Bostock v Bryant and another

Landlord and tenant — Rent Act 1977 — Payment by occupants of the greater part of a house of the gas and electricity bills for the house — Whether such payments constituted ‘rent’ — Owner of house occupied one room only and paid the general and water rates — Whether this arrangement gave rise to a periodic tenancy in favour of the occupants who paid the gas and electricity bills or whether these payments represented simply a contribution to the household expenses — Barnes v Barratt considered — Appeal from decision of county court judge who held that a periodic tenancy had been created — Appeal allowed In 1964 the owner, a Mr Jones, of the house which was the subject of these proceedings made an arrangement with the Bryant family, which then consisted of a husband and wife and three children, by which they should occupy all the house except for one room which was occupied by the owner himself — The arrangement appears to have been that he paid the general and water rates and the Bryants paid the gas and electricity bills, in each case in respect of the whole house — Apart from the payment of these bills the Bryants made no other payment in respect of their occupation — The Bryant father died in 1973 and Mr Jones, the owner of the house, died in 1987 — There were then left in the house, it appears, Mrs Bryant and a spinster daughter — The executor of Mr Jones brought matters to a head by serving a notice terminating the rights of these remaining Bryants, whether they had a licence or a tenancy — The county court judge refused to make a possession order, holding that the defendants had a periodic tenancy, the payments made for gas and electricity constituting rent — It appears that he found there to have been a protected tenancy until the death of the house owner and thereafter a statutory tenancy — The executor appealed The appellant challenged the judge’s finding of a periodic tenancy at a rent — It was clear from Street v Mountford that the grant of exclusive possession for a term at a rent prima facie gave rise to a tenancy, but a payment does not necessarily constitute a rent — There may be a more likely explanation of the payment — In the Court of Appeal’s view the more natural inference to be drawn from the discharge by the Bryants of the gas and electricity bills was that it was simply a payment of their part of the expenses incurred, a sharing of the expenses of the house — People sharing a house often share outgoings and expenses and they do not necessarily do so pound for pound The appellant also relied on the case of Barnes v Barratt, which decided that for the purposes of the Rent Act ‘rent’ had at least to be quantified in terms of money; services not quantified in money were not ‘rent’ for this purpose — The discharge of bills from time to time did not qualify as rent — The court accepted that the decision in Barnes v Barratt applied — They also noted the point that for a tenancy to be a protected tenancy, and subsequently a statutory tenancy, the rent had to be not less than two-thirds of the rateable value on the appropriate day — If the rent was to be determined by the fluctuating amount of fuel bills, the tenancy could be protected one moment and unprotected the next — Whether by the application of Barnes v Barratt or because the proper inference was that there was here no payment of rent at all, the judge had come to the wrong conclusion 102 The court also dismissed a cross-appeal by the respondents which submitted that there was evidence in the form of a rent book that actual rent had been paid and also that the first respondent, Mrs Bryant, had an equity in the house entitling her to stay there as long as she wished — There was no evidence which supported either contention — Appeal allowed The following cases are referred to in this report. Barnes v Barratt [1970] 2 QB 657; [1970] 2 WLR 1085; [1970] 2 All ER 483; (1970) 21 P&CR 347, CA Greasley v Cooke [1980] 1 WLR 1306; [1980] 3 All ER 710, CA Mackworth v Hellard [1921] 2 KB 755 Street v Mountford [1985] AC 809; [1985] 2 WLR 877; [1985] 2 All ER 289; [1985] 1 EGLR 128; (1985) 274 EG 821, HL This was an appeal by Francis Albert Bostock, the executor of Owen Henry Jones, deceased, from a decision of Judge Barr, at Brentford County Court, dismissing the plaintiff’s claim to possession of a dwelling-house at 48 Berrymede Road, Acton Green, Middlesex, and holding that the defendants (present respondents), Mrs Patricia Bryant and Miss Karen Bryant, were entitled to remain in possession. John A Hodgson (instructed by Watson Marshal) appeared on behalf of the appellant; David Edlin (instructed by Lock & Marlborough) represented the respondents. Giving judgment, STUART-SMITH LJ said: This is an appeal from a judgment of His Honour Judge Barr, sitting at Brentford County Court, given on January 12 1990. By that judgment he dismissed the plaintiff’s claim for possession of a house known as 48 Berrymede Road, Acton Green, Middlesex. The plaintiff is the executor of the will of Owen Henry Jones, who died on October 27 1987 and who was known to the parties as Uncle Joe. He was the registered owner of the house at 48 Berrymede Road, and in about September 1964 the deceased had agreed with a Mr Bryant, who was the husband of the first defendant and father of the second defendant, that the Bryant family, which then consisted of husband and wife and three children, should occupy all of the house except for one room which was occupied by Uncle Joe himself. The arrangement appears to have been that Uncle Joe paid the general and water rates and the Bryants paid the gas and electricity bills, in each case in respect of the whole house. The defendants’ case at the trial was that, in addition, a rent was paid and Mrs Bryant’s evidence was that at the date of Uncle Joe’s death she was paying £5 a week. That evidence was rejected by the learned judge. He found that there was no payment of £5 a week or any lesser sum at an earlier stage in respect of rent. Mr Bryant died in 1973 and, as I have said, Uncle Joe died in October 1987. A notice terminating the defendants’ right to remain in the premises, whether that was a licence or a tenancy, was served on April 21 1989, expressed to expire a month later. The judge decided to make no order for possession because he held that there was a periodic tenancy in favour of the defendants and that there had been payment of rent inasmuch as there was payment of the gas and electricity bills and, although he does not specifically deal with the point, the inference is, and it clearly must be the case on that finding, that it was a protected tenancy until the date of Uncle Joe’s death, and thereafter it became a statutory tenancy, and that grounds did not exist under the Rent Acts to enable the court to make an order for possession. The appellant has challenged the learned judge’s findings that there was a periodic tenancy at a rent. Mr Hodgson, on behalf of the appellant, accepts that prima facie, where residential accommodation has been granted for a term at a rent with exclusive possession, the grantor providing neither attendance nor services, the legal consequence is the creation of a tenancy. That derives from the House of Lords decision in Street v Mountford [1985] AC 809* and in particular from a passage in the speech of Lord Templeman at p 818: If on the other hand residential accommodation is granted for a term at a rent with exclusive possession, the landlord providing neither attendance nor services, the grant is a tenancy; any express reservation to the landlord of limited rights to enter and view the state of the premises and to repair and maintain the premises only serves to emphasise the fact that the grantee is entitled to exclusive possession and is a tenant. In the present case it is conceded that Mrs Mountford is entitled to exclusive possession and is not a lodger. Mr Street provided neither attendance nor services and only reserved the limited rights of inspection and maintenance and the like set forth in clause 3 of the agreement. On the traditional view of the matter, Mrs Mountford not being a lodger must be a tenant. There can be no tenancy unless the occupier enjoys exclusive possession; but an occupier who enjoys exclusive possession is not necessarily a tenant. He may be owner in fee simple, a trespasser, a mortgagee in possession, an object of charity or a service occupier. To constitute a tenancy the occupier must be granted exclusive possession for a fixed or periodic term certain in consideration of a premium or periodical payments. The grant may be express, or may be inferred where the owner accepts weekly or other periodical payments from the occupier. *Editor’s note: Also reported at [1985] 1 EGLR 128. Mr Hodgson accepts that the defendants here had exclusive possession of that part of the house which was not occupied by the deceased, but he submits that there was neither a periodic term nor a rent payable. I do not find it necessary to look at the learning on rent at common law to which we have been referred. The learned judge dealt with the matter in a short judgment in this way: I find that there was a periodic tenancy and that the only rent payable under that tenancy was the payment for gas and electricity, which included gas and electricity for Uncle Joe and so was of benefit to him although of small benefit. I find that those payments were capable of amounting to rent. Now, if parties to an agreement describe a payment from the occupier to the owner as rent, the court will normally accept that it is properly so described, though it is not bound to accept the label put upon a payment by the parties. Thus, if there is a payment of money described in some other way, such as a licence fee, the court may nevertheless draw the inference that it is in fact rent if it is paid as consideration for use and occupation of the premises and that occupation is exclusive. But there may be other explanations of the payment, an explanation which is a more likely one, in which case the court will not draw the inference that it is paid as rent. In this case the Bryants occupied by far the greater part of the house. They consumed a far greater part of the gas and electricity. The explanation of those bills, in the absence of express agreement that they were to represent rent, is, as it seems to me, that they were paying for what they consumed. The bills, it is true, were in Uncle Joe’s name because he was the householder but, since they were by far the larger of the two consumers, the inference I would draw from the fact that they paid those bills is that they were making good their obligation to reimburse him for the amount expended on themselves. Where people share a house in this way they often share outgoings and expenses, and they do not necessarily do so pound for pound. In this case the deceased, Uncle Joe, paid the general rates and water rates to which the Bryants made no contribution, and it seems to me that the more natural inference to be drawn from the payments by the Bryants of the gas and electricity was that it was simply the payment of their part of the expenses incurred and a sharing of the expenses of the house in the way that I have described. Moreover, Mr Hodgson has relied upon the case of Barnes v Barratt [1970] 2 QB 657 and he submits that the effect of that case is that, so far as the Rent Acts are concerned, and we are dealing here with a Rent Act case, rent has to be a payment in money terms and not in the satisfaction of bills, which may vary from time to time. In that case the defendants, who claimed to be tenants, performed services for the landlord in the form of cleaning his room, cooking and so on, and also paid the electricity, gas and fuel bills for the whole house. At p 666C Sachs LJ said: It is convenient first of all to deal with the issue as to whether, assuming there was a tenancy, the defendants did pay rent within the meaning of that word in the Rent Acts. The county court judge held that the services rendered by them in caring for Mr Constable, cooking for him and providing him with warmth and light did constitute such rent. That the rendering of services can constitute rent at common law is well settled but whether it can, when there has been no quantification of their value, constitute rent under the Rent Acts is a different question. It was answered 45 years ago in Hornsby v Maynard [1925] 1 KB 514 by a Divisional Court particularly experienced in dealing with the manifold problems then regularly being raised by the Rent Registration Act, 1920, the Act from which so much of the later rent legislation is derived. In that case, a tenant allowed his landlord the use of two rooms and the unquantified value of that user was alleged to constitute rent. The headnote of that case reads, as regards the relevant holding, as follows: ‘(1) that the right given by the tenant to the landlady to use the two rooms was not ‘rent’ within the meaning of the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, that term there denoting rent in money only, and, consequently, that that right could not be taken into account in considering whether or not the agreed rent exceeded the standard rent by more than the permitted amount . . .’ 103 Shearman J in the course of giving his judgment, said at p 524: ‘On the true construction of the provisions of the Act it seems to me that the term ‘rent’ in section 1 and the other sections in which it occurs means rent payable in money and in money alone.’ Salter J, at p 525, referred to this issue as to what was ‘rent’ within the meaning of the Acts as being ‘the most important of the points taken on behalf of the defendant’ and prefaced his decision by reference to instances such as allowing the landlord the use of part of the house rent-free, taking the landlord as a lodger or rendering him services. He then said: ‘The question is whether or not ‘rent’ in section 1 and the other sections of the Act refers only to money. At common law the term ‘rent’ was not restricted to pecuniary rent . . . In this Act, however, having regard to its own provisions and to the authorities decided upon it to which our attention has been called, I think that the term ‘rent’ applies only to pecuniary rent.’ It is to be observed that Salter J referred (as also by inference did Shearman J) to the provisions of the Act of 1920 — in other words the structure of that Act — as leading to the result already specified. That is a point to which I shall return. Then Sachs LJ goes on in the next paragraph to point out that, that decision having been taken, and a number of Rent Acts having been passed since, there is no alteration of the definition and at p 667D he says: However, if one turns to look at the structure of the Rent Acts as a whole, it is equally clear that their provisions with regard to rent restriction can only, in practice, be operated if that interpretation is correct. The effective basis of the restrictions turns on there being quantified sums to which the provisions of the Acts can apply. It is not necessary to proceed in detail through those provisions, though we were most helpfully guided by counsel amongst them from section 1 of the Act of 1920 onwards. It is sufficient to refer to two of them. The first relates to the sole permissible method of increasing rents. This was laid down in the Act of 1920 by section 3(2) and in the Act of 1968 by section 26. In each and every Rent Act from 1920 onwards the same pattern has been adopted as regards the increasing of rents. It has always been made mandatory to use forms of notice of increase which are prescribed by the statutes. The first of these forms is to be found in Schedule I to the Act of 1920. Each form in turn is based on the existence of a quantified rent at the time when the notice is served. Moreover, one glance at it is sufficient to show how ill-adapted it would be to the present case if, for instance, the defendants and Mr Constable had, in the middle of their occupation, agreed that Mrs Barratt should also wash Mr Constable’s linen or that Mr Barratt should clean his car. The second set of provisions to be noted are those which are to be found in section 14 of the Act of 1920, of which the lineal successor is section 33 of the Act of 1968. Section 14 provides for the recovery by the tenant of ‘any sum’ — and it is to be observed that the word ‘sum’ is used — ‘paid on account of rent’ to the landlord which was ‘irrecoverable by the landlord’ — that is to say, the amount by which the payment exceeded the permitted rents whether that rent was permitted in the original tenancy or in a later supervening statutory tenancy. So if, as seems probable, the value of the defendants’ services at times exceeded the permitted rent, how, in this case, could the provisions of those sections in practice be operated?  The answer, to my mind, is that they could not. Moreover, what would be the position as regards the ‘irrecoverable’ part of the services when once the parties had come to arm’s length on such a matter?  Could Mrs Barratt be held, as from the date when the point was raised, to be liable only to do the cooking on three days out of every seven and, if so, on which days?  It suffices to say that the good sense of the decision in Hornsby v Maynard [1925] 1 KB 514 is patent; it was correctly decided. Moreover, counsel was unable to point to any case which has come before the courts over the last 50 years in which unquantified services of this type have been held to produce a tenancy within the ambit of the Acts. And Sachs LJ then goes on to deal with the question of the services and at p 669G says: On top of that argument there was a lack of many of the normal incidents of a tenancy. There was no fixed amount of rent; it would presumably vary from quarter to quarter with the fuel bills. There was no term, fixed or periodic. Mr Hodgson says, with force it seems to us, that those observations apply equally in this case. He reinforces the submission by two further provisions of the Rent Acts: first, that, in order for the tenancy to be a protected tenancy and subsequently a statutory tenancy, the rent has to be not less than two-thirds of the rateable value on the appropriate day. Now, it is apparent that, if the rent is to be determined by the amount of fuel bills, the fuel bills are liable to fluctuate. They are likely to be more in the winter than in the summer. Indeed, it appears to be the position in this case that, the appropriate day being March 23 1965, if the rent is to be taken as the entire amount of the gas and electricity bills, that is to say for the whole house, then that is more than two-thirds of the rateable value. But, if it is to be apportioned, namely that proportion of the bills which were attributable to the deceased’s consumption, the matter could go either way, probably depending on whether it was summer or winter. It would, in my judgment, be a most unsatisfactory arrangement whereby a tenancy could be a protected tenancy one moment and an unprotected tenancy the next, depending on whether it was summer or winter and depending on when the notice terminating it was served. It is not clear in this case entirely whether the learned judge took the view that the entire payments were the rent or whether it was only that part which was of benefit to the deceased. I think that the learned judge took the latter view. Mr Edlin has submitted to us that, in fact, the proper view is that it was the payment of the whole amount of the fuel bills which amounted to the payment of rent and that it is immaterial that the deceased made no profit out of it. He referred us to the case of Mackworth v Hellard [1921] 2 KB 755 where the rent payable was £30 a year, the rateable value of the premises was £40, but the landlord agreed and paid the rates and taxes which amounted to £31 18s a year. It was contended on behalf of the landlord that the rent was the net receivable amount, which in fact amounted to nothing after payment of those necessary outgoings. But the court held that that was not so and it was immaterial that the landlord made no profit on the transaction. The rent was that which was described by the parties as the rent, namely the £30 a year. But, in my judgment, that case does not assist the defendants here. As I have already indicated, where the payment is not specifically designated as rent and does not appear to be the payment of a sum in respect of rent, then the court can reach the conclusion that it is rent only if that is the proper inference to draw from all the circumstances of the case and, in my judgment, that is not the proper inference to draw. So, for those two reasons — that, in my judgment, the matter is covered by the decision in Barnes v Barratt and also because I do not think the proper inference to draw here is that this was a payment of rent at all — in my judgment, the learned judge came to the wrong conclusion on the question of rent. That being so, it is not necessary to consider the second point, namely whether there was a periodic tenancy. It is accepted, in fact, by Mr Edlin that there was not, but that there was a tenancy at will. However, it is unnecessary, in view of the conclusion which I have reached on the first point, to consider that matter. There not being a payment of rent, plainly the provision in the Rent Acts which requires the rent to be more than two-thirds the rateable value was not satisfied. The problem here was that the first defendant’s case was that she paid a rent, a rent had always been paid, it was £5 a week at the time of the deceased’s death and, had that evidence been accepted, the position would have been quite different. But it was not accepted and she never suggested in her evidence that the payments of the bills were to be regarded as rent and, in my judgment, they could not be so regarded. It is necessary, therefore, to turn to the respondents’ cross-notice, and two points are raised on that. The first is that the learned judge’s conclusion that no actual rent was paid and his rejection of the first defendant’s evidence about that cannot stand. The learned judge said: The first defendant said that actual rent was paid. However she was vague as to amounts. She produced a rent book at the trial, a page or so of which was filled in her own handwriting and it covered the period from January 3 to December 26 1986. This was given to her solicitors in October 1989 when the case was first to be heard. That rent book has caused me trouble. I do not accept the first defendant’s evidence on this. I believe that the rent book was brought into being in the course of the proceedings. It is clear that the Bryants at all material times had exclusive possession of all the rooms in the house except one room and then he goes on to deal with the question of possession. The evidence about the rent book was this. The evidence in relation to the payment of rent was first from a Mrs Reeves, who was Uncle Joe’s sister. She said: I remember that there was a discussion [with Mrs Bryant] about the arrangement for the house. Mrs Bryant said there was a gentleman’s handshake on rent but she paid electricity and gas bills. She was cross-examined as to when that conversation took place but she does not seem to have resiled from what she said, and the plain inference, it seems to me, is that she was saying that the first defendant had told her that there was no actual rent paid. Mrs Bryant’s evidence about the rent book was: The rent book which was produced to the Court was in my writing. I decided to get a rent book. I mentioned it to Joe but he was ill at the time in 1986. I started to keep the rent book in 1986 after a conversation with my family. He never wrote anything in it. 104 Again, the inference of that passage would seem to suggest that she started keeping it at that time and entered it up week by week. She in fact said that the rent was paid monthly, £20 at a time, although the rent book appears to show payments of £5 each week. When she was cross-examined about it, she said: With regard to the rent book, I bought it from a local paper shop in 1986. The book is 4 years old. I did not read the reference to the Rent Act of 1968. I was approached about getting a rent book by my daughter. She said that it was wrong that I should not have a rent book . . . I filled in the rent book myself, all of it on one occasion. It was not filled in in advance but in arrears to bring it up-to-date. I was going to continue but I did not continue with the rent book because Joe was ill in December 1986. I did not have in mind at the time that Mr Jones could be dead soon. I signed the initials myself. When I was asked if there was any evidence of rent, I did not look for the rent book. I came across the rent book before the last hearing of the matter in October 1989. It is submitted by Mr Edlin on behalf of the respondents that the probability of the matter here is that there was a rent because these parties did not know each other, apparently, before the Bryants went to live in Uncle Joe’s house. Therefore, submits Mr Edlin, the probability is that there was a rent and that the learned judge was not justified in rejecting Mrs Bryant’s evidence, simply because he came to the conclusion that he could not accept her evidence about the rent book. But the learned judge saw and heard the lady give evidence. It seems to us that there is certainly material from which he could conclude that her evidence about paying rent was not truthful and, although it may be that, as between strangers, it would be more likely that a rent would be paid than not for the occupation of part of the house, it is not inconceivable that another explanation could be given for why the deceased apparently granted occupation of three-quarters of his house or more on such very favourable terms. It may be that he wanted to have somebody living with him, he did not need the whole house, he wanted somebody there when he was not there or he wanted company — I do not know. In my judgment, it is impossible for this court to reverse the learned judge’s finding of fact on that point and accede to Mr Edlin’s submission that the judge should have found that a rent was paid. In fact, what Mr Edlin submits is that the conclusion we should come to is that there was a rent paid initially, but that towards the end the deceased waived the payment of it. All I can say is that that is quite contrary to the evidence given by his clients at the trial. The second ground of the cross-appeal relates to an entirely separate matter. It is submitted on behalf of the first respondent that she enjoyed an equity in the house to the effect that she was entitled to stay there for as long as she wished. The learned judge said that it was unnecessary for him to deal with that but that he would refer briefly to it. He said, referring to the defence: Uncle Joe did wish the first defendant to stay in the house as long as she wished. He left a letter to that effect in his drawer. Moreover, when the first defendant’s husband died in 1973, Uncle Joe said to the first defendant ‘Don’t worry about the future, you’ll be alright’. I am doubtful if that would have constituted an inducement. Furthermore I find it difficult to see how the first defendant suffered any detriment. Mr Edlin has referred us to the expanded note of evidence about this, and the first defendant’s evidence is, to my mind, sketchy in the extreme about it. What she said was: Mr Bryant died in 1973. There was a conversation with Joe in which he said that I need not worry about my future. He said that I would be all right. I was not looking far ahead at the time. So far as any possible evidence of detriment is concerned, she said this: We did work on the house over the years. There were new windows fitted in the living room and the kitchen had new fitments. Joe did not mind what we did to the house. We had the outside toilet covered over with corrugated iron. I had a new toilet and cistern put in in the week that Mr Jones died. He knew about it. I did not ask Mr Jones to contribute because of the low rent I was paying. Well, it seems to me that those matters are equally referable to benefit that the Bryants obtained from doing those alterations to the house in the part they occupied and are equally explicable on that basis and do not amount to a detriment. Then she went on: The lady round the corner had a flat and she asked me if I wanted the basement flat but I said no because I would not leave Mr Jones alone. That was about 10-12 years ago. Again, it seems to me that it is difficult to spell out from that that the decision to stay on in the house was anything to do with any assurance that had been given to her. She appears to be saying there that the reason why she did not accept the alternative accommodation was because she did not want to leave Mr Jones alone. In any event, it seems to me that those matters could not really possibly amount to any detriment in this case. Furthermore, as Mr Hodgson has pointed out, the assurance itself on which reliance is placed is very vague and does not amount to an assurance that she could live in the house as long as she wished. All that is said is that she need not worry about her future: ‘He said that I would be all right’. It is clear that she was looking not at the long-term future at that stage but to her immediate future. As Mr Hodgson points out, it is quite possible that that expression about the future might refer to the immediate future, the future while Mr Jones himself was alive, or indeed to questions of pension, although it seems to me that that is less likely. It is more likely to have concerned the occupation of the house. But, in my judgment, that does not amount to a sufficiently clear assurance that the respondents could stay in the house as long as they wished. Mr Edlin has criticised the judge’s conclusion that there was insufficient evidence that she had suffered any detriment and he relied on the case of Greasley v Cooke [1980] 1 WLR 1306 in support of the proposition that a presumption may be made in an appropriate case of detriment, but that was a very much stronger case than this. In that case the defendant had continued to live in the house to afford services as a maid to the son and the son’s daughter who was mentally handicapped, continuing to do that work on the faith of the assurance that had been given her and continuing to do it without payment and, in those circumstances, it was held that there was an equity. The question was whether the judge was right in holding that she had not proved those matters. The analysis of that case to be found in Snell’s Principles of Equity, 28th ed, at p 561 is, in my judgment, correct, where it is said: Once it is shown that O [the owner of the property] gave assurances or other encouragement to A, and A suffers detriment, it will readily be inferred that the detriment was suffered as a result of the encouragement: the burden of proof is on O to show that A’s conduct was not induced by the assurances. Now that, in my judgment, is a very different case from what we have here. It seems to me that really there was no detriment to the respondents here. It was to their advantage that they should remain in the house on these very favourable terms and conditions, living rent-free simply on the payment of the outgoings in respect of the gas and electricity bills, and that there really was no detriment to them at all. Mr Edlin submits that the fact that they have no security now and are faced with an order for possession is a detriment, but it seems to me that, at whatever time they had to get out of the house, or chose to get out of the house, that would be the position. I find it impossible to discover really any evidence of detriment in this case and, therefore, in my judgment, the alternative grounds of the defence of the equitable interest and proprietary estoppel are not made out. I would therefore allow the appeal. SIR ROUALEYN CUMMING-BRUCE agreed and did not add anything. The appeal was allowed with costs in the Court of Appeal and below.