Statutory tenancy — Possession proceedings — Tenant occupying premises as second residence — Tenant requiring residence for furthering business activities — Tenant’s wider family also in occupation — Tenant becoming statutory tenant under the Rent Acts — Tenant required by agreement to use premises for “tenant’s staff or directors” — Whether phrase to be construed as “tenant or staff” — Concession that tenant a statutory tenant — Whether tenant in breach of covenant not to sublet or assign — First instance decision in favour of landlord — Tenant’s appeal allowed by majority of Court of Appeal
The landlord was a property company and entered into a written tenancy agreement with the appellant tenant, L, of a maisonette on the upper floors of premises above a shop, comprising two bedrooms, living room, kitchen and bathroom, at 177 Hemingford Road, Islington, London N1. The tenancy was granted for one year from September 29 1985. Clause 2(4) of the agreement specified that the tenant was “not to assign charge underlet or part with possession of the premises or any part thereof without the consent in writing of the landlord” except as mentioned in para 2(5).
Clause 2(5) specified that the tenant was not to carry on any trade at the premises but to use them “as a private residence for the purpose of accommodating the tenant’s staff or directors in such a way that the premises shall not become liable to any of the legislation … regulating residential accommodation …”.
Clause 2(5) had been taken from a tenancy agreement which the landlord had drawn up for the premises for a company let as he had not wanted any property of his to be subject to the Rent Act 1977 (all his other property was commercial). L was a builder and property developer, but had no company interests or staff. He lived with Mrs M in Essex and wanted accommodation in London to assist in his business activities of buying and selling properties in Islington. L had persuaded the landlord to grant a tenancy to him personally by stating that he had carried on business through a number of companies and that the tenancy should not be granted to one of them in particular.
In the possession proceedings, the landlord initially sought a declaration, inter alia, that on its true construction clause 2(5) of the agreement prevented L from occupying the flat as his residence. Alternatively, if L was not prevented from occupying the flat as his residence, he was now a statutory tenant and the landlord was entitled to possession by breach of the user clause in allowing persons into occupation who were outside the ambit of that clause. Thus when the tenancy expired he had no protection.
The judge at first instance found that L used the one bedroom of the flat for two or three nights per week, and that he was a “two-homes” man. Therefore he satisfied the residential qualification and had Rent Act protection. There was no appeal against that finding. However, the second bedroom had been used by N, Mrs M’s daughter and her boyfriend, who were added as parties, and once she left, by the second daughter G and her boyfriend. The landlord argued that there had been breach of the alienation clause in the agreement. In the court below it was conceded that the landlord no longer contended that the agreement precluded L’s personal occupation of the flat so that the landlord’s first ground was no longer pursued. However, the judge also found that L had knowingly been in breach of the user clause by permitting each of Mrs M’s daughters to set up home in the flat when none of those occupants had been a member of his staff or had any connection with his business activities. Accordingly, he granted an order for possession sought by the landlord. L appealed.
Held The appeal was allowed by a majority.
1. With regard to the construction of the phrase the “tenant’s staff or directors” in clause 2(5), the court accepted that the correct construction was the “tenant or his staff”. From that it necessarily followed that L had not given up residential occupation and was within its protection. That accorded with the realities of the case where the agreement was made to an individual and not to a company.
2. The clause was not meant to be read as meaning that the tenant should carry on business which was expressly forbidden. It was convenient for him to have residence in an area of his business activities.
3. With regard to the use of the premises by Mrs M’s daughters and their boyfriends, where a tenancy was granted to an individual, he was entitled to occupy with his wife or family. In the present age, there could be no objection to the fact that L was not married to Mrs M, with whom he was still living, and her daughters could be regarded as part of the wider family. That was borne out in cases of right to succession of protected tenancies where there was not a strict blood relationship.
4. Even if there had been a company letting direct, the tenant would still be allowed to have his wife, or common law wife and family in residence with him. It was so natural that a tenant of residential property should have his family with him that clear words would be needed to exclude them. No such words were used for such a purpose in the instant case.
5. Peter Gibson J dissenting stated that reading the words of clause 2(5) there was nothing in the wording that would have permitted the tenant to reside in the flat because he was neither “staff” nor “directors” so that the wording was wholly inappropriate to an individual tenant. L could have applied for rectification of the contract or have pleaded estoppel or acquiescence. But no such application had been made. A statutory tenancy for L was irreconcilable with the clause. As the concession was one of law, his lordship was reluctantly forced to the conclusion that he would refuse to accept it. Under the unrectified contract and without estoppel or acquiescence having been pleaded, L was not entitled to occupy the premises.
John Robson (instructed by J P Malnick & Co) appeared for the appellants; Steven Whitaker (instructed by Binks Stern) appeared for Blanway Investments Ltd.
