Somma v Hazelhurst ; Somma v Savelli

Important decision on agreements to grant non-exclusive licences of residential accommodation–Rent Act not applicable to these particular agreements–Separate licences granted to two persons living together to use a double-bed-sitting room in common with the licensor and with such other persons as the licensor should permit, not being more than one at any one time–Agreements conferred non-exclusive licences only–No reason why an owner should not grant a licence–Not a sham merely because it is a device to avoid the consequences of the Rent Act– Parties intended to be bound by agreements–Impossible to construe as a joint tenancy–Not contrary to public policy–County court judge wrong to decide that the agreements together constituted a joint tenancy–New trial refused–Licensor’s appeal allowed–Observations on construction of such agreements and on evidence of surrounding circumstances These were appeals from decisions of Judge McIntyre at West London County Court concerning the nature and effect of agreements described as ‘licences’ for the occupation of a double room at 4 Cornwall Mansions, London, W14, belonging to the appellant, Miss Immacolata Somma. The room was occupied in consequence of the agreements by Martin Hazelhurst and Miss Rossella Savelli. The application to the county court had been made by Miss Somma under section 105 of the Rent Act 1968 (now section 141 of the Rent Act 1977) for a determination as to the effect of the agreements. Miss Somma’s application followed an application on behalf of the occupiers to the rent officer (which he had adjourned in view of the likelihood of county court proceedings) to fix a fair rent. The county court judge decided that the agreements had to be construed together and constituted a joint tenancy. R Purchas (instructed by W Feldman) appeared on behalf of the appellant; Lord Gifford (instructed by Seifert, Sedley & Co) represented the respondents. Giving the judgment of the court at the invitation of Stephenson LJ, CUMMING-BRUCE LJ said: In February 1976 two young people Mr Martin Hazelhurst and Miss Savelli (herein called H and S) were looking for accommodation in which to live together in London. He was an educated man employed as a computer programmer, a job involving some mathematical qualifications. She also had a job. They were not married. On Wednesday February 18 they saw an advertisement in the Evening Standard in the column headed ‘Flats and Maisonettes to Let’ which read: ACTON/HAMMERSMITH, West Kensington. Double bedsits and flatlets. All amenities. Near Tubes. £13 to £19 per week 602 5464. They telephoned the number given and by appointment visited a house at 4 Cornwall Mansions, W14, which belongs to Miss Somma. The house is divided into four flats, sub-divided into four rooms and two maisonettes. There they met Mr Ritter, resident managing agent for Miss Somma. Ritter showed them a room 22 ft by 18 ft on the third floor, with two beds in it which he described as a double room. They looked at it and went away. On Friday February 20 they returned, saw Ritter again and said they wanted to take the room and to move in next day. Ritter gave each of them a printed form of agreement into which he wrote the appropriate detail in the blank spaces. They each read the form they were given. H asked a few questions including a query about the clauses which indicated that they would have to share with a third person described as the licensor. They each signed their agreement before they moved in, and, though they had not thought out the legal implications of the contracts, they urgently wanted accommodation and, in the judge’s phrase, understood what they were letting themselves in for. The agreements were identical save for the name of the licensee, and we have set forth as an example the agreement signed by S on February 21 1976: THIS LICENCE is made the 21st day of February 1976. One thousand nine hundred and seventy-six. Between I Somma or Agent of 7 Agate Road, W6 (hereinafter referred to as ‘the Licensor’) of the one part and R Savelli of Milan, Italy (hereinafter referred to as ‘the Licensee’) of the other part. WHEREAS the Licensor is not willing to grant the Licensee exclusive possession of any part of the rooms hereinafter referred to AND WHEREAS the Licensee is anxious to secure the use of the rooms notwithstanding that such use be in common with the Licensor and such other licensees or invitees as the Licensor may permit from time to time to use the said rooms AND WHEREAS this Licence is entered into by the Licensor and the Licensee solely upon the above basis By this Licence the Licensor licenses the Licensee to use (but not exclusively) all those rooms (hereinafter referred to as ‘the Rooms’) on the 3rd Floor Double B/Sit floor of the building known as and situate at Flat 4, Cornwall Mansions, W14 (hereinafter referred to as ‘the Building’) together with the use of the entrance hall and lift (if any) the staircase outer door and vestibule of the Building and the furniture fixtures and effects now in the Rooms (more particularly set out in the Schedule of Contents annexed hereto) from (Twelve weeks) 21.2.76 until 15.5.76 for the sum of £116.40 on the following terms and conditions: 1. The Licensee agrees to pay the said sum of £116.40 by 4 weekly instalments of £38.80 commencing on the 21st day of February 1976 next and thereafter on Saturday of each 4th week until 15.5.76. 2. The Licensee shall be responsible for the payment of all gas electric light and power which shall be consumed or supplied in or to the Rooms during the Licensee’s occupation thereof and the amount of all charges made in respect of the telephone installed therein or in the Building so far as the same relates to his use thereof. 3. The Licensee shall use his best endeavours amicably and peaceably to share the use of the Rooms with the Licensor and with such other licensees or invitees whom the Licensor shall from time to time permit to use the Rooms and shall not interfere with or otherwise obstruct such shared occupation in any way whatsoever. 4. The Licensee shall keep the interior of the Rooms and all fixtures and fittings and fixtures therein in good and clean condition and complete repair (fair wear and tear and damage by accidental fire only excepted) and immediately replace all broken glass. 5. The Licensee shall preserve the furniture and effects in the said Rooms from being destroyed or damaged and make good pay for the repair of or replace with articles of a similar kind and of equal value such of the furniture and effects as may be destroyed lost broken or damaged (fair wear and tear thereof only excepted). 6. The Licensee shall leave the furniture and effects at the expiration or sooner determination of this Licence in the Rooms or places in which they were at the commencement hereof. 7. The Licensee shall pay for the washing (including ironing or pressing) of all counterpanes blankets and curtains which shall have been soiled during the Licensee’s occupation (the reasonable use thereof nevertheless to be allowed for). 8. On notice in writing being given to the Licensee by the Licensor or her Agent of all wants of repair cleansings amendments and restorations to the interior of the Rooms and of all such destruction loss breakage or damage of or to the furniture and effects as the Licensee shall be bound to make good found therein the Licensee shall repair cleanse amend and restore or make good the same within two months of the giving of such notice. 9. The Licensee shall not remove any furniture and effects from the Rooms without the previous consent in writing of the Licensor. 10. The Licensee shall not carry on or permit to be carried on in the Rooms any profession trade or business whatsoever. 11. The Licensee shall not do or suffer to be done in the Rooms any act or thing which may be a nuisance cause of damage or annoyance to the Licensor and the other occupiers or users of the Rooms or the Building or of any adjoining premises or which may vitiate any insurance of the Building against fire or otherwise or increase the ordinary premium thereon. 12. The Licensee shall not affix to the windows of the Rooms externally or internally any venetian blinds except of such colour and construction as shall be previously approved in writing by the Licensor or her Agent. 13. The Licensee shall not hang or allow to be hung any clothes or other articles on the outside of the Rooms or the Building. 14. The Licensee shall clean all the windows of the Rooms once at least in every month during his occupation. 15. The Licensee shall not deposit any store of coal elsewhere than in the cellar or other receptacle provided for the purpose and70 shall not keep any combustible or offensive goods provisions or materials in the Rooms. 16. The Licensee shall not cause or permit any waste spoil or destruction to the Rooms or to the Building. 17. The Licensee shall not pull down alter add to or in any way interfere with the construction or arrangements of the Rooms without the previous consent in writing of the Licensor. 18. The Licensee shall not keep any animals or birds in the Rooms Nor shall the Licensee permit any child or children to reside or stay in the Rooms. 19. The Licensor shall not at any one time permit more than one other person to use the Rooms together with the Licensor and the Licensee. 20. Unless prevented by any cause not under his control the Licensor shall keep the entrance hall staircase vestibule and lift (if any) clean and properly lighted. 21. This Licence is personal to the Licensee and shall not permit the use of the Rooms by any other person whatsoever. 22. Upon the Licensee being in breach of any of the conditions referred to above this Licence shall immediately determine without prejudice to any other remedies of the Licensor and the Licensee shall immediately cease his use of the Rooms and the Building as permitted hereunder. Signed by the above-named Licensor or Agent S Ritter Signed by the above-named Licensee Savelli Rossella The Licensee hereby states having received a copy of this contract. SCHEDULE OF CONTENTS If an Electric Meter is installed the rent will be reduced by 25 pence per week. S Ritter Savelli Rossella S paid Ritter £77.60 in cash on signing the agreement, being £38.80 the first four weeks cash in advance, plus £38.80 deposit against breakages or damage. H telephoned his father and asked for a cheque to cover his first four weeks’ instalment and his deposit. Ritter received the cheque for £77.60 a few days later. So they moved in and stayed sharing the room with each other until the term of the agreement expired on May 15. Then they each received and signed second agreements in the same terms as the first, and on August 7 they repeated the exercise, signing agreements to expire on October 29. Throughout they continued to make separate payments monthly in advance and received a single receipt. In September 1976 H applied to the rent officer to get their monthly instalments reduced, alleging a tenancy or furnished occupation within the protection of the Rent Acts. The rent officer adjourned the applications pending a decision of the county court pursuant to section 105 of the Rent Act 1968 upon the questions whether there was a tenancy and whether Part VI of the Act applied. So Miss Somma instituted these two sets of proceedings by applications for an order determining whether H and S were statutory tenants of the dwelling-house known as Flat 4, Cornwall Mansions, W14. The grounds of her applications dated December 20 1976 appear there and read: The grounds of this application are–By a Licence dated August 7 1976–made between the Applicant and the Respondent the Applicant granted the Respondent a Licence to (but not exclusively) the said Flat consisting of a room on the third floor of a Building known as Cornwall Mansions aforesaid and the furniture therein contained. The names and addresses of the persons on whom it is intended to serve this application are M Hazelhurst. . . . A word has been left out there I see. It should read, ‘The Applicant granted the Respondent a Licence to use (but not exclusively)’ as appears on the application relating to Miss Savelli. The answers of the respondents H and S read: The Respondent denies that the agreement between the parties was anything other than a tenancy agreement. The Applicant well knew that the other person to whom the alleged Licence was granted was in fact living with the Respondent. On March 9 1977 the applications came on in the county court. They were consolidated and adjourned. On June 17 the hearing took place. The learned judge gave judgment for the respondents H and S. He declared that both respondents were regulated furnished tenants within the meaning of the Rent Acts 1968 and 1974. The order drawn up is in this form: And the Court doth declare that the Respondents are tenants of the premises known as Flat 4 Cornwall Mansions, Blythe Road, London W14, within the meaning of the Rent Acts. If it is upheld, it clearly should be rectified to declare that they are regulated furnished tenants. Against that order Miss Somma appeals. The submissions of Mr Purchas for the appellant fall under four heads: (1)   On the findings of the judge, the intentions of the parties are to be collected from the two agreements in writing which he conceded should be read together. On their proper construction they were two separate grants of licences to occupy and not grants of tenancy or tenancies. (2)   The contracts are not within the protection of section 70(1) and (3) of the Rent Act 1968 as the contracts did not grant exclusive occupation of the room that H and S were to share. (3)   The clauses of the contract which provided that H and S were to share with the licensor or another licensee were not illegal or contrary to public policy as the judge held. (4)   As an alternative submission if the court is against him on any of his first three submissions, there should be a new trial as the hearing was unfair on the ground that the judge wrongly ruled against the application to cross-examine further and call evidence which he made at the end of his closing speech. Lord Gifford for the respondents submitted that the learned judge’s decision was right. There was a single contract, and that contract was a joint tenancy. If not, it was a contract granting to H and S exclusive occupation of their room within the protection of section 70 of the Rent Act 1968. Those clauses in the written agreement which provided that H and S should be liable to share the room with the licensor or another licensee introduced by Miss Somma were illegal or void as contrary to public policy and should be disregarded in ascertaining the legal consequences of the transaction. He also sought a new trial in circumstances that appear hereafter. On the issue whether the transaction fell within the protection of the Rent Acts Lord Gifford submitted: (1)   In consideration of questions arising under the Rent Acts the court must look at the substance and reality of the transaction. (2)   In ascertaining the substance and reality of the transaction the court is entitled to look both at the documents and at the surrounding circumstances. (3)   Documents which purport to grant licences will be held to grant tenancies if either one of two sets of circumstances apply: (a)    If upon examining the documents in the light of the surrounding circumstances they are found to be in substance documents granting a tenancy, which he called ‘the construction route.’ (b)   If upon examining the surrounding circumstances the court finds that the documents are a disguise which cloaks the reality of the transaction, which he calls ‘the disguise route,’ for such a transaction may disguise the reality of the rights and obligations granted and assumed by the parties without necessarily being fraudulent or attracting the label of a mere sham. (4)   Residential licences should only be upheld as such by the courts in three special classes of case with which we deal hereafter. (5)   The courts must have regard to the policy of the Rent Acts and be astute to prevent their evasion. In applying those principles to the instant case, Lord Gifford submitted that the learned judge did address himself to the right question, and sought for and found the reality of the transaction in the surrounding circumstances which he admitted in evidence and took into account. Pursuing the construction route, the written contracts are to be construed as parts of a single transaction, granting joint rights and giving rise to joint obligations such as to transfer to the grantees a joint tenancy. Alternatively, pursuing the disguise route, he submitted the true nature of the transaction was, and that the judge’s findings can and should be read as finding, that the reality and substance of the transaction was that H and S were granted a joint tenancy disguised by the cloak of the documents drafted for Miss Somma, and that that finding of fact was amply supported by the evidence. Alternatively, Lord Gifford sought leave to amend his respondents’ notice to seek a new trial on the ground that the learned judge failed to appreciate the relevance of the circumstances surrounding the written agreements, stopped Mr Seifert, solicitor for the grantees, from investigating them in cross-examination, and so decided the case without making findings of fact on relevant matters which should have been explored. We gave leave to the respondents to amend their respondents’ notice, and entertained their applications for a new trial. We are confronted with one more attempt by an owner of housing accommodation to provide it at a profit for those in great need of it without the restrictions imposed by Parliament on his or her contractual rights to charge for it and regain possession of it. The attempt which has led to this appeal is made by a document drawn up by one, or a combination, of those who seem to have studied all the efforts, recorded in a welter of cases decided in every court from the county court to the House of Lords, to avoid letting a dwelling-house or part of it by arranging to licence or to share the occupation of it. On the particular facts of this case has this attempt failed as the judge held? Each document which we have to consider is on its face a licence to each respondent to share occupation–of one double-bed-sitting room for 12 weeks. But the obligation which the document imposes on each respondent is an obligation to share with (1) the owner (described as the licensor), (2) the other respondent (described as a person permitted by the licensor but identified, by reading the respondents’ documents with each other, as the other respondent). And the document so repeatedly proclaims itself a licence, and the relationship it creates between the appellant and each respondent as being that of licensor and licensee, that it raises the question why it should be necessary to protest so much and whether so many labels so clearly written all over it give a true or a false description of its real contents. Our first task is to examine closely the course of the proceedings in the county court. The next to observe and analyse findings made by the learned judge. Sidney Ritter, resident manager of Miss Somma, gave evidence of the circumstances preceding the signature of the agreements. However, the judge observed that he did not think it necessary to go into the background of the agreement because it could not affect the agreements subsequently entered into. But he did not in fact stop Mr Purchas in chief eliciting from-the witness the facts that we set forth at the beginning of this judgment. During cross-examination, the judge again said that he was not concerned with the surrounding circumstances of the agreement and asked to what issue the cross-examination was relevant. Mr Seifert said that he was endeavouring to show that an agreement was entered into before the forms of licence were signed and suggested that H and S had paid a deposit and moved in before they signed the agreements. The judge then observed that unless there was fraud or mutual mistake the parties were bound by what they signed. The witness gave evidence that H and S signed the agreements before they moved in; there was no evidence of a deposit being paid before the agreements were signed, and it appears from the judgment that Mr Seifert did not pursue the allegation of any agreement or bargain antecedent to the written agreements. And indeed he could not do so, because when H gave evidence he did not suggest any such antecedent bargain. Miss Somma gave evidence. She said that she had used the licence agreement for about three years, and that she did not think that she introduced the form of licence because of the Rent Acts. She said that normally if one licensee went, then a friend of the remaining licensee would move in with her approval, and that if another licensee did not move in then she would lose the money and would not be able to recover it from the remaining licensee. We quote the note of the evidence she gave in cross-examination: I do not force people to share accommodation with people they do not like. The licence says I can put one other person in the room. I run my business on a humanity basis. I would not let a drunkard into a room in any case. I do not deal with fantasies. My plans are very happy. I do not force anyone to share with those whom they do not like. We both have a right in practice to choose who goes in. If a man was a drunkard I would not let him share. I do not think the licence has anything to do with the Rent Acts. I always let on a sharing basis. I have changed to sharing licences for my flats and rooms. I introduced the forms several years before. It suits people as they are always moving–I use 12-week periods. H in evidence said that he was not shown the licence agreement on the first visit to Mr Ritter, whereupon the judge observed that there was no point in pursuing that line of questioning as H was an intelligent man and he entered into the agreement and was therefore bound by it, and that he the judge had to construe the documents. H said he read the document for five or 10 minutes at the most, and queried it slightly but was told it was a standard document for letting. He asked about clause 19, as it looked as if three people could share, but Ritter ‘brushed it off.’  He said he had moved his possessions into the flat, and that it did not seem a good thing to quarrel with the licence. In cross-examination he said that he and S signed separate agreements and made payments under the licences separately. He said he did not know if he would be responsible for paying both licence fees if S left; that he did not take legal advice because it would have been too expensive; and that he preferred to have the accommodation on the terms it was offered to him than not to have the accommodation at all. That concluded the evidence. The judge did not call upon Mr Seifert until after he had heard Mr Purchas. Mr Purchas invited the judge to construe the documents, and in the course of argument the judge said that everything in the documents was utterly artificial from start to finish. The document was not a licence at all but a joint tenancy, and the landlord could not wrap it up with extraordinary expressions. Mr Purchas said that was at variance with what the judge had said earlier when he said that he had to construe the documents, and asked to pursue further his cross-examination of H. The judge refused to hear further evidence. At the end of Mr Purchas’s speech, Mr Seifert was called upon, and reminded the judge of the 71 relevance of surrounding circumstances. Against that background we came to the judgment. It is clear from the terms of his judgment, from the note to his judgment which he has supplied, and from what he is reported to have said in the course of argument, that he was seeking to ascertain the nature of the agreement solely from the terms of the written documents. Thus, despite the fact that a fair body of evidence was called before him as to the surrounding circumstances, it seems from what the learned judge himself says on the second page of his judgment, that Mr Seifert did not press or at least did not press very strongly that the learned judge should consider anything outside the terms of the documents. This is what the learned judge had to say about it: ‘at first there was an attempt by the solicitor for the respondents which I am not sure if he abandoned to say that the parties’ rights were not circumscribed by these documents’; and a little lower down: ‘the parties would be entitled to ask the court to consider whether an antecedent bargain was made here, and whether that altered the contract before me. I do not think that side of the argument is now pursued because the male respondent is an educated man. I did not see the girl but I presume she is also educated.’  It is clear from these passages, and others to which there is no need for us to refer, that the learned judge rejected, inferentially at least, that there was any oral agreement outside the two documents which would be capable of affecting their meaning. Thus we start from the basis that it is to the documents that we must look and to the documents alone. This has an important bearing on the whole of the case. The next matter is to discover what was the ground of the argument for a joint tenancy vested in H and S. One reads from the judgment again. The learned judge says this, ‘They understood what they were letting themselves in for. On February 21 1976 there was really a joint licence relating to the flat albeit cloaked around by the documents.’  There he is saying it is a joint licence. Does he mean joint ‘interest’ of some sort?  That is probably the case although it is difficult to say. Then he goes on to say this: there is no sign here of the incidents which one finds for a landlord and tenant relationship but heaps of indications which show that the parties if they applied their minds to it conferred on these people a joint tenancy or the rights of joint tenants or the equivalent rights on them. It is not an elaborate matter of this sort. It is trite law that one does not now look for exclusive possession. We are warned off by placing too much emphasis on exclusive possession. The relationship between the landlord and these two young people was one of joint tenants I have no doubt about that whatever. He then goes on to deal with clause 19 of the documents which permits or purports to permit the landlord to impose another occupant on a remaining grantee whether it be H or S and to say that such a clause must be illegal and is therefore not binding upon the grantees. It seems to us that the reasoning behind the judge’s ultimate conclusion is this: (1)   Although there are on the face of it two documents here which if taken separately would give neither grantee exclusive possession, this is not fatal to the claim of the occupants that this was a tenancy, because the two documents must be construed together and if that is done they are apt to confer on the couple a joint interest of some sort in the room. (2)   The other clauses which appear to make the occupation non-exclusive are illegal possibly on the grounds of public policy and therefore are not binding upon the grantees. (3)   Consequently, one is left with a joint and exclusive occupation. (4)   The nature of the occupation is a tenancy because there are ‘heaps of indications’ which show that the parties if they applied their minds to it conferred on these people a joint tenancy or the equivalent rights. He does not say what these indications may be. We find ourselves unable to come to the same conclusion as the learned judge. Lord Gifford, basing himself on the judgment of Denning LJ, as he then was, in Facchini v Bryson [1952] 1 TLR 1386 at p 1389, and the reasoning in Marchant v Charters [1977] 1 WLR 1181 at p 1185 submits that in a ‘Rent Act’ situation, any permission to occupy residential premises exclusively must be a tenancy and not a licence, unless it comes into the category of hotels, hostels, family arrangements or service occupancy or a similar undefined special category. We can see no reason why an ordinary landlord not in any of these special categories should not be able to grant a licence to occupy an ordinary house. If that is what both he and the licensee intend and if they can frame any written agreement in such a way as to demonstrate that it is not really an agreement for a lease masquerading as a licence, we can see no reason in law or justice why they should be prevented from achieving that object. Nor can we see why their common intentions should be categorised as bogus or unreal or as sham merely on the grounds that the court disapproves of the bargain. This matter was expressed most happily by Buckley LJ in Shell-Mex and BP Ltd v Manchester Garages Ltd [1971] 1 WLR 612 at p 619 as follows: it may be that this is a device which has been adopted by the plaintiff company to avoid possible consequences of the Landlord and Tenant Act 1954, which would have affected a transaction being one of landlord and tenant; but, in my judgment, one cannot take that into account in the process of construing such a document to find out what the true nature of the transaction is. One has first to find out what is the true nature of the transaction and then see how the Act operates upon that state of affairs, if it bites at all. One should not approach the problem with a tendency to attempt to find a tenancy because unless there is a tenancy the case will escape the effects of the statute. This matter was also touched upon in a New Zealand decision, Donald v Baldwyn [1953] NZLR 313 at p 321, where F B Adams J in the course of his judgment said this: The law will not be hoodwinked by shams but real and lawful intentions cannot be dismissed as shams merely because they are disliked. It is a sham to say one thing while really intending another, but the court cannot say that a licence is a sham for the reason that the court thinks the parties ought to have intended a tenancy. There seem to us to be two questions which we have to answer: (1) Did the parties intend to be bound by the written agreement?  (2) Can it be said from the words which they used in those agreements that they intended to create a tenancy rather than a licence?  As to the first question there is a clear finding of the learned judge that H and S ‘knew what they were letting themselves in for’; also that they were both educated and that they both signed the document. It is plain from these findings that the learned judge was of the opinion that they knew what they were signing and nevertheless voluntarily signed it. The second question is really the nub of the whole case, namely, do the terms of the two documents show an agreement for a licence rather than an agreement for a tenancy?  Immediately one faces the problem of the two separate agreements, one with H and the other with S. If they are truly separate then it must follow that neither H nor S has the necessary exclusive occupation of the room on which to found a tenancy or indeed a Part VI licence. The judge, while saying that he is confined to interpreting the documents themselves, says simply in the passage already quoted, ‘on February 21 1976 there was really a joint licence relating to the flat albeit cloaked around by the documents.’  If indeed he was confining himself to the documents, there was no basis for saying that they were joint agreements at all. However,72 if that is too legalistic a way of looking at the situation, as Lord Gifford submits, it is impossible to reconstruct the separate obligations into one joint obligation without doing violence to the obvious intentions of the parties, particularly of the two grantees, H and S. For example, if one takes clause 1, which deals with the consideration which the grantees are bound to pay, it would be necessary, as we see it, either to have a joint interest coupled with a several liability for half the weekly amounts, which is something of a logical inconsistency, or else to redraw the terms of the agreements to make each grantee jointly and severally liable for the full weekly instalment of £77.60, as against the contractual liability resting on each under the agreement of £38.80. This is not construing the agreement between the parties; it is rewriting it in the absence of any claim for rectification or any allegation of fraud. Lord Gifford was unable to provide any answer to this problem which came near to satisfying us on this point. We find it impossible to say that on the contents of these two documents, even adding the fact that the two grantees made their bid for the room together, a joint interest was created in their favour. That is really the end of the matter, because if the rights of the parties are several as opposed to joint, it is impossible to say that either has the necessary exclusive possession to found a tenancy. However, assuming that that conclusion is wrong and that the interest is indeed joint, one must next examine the other clauses to see whether any of them prevents the joint occupation from being exclusive. The recitals and conditions 3, 19 and 21 point very strongly to a licence. Condition 2 imposes an obligation upon the grantee ‘for the payment of all gas, electric light and power which shall be consumed or supplied in or to the Rooms during the Licensee’s occupation thereof . . .’ which is a wider obligation than payment for his own proportion of a consumption or supply required or enjoyed also by a second licensee. This points in the direction of a lease rather than a personal licence. Likewise the obligations to repair and replace in conditions 4 and 5 are wider than an an obligation to remedy damage caused by his own default and are more consistent with a lease than a licence. Condition 8 is the kind of clause which is more appropriate for a lease than a licence for a short term. Conditions 9 and 10 are neutral. Condition 11 by its reference to a duty to other occupiers or users of the rooms is more suitable in a licence than in a lease. Clause 14 is to be read in the knowledge that if another licensee fulfils his obligation the windows will be cleaned twice a month. On balance, though it is not particularly strong, this suggests a joint obligation to clean once a month. Condition 16 prohibits ‘waste spoil or destruction to the rooms or to the Building.’  Waste is a familiar term of art in the law of real property and carries the meaning of damage or prejudice to the reversion. In a document such as this, which is obviously carefully drafted by a hand skilled in property law, the condition points to a lease rather than a licence. Condition 17 prohibits alteration or interference with the construction or arrangements of the rooms. It contemplates a continuing control by the licensor and is more consistent with a licence than a lease. So some of these obligations are more consistent with a licence than a lease, and some lead to a contrary inference. The balance comes down in favour of a licence because the document cannot be construed as a lease without substantial rewriting. The recitals, conditions 1, 3, 19, 21 and 22 would all have to be written in substantially different terms or disregarded altogether. But Clause 1 cannot be either rewritten or disregarded, and if it is to the documents that one looks for the terms of the contract the conclusion is that the document as drafted gives rise to personal obligations. The conditions which point to a joint obligation can without violence be explained as a protection required by the licensor who assumes that the licensees who share the use of the rooms from time to time will come to some arrangement of work or financial contribution between themselves in respect of the obligations which each has severally undertaken. When the agreements were entered into the unidentified one person in clause 19 was clearly identified as the grantee who signed the other agreement. But if at any time during the currency of the agreement either H or S decided to leave, either by agreement with Miss Somma on surrender of the unexpired portion of the 12-week term, or one of them repudiating the agreement by leaving without paying the balance of instalments as they fell due, Miss Somma has reserved the right to introduce a second licensee. She explained in evidence how she set about it, and was not cross-examined to suggest that the rights reserved of replacing the second sharing licensee were unworkable or other than of reasonable business efficacy. Such a right to introduce a new licensee as a replacement is wholly inconsistent with a grant of exclusive occupation, much less exclusive possession. These two clauses also impose on the licensee the obligation to share the room with the licensor as well as with another licensee. The room was that described as being 22 ft by 18 ft, with two beds in it. The question of construction is what are the rights and obligations to be ascertained from the agreement. The nature and frequency of the exercise of the rights are a different question: see Goodrich v Paisner [1957] AC 65. The issue in that case was whether the occupation was of a separate dwelling, but the distinction there made between the rights granted and the exercise of the rights is relevant to the construction of these agreements. Miss Somma has a house. She grants to H and to S the right to use one room, but expressly reserves the right to use that room in common with them. On no construction of such a contract can H and S claim that they have been granted exclusive occupation of the room. In the second part of his judgment the learned judge considered clause 3 and clause 19. Construing clause 19 he said: I pointed out that at first blush it looks as if three people can use the premises at any one time. What was intended but the document does not say so is plain, that the licensee, whether Miss Savelli or Mr Hazelhurst, can share with one other person. It contemplates that the other person shall be whatever other legal person is allowed in. What is laid down plainly is that the landlord is given a complete discretion, putting it mildly, and power in practice if somebody goes so he can say ‘I have the right to say who is to share and you cannot stop me. You as the remaining licensee can lump it if you do not like it. You can stay or get out.’  I cannot believe that if anyone applies their mind to the point that is a fair interpretation of the position of the parties that in answer to the question ‘Are you saying that you have the sole right to impose any other person or sex, language, class or other taste?’  the landlord would give the answer or can give the answer ‘Yes, I can’ as a result of this document. If he imposes someone of three times their age or who snores or plays a musical instrument or has other habits that the surviving person does not like, this means that he can impose such a person on him. Worse still–and this is quite new, I have not heard of it before and the sooner it is dealt with the better–not only can he impose a person of different race or occupation but also of different sex. This is a different, a most revolting different idea. No court known to me as advocate or judge would willingly uphold that. That part of the document is not binding and is illegal in my judgment. That means the parties can carry out the rest of the agreement without the one party forcing that clause on the other parties’ will. I am surprised that counsel cannot find any authority on it. I am sure that in the reports counsel would find a case on this point if not similar to what we have here. If not, I decide it for the first time. It is no part of my decision because it is not necessary for the resolution of the whole case. In our view the illustrations given by the judge of the kind of uncongenial persons who might be imposed upon H and S by Miss Somma if either of them left only illustrate the risks inherent in the bargain that they made and are no ground for invoking public policy to render unenforceable73 the right retained by the licensor. The judge did not like the bargain, but the agreements were the agreements of the parties and the fact that the judge envisaged circumstances in which the exercise of Miss Somma’s rights would be uncongenial to the remaining licensee does not entitle the court to rewrite the agreement. The judge was deeply offended by the thought that the grantor could introduce a person of a different sex to succeed to the vacancy left after H or S had left. But we can find nothing to indicate that there was such an intention. If S were to depart, and the licensor permitted another lady congenial to H to take her place, a moralist might regard the new sharing arrangement with regret or indignation, but the court would be as reluctant to intervene as it is in the case of the sharing arrangements of H & S. Nor can we construe the clause to find an intention on the part of the licensor to impose on one licensee the company of another licensee of the opposite sex against the wishes of either of them. For those reasons we cannot uphold the learned judge’s decision that clauses 3 and 19 are contrary to public policy. Lord Gifford did not try to support this reason for the judge’s judgment but submitted a further objection to these clauses on the ground of illegality as expressing an intention to contravene section 77 of the Housing Act 1957 by over-crowding the room which H and S were given a right to share. If the licensor exercised her right to share the room with H and S by sleeping in the room, the house would be deemed to be overcrowded within the meaning of section 77(1). There are many difficulties in his way. By the subsection a dwelling-house shall be deemed to be overcrowded at any time when the number of persons sleeping in the house either (a) is such that any two of those persons not being persons living together as husband and wife must sleep in the same room or (b) in relation to a house consisting of one room of the size of this particular room, is more than two. By section 87 ‘dwelling-house’ means ‘any premises used as a separate dwelling . . . or of a type suitable for such use.’  It is not possible as a matter of construction to hold that clauses 3 and 19 express an intention that the licensor shall sleep in the room when H and S are occupying it, and there was no extrinsic evidence of such intention. This submission fails. It is perhaps only fair to Lord Gifford to say that his own enthusiasm for the point was less than burning. In the course of the argument we were invited to consider a great number of cases, mostly cases in which the courts have considered the application of different provisions of the Rent Acts. But at the end of the day it was clear to us that the instant case is very much a case peculiar to its own facts. The difficulties, which were real, were largely difficulties in determining the content of the findings of the learned judge. Lord Gifford strongly argued that when properly understood the judge had found that the agreements were a sham, or at least a disguise of the substance and reality of the transaction. We have given our reasons for rejecting that submission, and in the result it has become unnecessary to refer to most of the authorities cited in argument. So we arrive at the decision that on an analysis of the judgment the result in law is that H and S entered into separate contracts; those contracts were personal licences and not leases or a lease; and by those contracts neither H nor S was given a right of exclusive occupation of the room that they shared. That brings us to the respondents’ application for a new trial, leave for which we granted as an amendment to the respondents’ notice. Lord Gifford submits that the learned judge approached the case in the wrong way. He confined himself to a construction of the documents when it was his duty, on the authority of the cases which have been concerned with different but in some ways similar problems under the Rent Acts, to admit extrinsic evidence and to consider whether the surrounding circumstances establish that the documents do not record the real intention of the parties at the time when the grantor agreed to let the grantees live in the room. The onus was upon the respondents to establish that the contract was other than that recorded in the documents that they signed. If authority is needed, it is to be found clearly stated in this court in Buchmann v May (Bar Library Transcript No 182 of 1976, shortly reported in (1976) 240 EG 49, [1976] 2 EGLR 57) and the cases therein cited. There Sir John Pennycuick, in a judgment with which Megaw LJ and Stephenson LJ agreed, held that the relevant clause of the agreement in writing was unequivocal and said: It seems to me that that provision must stand as evidence of the purpose of the parties unless (the tenant) can establish that the provision does not correspond to the true purpose of the parties. The burden lies upon her to do so. But Lord Gifford submits that they failed to do so because the learned judge made it clear that he was not interested in hearing evidence of the surrounding circumstances and so either closed his mind to the correct approach or alternatively made it impracticable for the respondents’ advocate to present their case adequately. He contrasted the course of the hearing with the proceedings in three other cases in the county courts of London of which he gave us reports of the judgments which he personally could certify. In all those cases the learned judges rightly admitted extrinsic evidence which satisfied them that the written contracts were not the real statement of the intentions of the grantor and two grantees, so that documents, described as licences, almost identical with the present agreements, were held to be the grant of a lease. The judgment of Judge McDonnell in Walsh and Walsh v Griffiths-Jones and Durant has been published in the Legal Action Group Bulletin for October 1977. We say with respect that Judge McDonnell’s judgment is a model of the approach to and analysis of an alleged agreement to grant licences to two persons to share residential accommodation, and it deserves wider publicity. Lord Gifford contrasted the hearing before and judgment of Judge McDonnell with the proceedings in the county court with which we are concerned. He pointed to the observations of the learned judge calculated to discourage the advocates for both sides from leading evidence of the surrounding circumstances or from cross-examining in relation thereto. In our view there is great force in Lord Gifford’s submission that the hearing had unsatisfactory features, as the judge’s interventions point to an inference that he was confused as to the relevance of extrinsic evidence. But with some hesitation we have decided that though there was confusion in the judge’s mind while the evidence was being given, in fact his interventions did not have the effect of shutting out the evidence of surrounding circumstances which was relevant to the transaction. In spite of the judge’s comments, Ritter, Miss Somma and H appear to have been permitted to give the evidence that they wanted to present of the relevant surrounding circumstances. Mr Seifert did not persist in his contention that H had paid a deposit and moved in before he signed the agreements, and H’s evidence was not consistent with the payment of any deposits save the deposits that each paid of £38.80 after the agreements had been signed. Where parties are professionally represented our forensic system requires that parties must persist in examining or cross-examining upon facts, and must seek a ruling from the court if the court indicates an intention to exclude material which the advocate regards as relevant. We do not underestimate Mr Seifert’s difficulties, but he did not persist in his cross-examination of Ritter, or his examination in chief of H about the events of the first occasion when he met Ritter, when the judge intervened. We conclude that in this court the case must be scrutinised on the evidence that was given, and that in spite of the criticisms that we have made of the judge’s interventions and approach to the case before he came to deliver judgment, it is not a proper case for a new trial in order to enable parties to canvas again the evidence of the circumstances in February 1976 which surrounded the signature of the two agreements in writing. Further, having regard to the uncontroverted facts in evidence at the trial, it seems unlikely that a second trial would enable H or S to discharge the onus of establishing that the intentions of the parties are not to be collected from the written documents that they signed, particularly having regard to H’s candid evidence that after he had read the document it did not seem a good thing to quarrel with the licence and that he preferred to have the accommodation on the terms that it was offered to him rather than not to have the accommodation at all. This court has today construed those agreements. The respondents’ application for a new trial is therefore refused. The appeal was allowed, with costs in the Court of Appeal and below. The costs awarded against Miss Savelli were limited to £50 in the absence of further order; legal aid taxation of her costs was ordered. The declarations granted were (1) that the respondents were not statutory tenants of the subject accommodation and (2) that Part VI of the Rent Act 1968 did not apply to the contracts dated August 7 1976 (these were the second agreements in the same terms as the first). Leave to appeal to the House of Lords was refused.