P let a flat to a company, D1, set up by D2, so that both sides could avoid the Rent Act and so that, although D2 would be the one occupying and paying the rent, it would be let to the company, not him. D2 tried to claim that he was a tenant. CA held that although the arrangement was made purely to avoid the Rents Acts, both sides were aware of the implications and D2 was not a tenant. (see Gardner’s explanation above).
Croom-Johnson LJ: It isn’t against policy for people to create licenses instead of leases and where they intend to do this it is fine. The problem is only where the parties intend a tenancy but create a licence. Here a lease was never intended. “The mere fact that the purpose of the legal arrangement was to prevent the creation of the statutory tenancy is by itself not enough.”
