Land - Landlord & Tenant (2)

2. As Ann and Liza were close friends and were doing the same postgraduate course, they decided to share a flat. After looking for a month they found a two-roomed flat owned b Lionel which suited them. Lionel insisted on each of them entering into separate but identical “licence agreements”. Each provided that the licence was to run for nine months and that the license was to pay $500 per month as a licence fee as well as 50% of the outgoings on the flat. The agreement further stated that the licensor should retain a key to the flat and that he reserved the right to occupy the flat whenever he wishes. The agreement denied that the licensee was to have exclusive possession of the flat or any part of the flat. Ann and Liza each signed their agreements and entered into possession of the flat. Nine months later Lionel told them to leave. Are they tenants or licensees?

Lionel retain the key to the flat
- If retention of the key is for emergency, repair or limited purpose, it will not negate exclusive possession
- If retention of the key is for general purpose of entering the flat at reasonable times, it will negate exclusive possession

Lionel reserves the right to occupy the flat whenever he wishes
- Is it genuine or not (to avoid the Rent Acts)? Might be struck down (i.e. ignored)

The agreement denies the licensee was to have exclusive possession of the flat or any part of the flat
- Ann and Liza enter into separate but identical ‘licence agreement’
- It is a sham to avoid tax (HL in Street v Mountford criticize the ruling of same facts in CA as a licence as the facts show it is a sham to aovid tax)
Intention of Ann and Liza?
- Will they accept join rent liability? i.e. each will be held liable individually for the whole of rent
- If yes, there is intention to be joint tenants
- If no, cannot be joint tenancy