Crancour Ltd v Da Silvaesa & Anor; Same v Merola & Anor

In summary possession proceedings, the claimant must show a sufficiently clear and straightforward right to possession. A residential agreement is classified by its substance: a lodger may use a room, but the landlord’s attendance or services must require unrestricted access; otherwise exclusive possession points to a tenancy. Labels and subjective intentions do not control. A term that is prima facie a sham, or evidence of a collateral oral agreement, can make summary determination inappropriate. Such issues require evidence and, where necessary, remission for trial.

Crancour Ltd sought possession of two furnished rooms from occupants who held identical written licence agreements. Hirst J and Boreham J made possession orders under Rules of the Supreme Court Order 113, treating the occupants as lodgers rather than tenants. On appeal, the occupants challenged the construction of the agreements, alleged sham provisions and, in the second appeal, alleged a collateral oral agreement. The central issues were whether the agreements granted exclusive possession and whether the contractual and factual disputes could properly be resolved summarily.

1. Disposition. All three Lords Justices agreed that both appeals should be allowed. The possession orders were set aside and both proceedings were remitted to the county court for trial. Costs were awarded in the Court of Appeal and below, subject to legal aid taxation.
2. Summary procedure. Under Rules of the Supreme Court Order 113, a landlord may use summary proceedings where the right to possession is clearly established. The procedure is inappropriate where the evidence or the nature of the claim raises a substantial issue requiring trial. The judge must consider whether the parties had a fair opportunity to present their case and whether the landlord’s claim is sufficiently clear and straightforward. The principles in GLC v Jenkins [1975] 1 WLR 155, Shah v Givert (1980) 124 SJ 513 and Henderson v Law (1985) 17 HLR 237 were applied.
3. Lodger or tenant. Applying Street v Mountford [1985] AC 809, Ralph Gibson LJ held that, if the written agreements represented the parties’ true agreement, the occupants were lodgers. The obligations to provide attendance and services, together with the retained control and access, were capable of preventing exclusive possession. The obligation to provide services was not conclusive; the question was whether the services required unrestricted access to the accommodation.
4. Sham provisions. Following Snook v London & West Riding Investments Ltd [1967] 1 All ER 518, a sham requires a common intention by all parties that the document should create an appearance of rights and obligations different from those actually intended. A sham term may be ineffective without infecting the remainder of an otherwise genuine agreement. However, clauses denying use of the room between 10.30 am and noon and permitting removal of furniture were sufficiently extraordinary to require investigation. They weakened the clarity needed for summary relief.
5. Application to the appeals. In the first appeal, the apparent sham provisions and evidence concerning the services provided made the claim unsuitable for summary determination. In the second, the affidavits raised a triable issue about an oral agreement made with the housekeeper and required cross-examination. Nicholls LJ placed particular weight on the unexplained daily restriction in clause 1. Purchas LJ added that the whole document, its genesis and factual matrix must be considered where its terms appear prima facie artificial.

• Court of Appeal (Civil Division) — Allowed both appeals, set aside the possession orders and directed remission of the proceedings to the county court for trial.
• High Court — Hirst J made a possession order concerning Room 3 on 17 September 1985 under Rules of the Supreme Court Order 113.
• High Court — Boreham J made a possession order concerning Room 12 on 28 November 1985 under Rules of the Supreme Court Order 113.