Leases Flashcards
Issue determined by looking at the true nature of the agreement rather than the name given by parties:
- Lord Templeman in Street v Mountford
- Lord Hoffmann, Bruton v London quadrant housing trust
- Bingham LJ in Antoniades v Villiers
“the consequences in law of the agreement, once concluded, can only be determined by consideration of the effect of the agreement. 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 license.” (Lord Templeman, Street v Mountford).
Affirmed: “the fact that the parties use language more appropriate to a different kind of agreement, such as a license, is irrelevant if upon its true construction it has the identifying characteristics of a lease.” (Lord Hoffmann, Bruton v London and Quadrant Housing)
However: “a cat does not become a dog because the parties have agreed to call it a dog. But in deciding if it is a cat or a dog the parties’ agreement that it is a dog may not be entirely irrelevant” (Bingham LJ, Antoniades v Villiers).
Title 1: Characteristics of leases
- 1925 LPA s.1(1)
- Historical background
Leases, or “terms of years absolute” under the LPA 1925, is one of the two “only estates in land which are capable of subsisting or of being conveyed or created in law” (s1(1) LPA 1925).
Historically it was a contractual right (damages, no recovery of land), but was eventually recognized as a proprietary right, so much so that a lease of over 7 years qualifies as a registrable interest and must be compulsorily registered or will lose its status as a legal estate and only qualify as a contract to grant a legal lease (s4, 27 LRA 2002).
- Is there a statutory definition of leases?
- Lord Templeman on the importance of exclusive possession
- facts of Street, i.e. fact it was called a ‘licence agreement’
No adequate statutory definition of leases. For a time, the parties’ intention determined whether it was a lease or license; today:
- Street v Mountford (1985): “the traditional view that the grant of exclusive possession for a term at a rent creates a tenancy is consistent with the elevation of a tenancy into an estate in land. The tenant possessing exclusive possession is able to exercise the rights of an owner in land [keep out strangers and the landlord except when the landlord is exercising limited rights reserved to him by the tenancy agreement], which is in the real sense his albeit temporarily and subject to certain restrictions.” (Lord Templeman)
Street v Mountford: agreement for furnished accommodation called “license agreement”, paying a “license fee”, but with exclusive possession. Signed statement at the end of the agreement that tenant/licensee agreed that it “does not and is not intended to give me a tenancy protected under the Rents Act”. Is she protected under the Rents Act?
Lord Templeman identifies three characteristics/indications of leases
What are the 3 elements identified by Lord Templeman?
- Exclusive Possession
- Certainty of Term
- Rent
Chapter 1: Exclusive possession
The role of exclusive possession
It’s the conclusive feature of a lease without which there can only be a personal right (license). “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” (Lord Templeman, Street v Mountford).
Chapter 1: Exclusive possession
Section II – The Common Law Genesis of Exclusive Possession Rule
Para I – Traditional Common Law Position
⇒ Is exclusive possession conclusive of landlord/tenant relationship?
Clore v Theatrical Properties: Lessee had right to sell refreshments and programmes at a theatre, and to manage cloakrooms. The word “lease” was used in the agreement, which provided for “free and exclusive use” of the rooms for the purpose of supply to and accommodation of visitors and no other purpose.
Held that it wasn’t a lease but a license to enter for specified purpose. The fact that the right was exclusive (no competition) was insufficient to make it a lease.
- Lord Wright follows Rigby LJ in Daly v Edwards, where he decides that on a natural reading the agreement seems to confer a lease, but upon careful reading the intention of the parties seems to be to confer a license.
- Romer LJ reaches the same conclusion, but regretfully because he thinks that there are obvious differences between the present case and Daley v Edwards: the word ‘lease’ was not used in that case; what was purported to have been granted was a license. But nothing in law is capable of conferring a right amounting to a lease.
⇒ Is exclusive possession conclusive of landlord/tenant relationship?
o Possession by freehold estate or without permission (adverse possession) are obviously not, but otherwise common law finds a tenancy whenever there was exclusive possession (Glenwood v Phillips) even where there was no rent (eg. purchaser who was permitted to occupy before completion was a tenant at will (Tomes v Chamberlaine) as is a relative permitted to live in a house (Groves v Groves))
o Traditionally lease vs license distinction doesn’t matter to the parties, but rather in other contexts such as liability for certain taxes or eligibility to vote
Chapter 1: Exclusive possession
Section II – The Common Law Genesis of Exclusive Possession Rule
Para II – Increased Importance with Regulation of Landlord/Tenant Relationship
Regulation restricted landlords’ rights (especially to regain possession). Two effects:
1) Courts reluctant to apply full statutory regulation where relationship wasn’t an archetypal lease (an arm’s length agreement for payment of rent in return for exclusive possession)
a. Booker v Palmer: owner agreed to let homeless people from wartime bombings to occupy his cottage rent-free – CoA held that this created a license terminable at any time.
2) An analysis developed that exclusive possession was not determinative of a lease, which led the courts to realize that there was a danger that landlords can avoid the regulations by creating a license. Thus, expressly creating a license was also no longer determinative.
a. Led to a war between drafters and courts, and drafters becoming more and more aggressive in finding ways to create licenses
Chapter 1: Exclusive possession
Para III – Street v Mountford
- facts
- held
- Templeman judgment
- practical importance of the distinction between licenses and leases? why is the distinction controversial?
example cases illustrating the difficulties in finding exclusive possession:
- Glenwood;
- Taylor v Caldwell
Street v Mountford: “license agreement” granted A right to occupy two rooms for weekly rent, subject to termination by two week’s notice + A signed a declaration that it didn’t give her protection under the Rents Act.
Held: where residential accommodation is granted for a term at rent with exclusive possession, a tenancy is created no matter the words used in the agreement.
Lord Templeman (Lord Scarman, Keith, Bridge and Brightman agreeing): exclusive possession is conclusive, except that there would be no tenancy if there is no intention to enter into legal relations (family/charity cases)
⇒ Practical importance of distinction: licenses are not protected under the Rents Act as it doesn’t confer an estate in land
⇒ Traditional distinction between tenancy and license: grant of land for a term at rent with exclusive possession.
⇒ But in practice, whether exclusive possession has in fact been given can be controversial (eg. you can grant a license to cut timber, or a lease to cut timber for the period of the lease):
o Glenwood Lumber v Phillips: Crown ‘licensed’ the respondents to hold an area of land for purpose of cutting and removing timber for 21 years at an annual rent – PC held that the agreement was a lease and conferred title to the respondents, because it gave an “exclusive right of occupation” (though subject to restrictions of purposes for which the land may be used), and allowed R to sue unlawful possessors/trespassers etc. In that case, the court after careful consideration of the purpose, terms and surrounding circumstances, concluded that it conferred exclusive possession.
o Taylor v Caldwell: D let C the use of a music hall on four specified days to give concerts for payment for each day – Blackburn J held that the parties inaccurately called it a ‘letting’ and ‘rent’, but the agreement shows that D retained possession and so there was no demise but a license.
Chapter 1: Exclusive possession
Section III – The characteristics of exclusive possession
It’s the control over anyone who enters the premises and the ability to exclude everyone, including the landlord.
Chapter 1: Exclusive possession
Cases that negate exclusive possession
(I) Landlord entitled to move the occupier at any time from one room to another
Westminster City Council v Clarke: council-run hostel for homeless persons, who could not claim any particular room, may have to share with others, had to be in their rooms + no visitors by 11PM. No exclusive possession.
Chapter 1: Exclusive possession
Cases that negate exclusive possession
(ii) Exclusive occupation only: no right to exclude others
- Exclusive occupation only: no right to exclude others (NB It would make sense to distinguish between exclusive occupation (lodgers count, in that they are the only ones in occupation and with a right to occupy) and exclusive possession (lodgers don’t count because landlord retains control), but Lord Templeman in Street appears to have used the two terms interchangeably so we shouldn’t put weight on the terminology used)
Abbeyfield v Woods: resident in a nursing home. No exclusive possession.
Chapter 1: Exclusive possession
Cases that negate exclusive possession
(iii) Services
Held by lord Templeman in street?
Held in Marcou v De Silvesa?
- provided by landlord (housekeeper, collection of rubbish, cleaning of windows and flats) that require him to exercise unrestricted access to the premises the occupier will be a lodger (Street v Mountford)
Marcou v De Silvesa: agreement required landlord to provide services – consider whether this would require unlimited access to the premises. Type of service provided was limited (removal of rubbish, laundering of linen) and did not need access to the flat. Yes exclusive possession it’s not the provision of services that prevents it from being a tenancy but fact that owner can enter at will
Chapter 1: Exclusive possession
Cases that negate exclusive possession
(iii) services
Is it the actual provision of services that counts, or the agreement?
Aslan v Murphy: to make the occupier look like a lodger, he was required to leave for 90 minutes each day, owner retained a key and was to clean the room and provide linen. CoA held that the requirement to leave was an obvious sham, the retention of keys was not of itself determinative (more important was the purpose for retention – if for emergency access, then consistent with lease; if used for “frequent cleaning, daily bed-making” etc., then license), and that the provision of services was minimal and there was a lease.
BUT Huwyler v Ruddy: services were virtually non-existent though parties had genuinely contemplated services (later agreed to suspend it for the time being), but court found that original contact provided for the provision of services and defendant could claim resumption of services if he wished license.
Chapter 1: Exclusive possession
Para II – Cases that are not obstacles to exclusive possession
(i) Retaining keys
Landlord retains a set of keys but must still request entry from tenant to gain access (Aslan v Murphy: pretense)
Chapter 1: Exclusive possession
Para II – Cases that are not obstacles to exclusive possession
(ii) Shared premises: joint occupation possible
Antoniades v Villiers: joint tenancy even though owner had asked each of the two joint occupiers (unmarried couple living together) to enter separate agreements (described as licenses) with himself + each undertake to pay half the rent + clauses allowing owner to introduce others or occupy the premises himself. Sham.
Chapter 1: Exclusive possession
Para II – Cases that are not obstacles to exclusive possession
(iii) Grantor does not have an estate to support a lease (i.e. is not owner or tenant)
Bruton v London and Quadrant Housing Trust: landlord had license but could still create a lease in favor of claimant.
Chapter 1: Exclusive possession
Para II – Cases that are not obstacles to exclusive possession
(iv) Shams and pretenses
1. Street v Mountford?
2. Aslan v Murphy?
3. Antoniades v Villiers?
Definition of a ‘sham’/ ‘pretence’?
- 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 Rents Act” (Lord Templeman, Street v Mountford)
Aslan v Murphy: clause said licensee had no right to use a room between 10:30AM and 12PM. Sham.
Antoniades v Villiers: two occupiers lived together, married, in a single bedroom; owner had insisted on a term that he could put another person there or live there himself. HL said that it was a sham and that there was a lease (result is not surprising in that Street had overruled Somma v Hazalhurst)
⇒ Sham = a term inserted to negate exclusive possession that neither party intends that it be acted upon
“Artificial transactions” or “pretences” are also prohibited (per Lord Templeman), but many cases treated pretences and shams interchangeably. Perhaps a term is not a sham if only one party (usually the landlord) had the intention to mislead, in which case it would be a pretence and can still be attacked by the tenant.
Chapter 1: Exclusive possession
Para III - Cases of exclusive possession but no tenancy
Lord Templeman’s exceptional categories
- service occupancy
- owners, mortgagees and trespassers
- purchasers in possession prior to completion
- object of charity
Lord Templeman’s exceptional categories:
- Service occupancy: occupancy by a servant of his master’s premises in order to perform his duties as a servant (Street v Mountford), but it has to be required for the better performance of the tenant’s job (Fachini v Bryson)
- Owners, mortgagees and trespassers
- Purchasers in possession prior to completion
o Traditionally treated as tenants at will
o Denning LJ said he was a licensee in Errington v Errington: has been applied and criticized, but ultimately Lord Templeman accepted it as a category of licensees
o Ramnarace v Lutchman: where possession is allowed during negotiations, then there is a tenancy at will. However, if possession is pursuant to a contract then it is referable to the contract (no tenancy). - Object of charity: no contract in charity cases
o However, cases since Street suggest that the category will not be extended – Royal Philanthropic Society v County said that payment of rent will normally be taken as showing that there is a contract.
o Family arrangements don’t preclude contract: Nunn v Dalrymple held that where the in-laws on understanding that they would give up their council house and renovate a cottage, live there and pay rent, that there was a tenancy.
Chapter 1: Exclusive possession
Para IV – Special case: joint occupiers
⇒ Cases
AG securities v Vaughan:
Antoniades v Villiers:
o AG securities v Vaughan: four people occupied a flat, each having their own room. When one left, another would enter, so each entered and agreed at different times, terminating at different times. Thus nobody could be treated as having exclusive possession of the flat, and it was impossible to regard all four as jointly enjoying exclusive possession. They were licensees. Thus it was accepted that Lord Templeman’s tenant/lodger dichotomy was inaccurate: you could be tenant/lodger/joint licensee.
♣ Importantly the four unities were lacking: no unity of title, interest, and time. CoA had said that each time someone came, a new agreement was entered into with all four – HL rejected this as it as too complex and inconsistent with reality.
o Antoniades v Villiers: married couple shared a flat with one bedroom – HL found that there was a lease.
Chapter 1: Exclusive possession
Para IV – Special case: joint occupiers
⇒ Two questions:
o Is it possible to construe the facts as involving a joint letting? (Impossible in Vaughan but appropriate in Antoniades) (NB maybe even if there is no joint letting, could one still have exclusive possession over their own room?)
o If there is a joint letting, then does a right to put others into possession (assuming that it’s not a sham) mean that the current possessors don’t have exclusive possession?
♣ In Antoniades, Lord Templeman said that where parties have exclusive possession in act, then even a valid power to force sharing will be void. *Lord Oliver disagreed – terms genuinely giving the right to disturb exclusive possession are effective.
♣ In Aslan v Murphy Lord Donaldson compromises by asking whether the true bargain is for exclusive possession until sharing is required (lease) or for sharing but with de facto exclusive possession for the time being (license)
Chapter 1: Exclusive possession
Para IV – Special case: joint occupiers
⇒ Borderline cases:
- Stribling v Wickham
- Hadjiloucas v Crean
o Stribling v Wickham: three friends took the flat together, some moved out and others moved in. Could be said that the friends entered into the agreement together, but when one left the others’ rights were unaffected (no unity of interest). Thus the circumstances under which the flat was initially settled was not conclusive.
o Hadjiloucas v Crean: two women took flat together, separate agreements, one left and replaced by someone else. CoA said that there was a license, but sent the case back for more investigation. Lord Templeman in Antoniades said that there should have been a tenancy because they had applied for and obtained exclusive possession.
♣ Two cases appear similar, however in Hadjiloucas each made herself liable for the entire rent, which is strongly suggestive of a joint agreement leading to a lease
Chapter 1: Exclusive possession
Para IV – Special case: joint occupiers
⇒ Role of the four unities:
o Mikeover v Brady: two separate licenses, no right to put others in. Flat was of a size suitable only for those “personally acceptable to each other”. Still, CoA held that there was no lease because there was no unity of interest – each occupier had agreed to pay half the rent (not a sham because the owner refused to take full rent from the other when one left).
o Hard to reconcile with Antoniades, where Lord Oliver said that if the real transaction was where couple became joint tenants with exclusive possession, then each would be liable for the rent - the for of the document was a sham.
o Nevertheless, Mikeover shows that it’s possible to create a license by negating one of the four unities (eg. by insisting that each pay a different rent, or that the agreements were entered into a week apart). Would Lord Templeman or Oliver have accepted this conclusion?
Chapter 1: Exclusive possession
Para IV – Special case: joint occupiers
⇒ Questions raised:
- Must rent be undertaken jointly?
- Why must the four unities be relevant?
- Is a license justified because none of the lessees enjoys exclusive possession?
o Must rent be undertaken jointly?
♣ Arguable that unity of interest merely means that interests are identical, and obligations don’t have to be identical.
♣ However, also arguable that rent is so central to a lease that liability must be joint before there can be unity of interest (just like term of years)
o Why must the four unities be relevant?
♣ Their role is normally to distinguish joint tenancies from tenancies in common, not joint leases from licenses. You can have a tenancy in common of a lease – so why wasn’t there one in Mikeover (possibly because there can’t be legal tenancies in common)?
o Is a license justified because none of the lessees enjoys exclusive possession?
♣ Strong argument that exclusive possession is based on the right to prevent the owner from entering at will and not that the owner doesn’t have a right to introduce other occupiers.
♣ Right to exclude third parties is the result of having a tenancy not the reason for having one (owner of a premise occupied by a licensee also has no right to introduce third parties)
Chapter 2: Certainties
Section I – Certainty of commencement
- what must be clear on the face of the lease?
- when can lease commence?
- any presumption re when it commences?
- can initial uncertainty be cured?
- contract for leases:
- impact of a.149(3)?
- if doesn’t specify the date upon which lease granted?
Harvey v Pratt
Date of commencement must be clear on the face of the lease.
⇒ Can commence immediately or at a future date up to 21 years (LPA s 149(3)) as the parties stipulate
⇒ There is a presumption that leases take effect immediately (Phillip and Walters v Benjamin)
⇒ Initial uncertainty can be cured if there is a formula that produces certainty before lease is to take effect
⇒ Contracts for leases:
o Unaffected by LPA s149(3) so can take effect after 21 years in the future
o Void if it doesn’t specify the date upon which the lease is to be granted (contrast contract to sell: implied that completion will take effect within reasonable time)
♣ Harvey v Pratt – CoA declined to apply similar reasoning between contract to sell and contract for lease, because authority for certainty of commencement is too strong. Difficult to see principled distinction between sale and 999-year lease though
Chapter 2: Certainties
Section II – Certainty of duration
Maximum duration must be certain at the date of commencement.
Chapter 2: Certainties
Section II – Certainty of duration
Para I – Caselaw up to Prudential Assurance
Lord Greene MR, Lace v Chantler
“A term created by a leasehold tenancy agreement must be expressed either with certainty and specifically or by reference to something which can, at the time when the lease takes effect, be looked to as a certain ascertainment of what the terms is meant to be.” (Lord Greene MR, Lace v Chantler)
Lace v Chantler: lease for the duration of the war = void because nobody knew how long the war was going to last at the time the lease was granted – “the term was completely uncertain. It was impossible to say how long the tenancy would last”.
Chapter 2: Certainties
Section II – Certainty of duration
Para I – Caselaw up to Prudential Assurance
Ashburn Anstalt v Arnold:
However: “the arrangement could be brought to an end by both parties in circumstances which are free from uncertainty in the sense that there would be doubt whether the determining event had occurred. The vice of the uncertainty in relation to the duration of the term is that the parties do not know where they stand.” (Fox LJ, Ashburn Anstalt v Arnold).
Ashburn Anstalt v Arnold: a term that allowed the occupiers to remain until they provided the landlord with a quarter’s notice was certain because the term could be brought to an end by a quarter’s notice and this was itself sufficiently certain.
But there was no way of predicting when the lease was going to end because no way of predicting when the quarter’s notice would be given.
Chapter 2: Certainties
Section II – Certainty of duration
Para I – Caselaw up to Prudential Assurance
(Lord BW, Prudential)
Asburn Anstalr overruled by Lord Templeman in Prudential, who considers the certainty of duration as one of the hallmarks of a lease.
Prudential Assurance v London Residuary Body: sale of a strip of land fronting a highway to the council, which leased it back to owner for a period “until the land is required by the council for the purposes of widening of the highway”. Reversion later assigned to D1 (no intention of widening highway), and tenancy assigned to C (paying 30 pounds/annum for land now worth 10 000 pounds/annum). Lease? If so, can it be valid for an indeterminate number of years for 30 pounds and determinable only in case of decision to widen highway? Alternatively, could it be a periodic yearly tenancy terminable on giving 6 months’ notice?
However, Lord BW criticized the rule of certainty of duration: “This bizarre outcome results from the application of an ancient and technical rule of law which requires the maximum duration of a term of years to be ascertainable from the outset. No one has produced any satisfactory rationale for the genesis of this rule [or] any useful purpose that it serves at the present day. [Departing from the rule would upset long-established titles, so] confine myself to expressing the hope that the Law Commission might look at the subject to see whether there is in fact any good reason now for maintaining a rule which operates to defeat contractually agreed arrangements between the parties.” (Lord BW, Prudential)
Chapter 2: Certainties
Section II – Certainty of duration
Para II - Academic debate
P Sparkes
(in full support of the rule)
- The same certainty rule applies to fixed and periodic terms
- Avoids risk of upsetting long established titles
- Any formal requirement risks upsetting the intention of contracting parties, but on balance, the result is not unjust and even if it is, “escape routes” are available (P Sparkes)
Chapter 2: Certainties
Section II – Certainty of duration
Para II - Academic debate
S Bright
more nuanced)
- Indeterminate nature of leases may well become a problem over time: parties may contract on the joint assumption that the terminating event would occur within a short period and allocate risks on this basis, but in fact the even doesn’t occur. In such cases, it would be unfair to the landlord if the rent cannot be renegotiated. “This is a contractual problem, not a property one, and should be met by being able to re-open the bargain”. Prescribing the circumstances where renegotiation is permissible is difficult (cf economic duress cases).
- Agrees with Lord BW’s statement that the rule is “ripe for review”, but “to recognize this does not mean that the rule should simply be abandoned. It is being used by the courts to free the landlord from a manifestly disadvantageous contractual arrangement”.
Chapter 2: Certainties
Section II – Certainty of duration
Para II - Academic debate
R Smith (defence)
- It may be necessary to differentiate leases (which last for a specific period of time) from freeholds (which are indefinite)
Chapter 2: Certainties
Section II – Certainty of duration
Para III – Berrisford v Mexfield
Recent challenge to the certainty rule.
Berrisford v Mexfield: a housing co-operative purchased property from people in mortgage arrears and leased the property back to them. It granted Berrisford a tenancy from month to month terminable by the tenant by giving 1 month’s notice, and by Mexfield only in certain circumstances (ex. arrears in rent). Was agreement void because of uncertain duration, so that the agreement was only a monthly periodic tenancy and Mexfield could terminate at a month’s notice irrespective of breach of terms?
CA found for Mexfield, but SC (unanimous) allowed the appeal: it was certain because it was really an agreement to last for Berrisford’s life, because under common law any uncertain lease would be converted to a lease for life, which is converted into a lease for 90 years (s149(6) LPA 1925) subject to landlord’s right to determine on the tenant’s death.
SC called for legislation on this point to be considered.
Criticism: the case distinguishes between commercial (void as cannot be considered a lease for life) and residential leases – it wouldn’t have saved a Prudential lease for example as the parties are not individuals.
Technique to address the uncertainty problem: fixed maximum term subject to tenant’s right to terminate if an event agreed by both parties should occur.
Chapter 2: Certainties
Section II – Certainty of duration
Para IV – Periodic tenancies
No fixed maximum duration at inception, but doesn’t infringe the certainty rule because the length of time = the period with reference to which the rent payable is calculated.
Chapter 2: Certainties
Section II – Certainty of duration
Para V – Fate of leases that fail for indeterminate duration
⇒ Might the courts hold that there’s a tenancy at will rather than a license where there is neither a rent nor a term?
o If there’s no rent then we can’t imply a periodic tenancy
o If there’s no consideration at all Street is unlikely to apply (no contract, so falls within exceptions)
o Authorities lean against tenancies at will but unclear why – exclusive possession has long led to tenancy at will regardless of rent/term. But in 1957 HL described tenancies at will as having a personal relationship, and in Street Lord Templeman didn’t explain why the movement away from tenancy at will survived.
o Ramnarace v Lutchman said that there can’t be a tenancy at will if there’s no intention to enter into legal relations, which covers most of the exceptions in Street.
Chapter 2: Certainties
Section 3: Certainty of Rent
Rent = the consideration paid to the landlord by the lessee in return for the use of the premises. Usually in money but can be in any form.
Historically an important feature of leases, but more recent cases accept lease possible without rent: “the reservation of rent is not necessary for the creation of a tenancy… [We agree with Lord Templeman that exclusive possession at a rent for a term is a lease.] We do not think that Lord Templeman was stating the quite different proposition that you cannot have a tenancy without a rent.” (Fox LJ, Ashburn Anstalt v Arnold).
s205 LPA defines terms of years absolute as ‘whether or not at a rent’.
⇒ If no rent: may suggest a license even in the presence of exclusive possession (ex. Colchester Council v Smith)
⇒ If rent: existence must be certain at commencement and amount must be clear at date of payment
o Where there is a provision for increasing the rent/renewal of lease at different rent:
♣ Clauses producing a formula (eg. reference to market value) are upheld (Brown v Gould)
♣ Clauses that provide that rent shall be a figure to be agreed are more difficult:
• If the lease is already running, courts have upheld it relying on cases from other contractual contexts (Beer v Bowden)
• If the clause governs initial rent, there is some authority to the contrary (King’s Motors v Lax) but courts have enforced them (Corson v Rhuddlan BC)
Chapter 2: Certainties
Section 3: Certainty of Rent
Rent = the consideration paid to the landlord by the lessee in return for the use of the premises. Usually in money but can be in any form.
Historically an important feature of leases, but more recent cases accept lease possible without rent: “the reservation of rent is not necessary for the creation of a tenancy… [We agree with Lord Templeman that exclusive possession at a rent for a term is a lease.] We do not think that Lord Templeman was stating the quite different proposition that you cannot have a tenancy without a rent.” (Fox LJ, Ashburn Anstalt v Arnold).
s205 LPA defines terms of years absolute as ‘whether or not at a rent’.
⇒ If no rent: may suggest a license even in the presence of exclusive possession (ex. Colchester Council v Smith)
⇒ If rent: existence must be certain at commencement and amount must be clear at date of payment
o Where there is a provision for increasing the rent/renewal of lease at different rent:
♣ Clauses producing a formula (eg. reference to market value) are upheld (Brown v Gould)
♣ Clauses that provide that rent shall be a figure to be agreed are more difficult:
• If the lease is already running, courts have upheld it relying on cases from other contractual contexts (Beer v Bowden)
• If the clause governs initial rent, there is some authority to the contrary (King’s Motors v Lax) but courts have enforced them (Corson v Rhuddlan BC)
Title 3: Types of leases
Chapter 1: Fixed-term leases
Lease where the exact duration is fixed at the outset – automatically determines after the set period.
Title 3: Types of leases
Chapter 2: Periodic leases
May continue indefinitely – lasts from one period to another. Determined according to the period for which rent is payable.
Can be implied because owner accepts rent paid on a periodic basis by a tenant at will.
⇒ Creation:
o Originated in 16C – protected tenants against arbitrary immediate eviction
o Two common cases:
♣ Lease is void for not being by deed, but tenant has entered and paid rent
♣ Lease has terminated but tenant is allowed o stay in possession and pay rent
o Paying rent = periodic tenancy; no rent = tenant at will
o After 20C reforms protected periodic tenants but not tenants at will, difference became material
o Express agreement for tenancy at will precludes periodic tenancies (Bastow v Cox) but unsure whether today a periodic tenancy will be presumed just because tenant enters + pays rent:
♣ Longrigg v Smith: Tenant stayed on and paid rent, but landlord wanted to evict him. CoA held that there was no periodic tenancy as paying rent was more attributable to refusal to leave than a contractual tenancy – Omrod LJ said presumption of periodic tenancy is “unsound and no longer holds”
♣ Javad v Aqil: Tenant allowed to enter and pay rent pending negotiations for a lease; subsequently relations broke down. CoA held that there had been no periodic tenancy because they hadn’t reached agreement as to the basis for occupation
o Thus simple payment of rent is no longer a strong pointer to periodic tenancy – must consider all circumstnaces to see if one was intended
⇒ Terms:
o Period (week/month/year/something else in implied periodic tenancies):
♣ Traditionally for a year (because possession for growing season is important for agricultural land)
♣ Depends on basis for calculating rent (not frequency of payment: Adler v Blakcman, but how it’s calculated)
o Other terms:
♣ Court looks to any agreement between parties (void leases, agreements for a lease, expired lease)
♣ But question is which terms the court will decide to be consistent with periodic tenancies (court will not imply terms that prohibit giving notice, for example):
• Terms appropriate only for long tenancies unlikely to be implied (eg. requirements to undertake significant repairs)
⇒ Termination:
o Notice must expire at the end of a period (or it continues for another period) – notice can say expire at next “proper day of expiry”
o In case of joint tenancies only one tenant has to give notice (arguable that periodic tenancies continue by default unless a positive action is taken to terminate, so should technically require both tenants to offer notice – however Lord Bridge rejected this by saying that it is the omission to give notice that signifies positive assent to extension of term)
Title 3: Types of leases
Chapter 3: Tenancy at will
A tenant occupies premises with the consent of the landlord. Either party can determine at any time.
If rent is paid and accepted on a periodic basis, usually implied into a periodic tenancy, except if it is in anticipation of a legal agreement being concluded, which would be a “weighty factor” in ascertaining their intentions.
Javad v Aqil: landowner allowed “tenants” into possession with rent while negotiating for a legal lease, expecting that an agreement would soon be reached. CA: no periodic tenancy.
Main difference with license: tenant at will can claim against trespassers + can claim possession of the land. However, no proprietary right in the land (will not bind third party purchasers).
Terminates when either party assigns or on death of either party.
Title 3: Types of leases
Chapter 4: Tenancy at sufferance
Tenant remains in property without landlord’s consent. Only right = action against trespassers.
If landlord expressly refuses, tenant at sufferance becomes a trespasser.
Title 3: Types of leases
Chapter 5: Leases for life
Uncertain, therefore not a term of years absolute (LPA 1925, s. 205(1)(xxvii))
But can be saved under s. 149(6) LPA 1925: any lease at a rent for life or determinable with life/marriage of lessee/any contract therefore takes effect as a lease for 90 years determinable after the death or marriage of the original lessee.
Title 3: Types of leases
Chapter 6: Perpetually renewable leases
If a lease contains a covenant for the tenant to renew the lease + the parties intended the lease to be perpetually renewable, it can be automatically converted to a lease for 2000 years (s145 LPA 1922).
Title 3: Types of leases
Chapter 7: Tenancy by estoppel
A lease where the landlord has no title but the tenant believes that he has the legal estate. “it is a fundamental principle of the common law that a grantor is not entitled to dispute the validity of his own grant” (Edwards v Bailey, 1777)
Both parties may use tenancy by estoppel. It makes no difference that the parties are aware of the defective title.
Title 3: Types of leases
Chapter 7: Tenancy by estoppel
Section I – Genesis: Bruton v London and Quadrant Housing Trust
“It is not the estoppel which creates the tenancy… The basis of the estoppel is that having entered into an agreement which constitutes a lease or tenancy, he cannot repudiate that incident or obligation. Thus it is the fact that the agreement between the parties constitutes a tenancy that gives rise to an estoppel and not the other way around… The issue is simply whether the agreement is a tenancy. It is not whether either party is entitled to deny some obligation or incident of the tenancy on the ground that the trust had no title.” (Lord Hoffmann, Bruton v London and Quadrant Housing Trust)
Bruton v London and Quadrant Housing Trust: C claimed that he held a lease based on exclusive possession, even though the landlord didn’t hold the freehold but were mere licensees. CA said that it couldn’t be a lease because nemo dat quod non habet, but HL rejected, based on exclusive possession. It was a lease repair covenant was enforceable.
Title 3: Types of leases
Chapter 7: Tenancy by estoppel
Section II – Academic commentary
Thus Lord Hoffmann distinguishes between two types of lease: the proprietary lease (Street v Mountford) and a contractual lease, “a ‘lease’ between the parties, but not a ‘lease’ in a proprietary sense… it muddies the waters. The decision in Street itself is premised on the assumption that a lease is proprietary and that is why it must be distinguished from a license! [Applying the ratio of Street to Bruton] does great violence not only to established principles of property law but goes against the very purpose of Lord Templeman’s judgment”. (M Dixon)
Title 3: Types of leases
Chapter 7: Tenancy by estoppel
Section III – Subsequent caselaw applications
Two cases followed the reasoning in Bruton but both claimants failed to maintain their rights in property against third-party purchasers though they were held to have Bruton leases.
Kay v Lambeth BC: Housing trust granted rights to C and were then evicted from the land, the council having recovered the property from the trust. C argued that their rights were binding on the council. HL: once the trust had been evicted, any rights binding on them could no longer subsist since they were carved out of the original estate which ceased to exist.
Other case = Islington v Green.
Title 3: Types of leases
Chapter 8: Equitable lease
⇒ When a purported lease is void for not being by deed, Equity treats it as an agreement of a lease and enforces it as such, but only if it is in writing signed by both parties (Miscellaneous Provisions Act s2)
⇒ Walshe v Lonsdale: If relief by specific performance is available, then Sir George Jessel suggests that an agreement for a lease is in all respects as good as a lease – but other judges in that case didn’t adopt so broad an attitude and in other cases it seems that legal and equitable leases aren’t exactly the same
⇒ Difference most pronounced in relation with third parties – legal interests bind purchasers more readily than equitable
⇒ Sir George Jessel also suggests that there is no longer a legal periodic tenancy where there is an agreement for a lease, but can the tenant not fall back on one if the equitable tenancy fails?
Bright, ‘Repudiating a Lease—Contract Rules’[1993] Conv 71 (Comment on Hussein)
Intro
In Hussein v Mehlman held that a tenant can vacate the premises and return the keys without incurring further rent liability because his actions were acceptance of a repudiatory breach (failure to comply with statutory repair obligations: no heating, collapsing ceiling, burst water pipe…) by the landlord.
Bright, ‘Repudiating a Lease—Contract Rules’[1993] Conv 71 (Comment on Hussein)
Important because
Important because:
1) Recognizes that a lease can be ended by repudiation.
2) Acknowledges that the foundation of a lease is contractual, opens way for other contractual doctrines in relation to leases.
No recent case until Hussein directly applied repudiation to leases; some 19C cases recognized that a tenant was able to “walk away from a letting” if the landlord’s breach of repairing obligations left the premises in unsafe and uninhabitable conditions, but in Total Oil v Thompson Garages, Lord Denning (relying on Cricklewood v Leighton – frustration can’t be applied to leases – overruled by HL in National Carriers v Panalpina) said that a lease cannot be repudiated because it conveys an interest in land and doesn’t come to an end like ordinary contract on repudiation and acceptance.
Bright, ‘Repudiating a Lease—Contract Rules’[1993] Conv 71 (Comment on Hussein)
Justification for permitting repudiation of leases
Other jursdictions have accepted that leases can be repudiated, drawing on desire to harmonize leases with other areas of contract: the law of landlord and tenant has outgrown its origin in feudal tenure, and it’s more appropriate in the light of the essential elements of bargain:
1) the modern money economy and the modern development of contract law that leases should be regulated by the principles of contract law (Mason J, Progressive Mailing House v Tabali (Australia))
2) modern living conditions and commercial practice necessitate greater accord to the contractual basis of leases (Highway Properties v Kelly, cited with approval in Panalpina)
Bright, ‘Repudiating a Lease—Contract Rules’[1993] Conv 71 (Comment on Hussein)
Limits of repudiation:
1) In practice, fixed term tenants are most likely to use this; periodic tenants can serve notice anyway. Landlords can usually use forfeiture, but repudiation may offer recovery of consequential losses, or they may not have reserved the right to forfeit for breach.
2) Some features of leases distinguish them from other contracts, and will affect the operation of repudiation: the further one moves away from cases where the parties’ rights are defined by contract [modern commercial lease, tenant paying market rent at periodic intervals with landlord assuming repairing obligations], to cases where the tenant’s rights are substantially more properly viewed by reference to their character as an estate in land [long estate + substantial capital sum], the more difficult it will be to apply repudiation (Deane J, Progressive Mailing) [MI: but in long estates what would be the breach if there are no obligations left??? Can the Panalpina argument (that the tenant has already gotten everything he bargained for) not be an obstacle to repudiation, so that it’s not that repudiation doesn’t apply, but that there was no repudiatory breach?]
Bright, ‘Repudiating a Lease—Contract Rules’[1993] Conv 71 (Comment on Hussein)
The contractualization of leases is seen :
1) Monk
2) Panalpina (where one of the arguments was that the tenant got what he bargained for, i.e. the leasehold estate, but this ignores the fact that after the grant, the lease is still partly executory. HL said that a lease could be frustrated, it would be wrong to compartmentalize the laws of contract and apply general contractual principles to some contracts only).
Liverpool CC v Irwin (implied duty of care on landlord to maintain common areas), but in the US the duty is far more extensive in residential tenancies (warranty of habitatility > > duty of reasonable care) : “Our approach to the common law of landlord and tenant ought to be aided by principles derived from … consumer protection cases…. The landlord sells housing as a commercial business-man and has much greater opportunity, incentive and capacity to inspect and maintain the condition of his building … Contract principles established in other areas of the law provide a … framework for the apportionment of landlord-tenant responsibilities; they strongly suggest that a warranty of habitability be implied into all contracts for urban dwellings.” (Javins v First National Realty Corporation)
Bright, ‘Repudiating a Lease—Contract Rules’[1993] Conv 71 (Comment on Hussein)
Conclusion: potential is now there for the doctrines ofnon est factum, contra proferentum,unconscionability (if such a general jurisdiction exists in contract) and relief from penalties to be applied to leases. The tide has now turned: leases will be assimilated with contracts unless the particular proprietary features of the facts and the issue demand a different result.
Happum, Leases as Contracts [1993] CLJ 212 (Comment on Hussein v Mehlman)
Issue 1: could a lease be repudiated (yes)?
Issue 2: the landlord’s breach of the implied covenant to repair amounted to a repudiatory breach (yes)? The landlord made it clear by conduct that he wasn’t going to fulfill the obligation, which rendered the house uninhabitable, and the tenants left the premises accepting a repudiatory breach, and are entitled to damages. But in principle, a mere breach of covenant would not in itself amount to a repudiatory breach; there must be “the party evinces an intention no longer to be bound by the contract or that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way” (Progressive Mailing per Mason J).
Conclusion: the case gives tenants a remedy against landlords who flout their obligations, but it also allows landlords to sue for damages for lost rent if the tenant commits a repudiatory breach, subject to duty to mitigate (whereas forfeiture doesn’t allow him to).
Hammersmith and Fulham LBC v Monk (HL)
A joint tenancy can only proceed if all joint tenants concur in its continuation; thus, it can be terminated, subject to provisions to the contrary in the agreement, by one joint tenant without the consent or knowledge of the others.
Hammersmith and Fulham LBC v Monk (HL)
Lord Bridge (Lords Brandon, Ackner, Jauncey and Browne-Wilkinson agreeing):
the House is not bound by any authority so should consider the question from first principles – is the determination valid. This may seem untoward, particularly where it will deprive the other joint tenant of statutory protection, but the statutory consequences are of no relevance to the question of whether, at common law, a contractual periodic tenancy granted to joint tenants is capable of termination by one tenant’s notice to quit.
“As a matter of principle I see no reason why this question should receive any different answer in the context of the contractual relationship of landlord and tenant than that which it would receive in any other contractual context.” If A and B contract with C on terms to continue for 1 year and thereafter from year to year unless determined by notice at the end of each year, neither A nor B has bound himself for more than one year; if each can’t terminate unilaterally, then it is to accept that each assumed a potentially irrevocable contractual obligation for the duration of their joint lives – they are unlikely to have intended that.
A periodic tenancy is founded on the continuing will of both landlord and tenant that the tenancy should persist. It comes to an end once one tenant indicates that they no longer wish to continue.
It hasn’t been argued and it is not the state of the law that termination severs the joint tenancy and leaves the other as the sole tenant.
Appellant’s arguments:
1) Tenancies from year to year are a single term no matter how long, not a series of separate lettings, so that termination is exactly like exercising a break clause in a fixed-term letting (which requires the concurrence of all). But retrospectively, a periodic tenancy is one term, but considered prospectively, the tenancy continues no further than the parties have impliedly agreed upon by their omission to serve notice
2) LPA 1925 provides that legal estate in land vested in joint tenants is held on trust for sale for the parties beneficially entitled + trustees must act unanimously in dealing with trust property. But where the joint tenants hold both the legal and beneficial interest, the existence of a trust for sale can make no difference to the principles applicable to terminating a tenancy. At any moment, the interest to which the trust relates extends no further than the end of the period of the tenancy.
3) All positive dealings with a joint tenancy require the concurrence of all joint tenants (exercise a break clause, make a disclaimer, etc.), analogously with serving a notice to quit. But it’s by the omission to give notice that each party signifies the positive assent to the extension of the term.
Hammersmith and Fulham LBC v Monk (HL)
Lord Browne-Wilkinson (concurring
the revulsion against one joint tenant being able to unilaterally terminate is property based: the other joint tenant’s property right in the home cannot be destroyed without his consent, and leases confer property rights. The opposite reaction is contract based: a joint tenant cannot be held to a contract which is dependent for its continuance on the will of the tenant.
If you sell to several joint owners, as against the world they constitute a single owner and they have to be unanimous. But with leases the law developed in the opposite direction (Doe v Summersett). This House shouldn’t overrule it.
The trusts submission also fails because in the relationship between lessor/lessee, the fact that there is a trust is irrelevant, though it may be that as between the trustees, there has been a breach of trust (which does not nullify the notice).
Sims v Dacorum BC [2015] AC 1336
C and his wife were joint periodic tenants, agreement provided that if either wanted to terminate they had to terminate the whole tenancy (clause 100) and D, owner, would decide whether the other joint tenant could remain in the property or moved to other suitable accommodation (clause 101). Marriage broke down, wife left and served notice to quit. D obtained a possession order, C appealed saying that the eviction was incompatible with Art 8 and 1P1 ECHR.
Held (UKSC): the rule in Monk (pre HRA) is not incompatible with Art 8 or 1P1 ECHR, because the rights of the remaining occupiers are adequately protected by the possibility of raising a proportionality defence. C was deprived of his property in circumstances specifically provided for in the agreement so that the loss of property was the result of a bargain he had made. Clause 100 was not unreasonable, and was mitigated by clause 101. As C could not be evicted without a court order, and the judge had to find (and did find) that the eviction was not disproportionate, the claim failed.
Sims v Dacorum BC [2015] AC 1336
Lord Neuberger (Hale, Clarke, Wilson, Carnwath, Toulson, Hodge agreeing):
Article 1P1 (everyone is entitled to “peaceful enjoyment of his possessions”, and nobody should be “deprived of his possessions except in the public interest and subject to conditions provided for by law”):
The only conceivable arguments are that:
1) Clause 100 is irrational, or so unreasonable as to offend the right to enjoy the property: fails because it is inconsistent with the Monk principle and its effect is mitigated by clause 101. If Monk were wrong, then a tenant who serves notice to quit would be forced to remain a tenant, or the landlord would be landed with one tenant instead of two (less security).
2) D unfairly operated clause 101: the district judge had considered all the circumstances (C had lived there for ten years, wife served notice voluntarily knowing the consequences, C was responsible for her leaving by his violence, there were no relevant medical circumstances or vulnerability that would prevent C’s search for other accommodation, D had a clear right to reallocate the property, social housing is a scarce resource, C had ample opportunity to present his case…). This is the only appropriate conclusion she could have reached.
Article 8 (everyone is entitled “to respect for his private … life [and] his home”, and there should be “no interference by a public authority with the exercise of this right” save if it is “in accordance with the law”, “necessary in a democratic society”, and “in the interests of … the economic well-being of the country … or for the protection of the rights or freedoms of others”):
C was entitled to argue against the proportionality of D’s possession claim, but it fails because the district judge carefully considered the question and said D’s decision didn’t violate article 8.
C argued that wife’s serving the notice to quit was a violation of his Article 8 right, but the fact that the notice put his right to stay in his home at risk does not mean that it operated as an infringement of his right to respect for his home. She had the right to serve notice, and the agreement specifically covers this right and its consequences.
Crawley BC v Ure (CA)
Wife left the flat shared as joint tenant with husband, and applied to council for assistance as a homeless person – told that she couldn’t be homeless because of her interest in the flat, and she accordingly served notice to quit without informing husband. Husband refused to leave the flat – judge granted a possession. CoA upheld the judge’s ruling – notice to quit by one of the joint tenants without the consent of the other was nevertheless effective. Though by virtue of s36 LPA 1925 a joint tenancy was held on trust for sale and s26(3) required trustees for sale to consult beneficiaries before exercising any powers vested in trustees for sale, this did not apply in the present case because notification that the wife didn’t want the tenancy to continue beyond the end of the current notice period was not a positive act that could amount to a breach of trust.
Bruton v London Quadrant Housing Trust (HL)
C entered into a weekly licensing agreement with housing trust D, noting that the trust held the property on license from a local authority pending development, requiring the occupier to vacate the property upon reasonable notice, and providing that the trust retained the right to re-enter to inspect and effect repairs. C sought to enforce a repair covenant, claiming that he was a tenant of the premises.
Held (HL): allowing the appeal, that the agreement had all the characteristics of a tenancy including exclusive possession, that no special circumstances enabled the agreement to be construed as a license. The existence of a tenancy does not depend on C establishing a proprietary interest binding on third parties; the fact that the landlord trust was a licensee was not a bar to granting a tenancy.
Bruton v London Quadrant Housing Trust (HL)
C entered into a weekly licensing agreement with housing trust D, noting that the trust held the property on license from a local authority pending development, requiring the occupier to vacate the property upon reasonable notice, and providing that the trust retained the right to re-enter to inspect and effect repairs. C sought to enforce a repair covenant, claiming that he was a tenant of the premises.
Held (HL): allowing the appeal, that the agreement had all the characteristics of a tenancy including exclusive possession, that no special circumstances enabled the agreement to be construed as a license. The existence of a tenancy does not depend on C establishing a proprietary interest binding on third parties; the fact that the landlord trust was a licensee was not a bar to granting a tenancy.
Bruton v London Quadrant Housing Trust (HL)
Lord Slynn
Lord Jauncy
Lord Slynn: the agreement was described as a license and may have been intended to be a license, but applying Street it was prima facie a tenancy, and there are no “surrounding circumstances” to displace the general rule, though its potential impact on the housing trust causes anxiety.
Lord Jauncey: the trust granted exclusive possession, a fact fortified by the reservation of rights of access to the trust for limited purposes. But are there special circumstances? The HT argues that:
1) The trust is a charitable organization performing important social functions
2) The trust is a mere licensee inhibited by the terms of that license from granting tenancies
3) The trust has no estate from which to grant a tenancy
But applying Family Housing Association v Jones (similar facts) it was a tenancy, and no reason to depart from this conclusion. Mentions an observation in Jones: it would be difficult for housing associations to enter into arrangements conferring exclusive possession without conferring security of tenure, which must reduce the choice of methods available to these bodies to deal with their limited supplies of housing. This may not benefit the class of homeless persons as a whole.
Bruton v London Quadrant Housing Trust (HL)
Lord Hoffmann (Lord Slynn, Hope, Hobhouse agreeing)
the fact that the parties use language more appropriate to a license is irrelevant if upon its true construction it has the identifying characteristics of a lease; the extent of possession an agreement grants depends on the intention of the parties objectively ascertained by reference to the language and relevant background, but the classification of the agreement as a lease doesn’t depend on any intention additional to that expressed in the choice of terms: it is a question of law.
In this case, there was exclusive possession: there was no shared possession with the HT or Council; only limited rights of entry for limited purposes.
None of the special circumstances (above) can make an agreement to grant exclusive possession anything other than a tenancy.
1) Charitable organization: the Landlord and Tenant Acts don’t distinguish between different kinds of landlords
2) Breach of license: irrelevant as there is no suggestion that the grant of a tenancy would have been ultra vires either the trust or the council
3) No estate:
Millett LJ said that an agreement couldn’t be a lease unless it created a legal estate that bound the whole world, except the case of a tenancy by estoppel, which depends on the grantor having purported to grant a lease.
Lord Hoffmann disagrees:
1) “the term “lease” … describes a relationship between two parties who are designated landlord and tenant. It is not concerned with the question of whether the agreement creates an estate … binding upon third parties”. A lease usually does create a leasehold estate this depends on whether the landlord had an interest out of which he could grant it. It’s the lease that creates the proprietary interest; whether the agreement is a lease does not depend on whether it creates a proprietary interest.
2) Millett LJ may have been misled into thinking that a “tenancy by estoppel” described an agreement that would not otherwise be a tenancy but treated as one by virtue of the estoppel. “it is not the estoppel which creates the tenancy, but the tenancy which creates the estoppel. The estoppel arises when one or other of the parties wants to deny one of the ordinary incidents or obligations of the tenancy on the ground that the landlord had no legal estate. The basis of the estoppel is that having entered into an agreement which constitutes a lease or tenancy, he cannot repudiate that incident or obligation”. Thus the question of tenancy by estoppel doesn’t arise in this case; the issue is simply whether the agreement is a tenancy, not whether either party can deny an obligation incident of it.
Bruton v London Quadrant Housing Trust (HL)
Lord Hobhouse
it would be different if the HT had no capacity to make the agreement; lack of capacity renders an apparent agreement without legal effect. But such was not the case.
Bruton v London Quadrant Housing Trust (HL)
COURT OF APPEAL
the grant of exclusive possession does not create a tenancy where the grantor has no estate in the land out of which to grant it, provided that it makes clear that it is only granting a license. He can still create a tenancy by estoppel if he purports to grant a tenancy. In this case none arises.
Bruton v London Quadrant Housing Trust (HL)
COURT OF APPEAL
Sir Brian Neill (dissenting):
the solution of the majority is “socially desirable and eminently sensible”, but disagree because authority (Street and Clarke) show that the court must look at what the parties did and not what they thought they were doing nor what they intended to do
Bruton v London Quadrant Housing Trust (HL)
COURT OF APPEAL
Millett LJ (important)
The grantee knew that the grantor had no estate in the land. The question is therefore at the intersection of the Street principle and the principle that the grantor of an interest in land is estopped from disputing the validity or effect of his own grant. Combining these principles, can the grantor who has, and is known to have, no title, nevertheless bring into being a tenancy by estoppel if he excludes himself and those claiming through him from possession?
In Street Lord Templeman identifies three examples of exceptional circumstances where exclusive possession doesn’t create a tenancy:
1) No intention to create legal relations
2) Possession is referable to another legal relationship (ex. vendor and purchaser)
3) The grantor has no power to create a tenancy: is scope confined to lack of capacity, or does it extend to want of title? A requisitioning authority cannot grant a tenancy, but IJO this is not from want of vires but want of title, in that it has no power to – and did not – acquire any estate in the land that it requisitioned. This will be true except tenancy by estoppel.
Bruton v London Quadrant Housing Trust (HL)
COURT OF APPEAL
Kennedy LJ:
“common sense” dictates that a homeless person housed by a housing association in residential accommodation which he knows that the association doesn’t own, does not become a tenant just because he has exclusive possession, is not a lodger, and agreed to make regular payments.
In Family Housing Association v Jones, the court didn’t address the lack of title, so we are free to address this point now. (NB Lord Hoffmann said that the reason the court didn’t address the point in Jones was because it was irrelevant).
Bright, Leases, exclusive possession and estates (Comment on Bruton)
Intro
There were two routes to Bruton’s success:
- Show that he had a lease (but as the Housing Trust had no estate, unclear whether it could grant a lease)
- Show that he had a tenancy by estoppel, and that the statutory repairing obligations attach to tenancies by estoppels (but the Housing Trust never purported to grant a tenancy, so it couldn’t be a tenancy by estoppel)
HL took the first route.
Bright, Leases, exclusive possession and estates (Comment on Bruton)
I – The Finding of a Lease
CoA and HL both agree that exclusive possession is necessary for a lease, but didn’t agree on whether it’s an absolute or relative concept:
- HL: exclusive possession was based on the contractual agreement between Bruton and the Housing Trust, whose lack of title was not relevant.
- Millett LJ (CoA): exclusive possession looks beyond the relationship between the two contracting parties, and means possession in exclusion of the whole world (“if the grantor has no power to exclude the true owner from possession, he has no power to grant a legal right to exclusive possession”: Millet LJ)
If the HL is right, then what is the nature of the relationship? HL says relationship of landlord/tenant, but not whether it’s an estate; it could be in the relative sense, given the relativity of title, but this is hard to accept because nemo dat quod non habet – no one can convey what he does not own.
Lord Hoffmann implies that it’s not an estate: a “lease may, and usually does, create a proprietary interest”, which means sometimes there can be leases that aren’t estates. CoA disagrees: a lease is always a proprietary concept – “a tenancy is a legal estate” (Millett LJ). Merits of this view:
- There are some “tenancies of sorts” that aren’t estates (tenancy at will, tenancy by estoppel) but these are special cases and wouldn’t be described as “leases”.
- Previous cases rely on this assumption, relying on it in their reasoning (ex. National Carriers v Panalpina) and sometimes make it explicit: “impossible to conceive of a relationship of landlord and tenant that has not got that essential element of tenure in it, and that implies that … the landlord has a reversion. You cannot have a purely contractual tenure” (Lord Greene, Milmo v Carreras).
So it’s surprising that Lords Hoffmann and Hobhouse state in Bruton with little discussion that an estate is not an essential element of a lease, “a relationship between two parties … designated landlord and tenant[,] not concerned with the question of whether the agreement creates an estate or other proprietary interest” (Lord Hoffmann).
Many consequences…
- Do contractual leases count as leases for all statutory purposes?
- Can they be created informally? Yes it appears – LPA 1925 s 52 etc. apply only to interests in land
- Certainty rules apply? Yes it appears, otherwise in Prudential the agreement would have been upheld as a contractual tenancy
- Status of contractual lease vis-à-vis third parties? Not registrable, probably not overriding, probably not assignable (as assignability flows from proprietary status: Lindon Gardens v Lenesta); but some in rem remedies available (cf contractual licenses), ex. right to recover possession from trespassers, specific performance or injunction against grantor.
Bright, Leases, exclusive possession and estates (Comment on Bruton)
II – Tenancy by Estoppel
Everything said about it is obiter, but Lord Hoffmann again departs from Millet LJ’s view: which comes first, the tenancy, or the estoppel?
- Millet LJ: estoppel comes first – a tenancy by estoppel arises when you grant a lease while unable to do so, and are estopped from denying your grant
- Lord Hoffmann: tenancy comes first – the parties are then estopped from denying any of the “ordinary incidents … of the tenancy on the ground that the landlord had no legal estate”.
Hoffmann’s reasoning is strange: entering into any legal relationship means that the parties are prevented from denying it; why do we need to talk about estoppel? Perhaps having entered into a contractual lease, the parties are estopped from denying the incidents of a proprietary lease.
But this would mean the application of tenancies of estoppel must be very narrow: most cases that were previously recognized as tenancies by estoppel are perhaps now to be viewed as contractual leases with parties estopped from denying the incidents of proprietary leases (obligation to pay rent…).
Lord Millett’s is the more conventional approach, though little turns on the analysis.
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
Intro
Most controversial aspects of Bruton:
- An agreement may create the relationship of landlord/tenant without creating a proprietary estate in land (implicit): author agrees that a contractual tenancy is a “contradiction in terms” (Dixon)
- Finding of a lease though landlords are mere licensees: most commentators question this but author defends this – a Bruton tenancy is a “true tenancy [that creates] a proprietary interest in the land, albeit of a highly circumscribed type which would not satisfy everyone’s definition of “proprietary””.
This could be so if we take property to mean “control over access” (Hinojosa), because the tenant has enforceable rights against the landlord and strangers. We can go further by grounding these arguments on the concept of the common law fee simple based on possession, emphasizing the relativity of title where unregistered conveyancing principles still operate.
Bruton could simply have been a decision on s11 Landlord and Tenant Act 1985 without further application (Lord Hoffmann asks “Did this agreement create a lease … with the meaning of the Landlord and Tenant Act 1985 or any other legislation which refers to a lease?”), but it’s unsatisfactory for an agreement to be a lease for some purposes and not others, and Lord Hoffmann does ask “any other legislation” and base his judgment on caselaw inconsistently with a question of statutory interpretation.
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
I – Arguments of the claimant
Bruton (Lord Hoffmann) takes the claimant’s arguments (based squarely on the concept of relativity of title, arguing for a proprietary lease on the assumption that a title can only be relative) considerably further than the claimant intended (deciding that it was a contractual, non-proprietary lease).
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
II – The common law fee simple of the person in possession
In common law, an adverse possessor immediately acquires a common law fee simple in the land that is good against all the world except someone with a better title – a trespasser in possession may grant a lease (Platt, 1852). This article argues that such a lease is proprietary, nothing less than an estate.
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
III – Proprietariness in English Law
Some authors (Pawlowski, Dixon) disagree with the idea of a proprietary interest that does not bind all the world – but prior to registration of title, one could rarely be sure that such an interest would be good against all the world because there might always be a yet undiscovered better title.
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
IV – The Meaning of nemo dat quod non habet
Many argue that it means “no one can convey what he does not own” – someone who doesn’t have an estate cannot grant a lease (Bright, Pavlowski, Dixon). But the principle should be explained in English law as “no man can give another any better title than he himself has”, or else it would force the maxim into the Civil Law model of dominium.
There’s not historical justification for the assertion that one must have an estate to grant a lease – a tenancy at will does not confer an estate, but Platt didn’t doubt that a tenant at will could grant a lease binding only against himself.
So a better argument against the lease in Bruton is that the HT, merely a licensee, did not have a sufficient degree of possession to grant the lease: it was not the intention of the parties to the agreement between the Council and the HT that the HT should have possession. But the HT did have de facto possession, which gives standing to grant a lease (ex. squatters only have de facto and not de iure possession, but can grant a lease).
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
V – The implications of the relativist, proprietary Bruton Tenancy
Whom does it bind?
nemo dat quod non habet, therefore, the Bruton tenancy cannot bind the holder of a superior estate (Kay v Lambeth: the Mellor principle, that the sub-tenant becomes the direct tenant of the final landlord if the immediate landlord surrenders his lease to the final landlord, only applies if the estate had been “carved … out of” a superior estate).
Some (Pawlowski) argue that a Bruton tenancy would only bind the original landlord, but author suggests that it wouldn’t bind the holder of a superior estate or one deriving title from him, but if it is proprietary to the extent of binding the landlord, then it should also bind others who derive title from the same landlord, ex. cases of double conveyancing – which would be resolved on a property law basis (grantee with earlier lease would prevail).
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
V – The implications of the relativist, proprietary Bruton Tenancy
Meaning of proprietary
boundary between what is and isn’t proprietary is difficult to draw. Can argue that in protecting a license through specific performance (Verrall v Great Yarmouth BC) the court was giving proprietary aspect to the license. But if a dispute arose between occupants who are licensees, so that enforcing one contract to the fullest precludes the enforcement of another, then author argues that the court would not be obliged to apply the “first in time” principle but can exercise discretion on equitable grounds.
In Verrall, if Licensee 1 knew that Licensor was about to grant a second license, he can get an injunction; but if it’s actually granted, then property considerations would not apply.
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
V – The implications of the relativist, proprietary Bruton Tenancy
Overriding interest?
It should qualify under Sch 3 para 1 LRA 2002 (as it’s accepted that a leasehold estate derived from a common law fee simple is still a leasehold estate for the purpose of the LRA), or otherwise para 2 as most Bruton tenants would be in actual possession.
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
V – The implications of the relativist, proprietary Bruton Tenancy
Registrability?
Presumably, if over seven years it will be registrable (though unlikely to be the case as if the landlord purports to grant a license it’s unlikely to be over seven years) if there were no titles already registered in the land. But if a superior title has already been registered, then common law relativity of title conflicts with the absolute title of the registry: the registered proprietor would object to the Bruton tenancy being registered. But what happens if a Bruton tenancy is registered with good leasehold title, then someone seeks to register a superior title… They should be able to coexist until the holder of the superior title brings the inferior title to an end (like in Kay).
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
V – The implications of the relativist, proprietary Bruton Tenancy
Domaine narrowed by compulsory registration
(it’s geographical coverage + reduction of minimum term from 21 to 7 years): if (as author argues) the Bruton tenancy is based on relativity of title, registration is based on a single hierarchy of absolute registered titles. There’s less room for the doctrine of estates, including the common law fee simple.
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
VI – Tenancies derived from equitable interests
Pawlowski and Brown argue that “a grantor of an equitable title can only create a term of years having equitable quality”, based on the doctrine of nemo quod non habet. If this is true, then the owner of an equitable title who grants a periodic tenancy would grant an “equitable periodic tenancy”, but few sources recognise the existence of such an entity; the closest is in Abbey National v Cann: “…proceeded to grant a number of weekly tenancies … the contract remained uncompleted and the tenancies were, therefore, necessarily equitable only”. But the Housing Act 1988 assumes that a tenancy will be equitable because of the way it was granted and not because of the tenurial status of the landlord.
In any case, the question of whether a periodic tenancy is legal or equitable is not likely to be relevant as a periodic tenant will in most cases be in actual occupation so enjoy an overriding interest.
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
VII – Another objection based on Milmo v Carreras
Pawlowski and Brown also argue that the HL’s decision in Bruton is difficult to reconcile with the proposition that a tenant who purports to grant a sublease for a term equal or greater than his own will be treated as having effected an assignment of the lease by operation of law (Milmo v Carreras).
This also presents a challenge to the concept of the Bruton tenancy as based on relativity of title. But the reasoning in Milmo wasn’t inevitable, and even if it’s now too well-established to be challenged, it is perhaps reconcilable with relativity of title because while the tenant realizes (or ought to realize) that he is granting a sublease longer than his own, the squatter proceeds on the assumption that his right would remain forever and the HT in Bruton purports to grant a weekly license, so that it never exceeded their own license.
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
VIII – The Tenancy by Estoppel
Some say that Bruton is a tenancy by estoppel, but Lords Hoffmann and Hobhouse specifically denied it. Accepting the author’s argument would mean that estoppel would rarely arise; only when the landlord subsequently acquires a better title. Relativity of title then requires that the strength of the tenant’s title be evaluated upon the landlord’s improved title unless Milmo applies.
Roberts, The Bruton Tenancy, A matter of relativity (Comment on Bruton)
IX – Conclusion
If we accept that a Bruton lease is based on relativity of title, then we can’t accept the existence of a non-proprietary lease; the Bruton lease is proprietary.
Dixon ‘The non-proprietary lease: the rise of the feudal phoenix’2000 CLJ59(1)25
Issue 1: was there exlusive possession (yes)?
Despite the fact that the HT tried to rely on its provision of emergency housing (successful in Westminster CC v Clarke), its charitable status (successful in Gray v Taylor), and the fact that it had genuine reasons for wishing to deny a lease (regarded as important in Jal Mehta v RBS). The identity or type of landlord is irrelevant to determining the existence of a lease (Lord Hoffmann); not borne out by these cases but “does no great violence to established principles”.
Dixon ‘The non-proprietary lease: the rise of the feudal phoenix’2000 CLJ59(1)25
Issue 2: can someone without title grant a lease (yes)?
This is difficult: many would argue that it’s inherent in the very nature of leases that they confer proprietary status.
Another view: the case is only concerned with s11 Landlord and Tenant Act 1985; the section only applies if a “lease” exists, so their Lordships may be deciding that for the purpose of this section there is a lease as between the parties. But it ignores the fact that s11 is triggered by a recognized legal concept of lease, not a contractual arrangement with some characteristics of a lease.
Lord Hoffmann said Millett LJ put the cart before the horse in deciding that a lease must be an estate in land, though another view is that Millett LJ simply recognizes that one of the inherent characteristics of a lease is that it’s an estate in land, and that it is independent from the contract out of which it arose [MI: could it be that the ‘lease’ simply conveys the estate in land, and all the other obligations (ex. repair covenants) are contractual and not part of the lease at all, so that applying contractual principles isn’t actually applying them to ‘leases’, but only the contract? Is the lease an estate in land, or does it convey one?]
cf Harwood, Leases: are they still not real? (2001) 20 LS 503 at pp 511-513
Easy to interpret Bruton as evidence of a contractual approach to leases, but suggests a different approach: the court did find a common law tenancy to exist, created by a landlord with a licencee. It seems from relativity of title, thus putting leases on the same footing as freehold (“If party A can prove a better title than party B he is entitled to succeed notwithstanding that C may have a better title than A, if C is neither a party to the action nor a person by whose authority B is in possession or occupation of the land” (Lord Diplock, Ocean Estates Ltd v Pinder).
This shifts focus away from the quality of proprietariness being measured by enforceability against a purchaser or all the world; different property interests have different degrees of enforceability against different people. The emphasis should not be on estates in land being a marketable commodity, but on land as a bundle of rights and obligations.
Thus, the case challenges the traditional notion of a fixed hierarchy of interests, that you can only create a lesser interest out of a greater but not the other way around. It might be “the shadowy beginnings of a changing schema in property law”.
Kay v Lambeth LBC [2006]
The Mellor v Watkins (the intermediate landlord cannot be a consensual surrender give away an interest that belongs to a subtenant) and Pennell v Payne principles have no relevance to tenancies granted by grantors without estate in the land (all Bruton tenancies), as they are not derivative estates carved out of any estate that the grantor acquired from the head landlord.
The HT couldn’t by a surrender of his license prejudice a Bruton tenant’s right against himself, but these rights never were enforceable against the Council; once the HT’s license ends, the Bruton tenant becomes a trespasser against the Council.
Same outcome for people who aren’t owners of land but in adverse possession grant a tenancy: there’d be a “valid ‘non-estate’ tenancy” as between the grantor and grantee, but it wouldn’t bind the true owner of the land (unless the adverse possession continues for the requisite 12 years).
