Street v Mountford

A residential occupier is a tenant where an agreement grants exclusive possession for a fixed or periodic term in return for a premium or periodical payments. The legal effect depends on the rights created, not the parties’ label or professed intention.

Exclusive possession is essential but is not always conclusive. A person may occupy as a lodger, service occupier, purchaser, office-holder, beneficiary of charity or under another exceptional relationship. A landlord’s limited rights to inspect, repair or maintain do not prevent exclusive possession. Courts should also detect sham devices designed to disguise a tenancy.

Mr Street granted Mrs Mountford the right to occupy two furnished rooms for £37 per week. The written agreement called the arrangement a personal licence, permitted termination on 14 days’ notice and reserved limited rights of entry for inspection and maintenance. It was conceded that Mrs Mountford had exclusive possession. Mr Street provided no attendance or services.

After Mr Street sought possession, the county court held that Mrs Mountford was a tenant protected by the Rent Acts and dismissed the action. The Court of Appeal reversed that decision and ordered possession, treating the agreement as a licence. The central issue before the House was whether the agreement created a tenancy or a licence.

1. Appeal allowed unanimously. Lord Templeman delivered the leading speech. Lord Scarman, Lord Keith of Kinkel, Lord Bridge of Harwich and Lord Brightman agreed with his reasons. The Court of Appeal’s order was reversed and the Recorder’s order restored.
2. Per Lord Templeman, a contractual tenancy requires a grant of exclusive possession for a fixed or periodic term certain in consideration of a premium or periodical payments. Exclusive possession enables the occupier to exclude strangers and, subject to limited reserved rights of entry, the landlord. A licence creates no estate in land.
3. The parties’ professed intention and the label placed on their agreement cannot alter its legal effect. Once parties have contracted, the court determines the consequences from the substance of the rights granted. The Rent Acts likewise do not alter the proper construction of the agreement.
4. Exclusive possession is necessary but not invariably sufficient. An occupier may instead be an owner, trespasser, mortgagee in possession, charitable beneficiary or service occupier. A residential occupier is a lodger where attendance or services require the landlord or servants to exercise unrestricted access and use. Special circumstances may also show no intention to create legal relations or that possession is attributable to purchase, employment or office rather than a tenancy.
5. Limited rights reserved to inspect, repair or maintain residential premises are consistent with, and may emphasise, the occupier’s exclusive possession. The court should examine the agreement and surrounding circumstances where exclusive possession is disputed. It should also detect sham devices or artificial transactions intended only to disguise a tenancy and evade the Rent Acts.
6. Mrs Mountford had exclusive possession of residential accommodation for a periodic term at a weekly rent. Mr Street provided neither attendance nor services, and the reserved rights of entry were limited. No exceptional relationship applied. The arrangement therefore created a tenancy despite its description as a licence.

1. House of Lords: Allowed Mrs Mountford’s appeal unanimously. The Court of Appeal’s order was reversed and the Recorder’s order restored.
2. Court of Appeal: Held that Mrs Mountford was a licensee, not protected by the Rent Acts, and made an order for possession.
3. County court: The Recorder held that Mrs Mountford was a tenant protected by the Rent Acts and dismissed Mr Street’s possession action.