Leases and Licences

Question 1

*Street v Mountford [1985] AC 809

Answer 1

FACTS:
- S entered into a written agreement with M to rent 2 rooms of a property
- A clause declared it a licence and not under the scope of the Rents Acts
LORD TEMPLEMAN:
An occupier of land for a term at a rent is a tenant providing the occupier is granted exclusive possession
- Exclusive possession is where the possessor is able to exercise the rights of the owner; albeit subject to so restrictions/limited rights/time limit
- May be more difficult in commercial circumstances
- A lodger will be subject to unrestricted access of the landlord/his servents
- Tenant has exclusive possession, any express reservation of limit rights to enter/view/repair/maintain is an indication of exclusive possession
Disregarding the intention of the parties does not interfere with freedom of contract
- “If the agreements satisfied all the requirements of a tenancy, then the agreement produced a tenancy”; if you have a fork, you cannot insist it is spade just because you do not understand the English language
- The only relevant intention is the intention to grant exclusive possession for a term at rent
- Look at Williams Article (noted)
FURTHER NOTES:
- A’s lack of intention to grant B a lease does not necessarily prevent B’s right from counting as a lease

Question 2

*AG Securities v Vaughan; Antoniades v Villiers [1990] 1 AC 417

Answer 2

FACTS:
AG Securities: A owned a four bedroom house which he rented out to 4 different, independent parties and they share communal areas. When one occupant left, it would be filled at the will of A. The attempted to argue that combined, they had a lease.
Antoniades: V and B (a couple) signed two separate agreements to occupy a flat owned by A. It was small. The agreements where identical. There was a clause stating it was a licence and trying to remove exclusive possession. The claimed that jointly, they had a lease.
LORD TEMPLEMAN:
- Parties cannot contract out of the Rent Acts, if they were able to the Ats would became dead letter especially in the difficult housing market
- The court must consider:
> The relationship/surrounding circumstances between the prospective occupiers
> The course of negotiations
> The nature and extent of the accommodation
> The intended and actual mode of occupation of the accommodation
- In a situation where a husband and wife have two separate contracts but pay the same rent and are required to love together, the contracts must be considered together
AG Securities:
- “If the four occupiers had been jointly entitled to exclusive possession of the flat then, on the death of one of the occupiers, the remaining three would be entitled to joint and exclusive occupation” - the company can nominate a fourth person so not the case here
- The agreements where independent of one another
Antoniades:
- The agreements where interdependent of one another, either both where signed or neither
- Until the powers where exercised the tenants had exclusive possession, and they could not be exercised as they were contrary to the Rents Acts…
- The applicants applied to rent the flat jointly and exclusively; and the landlord allowed this
- The clause was not a genuine reservation made by V: a pretense only intended to deprive the applicants of the protection of the rent acts
- Evidence at trial that neither V or B knew about exclusive possession or the Rents Acts, but A was going on about it during the signing, but they were not concerned as they were so grateful to find somewhere to stay; the owner’s real intention was to rely on the occupants not understanding the language (Somma v Hazelhurt)
- Premises not suitable for occupation by another whom is a stranger
- Equal and joint licence fee
Street v Mountford reasserted:
1. Parties to an agreement cannot contract out of the Rents Acts
2. In the absence of special circumstances, not here relevant, the enjoyment of exclusive occupation for a term in consideration of periodic payments creates a tenancy
3. Where the language of licence contradicts the reality of lease, the facts must prevail

Question 3

Bruton v London & Quadrant Housing Trust [2000] 1 AC 406; [1999] 3 WLR 150

Answer 3

{Millet LJ in CA; exceptions to Street v Mountford:
1. Where the circumstances mean there is no legal relation
2. Where there is an alternative relationship such as vendor/purchaser or master/servant *REMEMBER
3. Where the grantor has no power to create a tenancy…
(N.B. the first and third are not really exceptions to the general rule as there is no legal relationship)}
FACTS:
- L owned a block of flats which they planned to demolish and redevelop; in the meantime L licensed the property to Q who intended to provide accommodation to the homeless and those in need
- B claimed his agreement with Q was a lease and subject to statutory protection
- Q argued there was not a lease as they did not have th power to grant one
- HL found B did have a lease and so was subject to the statutory repairing duty
LORD HOFFMAN:
- The fact they were a responsible landlord performing social functions and promised not to grant tenancies is not an exceptional circumstance to the rule in Street v Mountford… this is as the Rent Acts distinguish between different types of landlords but do not say that different types of landlord are able to grant different types of agreeement on the same facts
- No evidence the tenancy agreement was ultra vires
- The agreement with B is irrelevant as one cannot contract out of a statute
- Agreement to grant exclusive possession, therefore tenancy
- A tenancy is not required to bind the whole world, it describes the relationship between the landlord and tenancy
LORD HOBHOUSE:
A relationship of landlord and tenant was created between B and Q so their contractual obligations must be adhered to

Question 4

Kay v Lambeth LBC [2006] UKHL 19

Answer 4

• Human Rights and Land; Lord Bingham; Discusses that the courts are not strictly bound by section 2 of the HRA, but are restricted from acting incompatibly with it. The court is the highest judicial authority on interpreting the rights.
• Also relate to Bruton; doesn’t make you the tenant of the landlord where licensee is remove; makes Bruton confined to its specific facts

Question 5

*Hammersmith v Monk [1992] 1 AC 478

Answer 5

FACTS:
- P and M (couple) jointly occupied a fat under a periodic weekly tenancy. The landlord where a local authority and subject to certain statutory requirements.
- P and M fell out so P served a notice to quit, M claimed he still had a tenancy
- The tenancy had come to an end
LORD BRIDGE:
- Viewed this as a simple contract question, it is clear the tenancy can’t continue without all the interested parties permission
- The omission by the party to give a notice to quit is a positive action, just as renewing a tenancy would be
LORD BROWNE-WILKINSON:
- Transferring land to two or more persons jointly makes them a single owner to the outside world
FURTHER NOTES:
- From a utility perspective this is unsatisfactory as M lost his tenure without his consent

Question 6

Sims v Dacoram BC [2013] EWCA Civ 12

Answer 6

FACTS:
- Two joint tenants married and entitled to a secure periodic tenancy of residential property let by a local authority
- The marriage broke down and the wife gave notice to quit (she moved to a women’s refuge with her children after alleged domestic violence)
- The husband made a claim that this was incompatible with Art 8 of the ECHR and Art 1 of the First Protocol of the HRA
MUMMERY LJ:
- The purpose of the ECHR law is to protect property rights and contractual rights, if he was to rely on these Articles to give him sole ownership he would be obtaining different property rights than those which he seeks to protect… he is attempting to obtain a three bedroom house for himself rather than a family home for him and his family

Question 7

Hunt and ors v Canary Wharf Ltd [1997] AC 665 HL

Answer 7

Lord Hoffman:

• Exclusive possession is a bedrock of English Law
• There can be licences with exclusive possession…

Question 8

Hill, ‘Intention and the Creation of Proprietary Rights: Are Leases Different?’ [1996] LS 200

Answer 8

• The intentions of calling it a licence where to avoid constraints of the Rent Acts rather than to ensure that the occupier’s interest would not be binding
• Consider inequalities to be important (relate this to contract law, shift to consumer protection in recent years) so the law should approach from consumer perspective

Question 9

MacFarlane, ‘The Structure of Property Law’ (2008, pp 661-2)

Answer 9

Does not feel that the decision in S v M was a thwarting of the law to suit the consumer’s rights: he felt it was a correct decision as it would be conceptually impossible to have exclusive rights but not proprietary rights

Question 10

Intention to create legal relations

Answer 10

In Booker v Palmer; P allowed an evacuee to occupy a cottage, but it was an informal agreement. Rent is considered a factor but is not required. Lord Greene MR says look at the circumstances and the conduct of the parties…

Question 11

Westminster CC v Clarke [1992] 2 AC 228, HL

Answer 11

If the agreement between A and B gives B only a limited set of rights, then B cannot have a lease
FACTS:
- W owned a Hostel, C occupied a room under a “licence to occupy” stating no rights of tenancy or exclusive possession
- The council sought to remove him and C argued he had a lease
LORD TEMPLEMAN:
- The purpose of the hostel was rehab for homeless, single men, and was designed as a half way house
- Limited cooking a living facilities (shared) and a Warden and social workers available
- Numerous reasons why no exclusive possession:
> Others could be put in the room if damaged or nuisance
> No restriction on council access
> Lodger could be moved to another room ad any time
> Forbidden visitors without permission
- It would be difficult and limiting to the council to be subject to the statute
- Took into account:
> The object of the council
> The necessity of the council to retain possession of all the rooms
- Special case with particular nature
NOTES:
- This led to landlords putting exclusive possession clauses in contracts to avoid S v M rules.. hence AG Securities…

Question 12

Snook v London and West Ridings Investments Ltd [1967] 2 QB 786, CA

Answer 12

Lord Diplock: a sham is where neither party intends to create strict legal rights
In Antoniades he intended to have the legal effect of voiding the lease, but did not intend to exercise his rights

Question 13

MacFarlane and Simpson, ‘‘Tackling Avoidance’ in Rationalizing Property, Equity and Trusts’ (ed Gaetzler, 2003)

Answer 13

• Lord Templeman goes beyond “sham” doctrine, labeling Clause 16 a pretence
• No general power to reject clauses removing power from the Rent Acts
• ‘Pretense test’: if it amounts to disregarding terms inserted for the purpose of denying an occupier exclusive possession, it cannot be justified

Question 14

Bright, ‘Avoiding Tenancy Legislation: Sham and Contracting Out Revisited’ [2002] CLJ 146

Answer 14

• In Aslan Lord Donaldson notes that it was not true to the bargain to not have exclusive possession
• There was never any intention to rely on Clause 16, although there was intention to put it in there, there had been no discussion on how it would operate

Question 15

Further notes

Answer 15

Hill draws an analogy between the lease -> licence as unfair contract terms; therefore justifies it for policy reasons rather than doctrinal

Question 16

Mikeover v Brady [1989] 3 All ER 618

Answer 16

There must be four unities present for the creation of a joint tenancy: possession, interest, title and time
(Does not prevent from being tenants in common)
Slade LJ thinks you should look at how the rent is paid to determine unity of interest
Academic skepticism; also on CA where as Antoniades made it do HL

Question 17

Prudential Assurance Ltd v London Residuary Body [1992] 2 AC 386, HL

Answer 17

FACTS:
- Shop owned by N pre-1930, council wanted to widen road so bought road in front of shop and leased back to N for £30 per year; no increase arrangement in place
- Intended to be temporary arrangement but in 1988 the new owner still only paying £30 a week rent when valued at £10,000 a week
LORD TEMPLEMAN:
- Must be some determinate period per LPA
- This is clearly a periodic letting as paying yearly
- Overrules previous cases - a grant for an uncertain term does not create a lease
- Can be cancelled with 6 months notice
- Periodic tenancies are not uncertain because each party has the power to make a notice to quit
LORD BROWNE-WILKINSON:
- Felt this was for the Law Com as a long established principle of law
FURTHER NOTES:
- No certainty so no lease “you cannot have land until we decide to widen the road”

Question 18

Berrisford v Mexfield Housing Co-operative Limited [1002] UKSC

Answer 18

FACTS:
- B sold her house to a co-op to rent it back
- M could only terminate the contract if she didn’t pay rent, doesn’t follow terms of the agreement, leaves Mexfield or if resolution…
- M claimed it was a limited periodic tenancy and could cancel it and this clause need not exist
ARGUMENTS:
- Pre-1926 it would have been treated as a life-long tenancy; a 90 year lease only terminated by her death
- Accepted by Wilson LJ in his CoA dissent: the Clause was contractually binding even if a lease was not formed (HoL judges found convincing but need not follow through)
LORD NEUBERGER:
- The intention of the agreement was to be a tenancy for life, so it is therefore only terminable by her death or the clause (under section 149(6) LPA 1925)
- Having other reasons to determine a lease does not mean this section does not come into force
- Would reasonable observer establish they intended it to be a tenancy?
LORD HOPE:
- Feels there should be statutory changes to the laws in tenancy
- Views this as a contract case
LADY HALE:
- The rule of certainty existed before periodic tenancies came into force and there has since always been issues about how to apply them
FURTHER NOTES:
- Does not reform Prudential Assurance, it merely finds her exclusive possession was for a maximum period of 90 years
- Must find leasehold for life, determinable on grounds in agreement, then transfer this to 90 years per s149(6) of the LPA 1925
- MacFarlane thinks this has a valid doctrinal purpose as A must be able to tell when they can assert their legal right to land
- Bright critiques Prudential Assurance as he feels the purpose was to strike down leases that have increased in value over time, but it instead ends all leases with unknown end-date… calls for Parliamentary reform

Question 19

Formalities

Answer 19

1. Generally a contract in writing signed by both parties, as required by s2 LP(MP)A 1989
2. Must in general be made by dead, as required by LPA 1925
3. B must then register as the holder of that lease, as required by s27 of the LRA 2002
   However… s54(2) LPA 1925 notes leases under 3 years can be solidified in purely oral form, they must show that:
4. Less than three years;
5. Takes effect in possession; and
6. Is at the best rent reasoably obtainable without taking a fine

Question 20

Termination

Answer 20

National Carriers Ltd v Panalpina: frustration can end a lease
Hussein v Mehlam: were fundamentally breached the central purpose of repairing and rendering the house
Reicheman v Beveridge: a landlord can elect to keep a contract open where no rent has been paid

Question 21

Ashburn Anstalt v Arnold [1989] Ch 1

Answer 21

Rent is not needed for a lease… case went to HL but not overruled on this point

Question 22

Skipton BS v Clayton (1993) 25 HLR 596

Answer 22

A premium was considered enough to be rent

Question 23

Lace v Chantler [1944] KB 368

Answer 23

There could not be a valid lease because no one knew when the war would end so term was uncertain…
Key is in the certainty

Question 24

Aslan v Murphy (No 1) [1990] 1 WLR 766

Answer 24

FACTS:
- Small basement room where occupant was required to leave between certain times
- Other people “allowed” to live there
- Landlord retained key
JUDGMENT:
- Pretense saying they must leave and that new licencees could come and stay as it was too small/unrealistic
- Landlord owning a key does not remove exclusive possession; it depends what they have the key for e.g. doing repairs or inviting in other lodgers
- If the landlord enters every day to change the sheets and clean up it is likely to be a licence

Question 25

Key tests

Answer 25

• A lease must have exclusive possession (Street v Mountford), for a period of time (LPA 1925 s1), with intention to enter into legal relations (Burton v London Quadrant)
• Periodic tenancy: apply Prudential Assurance first, then if residential compare to Berrisford