Antoniades v Villiers

Residential accommodation granted with exclusive possession for a term at a rent ordinarily creates a tenancy. The court must determine the transaction’s true legal nature from its substance and relevant surrounding circumstances. The parties’ description is not decisive, but it is not automatically irrelevant. An agreement is a sham only where all parties share an intention that it should create apparent rights different from those actually intended. A genuine licence remains lawful. Motives of avoiding Rent Act protection and subsequent conduct cannot alter the construction of the agreement. Where the agreement is not a sham, its terms must be given fair effect. Here, the agreements genuinely denied exclusive possession and permitted further sharing.

The freeholder of a flat granted identical written agreements to a young man and woman. Each agreement described the occupation as a licence, denied exclusive possession, permitted the owner to use the rooms or introduce others, and required a monthly payment of £87. The occupants later claimed that they were joint tenants protected by the Rent Acts.

The Lambeth County Court accepted that contention and dismissed the possession claim. The central issue on appeal was whether the agreements were sham devices concealing a joint tenancy, or genuine separate licences under which the occupants had no right to exclusive possession.

Appeal allowed. Bingham LJ gave the leading judgment. Mann LJ agreed with the result and gave separate supporting reasons.

1. The court must identify the true nature of the transaction. Residential accommodation granted with exclusive possession for a term at a rent ordinarily creates a tenancy, but the contractual label is not decisive and is not automatically ignored. Sharing agreements may require a distinct factual analysis. The Rent Acts cannot influence construction, and avoiding their application is not itself unlawful or contrary to public policy: see Street v Mountford [1985] AC 809, Shell-Mex & BP Ltd v Manchester Garages Ltd [1971] 1 WLR 612 and Aldrington Garages Ltd v Fielder (1978) 37 P & CR 461.
2. A written agreement is a sham only where all parties share an intention that it should create the appearance of rights and obligations different from those actually intended. If it is a sham, the court gives effect to the concealed bargain. If it is not, the court construes the agreement and gives fair effect to its terms in their relevant surrounding circumstances. The issue is factual. Subsequent conduct cannot assist construction unless it evidences a new agreement or an estoppel. The principles were drawn from Snook v London & West Riding Investments Ltd [1967] 2 QB 786 and Hadjiloucas v Crean (1987) 284 EG 927.
3. The written agreements repeatedly denied exclusive possession. The landlord had expressly reserved the right to share the rooms or introduce others, and the evidence did not establish any implied agreement to grant exclusive possession. Unlike Somma v Hazelhurst [1978] 1 WLR 1014, the flat contained separate rooms and beds, so additional sharing was physically possible. The occupants therefore could not show the common intention necessary to establish a sham.
4. The occupants were each licensees. Their licences were effectively determined by the written notices of 7 July 1986. The County Court order was set aside, possession was ordered within 28 days, and the appeal was allowed with costs. Execution was stayed pending an application for leave to appeal to the House of Lords, and the defendants’ costs were subject to legal aid taxation.

• Court of Appeal: Allowed the landlord’s appeal, set aside the County Court order and ordered possession within 28 days, subject to a stay pending an application for leave to appeal.
• Lambeth County Court: His Honour Judge Macnair held that the occupants were tenants protected by the Rent Acts and dismissed the possession claim.