Property Law

Leases – essential characteristics | Land Law – SQE1 & SQE2 Exam

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Leases – essential characteristics
The importance of the distinction between a lease and a licence
• ‘Security of tenure’ for tenants (not licensees) – right of occupants of
residential / business accommodation to occupy the premises for the
term of their arrangement (and possibly after this arrangement ends)
• Lease = estate in land
o Right of exclusive possession enforceable against all other inc.
landlord
o Control of property for term of lease
o Lease can be transferred
o Lease binds new owners of the freehold, as a proprietary interest
o Can sue a third party for nuisance or trespass
• Licensee = personal permission to be on the land
o Cannot bind new owners of freehold, subject to:
§ Estoppel
§ Constructive trust
Types of licence
1. Licence coupled with an interest (e.g. profit à prendre) – cannot be
revoked before the end of the interest + if interest binding on SiTs, licence
is also binding and may be assigned
Ø E.g. right to shoot animals + licence to enter land to remove dead
animals
2. Licence by estoppel – remedy where proprietary estoppel granted ~
estoppel may bind third parties, but licence is personal
3. Bare licence – permission to enter / use land without consideration in
return ~ may be revoked without notice at any time + automatically
revoked by death of licensor / by disposition of land, except where licence
granted expressly by, and/or impliedly to, a class of people
Ø Express
Ø Implied – e.g. bare licence for all persons who believe they have
legitimate business to walk up the path to someone else’s house
4. Contractual licence – granted in exchange for consideration ~ but must
not grant a lease and pretend it is a contractual licence (i.e. landowner is
not free to choose legal significance (licence or lease) of the agreement he
creates)
Is the interest being granted a lease?
• Initially, surface terms decisive – “licence” = licence (Somma v Hazelhurst)
© Liam Porritt 2020 2
Street v Mountford
• “Licence” used throughout agreement
• Mr Street reserved limited rights of inspection and maintenance and the
like
• ‘Express reservation to the landlord of limited rights to enter and view
the state of the premises and to repair and maintain the premises only
serves to emphasise the fact that the grantee is entitled to exclusive
possession and is a tenant’ (Lord Templeman)
• Courts must look at the substance of the agreement and not the label
Requirements for lease:
1. Certainty of term
2. Exclusive possession
Note: payment of rent is not essential for a lease (LPA 1925, s 205(1)(xxvii) &
Anstalt v Arnold)
Certainty of term
• Fixed or periodic term = certain, definable duration
• (See Ch 3 notes)
Exclusive Possession
• Right to exclude all others from the property, including the landlord
• When considering whether agreement is tenancy or licence, consider
whether each term is part of the true bargain or a mere pretence / sham,
and strike out those terms which are a sham (Aslan v Murphy)
o Here, provisions for sharing a room, right of access for provision of
services + requirements depriving D of right to occupy between
10:30am and midday = sham, so struck out and therefore = lease
Retention of a key
• Landlord having a key = indicative of not having exclusive possession
o However, ‘provisions as to keys […] do not have any magic in
themselves’ – must look to why the owner has a key (Aslan v
Murphy)
• Restricted access clause = only to be used for particular purpose
(emergency / arrangement) = indicative of exclusive possession as
landlord acknowledges he cannot enter the premises whenever he
chooses (Street v Mountford)
• Unrestricted access clause / access for provision of services on a regular
basis = no exclusive possession
o However, note that if there is no actual provision of services, may
be a sham (Aslan)
© Liam Porritt 2020 3
Clauses reserving the right to share or introduce others
• Landlord reserves right to share property / introduce others, may not be
exclusive possession
• Considerations from A G Securities v Vaughan and Antoniades v Villiers
o Nature of accommodation – where would sharers go, live, keep
possessions, sleep?
o Relationship of occupiers – would another sharer realistically live
with them? Are they a loose, shifting population?
o Wording of the terms – is there any provision for the functioning
of introducing new licencees (rent changes, bedrooms, limits on
numbers of additional licencees)
o Terms exercised?
A G Securities v Vaughan
• 4 bed flat
• 4 strangers
• Separate documents w / different terms
o Different terms (£)
o Different times
o Up to 3 sharers
• New sharers were introduced
= licences
Antoniades v Villiers
• Small space with one bed (double bed)
• Couple
• Separate agreements
o ½ rent each
o Sharers – landlord or others, with no number
• Right to have sharers never exercised
= Lease
Landlord provides services
• If (Marchant v Charters and Huwyler v Ruddy):
o Landlord provides services that require landlord / his servant to
exercise unrestricted access to premises
o Services are actually carried out (i.e. are not a sham) (Aslan)
o Services extend beyond a de minimis level
= licence
© Liam Porritt 2020 4
Examples of the importance of exclusive possession
Bruton v London and Quadrant Housing Trust
• Homeless man has lease of flat as he had exclusive possession (only rights
of Trust = specifically reserved to it = acknowledgement it did not have
rights automatically) + did not share it with anyone else
Westminster CC v Clarke
• Homeless man had licence to occupy, including declaration of not having
exclusive possession + ability for council to require him to change rooms/
share at any time = licence
Vesely v Levy
• Carer (Vesely) lives with person with mental health problems and
contributes to household expenses (no rent)
• Vesely has exclusive possession of some rooms, but this and
circumstances negate exclusive possession
Holland v Oxford City Council
• Holland claims tenancy over two sites at annual fair organised by D
• No exclusive possession as local authority retained implicit right to enter
sites freely + implied licence for public to enter site
Stewart v Watts
• Charity housing the appellants in house – weekly maintenance
contribution, declared in agreement to have no legal interest, trustees had
right to require her to move to another house at any time, visitors were
not permitted without consent, Trustees could set aside residency for
‘good cause’
• = Licence, due to genuine terms of the agreement meaning ≠ exclusive
possession
• Note: if there had been exclusive possession, this would have been a legal
lease (LPA s 54(2)), as weekly maintenance contribution = ‘best rent’)
Exclusive possession but no lease
No intention to create legal relations
• Rebuttable presumption of no ICLR where (Facchini v Bryson):
o Family arrangement
o Act of friendship
o Act of generosity
© Liam Porritt 2020 5
• Heslop v Burns – Act of generosity – woman and husband provided
cottage rent free + maintenance costs paid by benefactor; no
arrangements as to terms on which property held = licence
• Foster v Robinson – farmer allowed former employee to live rent-free for
rest of his life on the basis that the original tenancy granted to the
employee would then cease; on death, daughter not entitled to remain as
only a licence created
• Can be rebutted where there would otherwise be strong evidence of ICLR
and a tenancy (Nunn v Dalrymple) – evidence of ICLR
o Importance of agreement to parties
o Substantial renovation work by Dalrymples in reliance
o Precise terms of arrangement, including enforceable rent
obligations
o Lack of elements of generosity
Service occupancy
• Employer/employee relationship between landowner and occupier
• Where occupier is required to live in the premises for the better
performance of his duties (consider if duties include being available
at short notice / something requiring proximity) as an employee, there is
no tenancy
o E.g. caretaker’s flat, gamekeeper’s cottage, domestic staff
accommodation
Norris v Checksfield
• C was to be employed as mechanic by N
• C was allowed to live in bungalow next to depot on condition he applied
for licence to drive, as N felt it would be advantageous to be able to carry
out any urgent driving work
• Deemed to be a service licence, even though C began living there before
he got his licence as bus driver
• Service licence requires sufficient factual nexus between the
commencement of the occupation of premises and employment which
would benefit from the occupation
Royal Philanthropic Society v County
• Housemaster living on school site to supervise pupils = service licence
• Teacher (as was case here) in school house 2 miles away = tenancy, as
proximity did not allow him to better perform his duties as teacher
© Liam Porritt 2020 6
Exclusive possession and multiple occupancy
• Concerns the legal relationship vis-à-vis the occupants themselves
• Joint tenancy with single lease, individual leases or licences?
• Joint tenancy = nobody owns a specific share ~ they are jointly and
severally liable for the terms of the agreement
• Four unities all required for joint tenancy (Megarry & Wade):
1. Unity of possession – all entitled to occupy the whole of the
premises (no exclusive use of any part)
2. Unity of interest – all must have a leasehold interest
a. for the same term
b. conferring the same rights and obligations, for same extent,
nature and duration
c. and must be jointly liable for rent (Mikover)
3. Unity of time – all interests must start at the same time
4. Unity of title – all of the interests must derive from the same
document or from separate interdependent documents (note that
interdependence may not be docs referring to one another, but
same terms at same time)
• Individual tenancy possible if each have exclusive possession of a part of
property ~ if not, licence!
AG Securities v Vaughan and Antoniades v Villiers, see above
• AG – clearly not 4 unities, not exclusive possession of part as this would
require the marking out with the landlord’s concurrence of a particular
room as the exclusive domain of an individual ~ therefore, licences
• Antoniades – 4 unities fulfilled ~ note: unity of title satisfied by 2
interdependent agreements whereby one could not be signed without the
other
Mikeover Limited v Brady
• Right to exclusive occupation for D in common with Miss Guile granted by
agreements (no rights of sharers)
• Unities satisfied, except: not jointly liable for rent; each had an individual
obligation to pay £86.66 monthly, and following Miss Guile’s departure,
Mikeover had only allowed Mr Brady to pay his share
o NB on facts, Miss Guile paid both their rent and Mr Brady paid her
back = evidence that they had separate liabilities
• = Licences
© Liam Porritt 2020 7
Stribling v Wickham
• 3 friends sharing house
• Each signed separate but identical agreement being determinable on 28
days’ notice by either party
• Obligation for set sum = 1/3 of total rent
• Change of occupant = each time, the occupants all signed fresh, identical
agreements
• Unity of interest is again the predominant issue here:
o There is introduction of new occupiers
o Each occupier had individual right to terminate (as one did), which
would not terminate agreements with the other two occupiers
o Owner could terminate each individually on notice
o Each individual agreement terminated automatically if licensee
was in breach (i.e. rent obligations were individual)
= licence
Exclusive possession and business tenancies
• Street v Mountford applies
• Result affects security of tenure for businesses, as business tenants are
protected by Landlord and Tenant Act 1954
• More likely that courts take document at face value (i.e. on the express
words)
• Court construes document as a whole and sees if the landlord retains
control over the property (Dresden Estates v Collinson)
o Dresden – licence to occupy workshop granted by Dresden, with
right to require Collinson to move to other premises owned by D
OR change rent on notice = seems that intention of Dresden was to
have the right to move Collinson if necessary (which negates
tenancy), and so give effect to intention of the parties = licence
o Esso Petroleum Co Ltd v Fumegrage Ltd and others – Esso retains
large degree of control (to inspect premises, to alter layout and
décor of station, to install a car wash) = no exclusive possession, so
licence
© Liam Porritt 2020 8
Rent
Rent is not a requirement for a lease (LPA 1925, s 205(1)(xxvii) & Anstalt v
Arnold), but is significant in 3 cases:
1. Evidence of ICLR
2. Essential if claiming an implied periodic tenancy = in occupation and is
paying rent by reference to a period
3. Useful in establishing an equitable lease by specifically enforceable
contract, as:
a. Consideration flowing from tenant, which is essential when trying
to establish a valid contract; and
b. It ensures the contract is not void for uncertainty – i.e. for a valid
contract where no consideration, rent must be mentioned ( ‘no
rent payable’)
Formalities
• See formalities for equitable and legal leases – without these, there is no
lease = licence

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