Due to similarity of circumstance and the nature of the positions argued, this appeal hearing involved two separate, but inextricably linked, claims for tenancy under the pretence of sham agreements.

While both sharing the same fundamental contracts, there were deviations both within and without the documents, that deserved enquiry, if at least to clarify the terms of occupancy. 

Markou v Da Silvaesa

Having entered into an agreement displaying the hallmarks of a licenced residency, it was argued that after being requested to leave the premises following a change in property ownership, the two parties in occupancy were legally entitled to remain so under the assumption of a tenancy.

This was largely reliant upon the poorly worded contract, insomuch as clauses 1 and 2 were at no point enforced, and where the latter clause defied logic and reason when providing for a practical living arrangement.

Clause 1 required that each day, the appellants were expected to vacate the premises between 10.30am and noon for the duration of the contract, while clause 2 reserved a right for the landlord to remove and/or substitute items of furniture as deemed necessary.

What became of concern, was that the contract also required that the claimants not only vacated the property, but took their personal possessions too; a stipulation that by all accounts, was impossible to execute.

Likewise, the right to remove furniture rendered the appellants powerless to prevent beds or other essential items, from being taken away should the respondent see fit to do so.

Upon the respondent’s application for possession under Order 113 of the Rules of the Supreme Court (RSC), the appellants challenged its validity, on grounds that the agreement signed was nothing less than a sham, and that when applying the principles of Street v Mountford there could be no right to remove them.

In the first hearing, the judge ruled that despite vagaries in the terms of the contract, there was insufficient evidence to suggest sham intentions, particularly when the majority of the terms were clear and concise as to the engaging parties occupancy as licensees; and when later asked for the matter to be dealt with in the County Courts for the purposes of trial rather than summary judgment, the option was also dismissed.

When presented to the Court of Appeal, any contention that the agreement constituted a sham was, despite clearer presentation of the facts, further dismissed on grounds that echoed the previous judge.

However, the complications arising from the oddly drafted clauses raised significant issue around the right to allow possession when so much certainty lingered as to the exactness of the relationship shared between landlord and licensees.

This concern sustained the appeal in favour of new proceedings under trial, before any conclusive findings could be reached.

Crancour Ltd v Merola

Operating under identical contracts, the appellants relied upon oral agreements between themselves and the resident housekeeper, when challenging the presumption of licensee over what they believed to be exclusive possession leading to tenancy.

Prior to the change in ownership, the appellants had engaged in conversation with the domestic help, whereupon the offer to clean the room in accordance with the contract was turned down in favour of privacy while in occupancy.

Alternately, the appellants left their bed linen and waste outside the door in order to benefit from the services provided by the landlord.

It was for this reason, that the claim for tenancy was argued, along with the issues raised in the first case.

As was agreed above, the lack of certainty for clauses 1 and 2, coupled with a need for witness testimony with regard to the orally agreed terms, meant that just as before, the issue of possession orders could not be sustained without renewed appreciation of the full facts.

And so, the appeal was upheld in conjunction with the directions cited, while the court reminded the parties that:

“[P]ossession of rooms for occupation as ordinary residential accommodation must, from its nature, be intended by both parties to be exclusive except where, as stated, the landlord requires unrestricted access for the provision of services or attendance.”

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