Street v Mountford [1985]
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Street v Mountford [1985] UKHL 4 is a foundational case in English land law that distinguished between a lease (tenancy) and a licence, a critical distinction for determining tenants' statutory rights under the Rent Act 1977. The case revolved around whether Mrs Wendy Mountford, who occupied two rooms under an agreement labelled as a licence, actually held a lease, thereby entitling her to tenant protections such as controlled rent and extended notice periods.
The facts of the case are straightforward. On 7 March 1983, Roger Street, a solicitor, granted Mrs Mountford rooms in his property under an agreement termed a licence. The weekly payment was £37, and the agreement allowed for termination on fourteen days' notice. Additionally, the contract expressly stated that the Rent Act 1977, which applied to leases but not licences, did not cover the arrangement. However, Mrs Mountford argued that despite the label of licence, the reality of her occupation was that of a lease because she enjoyed exclusive possession of the premises. This was significant because leases, unlike licences, gave the occupier statutory rights under the Rent Act 1977, including fair rent regulation and more substantial notice requirements.
At first, the Court of Appeal sided with Mr Street, holding that the written agreement was clear and expressed both parties' intention that Mrs Mountford only had a personal right of occupation rather than a tenancy. Slade LJ, in delivering the judgment, emphasised that the language of the agreement indicated that Mr Street intended not to grant a lease but merely a licence. Consequently, the court found that Mrs Mountford did not have exclusive possession and thus was not entitled to the protections of the Rent Act.
The House of Lords, however, reversed this decision. In a pivotal judgment, Lord Templeman held that the reality of the agreement, not its label or the parties' expressed intention, determined whether Mrs Mountford had a lease. He emphasised that the defining characteristic of a lease was exclusive possession. If an occupier was granted exclusive possession of property for a term and at a rent, the legal result was a tenancy, regardless of whether the parties called it a licence. In his judgment, Lord Templeman famously compared this legal fiction to a manufacturer insisting that a five-pronged tool is a spade rather than a fork to explain that the function and reality of the arrangement matter more than the name given to it.
The principle established in Street v Mountford has had a lasting impact on property law. It confirmed that courts must look at the substance of an agreement to determine whether a tenancy or licence has been created. The ruling emphasised that exclusive possession is the cornerstone of a lease, whereas a licence simply grants a personal right to occupy the premises without exclusive possession. This distinction is critical because leases grant occupiers proprietary rights that can bind third parties and provide statutory protections, whereas licences do not.
Subsequent cases have applied the principles of Street v Mountford to various scenarios. In AG Securities v Vaughan [1988], the court ruled that no exclusive possession existed because the flat was shared by unrelated occupiers under separate agreements. In Antoniades v Villiers [1988], despite an express provision denying exclusive possession, the court found that the arrangement was a sham because the flat was too small to accommodate others, thus granting exclusive possession. In Family Housing Association v Jones [1990], the court held that a tenancy existed because the occupier effectively had exclusive possession despite a contractual clause stating otherwise. By contrast, in Westminster CC v Clarke [1992], a resident in a hostel was found to have a licence, not a lease, as the arrangement did not constitute a separate dwelling, and unrestricted access was granted to the owner.
In conclusion, Street v Mountford remains one of the most significant cases in English property law, providing clear guidance on the distinctions between tenancies and licences. The decision has been widely cited and remains an influential precedent in determining the legal status of occupiers and the corresponding rights and obligations under different types of agreements.
