrangement, to enjoy the services albeit that it may be that about then or shortly thereafter, Mr. Huwyler ceased to provide them or ceased to provide them anyhow to the extent that he previously done. In my judgment, the arrangement as regards room C started off on the same basis as in relation to room A, namely that there was this entitlement to receive and an obligation to provide services, and I conclude that nothing that has happened since then has amounted to a complete reconstruction of this agreement so as to change the nature of Mr. Ruddy's occupation. So the result of that, in my judgment, is that Mr. Ruddy continues to have the status of a lodger."
It seems to me to be the obvious inference that when the room was changed from room A to room C, the same contractual terms continued to apply. Nothing, it will be noted, was said about the kitchen in the original agreement. The same rent continued to be paid, and I do not see how it could be inferred that some wholly different arrangement thereafter was to apply to room C. Indeed, it is to be noted that when the Defendant wrote to Camden and complained, as he said in his own oral evidence, he wanted the Council to be aware of what he was entitled to and what he was no longer receiving. That is a reference to the services to which he had been entitled under the original agreement. It would, therefore, appear that the Defendant was proceeding on the footing that the terms of the original agreement applied to room C, and to my mind that is entirely consistent with what I have called the obvious inference.
Mr. Carrott had a further submission which was based on a conversation which occurred subsequent to that letter. He submitted that the Defendant's occupation became under a tenancy when it was agreed that services would not be provided to him. The judge said at page 8G of the transcript:
"In my judgment what happened was that the services gradually wound down such that Mr. Ruddy had cause to complain as to the absence of services in 1990 and that at some indeterminate date a modus vivendi between Mr. Ruddy and Mr. Huwyler was reached where it was recognised that Mr. Ruddy would thereafter arrange his own cleaning; effectively he was saying, 'Don't trouble any more to do the cleaning and I do not expect you to provide the services.' As regards the date, it is my judgment that the services effectively stopped either more or less at the stage when Mr. Ruddy moved into room C or shortly thereafter. However, the conversation whereby it was recognised that Mr. Huwyler would not be expected to provide services any longer, was substantially later than this - and one notices Mr. Ruddy effectively complaining to Camden, or expressing disappointment to Camden that he was not obtaining the services, services which he felt he was entitled to in 1990.
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In summary, as a matter of fact, the services wound down in about 1988 or shortly thereafter and little or no services were in fact provided after that date but Mr. Ruddy did not dispense with those services at that date and no formal arrangement dispensing of the services was ever made. There was merely an informal recognition later on that Mr. Huwyler would not continue or would not recommence the provision of services."
Thus the judge was saying that, as a matter of contractual entitlement, there was only a forbearance by the Defendant in requiring the performance of the services, and that was a matter which was agreed with the Plaintiff. But it does not follow (and the judge is certainly not implying) that the Defendant could not have insisted on the resumption of the services. It seems to me that there is no reason why, at any stage, he could not have asked that the contractual services be resumed.
When we are considering whether or not there is an agreement or a licence, in my judgment we must look at the contractual position between the parties. I respectfully agree with the judge that as a matter of contract, therefore, the position did not change either when the Defendant moved to room C or subsequently when the modus vivendi was reached.
For these reasons, despite the valiant attempts of Mr. Carrott to sustain this appeal, I have come to the conclusion that the judge was right on the primary question and that it was at all times only a licence and not a tenancy which the Defendant enjoyed. That licence, it is common ground, was validly determined. It is, therefore, not necessary for me to deal with the second question and I shall say nothing about it. I would dismiss this appeal.
LORD JUSTICE SCHIEMANN: I agree. Whether an arrangement between an occupier of a room in a flat and the owner of the flat amounts to a tenancy or to a licence has given rise to much case law. The principles which have been established by the courts boil down to setting out the task of a judge in these circumstances as, first of all, determining what is the true arrangement between the parties and, second, coming to the conclusion as to whether this gives rise to a tenancy or a licence. These principles were well understood by the Assistant Recorder who, I note, was an editor of the last bound edition of Woodfall.
In my judgment, as in the judgment of my Lord, the findings of fact which the Assistant Recorder made were open to him on the evidence which is recorded in transcript form before us; he applied the correct principles to those facts and, for my part, I also can find no reasons to quarrel with the conclusions to which he came. I also would dismiss this appeal.
Appeal dismissed.
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