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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Mikeover Ltd v Brady [1989] EWCA Civ 1 (26 May 1989) URL: https://www.bailii.org/ew/cases/EWCA/Civ/1989/1.html Cite as: 21 HLR 513, [1989] 40 EG 92, [1989] 3 All ER 618, [1989] 2 EGLR 61, [1989] EWCA Civ 1, 59 P & CR 218 |
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B e f o r e :
____________________
MIKEOVER LTD | ||
V | ||
BRADY |
____________________
THIS AGREEMENT is made the 6th day of June 1984 BETWEEN Mikeover Ltd (hereinafter called 'the Owner') of the one part and Gerard Brady (hereinafter called 'the Licensee' of the other part.
WHEREBY IT IS AGREED as follows:--
1. The Owner grants to the licensee the right to use in common with others who have been granted the like right the rooms on the second floor forming part of the flat premises known as 179 Southgate Rd TOGETHER with the fixtures furniture furnishings and effects now in the said rooms for six months from the 6th June 1984
2. THE Licensee agrees with the Owner as follows:--
(1) To pay the sum of £ 86.66 per month for the right to share in the use of the said rooms such sum to be payable by equal monthly instalments in advance on the First day of each month, the first of such payments to be made on the signing of this agreement.
(2) Not to damage or cause any damage to the walls or floors of the said rooms or the said flat or any other part thereof and to preserve the fixtures furniture furnishings and effects from being destroyed or damaged in any way and to replace all broken glass.
. . .
(4) Not to impede the use of the said rooms or any of them nor, upon terms that each shares the cost of the gas, electricity and telephone services, to impede the use of any services supplied to the said rooms or any of them, by such other persons not exceeding one in number to whom the Owner shall grant Licence.
(5) Not to assign this Agreement nor permit any other person, except as licenced by the Owner, to sleep or reside in or share occupation of the said rooms or any of them at any time.
(6) Not to do or suffer to be done in or upon the said rooms or the said flat any act or thing which may be a nuisance damage or annoyance to the Owner or to the tenants or occupiers of other parts of the building of which the flat forms part or to the occupiers of any adjoining property or which may vitiate any insurance on the flat against fire or otherwise or increase the ordinary premium thereon.
3. PROVIDED as follows:--
(1) If the said sum or any part thereof shall be in arrear or unpaid for at least fourteen days after the same shall have become due or
(2) in the event of any breach by the Licensee of the Agreements herein contained then the Owner may terminate this Agreement and the Licensee's rights hereunder shall absolutely determine but without prejudice to any other remedies of the Owner hereunder.
4. The Owner agrees with the Licensee to pay all general and water rates payable in respect of the flat but not any charges for the supply of gas or electric current or for the use of the telephone.
5. The Licensee shall pay the sum of £ 40 which shall be retained by the Owner until the termination of this Agreement as a deposit to secure to the Owner the performance by the Licensee of the agreements on the part of the Licensee herein contained but without prejudice to the Owner's rights under and in respect of this Agreement. At the termination of this Agreement and on the Licensee vacating the said rooms and subject to the proper performance by the Licensee of his obligations herein contained the Owner will refund the said deposit to the licensee.
AS WITNESS the hands of the parties hereto the day and year first before written.
I am writing to terminate our original contract. Due to personal circumstances I have had to leave.
Sorry about any inconvenience caused. I enclose the keys as agreed, and would be grateful if you would send my deposit money to the above address.
I can't accept it. I'll hold you responsible for your share only.
The defendant made a number of payments of £ 173.32 to the plaintiffs by cheque (in June, August and September 1986) and several other payments, including four or five payments of £ 50 (though the August and September cheques were not cashed until February 1987). However, the judge found that the receipts by the plaintiffs represented no more than was due from the defendant on the footing that he was liable only for monthly payments of £ 86.66. We see no sufficient grounds for disturbing this finding.
(a) if the defendant's rights were those of a licensee only, his licence was properly determined and the plaintiffs are entitled to possession;
(b) if the defendant's rights were those of a tenant, in view of the decision of this court in Lloyd v Sadler [1978] QB 774, he is entitled to the protection of the Rent Acts and the plaintiffs are not entitled to possession (though Mr Primost, on behalf of the plaintiffs, has told us that he reserves the right to challenge the correctness of that decision in a higher court).
(a) by reading the phrase 'in common with others who have been granted the like right 'in clause 1 as meaning' in common with others who have or may from time to time be granted the like right', and
(b) by reading the phrase 'by such other persons not exceeding one in number to whom the Owner shall grant licence' in clause 2(4) as meaning 'by such other persons not exceeding one in number to whom the Owner shall from time to time grant licence in substitution for [Miss Guile or Mr Brady, as the case might be]'.
He sought to pray in aid clause 2(5) of the agreement in support of this submission, though we think it carries the matter no further.
The licensee may terminate this agreement and vacate the flat at any time on seven days prior notice: (see p 464).
As regards the contention of the plaintiff that the transactions between himself, Auto Finance and the defendants were a 'sham' it is, I think, necessary to consider what, if any, legal concept is involved in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the 'sham' which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities (see Yorkshire Railway Wagon Co v Maclure (1882)21 Ch D 309 and Stoneleigh Finance Ltd v Phillips [1965] 2 QB 357), that for acts or documents to be a 'sham', with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating.
Here the artificiality was in the pretence that two contemporaneous and identical agreements entered into by a man and a woman who were going to live together in a one-bedroom flat and share a double bed created rights and obligations which were several rather than joint. As to the nature of those rights and obligations, the provisions of the joint agreement purporting to retain the right in the respondent to share the occupation of the flat with the young couple himself or to introduce an indefinite number of third parties to do so could be seen, in all the relevant circumstances, to be repugnant to the true purpose of the agreement. No one could have supposed that those provisions were ever intended to be acted on. They were introduced into the agreement for no other purpose than as an attempt to disguise the true character of the agreement which it was hoped would deceive the court and prevent the appellants enjoying the protection of the Rent Acts. As your Lordships all agree, the attempt fails.
the interest of each joint tenant is the same in extent, nature and duration, for in theory of law they hold but one estate.
'Interest' in this context must, in our judgment, include the bundle of rights and obligations representing that interest. The difficulty, from the defendant's point of view, is that the two agreements instead of imposing a joint liability on him and Miss Guile to pay a deposit of £ 80 and monthly payments of £ 173.32, on their face, imposed on each of them individual and separate obligations to pay only a deposit of £ 40 and monthly payments of only £ 86.66. On the face of it, the absence of joint obligations of payment were inconsistent with the existence of a joint tenancy.
. . . Miss Guile had a bank account; the Defendant did not. The money was sent by cheque by post. It was a matter of convenience for everybody for Miss Guile to pay by cheque and send the cheque by post to the Plaintiffs and recoup herself from the Defendant for his share of the money paid out. It was merely a matter of convenience that Miss Guile paid the money due in that way.
This finding of fact is not in dispute. The judge appears to have considered that the failure of the defendant to challenge the plaintiffs' refusal to accept the defendant's offer to pay a monthly sum of £ 173.32 after Miss Guile left amounted to a plain understanding and agreement between the parties that the defendant was legally liable to pay only £ 86.66 per month. With respect to the judge, we do not think that any such agreement can necessarily be inferred. Nevertheless, the plaintiffs' failure to accept the defendant's offer to pay the higher monthly sum does not in any way assist the defendant's contention that the provisions for payment contained in the two agreements were shams.
I have come to the conclusion that this is a case in which the agreement sets out precisely what the parties intended. There is no suggestion that the Defendant did not understand what the agreement meant. He looked at it and read it before he signed it. It was clear to him that this was the true nature of the agreement.
. . . Mr Antoniades required each of them, Mr Villiers and Miss Bridger, to agree to pay one half of each aggregate periodical payment, but this circumstance cannot convert a tenancy into a licence. A tenancy remains a tenancy even though the landlord may choose to require each of two joint tenants to agree expressly to pay one half of the rent.
If the real transaction was, as the judge found, one under which the appellants became joint tenants with exclusive possession, on the footing that the two agreements are to be construed together, then it would follow that they were together jointly and severally responsible for the whole rent. It would equally follow that they could effectively exclude the respondent and his nominees.
In the same case Lord Jauncey said (at p 1225):
Normal attributes of a lease to joint tenants include a demise for a specific period with exclusive possession at a single rent for payment of which each joint tenant is liable to the lessor in full subject to relief from his co-tenants.
The three licences were in substance and reality just what they purported to be. The right, specifically given under each of termination on 28 days' notice by either side, and the provision whereby each was responsible only for a specific sum which was in fact one third of the total required by the landlord, are wholly inconsistent with a joint tenancy.
The entire inconsistency with a joint tenancy of a provision rendering each licensee responsible only for one third of the total required by the landlord was, as we read Stribling v Wickham, part of the essential reasoning which led this court to its final decision.
The appeal was dismissed with costs, not to be enforced without leave of the court; Legal Aid taxation ordered; leave to appeal refused.
The electronic text of this judgment was provided by Estates Gazette, whose assistance is gratefully acknowledged.