Aslan v Murphy [1989] 3 All ER 130

Facts

• The case concerned an occupancy agreement between Aslan (occupier) and Murphy (owner), in which the documentation purported not to grant exclusive possession to the occupier.
• The agreement included a term allowing the owner to enter the premises at any time, except between 10:30 am and 12 pm, and for the owner to retain a key.
• The clause regarding access and retention of the key was not enforced in practice and was deemed unrealistic given the circumstances.
• The arrangement's terms were examined to determine whether they constituted genuine restrictions or were mere devices to avoid creating a lease.
• The court examined a companion case, Duke v Wynn, where a landlord had a right under the written agreement to introduce another occupant into a vacant bedroom, but did not exercise that right.

Issues

1. Whether the agreement between Aslan and Murphy created a lease or a license.
2. To what extent the retention of a key or a right of entry by a landlord negates exclusive possession.
3. Whether clauses in the agreement, such as rights of entry or non-exclusive possession, were genuine or constituted pretenses.
4. How courts should approach determining the true nature of an occupancy arrangement, particularly when written terms may disguise its substance.

Decision

• The court found that the access and key retention clauses were pretenses, intended to avoid the effect of creating a lease and were not genuinely enforced.
• It was held that exclusive possession is not defeated by unrealistic or inactive clauses and that the substance of the agreement takes precedence over its form.
• The mere retention of keys or rights of entry by a landlord does not negate exclusive possession if retained only for legitimate purposes (such as emergencies or repairs).
• In the companion Duke v Wynn case, the court held that, despite the textual reservation of the right to let out part of the property, exclusive possession existed in practice.
• Courts must look beyond the express language of agreements to determine the true nature and substance of the occupancy.

Legal Principles

• The distinction between a lease and a license is determined by the presence of exclusive possession and the substance of the agreement, not merely its wording.
• Clauses that are unrealistic or not enforced are considered pretenses and disregarded in determining the true relationship.
• As established in Street v Mountford, the reality of the arrangement overrides artificial devices intended to avoid statutory protection.
• Landlords cannot unilaterally convert a tenancy into a mere license by the inclusion of unenforced restrictions or rights.
• The practical conduct and intentions of the parties are central to deciding whether a lease has been granted.

Conclusion

The Court of Appeal in Aslan v Murphy affirmed that exclusive possession is key to distinguishing leases from licenses, with the practical realities and genuine intentions of the parties prevailing over form or unenforced terms. Artificial contractual clauses designed to circumvent the creation of a lease will be disregarded, ensuring that statutory protections for tenants cannot be evaded by mere drafting.