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Consultation Paper on the General Law of the Landlord and Tenant

Consultation Paper on the General Law of the Landlord and Tenant

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parties an intenti<strong>on</strong> which <strong>the</strong>y never had.” 119 However, it isquesti<strong>on</strong>able how far <strong>the</strong> courts have heeded this warning.1.27 What appears to have influenced many judges in <strong>the</strong> past is<strong>the</strong> danger that a l<strong>and</strong>owner, perhaps taking advantage <strong>of</strong> a superiorbargaining positi<strong>on</strong>, may persuade, if not force, an occupier to sign anagreement which purports to create <strong>on</strong>e type <strong>of</strong> relati<strong>on</strong>ship ra<strong>the</strong>rthan ano<strong>the</strong>r. Often <strong>the</strong> motive will be to prevent <strong>the</strong> occupierobtaining statutory protecti<strong>on</strong> or rights which apply to a tenant, butnot to o<strong>the</strong>r occupiers, such as a licensee. 120 Thus <strong>the</strong> courts have<strong>of</strong>ten been astute to identify “sham” agreements <strong>and</strong> to look at <strong>the</strong>substance <strong>of</strong> what has been entered into, ra<strong>the</strong>r than <strong>the</strong> wording orform. 121 Such a judicial attitude is perfectly underst<strong>and</strong>able <strong>and</strong>entirely c<strong>on</strong>sistent with <strong>the</strong> noti<strong>on</strong> that <strong>the</strong> courts should seek toadvance <strong>the</strong> purpose <strong>of</strong> legislati<strong>on</strong> such as <strong>the</strong> old Rent Restricti<strong>on</strong>Acts <strong>and</strong> <strong>L<strong>and</strong>lord</strong> <strong>and</strong> <strong>Tenant</strong> Acts. However, it is arguable that <strong>the</strong>process has g<strong>on</strong>e too far <strong>and</strong> has resulted in c<strong>on</strong>siderable uncertaintyin <strong>the</strong> law <strong>and</strong> practice.1.28 The difficulties which have arisen may be illustrated byreference to two recent cases: Kenny Homes & Co Ltd v Le<strong>on</strong>ard 122<strong>and</strong> Smith v CIE. 123 These both involved commercial arrangements.In Kenny Homes <strong>the</strong> operati<strong>on</strong>s <strong>of</strong> a garage <strong>and</strong> adjacent car park hadoccupied <strong>the</strong> premises for some 35 years under a series <strong>of</strong> “hiring <strong>and</strong>licence” agreements. In Smith <strong>the</strong> operator <strong>of</strong> a shop in a railwaystati<strong>on</strong> had entered into a 10-year “licence” agreement negotiated byhis legal advisers with <strong>the</strong> owner’s legal advisers. What is interestingis to compare key clauses in <strong>the</strong> written agreements under scrutiny by<strong>the</strong> courts in <strong>the</strong> two cases:119120121122123[1984] IR 511, 517.See paragraph 1.07 above.See cases cited in footnote 118 above. This principle was also <strong>the</strong> basis <strong>of</strong><strong>the</strong> House <strong>of</strong> Lords leading decisi<strong>on</strong> in Engl<strong>and</strong>, Street v Mountford [1985]AC 809.High Court 11 December 1997; Supreme Court 18 June 1998.High Court 9 October 2002 (Circuit Appeal).26

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