little duckling

It is a truth, universally acknowledged, that if a bird looks like a duck, swims like a duck and quacks like a duck, then what you have in your pond is probably a duck.

In much the same way, establishing whether a person occupies a property as a tenant under a lease has, for the past 30 years [1], relied on identifying three essential elements, regardless of the actual wording of the document itself.

If a person:

  1. has a fixed or periodic term to occupy a premises;
  2. pays rent; and
  3. has exclusive possession of the premises,

then that person has a lease of the premises. This will attract proprietary rights and obligations and may attract statutory protection.

This means that the Courts would ignore the intentions of the parties stated in a formal written document in circumstances where the facts on the ground did not match the words in the document.

The essential principle of the Court giving effect to what it regarded as ‘the reality on the ground’ rather than ‘the clear intention of the parties’ was repeated in a recent Court of Appeal decision in July of this year[2]. The Court of Appeal ruled that a holiday park plot rental arrangement was a statutorily protected residential tenancy rather than a contractual licence.

The clear evidence before the Court was that when the arrangement was entered into in 1992 both parties intended the arrangement to be such that the holiday park owner rented out a holiday park plot space and the occupier owned the structure that had been erected on the plot. The clear intention of the parties followed a pattern which had been repeated for other plots on countless occasions since the 1930s. Indeed, the occupiers had paid a considerable capital sum to the previous occupiers to take ownership of the structure on the holiday park plot.

In time, the parties fell out and the holiday park owner wanted to recover possession of the holiday park plot. The defendants to the possession action ran the only defence available to them – that they had a statutorily protected residential tenancy. The first instance Court and the Court of Appeal upheld the defence but these decisions flew in the face of the clear evidence as to what the parties intended when the arrangement was entered into in 1992 and have had dramatic consequences for both parties to the litigation.

To succeed with such an argument the defendants had to establish that at the time the arrangement was entered into the structure was for all intents and purposes permanent, that it was occupied on a year round basis and that it was the defendants’ only residence. These facts were established in the defendants’ favour in the first instance trial and the first instance judge felt that she had no alternative but to follow the 1997 House of Lords authority on the subject [3] in ruling that the defendants had a statutorily protected residential tenancy. The clear evidence before the Court was that this was not what the parties had intended in 1992 and that both sides intended the defendants to be the owners of the structure which had been erected on the plot.

The Court of Appeal rejected the argument that the Court should give effect to the clear intention of the parties with dramatic consequences. The holiday park owner acquired the ownership of a structure which it did not want with attendant consequences with regard to insurance and maintenance. The defendants lost the ownership of a structure which they had regarded as their principal asset and in respect of which they had paid a considerable capital sum in 1992 and on which they had spent in excess of £100,000 during the intervening years.

Be warned. Parties to property documents should expect the Court to slavishly follow the established legal principles even if these fly in the face of the clear intention of the parties.

This post was edited by Iain Davies. For more information, email blogs@gateleyplc.com.

[1] Street v Mountford [1985] 1EGLR128

[2] Spiel Platz Limited v John Pearson & Maureen Pearson [2015] EWCACiv804

[3] Elitestone v Morris [1997] 1WLR687


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.