1. On 29th September 2004 the Trustees of the Ashtead United Charity allocated Mrs Janet Watts accommodation in an almshouse, in fact one of 14 residential flats the Charity owned at Ashstead in Surrey. In May 2015 they issued proceedings for possession based on the allegations that Mrs Watts had acted in an anti-social manner, swearing, spitting, and aggression. This was a breach of the terms of the Appointments Letter under which she was allocated the property. At the first directions hearing the District Judge ordered a trial of the issue of whether Mrs Watts occupied as a licensee of the Charity or a tenant. If the former of course it would be relatively easy for the Charity to evict her; if the latter, much less so.
  2. The Letter of Appointment referred to Mrs Watt’s interest as ‘a tenancy’, and referred to payment of ‘rent’ but also stated that: “Neither the resident(s) nor any relation of his/hers/theirs will be a tenant of the charity or have any legal interest in his/hers/their almshouse.” (paragraph 13)
  3. Mrs Watts of course had exclusive possession of her property. It was her case that she entered the property as a periodic tenant, or under a tenancy at will which converted to a periodic tenancy on the payment of rent. It was submitted that if a person is allowed to take up exclusive possession of a property, a tenancy must arise.
  4. Giving the judgment of the court Sir Terence Etherton, MR explained that “The short answer to this point is that there is a distinction between legal exclusive possession or a legal right of exclusive possession, on the one hand, and a personal right of exclusive possession, on the other … Legal exclusive possession entitles the occupier to exclude all others, including the legal owner, from the property. Exclusive occupation may, or may not, amount to legal possession. If it does, the occupier is a tenant. If it does not, the occupier is not a tenant and occupies in some different capacity.”
  5. In this case Mrs Watts did have personal right exclusive possession of the property, but did not have a legal right of exclusive possession. This meant that she occupied as licensee not as tenant.
  6. The Court held that the references to ‘rent’ and ‘tenancy’ could be explained by the fact that the Trustees of the Charity were lay volunteers and that there were express provisions in the Appointment Letter which pointed away from the grant of legal exclusive possession and a tenancy, including paragraph 13 quoted above, and terms permitting the Trustees to relocate to another almshouse, prohibiting visitors without permission and requiring the resident to give notice if away for more than a week. So no periodic tenancy.
  7. The judgment in Watts v Stewart reminds us that a person will not be a tenant even if let into exclusive possession if the circumstances negative any intention to create a tenancy. More familiar examples of persons who have personal exclusive possession of their accommodation but not tenancy are lodgers or service occupiers such as residential caretakers.
  8. It is important to recall that the particular language used in an agreement is not sufficient to make a difference. Parties cannot turn a tenancy into a licence merely by calling it one. In the famous words of Lord Templeman in Street v Mountford [1985] 1 AC 809: “[t]he manufacture of a five-pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.”
  9. Thus it was that use of the words ‘rent’ and ‘tenancy’ in Watts were not sufficient to transform what was, on its facts, a licence, into a tenancy.
  10. The facts of this case are interesting and unusual. Where residential occupation is concerned, it is more often the case that what is described as a licence will in truth be a tenancy; here it was the reverse. However notwithstanding the rather unusual facts, the analysis and explanation of the relevant law makes Watts v Stewart a useful ‘cut out and keep’ guide for landlord and tenant lawyers on the lease/licence distinction.