Week 3- Leases: Flashcards
What does s1 of the LOPA 1925 set out?
Sets out the types of estates, interests and charges which are capable of subsisting or being conveyed or created at law eg an estate in fee simply (freehold estate which exists as absolute ownership). This includes term of years, easements, rights/ privileges over land, mortgages, All other estates, interests and charges not listed under s1(1) and (2) take effect as equitable interests. If not, they are known as legal estates.
What is Hussein v Melhman 1992 authority for?
What, in conjunction with the case of National carries v Panalpina, does it say about contract law and property law?
The possibility that a lease may be terminated after a repudiatory breach of contract.
Hussein v Melhman: The landlord (D) refused to carry out repairs in breach of a statutory implied covenant to repair The tenants (Cs) had vacated the premises and sought a declaration that D had committed a repudiatory breach of contract, which they had accepted by giving up possession of the lease. It was contended whether or not a lease could be terminated through a repudiatory breach, and this was affirmed here.
Key point
Leases can be frustrated like ordinary contracts (although not on these facts due to the insignificance of the period)
Facts- A 10-year lease for a warehouse was unusable for 10 months because of a street closure, as a result the tenant (D) withheld rent
The landlord (C) sued for the withheld rent, D argued that the lease had been frustrated
Counsel for C argued that leases cannot be frustrated since land is indestructible
Held (House of Lords)
Frustration is in principle applicable to leases but not in the current case
Lord Wilberforce
Can leases be frustrated?
The fact that the lease creates an estate in land does not prevent the doctrine of frustration from operating
Express terms of the lease can provide that it shall terminate upon specific events, thus there is nothing illogical in implying a term that it should be terminated on the happening of other events which in contract leads to frustration
Hammersmith and Fulham LBC v Monk 1992 facts and significance?
What does it say about the connection between contract and property law?
Facts- D and his cohabitee were granted a flat by a council in the form of a joint periodic tenancy, terminable by four weeks-notice. The cohabitee left the flat on the condition that the council rehouses her, and thus terminated the tenancy without Ds knowledge, so the council brought proceedings for possession to remove D. (periodic tenancy continues from period to period indefinitely until proper notice given).
Significance- Ds appeal dismissed, and that unless expressly stipulated otherwise, only notice by one cohabitee need be given to terminate a lease.
-No weight given to the context of the lease ie agricultural, commercial, private should all be treated the same.
“If A and B contract with C on terms which are to continue in operation for one year in the first place and thereafter from year to year unless determined by notice at the end of the first or any subsequent year, neither A nor B has bound himself contractually for longer than one year. To hold that A could not determine the contract at the end of any year without the concurrence of B and vice versa would presuppose that each had assumed a potentially irrevocable contractual obligation for the duration of their joint lives, which, whatever the nature of the contractual obligations undertaken, would be such an improbable intention to impute to the parties that nothing less than the clearest express contractual language would suffice to manifest it.”
What does Bruton v London and Quadrant housing say about the characteristics of a lease versus a license, and the rights afforded to a licensee to create a lease?
THE BRUTON LEASE
Effectively, the council gave D a license to use flats, and D subsequently gave C an arrangement labelled as a license, which C sought to prove was in fact a lease, and thus he was entitled to rights of repair afforded to lessees as opposed to licensees.
The court held that the license was in fact a lease, as it had all the characteristics of a lease, and that, following Street v Mountford, the right to exclusive possession required for a lease was met. This also goes to the root of contractual interpretation, which meant that the contract was construed as a lease notwithstanding the terms used.
Under the nemo dat quod non habet rule (meaning “no one gives what they do not have”), a person cannot transfer a greater right to a piece of land or chattel than what he has himself e.g. the owner of a house can give a lease to another but a tenant cannot give the freehold of the house to another
To overcome the nemo dat rule, Lord Hoffmann argued that leases need not be proprietary in character, which inadvertently creates two forms of leases in common law, one that is proprietary and one that is not
In Kay v Lambeth it was held that the right of a Bruton lessee is akin to the right of an adverse possessor
What does Kay v Lambeth confirm/ refine about the Bruton tenancy?
That, despite the existence of the tenancy in favour of Bruton, once the license as between the council and LQHT had been revoked, the lease was not enforceable against the council. they were trespassers at this point, and their right to the flats in question were similar to that of an adverse possessor.
What does the LOPA 1925 s 149(3) say?
Law of Property act 1925 s 149(3):
(3) A term, at a rent or granted in consideration of a fine, limited after the commencement of this Act to take effect more than twenty-one years from the date of the instrument purporting to create it, shall be void, and any contract made after such commencement to create such a term shall likewise be void; but this subsection does not apply to any term taking effect in equity under a settlement, or created out of an equitable interest under a settlement, or under an equitable power for mortgage, indemnity or other like purposes.
What are the important points of Street v Mountford?
S granted M right to occupy property at a weekly rent, subject to two weeks notice of termination, including a provision that this agreement was in fact not a tenancy. The CA held that this was binding and it was in fact a license.
On appeal, , allowing the appeal, that where residential accommodation was granted for a term with exclusive possession, no attendance or services being provided, the legal consequence was the granting of a tenancy (notwithstanding the use of the word “licence”). The importance in distinguishing between license and lease is that the latter is afforded protection by the rents act whereas the former is not.
-Lord Templeman: “My Lords, there is no doubt that the traditional distinction between a tenancy and a licence of land lay in the grant of land for a term at a rent with exclusive possession…There can be no tenancy unless the occupier enjoys exclusive possession; but an occupier who enjoys exclusive possession is not necessarily a tenant. He may be owner in fee simple, a trespasser, a mortgagee in possession, an object of charity or a service occupier. To constitute a tenancy the occupier must be granted exclusive possession for a fixed or periodic term certain in consideration of a premium, or periodical payments. The grant may be express or may be inferred where the owner accepts weekly or other periodical payments from the occupier.”
What is the sham doctrine expounded in Street v Mountford, and why is it an issue?
What metaphor is used by Lord Templeman in Street v Mountford to explain the courts role in defeating sham devices which seek to disguise leases as licenses?
(note that it wasn’t really a sham device in Street v Mountford, it was quite explicit that, despite meeting the substantive requirements of a lease, the proprietor thought he was granting a license, and made the tenant sign an agreement to this effect).
“Street v Mountford did not involve a pretence, the agreement did not mention exclusive possession and the owner conceded that the occupier enjoyed exclusive possession.”
The court should be astute to detect and frustrate ‘sham devices and artificial transactions whose only object is to disguise the grant of a tenancy and to evade the Rent Acts’
Now the Housing acts 1988/2004, the relevant statutes provide a heightened sense of protection for lessees compared to licensees, and thus defeating devices which seek to obscure the existence of a lease affords the proprietor much greater statutory protection from exploitation.
‘If the agreement satisfied all the requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agreement by insisting that they only created a licence. The 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.’
Though still contentious due to underlying theories of contract freedom, what principle reasons should courts be looking to defeat sham devices which seek to contract out of the rent acts (now the housing acts)?
The law should strive to protect potential victims from exploitation by parties operating under an imbalance of power, especially in the context of housing, due to the sentimental and socio-economic importance of having a place to live for prospective tenants
1) “Where a landlord creates a tenancy of a flat and reserves the right to go into exclusive occupation at any time of the whole or part of the flat with or without notice, that reservation is inconsistent with the provisions of the Rent Acts and cannot be enforced without an order of the court under section 98. Where a landlord creates a tenancy of a flat and reserves the right to go into occupation of the whole or part of the flat with or without notice, jointly with the existing tenants, that reservation also is inconsistent with the provisions of the Acts. Were it otherwise every tenancy agreement would be labelled a licence and would contract out of the Rent Acts by reserving power to the landlord to share possession with the tenant at any time after the commencement of the term.”
2) The occupiers were obliged to acquiesce with this pretence in order to obtain the accommodation. In my opinion the occupiers either did not understand the language of the agreements or assumed, justifiably, that in practice the owner would not violate their privacy. The owner’s real intention was to rely on the language of the agreement to escape the Rent Acts.
Why was there no pretence in Watts v Stewart?
What is the difference between exclusive occupation and exclusive possession?
Where a landlord exercise his legal rights to reserve further rights in relation to the land, this will not be a pretence, and if these reserved rights prevent the conditions of a lease being granted, then there will be no right to exclusive legal possession, thus no lease.
Exclusive personal occupation is not indicative of a legal right of exclusive possession. The latter amounts to a tenancy, whereas the former amounts to some other form of proprietary agreement, short of a lease.
In Watts v Stewart, the housing of a homeless woman, whereby she was granted exclusive personal occupation, did not amount to a lease- even where labels of lease/ tenancy are used, this is not conclusive of the agreement reached between the parties, and contractual interpretation relating to Lord Templemans metaphor in Street v Mountford much be invoked.
What was said to be required for a sham to exist in Hilton v Plustitle?
Here the agreement reflected the parties’ intentions and would be upheld.
- “that for acts or documents to be a ‘sham,’ with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating.”
- In the present case the judge found as a fact that it was the intention of both parties, with all knowledge of what this involved, that the flat should be let to the company and not to Miss Rose personally. This finding has not been challenged. Directing himself in accordance with the law as stated by Diplock L.J. in the Snook case, he held that this transaction was not a sham. We do not find it possible to fault this reasoning.
- “Unlike Street v. Mountford the transaction did represent the true position. The company obtained a protected tenancy with the benefits attached to that but neither it nor Miss Rose obtained a statutory tenancy when the protected tenancy came to an end.”
What was the difference between the two joint appeals in AG v Vaughan and what does it say about the courts role in distinguishing between licenses and leases?
AG Securities: application to the facts
If the 4 occupiers had been jointly entitled to joint and exclusive occupation, on the death of one the remaining 3 would be similarly entitled and be able to exclude a 4th person nominated by the company
In reality they do not have the power to do so and the company can nominate a 4th person
The occupiers moved in separately, there was no unity of time
The 4 agreements were independent of each other
Antoniades: application to the facts
The 2 agreements are interdependent, both occupiers would have been signed or neither, they must therefore be read together
The couple applied to the rent the flat jointly and sought and enjoyed joint exclusive occupation of the whole flat
Cl 16 is not a genuine reservation of power as L did not genuinely intend to exercise the powers save to bring pressure to obtain possession – the flat was not suitable for occupation of more than 2 persons
Street was not a case which involved pretence concerning exclusive possession
Where the language of licence contradicts the reality of lease, facts must prevail
What are the three requirements for a lease?
- A conferral of exclusive possession over the land
- done so in return for rent and/ or a lump sum payment (premium)
- Not perpetual but for a term of time.
Facts and significance of Aslan v Murphy?
This is a conjoined appeal of two cases
In Aslan v Murphy, a term stated that the licensee was excluded from using the room between 10.30am to 12pm; also a provision stating the landlord’s right to retain the keys
In Duke v Wynne, a married couple occupied a three-bedroom house along with their two young sons, the evidence did not disclose immediate intention on landlord’s part to find an extra occupant for the third bedroom and the family occupied the whole house
Held (Court of Appeal): A lease had been granted in both cases
Lord Donaldson MR
Pretence
The identification of a pretence does not necessarily lead to the conclusion that the agreement is a sham but only that the terms of the true bargain are not wholly the same as those of the bargain on the face of the agreement
Aslan
The judge erred in only considering whether it was a sham and finding that is was not a sham upholding it as a licence
What he should have done was to consider whether it was a sham, and then consider whether it was a pretence (not part of the true bargain)
The provisions were highly unrealistic and clearly pretences
The landlord did not actually attempt to remove the lessee from land between 10.30am – 12pm
It is not a requirement of a tenancy that the occupier shall have exclusive possession of the keys to the property, a landlord might need keys for repairs or for emergencies
How can Aslan v Murphy be distinguished from Watts v Stewart, and how is it similar to Westminster CC v Clarke?
Reservation of rights over the property by the landlord amount to pretences if they are unrealistic and not actually exercised, they therefore do not affect the exclusive possession of the tenant and a finding that a lease has been granted.
In Watts v Stewart, the rights retained were important to the means being achieved (providing the vulnerable with accommodation) and were thus properly exercised.
