Gray v Brown

Rent Act 1977 — Whether tenancy agreement a restricted contract within section 21 of the Rent Act 1977 By an oral agreement made in March 1978 for the exclusive occupation of a room at 40 Maidstone Road, London N11, the appellant tenant was to share the bathroom, lavatory and kitchen. The respondent landlord has always lived elsewhere. The respondent served a notice to quit on the appellant dated November 8 1990 and commenced proceedings in July 1991 seeking possession of the room. The appellant did not appear at the hearing, although he sent three friends to seek an adjournment on the ground that he was seriously affected by agoraphobia. The judge refused the adjournment, found that the agreement was a restricted contract within section 21 of the Rent Act 1977 and made an order for possession. The appellant appealed contending, inter alia, that he held a tenancy protected by the Rent Act 1977. Held: The appeal was allowed. The terms of the 1978 agreement did not disclose any reference to the possibility of the landlord himself residing in the property. The words of the landlord’s affidavit setting out the terms of the oral agreement were not sufficiently specific to make it clear that the landlord had reserved to himself the right to be one of the possible occupiers of the premises. To come within section 21, the terms must include clear words reserving the right to the landlord to live on the premises sharing the accommodation with the tenant. It is sufficient for the landlord, who does not live on the premises, to reserve to himself the express right to share accommodation with the tenant, and it is not necessary that he should actually exercise that right, nor have a clear intention to do so, so long as the possibility of moving into the premises is genuinely within his contemplation at the time of the tenancy agreement. But on the evidence found in this case that was not the position. The appellant was a protected tenant under section 22 of the Rent Act 1977. The following cases are referred to in this report. A G Securities v Vaughan; Antoniades v Villiers [1990] 1 AC 417; [1988] 3 WLR 1205; [1988] 3 All ER 1058; (1989) 57 P&CR 17; [1988] 2 EGLR 78; [1988] 47 EG 193, HL Stanley v Compton [1951] 1 All ER 859, CA This was an appeal by the appellant, Mr Brown, the tenant of a room at 40 Maidstone Road, London N11, against a decision of Judge Stockdale at Barnet County Court on October 14 1991 making an order of possession upon a claim for possession by the respondent Mr Gray. Simon Birks (instructed by Caines, of Enfield) appeared for the appellant; David Matthias (instructed by Attwater & Liell, of Loughton) represented the respondent. Giving judgment, BUTLER-SLOSS LJ said: This is an appeal by a tenant from an order for possession of 40 Maidstone Road, London N11, made by Judge Stockdale at Barnet County Court on October 14 1991. By an oral agreement made in March 1978 for exclusive occupation of the second-floor rear room as a bedsitter, on a weekly tenancy of £15, the tenant was to share the bathroom, lavatory and kitchen. The landlord has always lived elsewhere. The background to this case is that the tenant and his brother (and at one time his mother) lived in the property — a house with seven rooms owned by the landlord. At one stage the brother shared with the tenant and in 1965 the brother himself became the tenant of a first-floor room, with a written agreement entered into in December 1985, which the court has not seen. The landlord decided that he wanted to demolish the house and rebuild. He obtained planning permission. He issued proceedings for possession in respect of the first-floor room occupied by the brother. The hearing was before Judge Stockdale and an order for possession was made on May 15 1990. At the 1990 hearing the judge did not have the brother in court, although he was legally represented. The judge commented that both brothers suffered from problems and that the tenant in the present appeal was said to be suffering from agoraphobia. In the written agreement, according to the judgment, the landlord agreed that the tenant had exclusive possession to the first-floor room with a right to share the kitchen and bathroom. The agreement gave the landlord the right to choose the other occupiers of the house, who would share the shared rooms (the words being ‘. . . whosoever I choose. . .’) which, as the judge put it, gave the landlord the widest possible scope, even to be included himself. The judge held that the terms of the 1985 agreement came within the provisions of section 21 of the Rent Act 1977. It was therefore a restricted contract and the brother did not have a protected tenancy. The landlord then brought proceedings to obtain possession of the second-floor room occupied by the tenant. The notice to quit was dated November 8 1990. Proceedings were issued in July 1991. The tenant sent a home-made defence, claiming that he was a protected tenant. The case was due to be heard on August 20, but on the application of the landlord and agreement of the tenant, it was adjourned to October 14. On that occasion the tenant did not attend, but sent three friends to ask for an adjournment and he provided letters from his doctors to explain that he was seriously affected by agoraphobia and had not left the house for several years. The judge refused the adjournment. He obviously had a clear recollection of the unusual features of the previous case involving the brother and the judge relied upon that evidence in coming to his decision. It appears that no application was made under the Civil Evidence Act 1968 to admit the evidence. The landlord did not give any further evidence at this hearing and the judge made an order for possession against the tenant. In the amended notice of appeal and skeleton argument, counsel for the tenant, Mr Birks, raises three issues: the refusal of the judge to adjourn, and the reliance exclusively upon the evidence of the previous proceedings, which seems to have been done by a somewhat rough-and-ready procedure. It is not necessary to deal with either of these points which in isolation would not, in my view, have been sufficient to allow the appeal, since the third issue is of substance and, if successful, renders the other two points unnecessary. 120 The third issue is whether the tenancy granted to the tenant by the landlord falls within the provisions of either sections 21 or 22 of the Rent Act 1977. Section 21 (which has subsequently been repealed) is headed: ‘Tenant sharing accommodation with landlord’ and provides: Where under any contract — (a)   a tenant has the exclusive occupation of any accommodation, and (b)   the terms on which he holds the accommodation include the use of other accommodation in common with his landlord or in common with his landlord and other persons, and (c)    by reason only of the circumstances mentioned in paragraph (b) above, or by reason of those circumstances and the operation of Section 12 of this Act, the accommodation referred to in paragraph (a) above is not a dwelling-house let on a protected tenancy, the contract is a restricted contract notwithstanding that the rent does not include payment for the use of furniture or for services. That is to be contrasted with section 22, headed ‘Tenant sharing accommodation with persons other than landlord’ which provides: (1)  Where a tenant has the exclusive occupation of any accommodation (‘the separate accommodation’) and — (a)   the terms as between the tenant and his landlord on which he holds the separate accommodation include the use of other accommodation (‘the shared accommodation’) in common with another person or other persons, not being or including the landlord, and (b)   by reason only bof the circumstances mentioned in paragraph (a) above, the separate accommodation would not, apart from, this section, be a dwelling-house let on or subject to a protected or statutory tenancy, the separate accommodation shall be deemed to be a dwelling-house let on a protected tenancy or, as the case may be, subject to a statutory tenancy and the following provisions of this section shall have effect. It is not necessary, for the purposes of this judgment, to set out any further part of section 22. There is a paucity of evidence about the oral agreement in 1978. We accepted, as additional evidence, an affidavit sworn by the landlord on October 16 1992, para 3 of which reads: I gave evidence to the learned Judge in the previous action. I have been shown by my solicitors a copy of his notes of evidence from the case which include his note of my evidence . . . I gave evidence that John Brown had been let into occupation of the property on the same terms as in the case of his brother, David Brown, ie that he could share the property with other people chosen by myself. I had expressly discussed this term with John Brown, and it was understood between us that this was the arrangement as there are, in all, seven bedrooms in the house. The question is whether those words are sufficiently wide and sufficiently clear to include the landlord. If they are, it would appear that section 21 would apply; if they are not, then section 22 would apply. We have a note of the argument put forward by those representing the tenant, together with a note of the judge’s reply: Judge: It is hard to see what John Brown’s defence is. I cannot see that John Brown can have any stronger case (than David Brown). It is not his house and he can have no defence. The landlord does not have to be there. Then at p 73: Judge: . . . John Brown does not have a protected tenancy. John Brown was misinformed (that he had a protected tenancy). In the note of his judgment (which is the subject of this appeal) the judge said: I made an order for possession last year when I found that there was an arrangement for sharing and that David Brown was not protected. Then a little later he said: But the question remains, does he have a defence?  He has filed a defence. This is based on a misapprehension. It seems to me that the landlord must share. It was a deciding point in David Brown’s case . . . there is no defence provided in the defence. The judge was clearly relying on his previous decision which had not been appealed. In the previous judgment he found that the landlord had never resided there. I refer next to where the judge said in the David Brown judgment: Although the agreement says it relates to occupation of the house, it is agreed it is to be read as referring to a particular room with shared rights to the living rooms. According to the agreement these were to be shared with other occupiers chosen by the landlord, and this gives to the landlord the widest possible scope — even to be included himself, according to a case concerning a similar agreement in the House of Lords . . . — I interpolate to say it has not been possible to find that case. At p 89 he said: The landlord may choose himself to be one of the occupiers. But must he move in?  The early authorities show it is not necessary, so long as he can, before the issue of the proceedings . . . The landlord can become a person entitled to do the sharing, unless the contract bars that or says only named persons may share. The landlord does not have to actually move in to come within section 21. Although not entirely clear, it appears the judge was relying upon the decision of this court in Stanley v Compton [1951] 1 All ER 859. In that case the landlord let the flat to the tenant on a protected tenancy, and the tenant let a room in the flat to the subtenant, with the sharing of the kitchen. The landlord obtained possession against the tenant and claimed that the subtenant was a trespasser. It was held that the subtenant became the tenant of the landlord on the same terms as he had been of the tenant, and could not be in a better position than he would have been with the tenant. He had no protection against the tenant, who could have claimed under the previous section analogous to section 21, and consequently no protection against the landlord. Section 8(1) is the previous section analogous to section 22. On the facts of that case the landlord was exercising the rights of the tenant even though he himself had not exercised the right to share the kitchen. More particularly, the subtenant was unable to establish that he was sharing with someone other than the landlord, so as to come within the provisions of section 8(1). This decision is not, in my judgment, authority for the very wide proposition advanced and relied upon by the judge. There appears to be no other decision on this point. Section 21 appears to have been passed to protect the interests of a landlord who was, or might be, sharing accommodation with a tenant or tenants, who were consequently not protected. On the other hand, tenants sharing accommodation, not including the landlord, were protected. It would therefore be of importance for a tenant to be aware of the terms of the agreement and whether he was a protected tenant. The terms of the 1978 agreement as set out in the affidavit of the landlord do not disclose any reference to the possibility of the landlord himself residing in the property. The words are not sufficiently specific to make it clear that the landlord is reserving to himself the right to be one of the possible occupiers of the premises. I do not believe, myself, that a tenant ought to be expected to interpret those words as including the landlord himself. To come within section 21 the terms must include clear words to reserve the right to the landlord to live on the premises and share the accommodation with the tenant. This 1978 agreement, in my view, brings the tenant into the ambit of section 22, and not section 21. Mr Birks has also argued that an express reservation of the right to live in the property and share accommodation cannot bring a tenancy agreement within the scope of section 21 unless, at the time of the tenancy agreement, he clearly intends at some stage to come to live on the premises. In my view, it is sufficient for the landlord, who does not live on the premises, to reserve to himself the express right to share other accommodation with the tenant. It is not necessary that he should actually exercise that right, nor have a clear intention to do so, so long as the possibility of moving into the premises is genuinely within his contemplation at the time of the tenancy agreement — that is to say, there is a real prospect at some future date of his doing so. That real prospect is to be contrasted with a colourable device designed to exclude the operation of the Rent Acts. In AG Securities v Vaughan [1990] 1 AC 417*, Lord Templeman was, at p462, considering a reservation by a landlord of a power to share the flat with the tenant to be exercised either by himself or those he authorised. Lord Templeman laid stress upon a genuine intention to exercise the powers contrasted with the reservation in question, the only purpose of which was to deprive the tenant of the protection of the Rent Acts. I do not understand Lord Templeman’s reference to ‘genuine intention’ to mean that the landlord must actually have decided to share accommodation; rather he must be able to demonstrate that there was a real prospect that this might happen. *Editor’s note: Also reported at [1988] 2 EGLR 78. I would allow this appeal and hold that the tenant is a protected tenant under the provisions of section 22 of the Rent Act 1977 and set aside the possession order. SIMON BROWN LJ agreed and did not add anything. Appeal allowed with costs. Leave to appeal to the House of Lords refused.