A G Securities v Vaughan

Separate agreements made independently with residential occupiers do not create a joint tenancy merely because the occupiers together fill the premises and can exclude further occupants for the time being. Several rights arising at different times, for different periods and payments, cannot be amalgamated into a single joint estate.

Exclusive possession remains essential. A contractual limit on the number of occupants does not confer it where each occupier must share with persons nominated by the owner. The court examines the substance and reality of the arrangement. Genuine independent sharing agreements may therefore create licences, while pretended sharing provisions designed only to conceal joint exclusive possession must be disregarded.

The appellant company owned a four-bedroom flat. Four respondents occupied it under genuine agreements made separately between 1982 and 1985. Each agreement began on a different date, required a different monthly payment and permitted the occupier to share the flat with up to three other persons authorised by the company. The respondents claimed a joint tenancy of the whole flat.

The county court held that the agreements created licences. By a majority, the Court of Appeal [1988] 2 W.L.R. 689 held that the four respondents jointly enjoyed exclusive occupation and were joint tenants. The company appealed. The House heard the appeal with Antoniades v Villiers and Bridger, which concerned contemporaneous agreements used for a couple occupying a one-bedroom flat.

The central issue was whether the substance and reality of each arrangement created a tenancy or licences.

1. The appeal was allowed unanimously. The Court of Appeal's order was set aside and the county court's order restored. The cause was remitted to the Clerkenwell County Court.

2. Per Lord Templeman, the four agreements were independent. They were made with unrelated applicants at different times, imposed different payments and gave rights capable of separate termination. No agreement entitled or compelled an occupier to become a joint tenant with a later occupant. The respondents therefore had no joint and exclusive occupation of the flat. Lord Bridge likewise held that rights and obligations which were initially several could not become joint.

3. Per Lord Oliver, the agreements reflected the parties' true bargain. Neither an individual occupier nor the four collectively could exclude another person whom the company was contractually entitled to nominate within the agreed maximum. Overlapping individual terms could not become one indivisible term, and separate payments could not become a single rent. Lord Jauncey added that the supposed tenancy lacked the necessary interlocking interests and the unities of interest, title, time and possession.

4. Per Lord Ackner, the substance and reality were that each respondent acquired no more than a licence to share the flat. No respondent had claimed a tenancy of an identified bedroom, so that possible basis for protection did not arise.

5. Lord Templeman stated the governing principles. Parties cannot contract out of the Rent Act 1977. Save in exceptional circumstances, exclusive occupation for a term in return for periodical payments creates a tenancy. Labels do not control the legal result. The court must examine the documents with the surrounding circumstances, including the relationship between intended occupiers, negotiations, the accommodation and the intended and actual mode of occupation.

6. The conjoined appeal in Antoniades v Villiers and Bridger was also allowed unanimously. The two contemporaneous and interdependent documents constituted one transaction granting the couple joint exclusive possession. The purported power to introduce the landlord or strangers was a pretence and could not defeat the tenancy or the protection of the Rent Acts.

1. House of Lords: allowed the company's appeal unanimously, set aside the Court of Appeal's order and restored the county court's order.

2. Court of Appeal: by a majority, Fox and Mustill L.JJ., Sir George Waller dissenting, held that the four respondents were jointly entitled to exclusive occupation and were joint tenants: [1988] 2 W.L.R. 689.

3. Clerkenwell County Court: Judge Owen held that the agreements created licences. His order of 16 February 1987 was restored.