Leases Flashcards

Question

Chapter 2: Certainties Section II – Certainty of duration

Answer 1

Maximum duration must be certain at the date of commencement.

Answer 2

“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”.

Answer 3

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.

Answer 4

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)

Answer 5

(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)

Answer 6

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”.

Answer 7

- It may be necessary to differentiate leases (which last for a specific period of time) from freeholds (which are indefinite)

Answer 8

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.

Answer 9

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.

Answer 10

⇒ 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.

Answer 11

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)

Answer 12

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)

Answer 13

Lease where the exact duration is fixed at the outset – automatically determines after the set period.

Answer 14

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)

Answer 15

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.

Answer 16

Tenant remains in property without landlord’s consent. Only right = action against trespassers. If landlord expressly refuses, tenant at sufferance becomes a trespasser.

Answer 17

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.

Answer 18

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).

Answer 19

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.

Answer 20

“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.

Answer 21

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)

Answer 22

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.

Answer 23

⇒ 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?

Answer 24

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.

Answer 25

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.

Answer 26

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)

Answer 27

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?]

Answer 28

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)

Answer 29

Conclusion: potential is now there for the doctrines of non 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.

Answer 30

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).

Answer 31

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.

Answer 32

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.

Answer 33

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).

Answer 34

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.

Answer 35

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.

Answer 36

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.

Answer 37

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.

Answer 38

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.

Answer 39

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.

Answer 40

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.

Answer 41

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.

Answer 42

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.

Answer 43

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

Answer 44

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.

Answer 45

“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).

Answer 46

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.

Answer 47

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.

Answer 48

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.

Answer 49

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.

Answer 50

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).

Answer 51

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.

Answer 52

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.

Answer 53

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).

Answer 54

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).

Answer 55

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.

Answer 56

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.

Answer 57

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).

Answer 58

(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.

Answer 59

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.

Answer 60

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.

Answer 61

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.

Answer 62

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.

Answer 63

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”.

Answer 64

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?]

Answer 65

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”.

Answer 66

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).

Answer 67

A term, at a rent or granted in consideration of a fine, (…) to take effect more than twenty-one years from the date of the instrument purporting to create it, shall be void, and any contract made after such commencement to create such a term shall likewise be void; but this subsection does not apply to any term taking effect in equity under a settlement, or created out of an equitable interest under a settlement, or under an equitable power for mortgage, indemnity or other like purposes.

Answer 68

Facts: An indenture (agreement for front of the house rights) provided that the lessee had the “free and exclusive use” of refreshment rooms for the purpose of supply to and accommodation of visitors and no other purpose. Held: 1. The indenture was a license and not a lease Judgments: Lord Wright MR 1. In Daly v Edwards Rigby LJ said that the matter was not free from doubt: on a natural reading the agreement seemed to confer a lease, but upon careful reading the intentions of the party seems to be to confer a license. The present case should follow that case. Romer LJ 1. Reached the conclusion that the agreement didn’t confer any rights in the rooms regretfully because there were obvious differences between it and Daly v Edwardes/Frank Warr v London CC: in those cases the word ‘lease’ was not used, and what was purported to be granted was a license to the free and exclusive use of the rooms 2. However there is nothing in law that could confer upon the defendants in this case a right to the rooms that can amount to a lease

Answer 69

1. Practical importance of distinguishing between a lease and license is that the latter is not protected under the Rents Act as it doesn’t lead to any estate in the land Factual question of whether exclusive possession has been granted 2. The traditional distinction between a tenancy and license is the grant of land for a term at rent with exclusive possession. However, whether exclusive possession has in fact been given is sometimes controversial (eg. you can grant a license to cut timber, or a lease to cut timber for the period of the lease) a. 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. b. 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. 3. Residential accommodation: no difficulty in deciding whether a grant confers exclusive possession. He is either a lodger or tenant – he is a lodger if the landlord provides “attendance or services which require the landlord … to exercise unrestricted access to and use of the premises” a. Allan v Liverpool Overseers: Blackburn J said that a lodger: i. Has exclusive use of the rooms (nobody else is to be there) ii. Not in “exclusive occupation” (landlord is able to have his own servants look after the house, retained occupation though gave the exclusive enjoyment of the occupation to lodger) b. Any reservation to the landlord of limited rights to inspection and maintenance emphasizes the fact that the grantee is in exclusive possession (= tenant) 4. Exclusive possession is necessary but not sufficient for tenancy (can also be owner in fee simple, a trespasser, mortgagee in possession, object of charity, service occupier) – for a tenancy there must be also: a. Fixed/periodic term certain b. In consideration of a premium/periodical payments 5. Service occupiers are treated as the possession and occupation of the master (no landlord/tenant relationship) – test is whether the servant requires the premises he occupies in order to better perform his duties as servant: a. Occupation must be necessary for performance of services b. Occupation must be required c. Occupation is strictly ancillary to performance of the duties 6. Courts will not impute intention to enter into legal relationships where the circumstances and conduct of the parties negative intentions of this kind (this is not to distinguish a contractual license from lease – but rather to negative intention to contract at all) a. Booker v Palmer: owner allowed a friend to install an evacuee in the cottage rent free for duration of the War – CoA held that there was no intention of the owner to enter into legal relationships with the evacuee and so no relationship of landlord/tenant. b. Marcroft Wagons v Smith: daughter of a deceased tenant who had been living with the tenant claimed statutory tenancy by succession – landlord allowed her to live there for the meantime and accepted rent, but asserted that she had no rights under the Rents Act. Held that she was not a tenant even though landlord accepted rent from her for a short time, and she was in occupation, while he decided her status. Lord Templeman said that this decision was reached because the conduct of the parties showed that they didn’t intend to contract at all. c. Cobb v Lane: Owner allowed brother to occupy a house rent free. CoA held that there was no intention to create legal relationships. 7. Submitted by party wanting a license that: a. Concluding that it is a lease limits parties’ freedom to contract – rejected because parties still had the freedom to contract or not, just that the consequences of the agreement, once concluded, can only be determined by consideration of the effect of the agreement (if it satisfies the requirements of a lease, then it is one) b. In deciding between lease/license, court should ignore the Rents Act (as it cannot alter the effect of the agreement) – Lord Templeman accepts this. 8. Thus, there are exceptional circumstances that negative the prima facie intention to create a tenancy even though there is exclusive possession: a. Parties didn’t intend to enter into legal relationships at all b. Relationship is between vendor and purchaser/master and service occupier c. Owner had no power to grant a tenancy 9. Parties cannot turn a lease into a license by calling it one a. Facchini v Bryson: employer and assistant agreed to allow the latter to occupy a house for weekly payment that conferred exclusive possession. She was not a service occupier, but the agreement said that it shall not be “construed to create a tenancy” – Somervell LJ said that if looking at the operative clauses in the agreement, the rights of the occupier are those of a lessee, then the parties cannot turn it into a license by calling it one. 10. Overruled Murray Bull v Murray, where a contractual tenant held over, paying rent quarterly, and which found that the parties intended that the relationship be that of licensee because the primary consideration on both sides was that the occupier should not be a controlled tenant. Overruled because: a. Failed to distinguish between conduct that negatives intention to create legal relations, special circumstances that prevent exclusive occupation from creating a tenancy, and the professed intentions of the parties. The tenant holding over continued by agreement to enjoy exclusive possession, pay rent for a term certain – he continued to be a tenant. 11. If exclusive possession at a rent for a term doesn’t constitute tenancy, then the distinction between tenancy and license becomes unidentifiable. 12. ‘Disapproved’ Somma v Hazelhurst which decided that the agreement created a license, because the terms that led to this conclusion were obviously sham and it was clear that exclusive possession was intended.

Answer 70

Facts Agreement granted appellant the right to occupy two rooms for weekly rent subject to termination by 2 week’s notice, and other conditions in a ‘license agreement’ and a declaration signed by the appellant that it didn’t give her protections under the Rent Acts. She had exclusive occupation of the rooms. Held 1. 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.

Answer 71

Facts C owned a basement room occupied exclusively by D under a written agreement that provided that D was not granted exclusive possession but had a license to use it in common with other licensees. He must vacate the room for 90 mins each day, C would retain keys to the room. Trial judge held that it wasn’t a sham so it created a mere license. Held After concluding that the agreement is not a sham, the court must have regard to the true rather than the apparent bargain made by the parties – if the true bargain was that D was entitled to exclusive possession unless/until Cs required them to share their occupation, then D was tenant and the requirement to share occupation didn’t make it a tenancy.

Answer 72

1. Label that the parties agree to attach to their agreements is never conclusive, and in residential agreements (where the homeless are under enormous pressure to agree to any label) the label gives “no guidance at all” 2. Court must “keep a wary eye” for pretences because of the various pressures on both parties to pretend – these pretenses don’t necessarily lead to the conclusion that it is a sham but just that the true agreement is not the same as that appearing on the face of the agreement 3. If an occupier is protected by Rents Act, he doesn’t lose the protection by agreeing to surrender it, directly or indirectly, immediately or in the future 4. The judge correctly concluded that the agreement at face value was lawful, and not a sham, but he was wrong to stop there. He should then have considered whether the terms were part of the true bargain between the parties or were pretences – as the provisions were unrealistic, they were pretenses. 5. Retention of keys, even if not a pretence, is never conclusive – the important part is the reason why the owner wants the key (if for emergencies, or to allow those authorized to read meters or do repairs, then these pruposes are not inconsistent with tenancy). Only if the true bargain is that the owner will provide “genuine services” that can only be provided by having keys (frequent cleaning, daily bed-making etc.) can the occupier be a lodger. 6. In Duke v Wynne (another appeal heard together) it was possible for the occupiers to share the house with another occupant as there was an extra room, but because the evidence didn’t disclose an “immediate intention” to put another person in, and this was never done, Ds were tenants as they were in fact in exclusive occupation. 7. However, if C had determined to have two couples as lodgers, and took steps to find another occupant, then the fact that D was de facto in exclusive occupation didn’t mean that they were tenants. In that case they would be lodgers.

Answer 73

Facts: C had a long lease of a flat, and entered into an agreement with D that purported to grant him a license to occupy one of the rooms. Cleaning/linen were provided at times not inconvenient to D. Subsequently, the services wound down and it was agreed that D would do his own cleaning. Held C had to provide services and so had unrestricted access (was not a sham because the access wasn’t trivial), and that by agreeing to do his own services, D didn’t become a tenant because he was still contractually entitled to the services and the contractual relationship remained the same.

Answer 74

1. D submitted that the provision of cleaning and linen once a week for 20 minutes couldn’t turn what was otherwise a tenancy into a license. a. Changes to the law: i. Originally (19C) exclusive possession was decisive ii. Then in 20C the Rents Act conferred security of tenure on tenants but not licensees, so a more flexible test emerged: the intention of the parties inferred from all circumstances iii. Street v Mountford: HL rejected more flexible test – save for exceptional circumstances, the result is a tenancy if exclusive possession is given. b. Rejected the submission – if the purpose for which unrestricted access is granted is trivial, then it’s probably a sham, but the purpose here is not so trivial and is a license. §§ 2. When the cleaning services were stopped, it was merely a “forbearance” of the services and the occupier could have at any time asked that they be resumed. Thus, the suspension of services didn’t change the contractual position of the parties

Answer 75

Facts D and a friend each agreed separately with C to rent a flat under a “license” to share with one other person. Judge said that D was a licensee as there was no exclusive occupation. Held Factual matrix had to be examined to determine whether the agreements created a joint tenancy so that D and friend together had exclusive possession, or whether they had separate licenses. Judge didn’t make sufficient factual findings to allow the court to determine this – remitted to the court.

Answer 76

Purchas LJ 1) Lord Templeman holding that the expression of intent that the Rent Act not apply did not negative a tenancy based on exclusive occupation must be viewed in the context of a single occupation where exclusive possession is conceded 2) Somma v Hazelhurst was clearly a sham, but other cases were not and should not be equated with it. In non-sham cases, the court must inquire into the true contractual effect of the agreement, eliminating any artificial provisions. 3) Factors that the judge ought to have considered: a. D and her friend made a joint approach to the landlord b. The initial agreement was for £130 each but was later altered to £260 each but for a maximum of £260 recoverable – reason for change should have been considered Mustill LJ 1) Three situations where court may take an agreement other than on its face value must be distinguished: a. Surrounding circumstances show that the arrangement was never intended to create any legally enforceable obligation b. Sham cases (agreements deliberately framed to deceive third parties as to the true nature and effect of legal relations between the parties) c. Document doesn’t precisely reflect the true agreement between the parties but where the document superficially indicates that it falls within one legal category while properly analysed in light of surrounding circumstances it falls within another 2) In Street v Mountford exclusive occupation had been conceded so it doesn’t hold authority on the manner of ascertaining such an intention. 3) In multiple occupation cases we must consider not only multiple documents against their respective backgrounds, but also the possibility that these documents are linked: the choice is not license/tenancy, but: a. License b. Pair of parallel tenancies in relation to identifiable separate parts of the premise c. Single tenancy for the whole of the premises as joint tenants.

Answer 77

Facts Vaughan: four separate agreements, different dates, monthly payment, exclusive right to use a four-bedroomed flat in common with three other occupants, six month terms, provision for renewal, payment differed. Antoniades: separate but identical agreements, boy/girlfriend living as husband and wife, flat with a single bedroom, expressed to be licenses, stated that Rent Acts didn’t apply and no exclusive possession, and that license was granted in common with licensor and other licensees that he may permit to use the rooms. Held Vaughan: separate agreements were independent of each other, and did not confer a right of exclusive possession on anyone. No joint tenancy because different dates, terms and rents (while CoA held that there had been, together, exclusive possession; Sir George Waller dissenting) Anotniades: agreements were interdependent and must be read together to constitute a single agreement, right to put in more people was a pretence, there was an intention to offer exclusive possession. There was a lease. (while CoA held that there had been no sham – that for a sham not only did the tenant have to intend exclusive possession but the landlord also had to, that the landlord’s desire to be outside the Rents Act fortified his intention against exclusive possession rather than undermined it, and that though the flat was small so introducing another occupant was difficult it wasn’t impossible – so there was only a license)

Answer 78

1) Since parties to an agreement cannot contract out of the Rent Acts, a document that expresses the “genuine or bogus” intention of both parties/one party to create a license will still be a tenancy if the rights and obligations satisfy the legal requirements of a tenancy. 2) Vaughan: disagrees with CoA (that the four were jointly entitled to exclusive possession) and held that if a landlord enters into three separate agreements with three tenants each entitled to one room and to share the common parts, then they can (if they agree) exclude anyone else from the flat but they don’t have exclusive possession of the flat jointly under the terms of their tenancies. 3) If they had been entitled to exclusive possession then on the death of one the rest would still be entitled to joint exclusive possession – as in fact they couldn’t exclude a fourth person, Lord Templeman would allow the appeal and hold that they were mere licensees. 4) Antoniades: Unlike Vaughan the two agreements were interdependent – both would have been signed or neither, and therefore they must be read together. 5) A tenancy remains a tenancy even if the landlord requires each of two joint tenants to pay half the rent. 6) The clause where power is reserved for the landlord to introduce new people or share occupation must be ignored because 1) it is inconsistent with the provisions of the Rent Acts if it is allowed to deprive the occupants of the right to exclusive possession unless and until the power is exercised and 2) the landlord didn’t actually intend to exercise the power 7) Thus it was a tenancy.

Answer 79

1) If the documents are to be taken at face value then the CoA is right that the landlord enjoyed the right (whether or not he exercised it) to introduce more people, and the occupants were mere licensees as they didn’t enjoy exclusive possession. So C’s only case is to show that the agreement was a sham. 2) Disagrees with CoA that the trial judge construed the agreement in light of what the parties subsequently did – but agreed with CoA that if he did do this he would be in error. However, though such evidence is inadmissible as an aid to construction, it is admissible as evidence of whether the agreement was genuine. 3) Even though the facts weren’t exactly the same as in Somma, they are sufficiently similar and the judge was entitled to conclude that the appellants had exclusive possession. The licenses are artificial transactions designed to evade the Rent Acts – they were shams.

Answer 80

Facts/Held: Exclusive possession, certain term after which tenant could stay on without paying rent unless landlord needed the premises to redevelop the property and for no less than a quarter’s notice, no rent. Held – periodic tenancy, rent not necessary.

Answer 81

Fox LJ: 1) In Street v Mountford Lord Templeman identified three hallmarks decisive of tenancy: a. Exclusive possession b. For a term c. At a rent On Rent 2) In the present case there was exclusive possession, but no rent – IJO this is not fatal to there being a lease, as Lord Templeman’s speech cannot be read as ‘no rent, no lease’ because: a. It would be inconsistent with s205(1)(xxvii) LPA 1925 (a term of years absolute is a term of years “whether or not at a rent”) b. It would be inconsistent with Radaich v Smith (which makes no reference to a rent), which was expressly approved by Lord Templeman 3) Therefore a valid lease can exist without a rent. On Certainty of Maximum Duration 4) On the question of existence of term, the Lace v Chandler principle of a certain maximum duration cannot apply to periodic tenancies (because the term is uncertain at the outset, being liable to grow indefinitely) 5) In the present case there was an initial term until a specified date, after which the term would continue until one party should give at least a quarter’s notice. 6) Thus, each party is at any time certain of their maximum commitment, and so this is distinguishable from Lace v Chandler because in that case there was no provision for either party to terminate before the end of the war. 7) The vice of uncertainty of duration of term is that parties don’t know where they stand, but in this case they do, as both parties are allowed to terminate and it would be clear when a determining event has occurred. A mere absence of formula referring to a periodic tenancy shouldn’t alter the position.

Answer 82

Landlord’s predecessor entered into an agreement with tenants granting an assured tenancy for an initial rent of 4680 pounds per annum, with a rent review clause providing for a rent increase to 25 000 pounds from February 1996. The provision was drawn to the tenant’s attention but was not explained to them and they didn’t read the agreement properly. Landlord tried to recover possession because of outstanding arrears in rent. Held (CoA): the parties to an assured tenancy agreement cannot agree to vary the statutory scheme for security of tenure to reduce the level of protection. A provision inconsistent with and repugnant to the statutory purpose has to be ignored. The rent increase was a device, which is impermissible and therefore unenforceable, because its effect is that the tenants are prevented from paying the sum genuinely reserved as rent by a provision for payment of a sum never expected to be paid.

Answer 83

the clause isn’t a sham as normally understood, because there was no common intention to mislead a third party, who may be the court. But there is a variant on the usual definition of sham where the agreement isn’t intended to have the effect stated but to evade the operation of a statute out of which the parties cannot contract (Antoniades v Villiers, Johnson v Moreton). For this type of sham: 1) The court can look at all relevant circumstances, including the parties’ subsequent conduct 2) No need for common intention to enter into other obligations or deceive a third party 3) Freedom of contract cannot be invoked to counter landlord and tenant legislation that interferes with it, because, as the market is limited and sluggish, generally one becomes a tenant rather than an owner-occupier because his circumstances compelled him to. Thus, need to consider whether the Act imposes a mandatory and comprehensive scheme, and if so, whether the clause is an attempt in substance to avoid the scheme. The clause is not in substance or reality a provision for fixing rent, but a provision to enable the landlord to recover possession otherwise than in accordance with the mandatory scheme, “either because the tenant voluntarily surrenders possession when asked to pay a sum purporting to be but not in fact rent or because it facilitates the landlord relying on a mandatory ground for possession when in truth he is not entitled to do so”. In this case, enforcing the clause would be to defeat the main purpose of the agreement, which is the statutory purpose of security of tenure, therefore, it cannot be enforced.

Answer 84

Facts: C let a flat to D1 (a company), six month term, intention that D2 (an individual) could occupy the flat without becoming a tenant. Held: Despite the intention to avoid the Rent Acts, as it was the intention of both parties, knowing all the circumstances, that the flat was to be let to D1 and not D2, that it was not a sham.

Answer 85

1) The mere fact that the purpose of the arrangement was to prevent the creation of a statutory tenancy was not enough to make something a sham – Aldrington Garages per Lane LJ: no reason why, if possible and properly done, that agreements should not be entered into that do not fall within the Rent Acts. The mere fact that it might result in increased profits for owner doesn’t mean that the agreement should be construed as tenancies rather than licenses. a. Supported by Bingham LJ in Antoniades: it is not a crime or contrary to public policy for owners to license property on terms that don’t give rise to a tenancy. 2) Thus it was not a sham, and must be construed. However, as both parties understood what they were doing, it was their true intention that the flat would not be leased to D2 and the agreement should be construed thus. 3) Argument that it wasn’t a lease to the company but was a lease to the individual who controlled the company was rejected ⇒ This originated in tax avoidance cases – not sham analysis but artificial transactions (which uses a different set of ideas)

Answer 86

Introduction: 1) In Street v Mountford Lord Templeman didn’t directly consider the issue of where an agreement specifically excludes exclusive possession by reserving a right to himself (because the parties conceded exclusive possession). 2) This was considered in Antoniades and Vaughan Facts: Four rooms, first occupied by three friends, separate but identical agreements, landlord reserved right to place other licensees at own discretion, one moved out, remaining occupiers asked if a friend could replace her, landlord agreed. Signed same agreement as others for remaining period. Another moved out, and suggested a friend who could move in, and she did, same agreement to identical terms for remaining term. Upon expiry of term all signed identical new agreements, each occupier agreed to pay separate rent. Held: In determining whether a number of agreements, each purporting to grant a license, could collectively create a joint tenancy: 1) Court must construe the agreements in light of surrounding circumstances (relationship between occupiers, course of negotiations, nature of accommodation, intended and actual mode of occupation) 2) Actual mode of occupation cannot guide construction of document but can be used to determine whether any part of the agreement should be ignored when determining their construction 3) Task of court is to determine true nature and reality of transaction, taking into account many factors (no exhaustive list) 4) Fact that the agreements were all entered into at one time by way of replacement of earlier agreements will not be significant if earlier agreements were entered into separately Thus the three licenses were what they purported to be – licenses. The right to terminate with 28 days’ notice, each occupier responsible for 1/3 rent are both inconsistent with a joint tenancy.

Answer 87

1) Lord Oliver, Vaughan (referring to four occupants initially signing different agreements at different times but ultimately signing new agreements at same time): new agreement makes no difference – if the occupants were licensees at the beginning, the mere replacement of agreements cannot convert them into tenants. 2) In the present case, the agreements on a pure construction cannot be, taken together, to create a joint tenancy – if there was a joint tenancy, then the original 3 would be joint tenants, but when one of them left and was replaced, what happened? It cannot be construed as the extinction of the original joint tenancy and the creation of another between the new occupants because: a. The flat was suitable for use by multiple and shifting population (and was so used) b. Each occupant was given a specific right to terminate on 28 days’ notice (and they did, intending specifically that only their right would be affected, leaving the other occupants’ rights alone) c. Each occupant was only obligated to pay his share of the rent. 3) Rejected circumstances that may have led to a tenancy: a. Original agreements were entered into at same time, but the three defendants first entered into their agreements at different times b. All were friends, but friends can share on license bases leaving each to leave on short notice 4) Thus the licenses were in reality what they purported to be. Sir Denys Buckley (Fox LJ agreeing): 1) Just because Lord Templeman said that courts should be “astute” in detecting and frustrating sham devices, this doesn’t mean that courts should lean in favour of any particular approach to construction 2) The question of whether there is a sham must be approached “even-handedly”

Answer 88

Introduction Separate agreements to pay portions of the rent have been held not to be fatal to claim of joint tenancy: Demuren v Seal Estates. In Vaughan Lord Templeman said that a tenancy remains a tenancy even if the landlord requires each to agree to pay half the rent, but Lord Oliver and Lord Jauncey suggest that joint liability for rent is required. Facts Two rooms, D applied with friend, signed identical agreements, monthly payments for both were paid in single cheque, friend moved out, D offered to pay the whole rent, landlord refused. D fell into arrears and landlord sought possession. § Held 1) Necessary to look at matrix of transaction (background to agreement – flat was only suitable for occupation by people personally acceptable to each other). Thus the agreement conferred exclusive possession because the agreement didn’t actually confer a right to impose a substitute co-occupant. 2) No unity of interest so no joint tenancy – interest means joint rights and obligations, including the obligation to pay rent. In this case there was genuinely no obligation to jointly pay rent and so there was no joint tenancy.

Answer 89

Sham? (No) 1) Layout of flat was only suitable for people personally acceptable to each other 2) Two occupants agreed to identical agreements at the same time – whether or not they were “interdependent” won’t be discussed, but this fact is still relevant 3) Also the wording of the clause permitting the landlord to introduce a new person is ambiguous, and doesn’t clearly convey this purpose 4) On a true construction the clause permitting landlord to introduce a new person was a sham Joint liability for rent (No) 1) D submitted that the agreements making each liable for half the rent was a sham, that on a true construction they should be read as jointly liable for the whole. 2) Subsequent conduct of parties is admissible in evidence (not for construction but the question of whether documents were genuine documents giving effect to parties’ true intentions) 3) Onus of proving a sham falls on D (occupier) and there is not enough evidence to support this – the fact that D only paid the half even when the friend left was evidence of the intention that each should be separately liable. 4) Thus there was no sham – no evidence would have justified the contrary conclusion. Joint liability for rent necessary for Tenancy? (Yes) 1) Antoniades v Villiers: Lord Templeman (obiter) said that separate obligations to pay half of the rent each doesn’t convert a tenancy into a license. Though he said this in the context where the agreements were shams, he did intend that a joint tenancy can exist even if the occupiers aren’t jointly liable for the whole rent. 2) However, the weight of authority goes the other way: a. Antoniades (per Lord Oliver): if the real transaction was that the occupiers were joint tenants because the two agreements were to be construed together, then it must follow that they were jointly responsible for the whole rent. b. Antoniades (per Lord Jauncey): Joint tenancy includes each being liable in full. c. Stribling v Wickham (Parker LJ, Fox LJ and Sir Denys Buckley agreeing): provision that each was responsible only for a specific sum that was one third of the total is inconsistent with a joint tenancy. 3) Thus joint liability is necessary for a tenancy.

Answer 90

31 single rooms, hostel for homeless single men, hoped that occupiers would eventually move to permanent accommodation, D provided with accommodation pursuant to a “license to occupy” (not intended to give D rights of a tenant or exclusive occupation of room allotted to him), council could require sharing or change D’s room at any time. Held A license could only create a tenancy if it conferred exclusive possession – grant of exclusive possession would be inconsistent with the purpose for which the council had provided the accommodation. Thus there was only a license.

Answer 91

Judgment Lord Templeman (Griffiths, Ackner, Lowry agreeing) 1) There was no grant of exclusive possession as that would be inconsistent with the purpose for which the council provided accommodation: a. Exclusive possession would not allow council to impose restrictions such as excluding visitors and other conditions of occupation b. Exclusive possession would not allow council to move people to different rooms if one room was unsuitable/no longer inhabitable

Answer 92

Camden LBC v Shortlife Community Housing Limited 1) Millett J considered the exceptions where exclusive possession wasn’t the vital distinction between lease and license: a. No intention to create legal relations b. Other relationship is involved than lessor/lessee c. Grantor has no legal power to grant tenancy 2) Camden LBC owned a block of flats and licensed them to Shortlife, who licensed them to homeless people; Camden then wanted to repossess the flats but Shortlife claimed that it had a lease. Millett LJ said that Camden had no legal power to grant tenancy. 3) Millett LJ approved of Denning LJ in Errington v Errington – in exceptional circumstances the parties can contract for a license by manifesting an intention not to create a tenancy. 4) However City of Westminster v Clark suggests a reduction in the scope of exceptional categories, so that the factors formerly relevant to them were now relevant to a discussion of whether exclusive possession had been granted. 5) Though Shortlife didn’t cite Clark, it seemed to continue this progression – “there is no room for ‘special circumstances’ to negative the legal consequences of the transaction” 6) Street attached crucial importance to intention when considering the exceptions, but Clark and Shortlife don’t seem to consider it relevant at all 7) Before Clark, exceptions created flexibility and allowed the tenant/licensee distinction to be applied to a range of circumstances – from local authorities housing homeless people to complex commercial transactions. 8) However, certainty is also important – this may well be the rationale for narrowing the exceptional categories 9) Conclusion; Clark ‘strips these exceptions of their relevant facts and, in doing so, narrows their width’. In Shortlife, circumstances that would previously be relevant to exceptions (properties intended to be licensed for short period, Shortlife was an extension of council’s social housing program, council needed to retain access to buildings) are now only relevant to whether exclusive possession has been granted 10) Camden ‘unwittingly’ followed this trend and marginalized exceptions even further – both cases concerned local authorities trying to avoid creating secure tenancies; whether this represents a departure from Street will still be seen.

Answer 93

Watts submitted that she had exclusive possession, therefore, was tenant. Despite occupying the property in her capacity as a beneficiary of the charity, she entered as a tenant at will and on payment of periodic sums became a periodic tenant. Court does not accept that she had exclusive possession. She submitted that Lord Templeman (Street) was right in saying that exclusive possession was necessary for a tenancy, but wrong in saying that an occupier with exclusive possession is not necessarily a tenant as he may be “an object of charity”. This is not supported by authority. The short answer is that there is a distinction between a legal right to exclusive possession (entitles tenant to exclude all others) and a person right to exclusive occupation (may or may not amount to legal possession; if not, it is a tenancy, if not, then not a tenancy). In Lord Templeman’s passage that Watts quoted, “exclusive possession” actually refers to exclusive occupation (or “de facto exclusive possession”) and not legal possession. This distinction is also drawn in Errington v Errington: 1) Lord Denning: although a person let into exclusive possession is prima facie considered a tenant, he will nevertheless not be so if the circumstances negative any intention to create a tenancy, if the intention is to create some personal privilege and not interest in land. 2) Somervell LJ: for the reasons given by Denning LJ: “there is no legal obstacle to holding that as licensees [the son and daughter-in-law] are entitled to retain exclusive possession…” No legal exclusive possession was granted to Watts. The appointment letter refers to “rent” and “tenancy”, but “resolution of the issue whether an occupier is a licensee or a tenant is not necessarily determined by the labels or language used by the parties. It turns on the intention of the parties having regard to all the admissible evidence.” Quotes Lord Templeman (Street): “The manufacture of a five-pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.” Here the reference to a tenancy and rent is because the trustees are lay volunteers, additionally, there are factors pointing against the grant of legal exclusive possession: 1) the resident shall not be a tenant or have any legal interest in the almshouse 2) trustees have the right to require a resident to move to another almshouse 3) visitors are not permitted to stay in an almshouse except with the consent of the trustees 4) residents should not vacate their dwellings for more than a total of 28 days in any one year without the prior consent of the trustees and should inform the trustees/warden if they will be away for more than a week at a time 5) the trustees can set aside a resident's appointment for good cause, for example in the case of serious misconduct or if there is a breach of the regulations

Answer 94

Facts: Leased until the land is ‘required by the council for the purposes of’ X. Held: Term must be certain duration for a lease – this one was void for uncertain duration. Ashburn Anstalt v Arnold and In re Midlands Railway overruled.

Answer 95

Judgments: Lord Templeman (Lord Griffiths, Lord Goff, Lord Mustill, Lord Dyson and Lord Browne-Wilkinson agreeing): Relevant authority 1) LPA 1925, s1(1) holds that the only estates capable of subsisting at law are estates in fee simple absolute in possession and a “term of years absolute” 2) LPA 1925, s205(1) defines terms of years absolute as “term of years … either certain or liable to determination” 3) Lace v Chantler (per Lord Greene): a lease for the duration of the War doesn’t create a good lease. The fact that at some future time it would be made certain is not enough – the certainty must be ascertainable by some express limitation at time the lease is made, or by reference to some collateral act that can with equal certainty, measure the continuance of it. Otherwise it is void. 4) Wartime Leases Validation Act was enacted in response to this case to make valid leases for the duration of the war, as these leases were common and valuable. Present case – yearly tenancy 1) The present lease is void. 2) A tenant entering under a void lease became (by virtue of possession + payment of rent) a yearly tenant holding on terms of the agreement insofar as they are consistent with a yearly tenancy 3) These tenancies are determinable by either party at the end of each year by six months notice 4) Argued that in the present case by virtue of entering and paying yearly rent the occupier became a yearly tenant that prevents the landlord from giving notice until the land is required for road widening, but this is rejected because if true this would make nonsense of the rules: a. Grant for uncertain term doesn’t create a lease b. Tenancy from year to year means that both parties can give notice to determine the tenancy 5) Thus (after referring to authorities), the agreement in the present case doesn’t create a lease, and the tenancy from year to year enjoyed as a result of possession + paying rent can be determined by six months’ notice by both parties. 6) Indeed a periodic lease with a clause preventing landlord from terminating until a condition is met was allowed in Re Midlands Railway (both parties can determine with 3 months’ notice subject to proviso that landlord should not exercise this right unless they required the premises for their undertaking – CoA held that the notice to quit was invalid because the landlord didn’t require the premises for their undertaking; Lace v Chandler didn’t apply to periodic tenancies), but IJO the Lace v Chandler principle applies to all tenancies, including periodic tenancies, but it’s just that a periodic tenancy is saved from being uncertain because each party has power to determine at the end of any period. It is as if they made a new agreement from year to year – a power for nobody to determine/for one party only to be able to determine is inconsistent with the concept of periodic tenancies. 7) Thus principle and precedent dictate that parties cannot create uncertain terms – you can create a lease of five years subject to right to determine if the war finished before them, in that the maximum term is certain. 8) In re Midland Railway was taken further in Ashburn Anstalt v Arnold; if that case was correct then it would make it unnecessary for a lease to have certain duration: in that case it was said that there was no uncertainty because the tenant could determine at a quarter’s notice, but the same could be said of Lace v Chantler so if Anstalt and Midland Railway were taken together, it would destroy the need for term certain. 9) In the present case the CoA was bound by Midland and Ashburn, but they were both wrongly decided: a. A grant for an uncertain term does not create a lease b. A grant for an uncertain term that takes the form of a yearly tenancy that cannot be determined by the landlord does not create a lease 10) Thus the six months notice was good notice.

Answer 96

1) “It is difficult to think of a more unsatisfactory outcome or one further away from what the parties … can ever have contemplated” 2) Giving effect to their contract could never have produced this result. 3) This “bizarre” outcome results from an “ancient and technical” rule that requires certain maximum duration to be required at the outset – it serves no useful purpose. 4) If it were possible for this court to change it his Lordship would urge it to do so, but the rule has been established for many centuries and changing it might upset established titles. 5) Hopefully the Law Commission will look at the subject.

Answer 97

Ways to escape uncertainty: 1) Determinable really long lease 2) Determinable lease for life 3) License – don’t need to be certain from the outset, but needs to be certain in retrospect Conclusion: 1) The result in Prudential is not unjust as the certainty rule has always been a requirement of leases, and reaffirming the rule is desirable as it protects established titles. 2) Even if it was unjust, escape routes are available – no need for reform of the law has been demonstrated

Answer 98

Example: an agreement that A lets a room to B for 30 pounds per week ‘until B is in a position to proceed with the redevelopment’ cannot be a lease but can only be a weekly tenancy, because a lease must be for a certain term (certain commencement, duration and end-date): Prudential v London Residuary Body.

Answer 99

Fixed-term leases: the commencement date and maximum possible duration must be known from the outset. A lease for the “duration of the war” (Lace v Chantler) and a lease “until the … land is required … for the purpose of the widening” of a road (Prudential) are both void for uncertainty, but in both cases, the desired results could have been achieved by “a lease for a fixed term … with power for the landlord to determine before the expiry of that period for the purposes of road widening” (Lord Templeman, Prudential). No reason is given why it’s permissible, save for the fact that it no longer offends the certainty rule. This distinction “has an air of artificiality, of remoteness from practical considerations” (Russell LJ, Re Midlands Railway). Periodic tenancies: “There is no previously ascertained maximum duration for the term; its duration will depend on the time that will elapse before either party gives notice” (Russell LJ, Re Midland Railway), and yet the legal quality of periodic tenancies is not doubted. Most common explanation: each separate period is of known maximum duration. But unsatisfactory: “periodic tenancies are not seen as a series of separate and new tenancies but as one continuing tenancy” (Bright); “not a reletting at the commencement of every year but … a springing interest” (Gandy v Jubber). Also no reason why periodic tenancies are inoffensive but fixed-term leases are.

Answer 100

commonly held view is that Lace v Chantler lease is void because no-one knew when the war would end, but an alternative explanation is that the uncertainty is in the use of the words “for the duration” – at what point the war can be taken to be at an end (this is the reasoning in Eker v Becker, but most commentators view it as wrongly decided and inconsistent with Lace). Other example: Birell v Carey – lease “so long as the company is trading” void for being insufficiently certain, but because no-one can predict when or if the company will cease trading, or because no-one can define ceasing trading? In light of this certainty isn’t a land problem but a contractual one (interpreting the agreement between the parties); Ashburn Anstalt v Arnold upheld an agreement until the landlord was ready “to proceed with the development of the property”, which is “free from uncertainty in the sense that there would be no doubt whether the determining event had occurred. The vice of uncertainty … is that the parties do not know where they stand… the court does not know what to enforce” (Ashburn Anstalt v Arnold, followed reluctantly by Canadian Imperial Bank of Commerce v Alhaji: lease good until the owner returned to the UK and paid the builder for the works). Ashburn Anstalt overruled by Prudential: Lord Templeman doesn’t address the two possible meanings of the certainty requirement, but “the tenor of the judgment seems to require certainty in the sense of being able to predict the end-date” (Bright).

Answer 101

focus is different – on the effectiveness of a contractual fetter on the common law right to serve a notice to quit (ex. can the landlord agree not to serve a notice unless he requires the premises for his own occupation?). - Re Midland Railway, Breams Property Investment Co v Strougler: CoA upheld periodic tenancies where landlord couldn’t end unless the premises were required for their own use - Cheshire Lines Committee v Lewis: CoA held lease invalid where landlord couldn’t end unless he wanted to pull down the premises - Centaploy v Matlodge: was void a tenancy terminable only by tenants - In Prudential, rejected idea that it was a yearly tenancy subject to restriction that the landlord wouldn’t end unless required for road widening. Divergence of approach between Re Midland Railway and other periodic tenancy cases: most cases approach from a property perspective (it’s inherent in a periodic tenancy that either party should be able to end the lease with appropriate notice), though it’s less clear whether they need to be completely free so any restriction would be unacceptable or only restrictions that completely fetter the right to end. - Lord Templeman seems only to be concerned with total restrictions, though he cites examples of partial restrictions and invalidates them on the ground of uncertainty (not repugnancy), ex. a lease subject to a fetter on landlord’s right to determine before the war ends is void for uncertainty In Re Midlands approaches from a contractual perspective: it sees the tenancy as a contract between the parties, before considering whether any reasons in property law should prevent the contract from taking effect.

Answer 102

Linguistic clarity: but as long as the parties’ intentions are clear, there’s no reason not to give effect to them, especially seeing that in contract courts are very reluctant not to give effect to intentions, especially in ongoing relationships Predictability: but why is it necessary to specify the particular end date? Perpetuity: in some cases the court stressed the importance of an end date but because the lease was perpetual (ex. Say v Smith); Cheshire Lines (Bramwell LJ) and Prudential Assurance (Lord Templeman) refer to the possibility that unless the company wanted to pull down the premises, the lessees might “continue in possession for 100 years with no power of re-entry” or stay “for ever and a day”. This would explain why a lease for 5 years determinable if the war ends is acceptable but not a lease for the duration of the war. But perpetuity is not objectionable in leases: perpetual trusts are objectionable because it’s against the public interest that property should be inalienable for long periods, but it’s still possible to mortgage etc. leased property, and it’s possible and common to have 999 year leases. In leases cases it’s not so much the perpetuity that’s objectionable, but the fact that the parties didn’t envisage a potentially perpetual lease but usually only short leases. Contractual imbalance: because initially it’s supposed to be a short lease, it becomes more heavily slanted against the landlord over time (ex. Lord Templeman in Prudential was influenced by the fact that giving effect to the lease would allow the tenants to stay forever at the 1930 rent of 30 pounds which has since increased to 10 000. But the courts never approached such cases openly as contractual issues.

Answer 103

Leaving aside the merits of the solution in Re Midland Railways, its reasoning (that we should start with the contract and depart from it only if required by policy or reasons peculiar to leases) should be adopted. Many decisions support this approach: - Hussein v Mehlman: “the tide of the general law” recognizes that the foundation of leases is contractual, and there’s an ongoing process of “assimilating leases to other contarcts”. - National Carriers v Panalpina: a lease can be frustrated - Hammersmith and Fulham LBC v Monk: a joint tenancy can be determined by one tenant acting alone (like other contracts) Adopting this approach to uncertainty focuses the question on whether there are “sufficient justifications for interfering with the term which the parties have agreed upon”. Limits to the contractual approach: the approach suggests that one should be able to re-open the bargain once a serious imbalance has developed within it, but contract law itself hasn’t developed a clear solution in long-term contractual relationships, as substantive unfairness isn’t a ground for setting aside a contract, nor can the fact that the bargain turns out manifestly disadvantageous for one party over time constitute frustration. The narrowness of frustration is unsuitable for leases, and for the time being, certainty is fulfilling its role: by declaring a lease void, the court is forcing renegotiation to reflect current property values – the outcome is the same as using frustration, “but has been achieved by using the language of property law rather than contract”. Limits to the property approach: two main criticisms 1. It disguises what is really going on: courts say fetters on the right to serve notices to quit as repugnant to the nature of periodic tenancies, but we don’t see what the real objection is and risk striking down perfectly reasonable agreements. In Prudential Assurance, the fetter was void from day 1, but both parties clearly intended that for a certain period the landlord shouldn’t be able to determine unless the property is needed for road widening. 2. Voidness is too harsh as the balance tips in favour of the landlord: undermines the statutes protecting tenants by jeopardizing the position of people who in substance might have the status of a protected tenant.

Answer 104

Leases for a term with an unpredictable end date: it shouldn’t matter that we don’t know at the outset the maximum possible duration, as it’s artificial for periodic tenancies anyway. It might matter that the event supposed to trigger the end might not occur, so the lease could become perpetual, but there’s no policy objections to a lease that could theoretically, though in practice unlikely, be perpetual should be struck down. Even if there are, the problem could be met by converting it legally to a fixed-time lease (ex. Validation of War-Time Leases Act 1944) to reflect current rent review patterns. Other problem: a lease intended to be short goes on for a very long time. This is a contractual problem, and should be met with reopening the bargain – it would be difficult to prescribe the circumstances permitting reopening the bargain (cf economic duress cases), but the court can look at factors like the period the lease has been running for, the appropriateness of the initial agreement to a long relationship, the disparity between the rent and comparable rents. [The author recognizes that this would be tortuous, but argues that courts are used to this in contract cases, and the outcome would be fairer.] Periodic tenancies: they’re unobjectionable, both parties are protected through the ability to give notice, and the tenant is protected by statutes protecting tenants. Periodic tenancies with a contractual fetter on the right to terminate: - Fetters tied to an event or landlord’s needs: why can’t the landlord fetter his own right to end the lease? Bad bargain? But it isn’t in itself sufficient to justify courts’ intervention. More convincing reason: the event over time becomes apparent that it will never materialize, and the only way for it to materialize is through wasteful manners that neither party intended (ex. Cheshire Lines where the landlord no longer wants to demolish). But most such situations now fall into statutory controls with statutory compensation schemes. Suggested outcome: apply the contract, but the landlord who wants to reclaim the property but not for the purpose contractually stated can do so by paying the statutory compensation to the tenant. It’s better than the Prudential outcome: the landlord can change his mind at any time. - Fetters limited in time: no good reason why landlords shouldn’t be able to do this, and it’s often reflected in the bargain; “a similar curb for [x] years should not be rejected as repugnant to the concept of a periodic tenancy” (Russell LJ, Re Midland Railway).

Answer 105

Agrees with Russell LJ (Re Midlands Railway) that the certainty rules are ripe for review, but “to recognize this … does not mean that the rule should simply be abandoned”. It’s being used to free the landlord from manifestly disadvantageous contractual arrangements and “to this extent it is welcome”, but more open recognition of the underlying concerns would enable a more satisfactory approach and perhaps even promote a greater willingness to free parties from other kinds of long-term contracts which have become manifestly imbalanced over time.

Answer 106

Article argues that there is a fundamental logical flaw in the HL’s reasoning and that the case leaves the law in a very uncertain state.

Answer 107

HL decided that in a periodic tenancy, a restriction on either party’s power to give notice can only be valid if its maximum duration is ascertainable from the commencement of the tenancy (“for five years, unless the land is required for road widening” is fine, but unlimited restriction to give notice “unless the land is required for road widening” isn’t).

Answer 108

The reasoning in relation to fixed-term leases is unobjectionable, but in relation to periodic tenancies it’s flawed, and is a matter for concern because such leases are becoming more common especially by legal implication because of the return to the certainty rule in respect of fixed term leases. Periodic tenancies respect the certainty rule because, at any point, the parties are only regarded as agreeing to a certain one week/month/year term, which is, at its commencement, of certain maximum possible duration. Fetters don’t detract from this certainty unlike what Prudential purports to decide, because necessarily, any terms are only agreed for the maximum yearly (ex.) duration, to continue year upon year until the tenancy’s end, but never amounting to more than a one year commitment at a time – the fetter simply has “nothing whatever to do with certainty of term”. Take a yearly periodic tenancy where the landlord isn’t allowed to terminate for five years unless required for road widening – there is certainty of term according to HL, but what is the certain term? One year (from tenant’s perspective), or five (from landlord’s)? If the term is five years, how is it a yearly tenancy? Why should the five years have anything to do with certainty of term? Therefore, it is suggested that in (i) a yearly tenancy without fetter, (ii) a yearly tenancy with a fetter temporally defined unless event x occurs, and (iii) a yearly tenancy with a general fetter unless event x occurs – there is certainty of term.

Answer 109

Lord Templeman suggests that the fetter might, irrespective of certainty, fall for repugnancy to the nature of a periodic tenancy, which presupposes freedom to give notice. But if we can’t justify the decision on certainty, we shouldn’t try to do it on the ground of repugnancy: the House was ready to accept a limitation “for a million years, unless the land is required for road widening”, which hardly suggests respect for freedom to give notice as a ground of decision + we shouldn’t infer an unexpressed ratio in relation to such an important question. Therefore, we should accept that repugnancy is no obstacle to periodic tenancies unless “it denies the landlord the right to give notice absolutely and for ever”: Breams Property Investment v Strougler.

Answer 110

Millett J suggested alternative solutions: the fetter would only last so long as the landlord continued to be a highway authority + limit on his right to assign to a non-highway authority; the fetter would only last so long as the land may still be required for road widening (ex. until the said road disappears).

Answer 111

What to do with this case? - Disregard it because the ratio is plainly wrong as logically inconsistent with established understanding of periodic tenancies? - Regard it as right but not follow the reasoning? But then what other interpretation is tenable? - Follow it despite its shortcomings?

Answer 112

Property taken from month to month, weekly rent, occupant could determine agreement with one month’s notice, landlord could determine only if the rent was in arrears for X period of time. Exclusive possession, after many years, landlord tried to determine without rent being in arrears. Held 1) Absent of any indication to the contrary a tenancy from month to month was a monthly tenancy that can be determined by either party giving one month’s notice 2) But because of contractual agreement, landlord could only determine if the rent was in arrears for X time 3) As the agreement was for an uncertain term, it couldn’t take effect as a tenancy but as it could have given rise to a tenancy for life before 1926, s149(6) LPA 1925 meant that it was to be treated as a tenancy for 90 years determinable on the tenant’s death or conditions satisfied 4) Thus occupant retains his tenancy and landlord was not entitled to possession

Answer 113

1) Position of the law following Prudential: a. An agreement for a term whose maximum duration can be identified from inception is valid b. An agreement that gives rise to a periodic arrangement determinable by either party is valid c. An arrangement is invalid if it is for a term whose maximum duration is uncertain at inception d. A fetter on a right to serve notice is ineffective if it is for an uncertain period e. But a fetter can be valid if for a specific period 2) The position is unsatisfactory and calls for a change – if it is based on justification, that justification no longer applies, and “insofar as it is based on principle, the principle is not fundamental enough for the Supreme Court to be bound by it”. 3) But this case is not the proper forum to jettison the certainty principle: a. The requirement has existed for centuries and it is only logical that a similar requirement would develop in the case of periodic tenancies b. 1925 Act supports this conclusion: i. s205(1)(xxvii) defines a term of years as liable to determination ii. s149(6) converts a life tenancy to a term of 90 years, converting an uncertain duration to a certain duration c. Requirement was confirmed only 20 years ago by HL d. Lord Browne-Wilkinson’s point about how changing the law might upset long established titles e. When the purported grant is to an individual and not company, it does give rise to a valid tenancy according to its terms (as will be explained below)

Answer 114

1) Tenant argued that before 1926 there is authority to support that the terms would have been treated as a tenancy for life, determinable before tenant’s death according to its terms. IJO this is correct. a. Landlord argued that this could only be true if this was what the parties to the agreement intended on a fair reading of the agreement (authority: Zimbler v Abrahams). IJO this is not true because it would be inconsistent with the dicta relied on by the tenant, and even if it is true, it was intended that the tenant enjoy the premises for life subject to the determination clause. 2) Thus, tenant then argued that s149(6) would convert the tenancy into a 90 year term determinable on the death of the tenant, subject to the determination clause. a. The 1925 Act begins by limiting the permissible legal estates to the fee simple and the term of years, which necessitated dealing with estates for lives which were no longer legal estates – thus s149(6). But that section isn’t only concerned with life estates created before 1926, but expressly applies also to those created after. 3) Arguments against this conclusion: a. The agreement wasn’t a lease for life but a contract that merely would have been treated as a lease by established caselaw – IJO this is incorrect as it is inconsistent with the wording of s149(6) b. S149(6) is concerned only with tenancies that automatically end with tenant’s death, not those that can be determined on tenant’s death – accepts the premise, but IJO the argument misses the point, which is that the agreement would have been a tenancy for life because of established common law rule c. S149(6) doesn’t apply to arrangements determinable in circumstances other than tenant’s death – IJO this is incorrect as it is not backed by principle or practical reasons. Common law rule that uncertain terms are treated as life tenancies applies to arrangements determinable by other events. 4) Therefore Ms Berrisford is entitled to remain in possession

Answer 115

1) Differences between English and Scots law treatment of the issues: a. Mexfield is a mutual housing association, so it cannot create assured or secure tenancies in England, so that its members enjoy no statutory protection except those given in the Protection from Eviction Act 1977. In Scotland these associations can register as social landlords and themembers would have security of tenure. b. Scots common law treats leases as contracts that give tenants a personal right to the subjects, if no statutory security of tenure is available. These rights arise simply by agreement, and are binding so long as the original proprietor retains ownership and tenant remains in occupation. When ownership passes, tenant will acquire a real right if he meets criteria set out in Leases Act 1449 (lease must be of definite duration (number of years or lifetime of either party)) or if registered under the Registration of Leases (Scotland) Act 1857. 2) Scots caselaw shows that between original parties a lease can be granted for indefinite periods with security of tenure against singular successors, if the lease sets out the term when it is to come to an end: Carruthers v Irvine (1717) – lease was granted “perpetually and continually as long as the grass groweth up and the water runneth down”. The lease was upheld because the contract was intended to be a perpetual right to tenant and successors – it was not enough to create a real right but personal right against heir was valid. 3) Applying these to the current case: a. Indefinite period, so agreement isn’t capable of conferring real right under Leases Act 1449, but under Scots law there would be no need to imply any period because dispute is between original parties to the agreement and circumstances where it is to come to an end are sufficiently set out in contract b. Difficult to understand why English law finds it so difficult to hold that where agreements cannot for technical reasons take effect as a tenancy, it can be regarded as binding on parties because of contract: there might be problems if the agreement was to have proprietary effect, but this isn’t the case here. c. Also it may be the time to remove the legislative fetter preventing mutual housing associations from granting statutory leases (like in Scotland) – this will have to come from Parliament.

Answer 116

1) Bass Holdings v Lewis (CoA) was the only documented case that made detailed reference to s149(6), and it held that the term ‘determinable’ meant ‘liable to terminate automatically’ on a person’s death rather than ‘capable of being terminated by notice’ 2) The term can really have either of the two meanings, but the first meaning should be preferred because s149(6) was intended to allow leases for life to exist as legal estates under LPA 1925, and not intended to apply to leases that don’t need the help. The lease in Bass was capable of standing on its own without s149(6). 3) Lord Neuberger didn’t need to mention this case because the agreement was treated as a lease for life because of common law, not by virtue of the specific circumstances described in the determining clause.

Answer 117

1) Periodic tenancies pose “something of a puzzle” if the law insists on a certain maximum term – the rule was invented long before periodic tenancies were and there’s always been a problem of how the rule applies to them: the term is certain in one sense because it comes to an end when the period ends, but the practical reality is that the law “assumes a re-letting” or “extension of the term” at the end of each period unless either party gives notice to quit, so the actual maximum term is uncertain a. Theory – as long as both parties can determine, legal maximum is certain. Uncertainty is introduced with fetters on power to determine, making a lease capable of lasting indefinitely 2) The rules have an “Alice in Wonderland” quality: a. In Re Midlands: a half-yearly tenancy prohibiting landlords from serving notice to quit unless they required property for own undertaking was valid. b. Ashburn Anstalt v Arnold: rent free ‘license to occupy’ that landlord could only determine if ready immediately at end of quarter’s notice period to demolish and redevelop property upheld (because the real vice of uncertainty is that the parties don’t know where they stand) c. Prudential: overruled both, holding that the agreement was in effect a single term of uncertain and potentially perpetual duration and incompatible with common law rule against uncertain duration – understandable to take the same view of Ashburn Anstalt, but IJO unnecessary overrule In Re Midland Railway because that was a curb on an otherwise conventional periodic tenancy d. In Prudential the court didn’t consider the 90 year lease argument because that was a lease by a company that couldn’t lease for their own lives 3) So now we are in a “curiouser and curiouser” position: a. Rule against uncertainty applies to both single terms of uncertain duration and to periodic tenancies with a curb on either party’s power to terminate unless an uncertain event occurs b. This rule doesn’t matter if tenant is an individual because common law would have turned it into a tenancy for life before LPA 1925 and the Act turns it into a 90-year lease 4) As it happened this is in the present case consistent with parties’ intention, but there can be cases that will not coincide with parties’ intentions. 5) As pointed out in In Re Midland Railway, the court has no objection to creating a really long lease determinable on the uncertain event, so why would there be policy objections to upholding the arrangement that the parties in fact came to 6) Even more bizarre that had the ‘tenancy for life’ analysis failed, the conclusion might have been that it was a contractual license (rather than a contractual tenancy) – this is the difference between English and Scots law, though it doesn’t make a difference to the result (both are enforceable between original parties)

Answer 118

1) We must consider situations where the agreement wouldn’t have given rise to a tenancy for life, so s149(6) won’t apply: in those situations landlord asserts that it could only take effect as a license determinable at one month’s notice by either party. IJO this is not necessarily the case – the contractual tenancy would fail because not all three requirements are met, but the contract subsists and there is no reason for not giving effect to its terms (though as a matter of legal categorization it can only be a license) 2) To force the contract into a category of tenancy (monthly tenancy is only option) would be to: a. “substitute for the agreement that the parties have made a wholly different contract” b. treat first two characteristics of tenancy (rent, exclusive possession) as sufficient in themselves and displacing need to satisfy the third c. insist on terminology over substance (parties’ express limitation of right to terminate)

Answer 119

1) “Unsettling” SC case of Mexfield has unexpected reasoning and far reaching potential implications 2) Certainty rule was excluded from Law Commission’s Eleventh Programme despite Lord Browne-Wilkinson’s invitation to consider in Prudential – “the scale of the problem is unknown, particularly since the rule can be circumvented by careful drafting” (letter from Law Commission to Sue Bright) 3) With the 7-justice panel in Mexfield, it was expected that the court would either strongly affirm or abandon the certainty rule, but Berrisford didn’t argue for Prudential to be overruled. 4) Lord Neuberger stated that the same principle could be used to save periodic tenancies with a fetter 5) Though the outcome in this case protected Berrisford, the wide implications are “alarming”: a. The 90 year lease falls within ts166 Commonhold and Leasehold Reform Act 2002, meaning that tenant is not liable to pay rent unless notice has been served in prescribed statutory form b. Reasoning only works if there is a lease to an individual – if the grantee is a company the certainty rule will still have full effect 6) After Mexfield “the future of the certainty rule must, itself, be very uncertain”, because Lord Neuberger says that there’s “no apparent justification” but that he would not support jettisoning it in this case. Other justices also say that the rule should be abandoned (Clarke, Dyson, Hale) – Lord Hope compares English and Scots law, expressing surprise at how English law “struggles so much” 7) Another way Berrisford could have succeeded: though the agreement wasn’t a good tenancy, it was a good contract and was therefore binding on the parties – SC didn’t decide this point but most justices supported it (only Lord Hope was equivocal – [80] no principled reason why not, but authority supports the contrary position and shouldn’t be brushed aside so easily; better to reform the certainty requirement instead)

Answer 120

Abstract: their Lordships in Mexfield misunderstood and overstretched the common law rule allowing uncertain duration to be converted into leases for life, and haven’t fully considered the implications of their decision 1) Though the abandonment of certainty rules was not called for, their Lordships feared that it would “upset long-established titles”, but a much greater implication is that it will upset the principle of numerus clausus, which prevents new proprietary rights from being created. Though it doesn’t mean that rules relating to leasehold estates may not continue to evolve in common law, the decision still has far-ranging implications. 2) It’s now always 90 years, through a two-stage process that Lady Hale called “curiouser and curiouser” – though the conclusion is perhaps “less curious than it is precarious”: a. The rule converting uncertain leases into life tenancies appears not to have originated as a way to rescue failed leases of uncertain duration, and it’s uncertain that it was originally considered to be a rule of law at all, but as a rule of construction b. Problems: i. By considering the rule as one of law rather than construction, the court doesn't have to first presuppose that the parties intended to grant a lease, but the problem is that it pushes at the limits of the court’s jurisdiction to rescue failed transactions – it cannot be argued that leases are especially deserving of rescue than other transactions ii. Efficacy of the solution may be implicated by the compulsory registration scheme envisaged by Land Registration Act 2002 in the context of periodic leases – if registration is to become necessary, then Lord Neuberger’s remark that “such formalities have now largely been done away with” no longer holds true (periodic leases are unlikely to be registrable as they clutter registers, but if they’re not registered they wouldn’t be transmogrified into 90 year leases) 3) The second solution argued by Berrisford was that it may be rescued by pretending to be a mock license – their Lordships appear to favour this argument, though Lady Hale regarded it as ‘even more bizarre’ than the first solution which she already regarded as ‘curiouser and curiouser’ a. If this solution were elevated to a solution of first resort, then at least it would be universally applicable (to both individuals and corporations) b. Their Lordships suggest that this solution is more in line with parties’ intention, but this is surely incorrect, as the rights of a licensee and tenant are very distinct (exclusive possession) so rescuing a failed lease by calling it a mock license is absurd since the parties didn’t intend mere permissive use c. The line between licenses and leases has blurred, so that it was suggested that licensees may acquire possessory rights to bring actions in trespass or nuisance. However, whether these rights are good against licensors’ successors-in-title has never been tested and it would be undesirable to blur the line further – though it wasn’t considered in Mexfield, many occupiers would surely want to be protected against successors in title, so this second solution doesn’t work 4) Most principled solution (not argued, but reflected in Wilson LJ’s judgment in CoA): though Prudential negates the determining clause at common law, Equity can intervene to prevent Mexfield, an immediate party to the agreement, from seeking possession against Berrisfield, another immediate party. Parties can’t create leases with fetters, but they can make a periodic lease without fetters and then separately agree by way of contract that they weren’t to exercise their rights to determine the lease except upon fulfillment of the conditions. a. Scots law appears to reach this conclusion according to Lord Hope 5) Conclusion: whatever the criticism of certainty of terms rule, the divide between freehold and leasehold estates remains worth defending: they weren’t only kept apart by accident of history; their nature remains distinct. Leasehold covenants more readily bind successors in title (esp. after Landlord and Tenant (Covenants) Act 1995. Abolishing certainty of terms would allow the creation of perpetual leases that create binding positive covenants that need not even concern land – this would 1) effectively abolish the numerus clausus principle, 2) contradict the raison d’être of the LPA 1925, and 3) permit the creation of perpetual leases with rent obligations – circumventing the Rentcharges Act 1977.

Answer 121

“The certainty of a lease as to its continuance must be ascertainable … by express limitation of the parties … otherwise it is void” (Prudential). The tenant invoked sanctity of contract, referring to the validity of one joint tenant’s ability to give notice to quit: “I see no reason why this question should receive any different answer in the context of the contractual relationship of landlord and tenant than … any other contractual context”. But HL disagreed, even though Lord Templeman thought that the original landlords clearly intended the agreement to be of short duration; that leases are merely contracts, has been dealt a blow by the decision. It is arguable that the substantial nature of fixed term and periodic tenancies may differ: the legislature seems to recognize this by allowing the informal creation of periodic tenancies (deeds unnecessary). But the decision affirms a rule of universal application to all fixed term and periodic tenancies that the parties have little power to directly contract out of: fixed term tenancies must have a certain maximum duration from the outset; periodic tenancies cannot contain even partial fetters. This may not be unfortunate: - pacta sunt servanda cannot be an absolute rule, without risking the acceptance of perpetual tenancies - the desired result can be achieved by inserting an option to determine - in periodic tenancies, tenants are statutorily protected from landlords at once implementing a general notice to quit so contractual protection in the form of partial fetters is less necessary - formality requirements (deed) suggest Parliament’s wish that parties take care in drafting the terms of fixed-term leases; certainty punishes carelessness at the time of drafting - One result of this case appears to be that once the term of demise is fixed the courts can no longer revise the lease against the will of one of the parties, because leases are estates in land and we cannot risk adverse changes being passed onto transferees. This is good, because allowing the revision of leases if circumstances change so as to unduly prejudice one of the parties is difficult (as authors advocating this solution admit); it’s better to let Parliament pass specific enabling legislation than to impose a “wholesale upheaval in the law of contract, … a large sledgehammer to crack a small nut”. Arguable that the HL went too far in extending the rule to periodic tenancies, but Parliament has limited considerably landlords’ ability to serve notices to quit, so this doesn’t matter really in practice. Reform of certainty from the Law Commission may be welcome, but it may as well look at implementing a tenants’ termination scheme, which would render unnecessary any radical change to the present law.

Answer 122

Facts Agreement that expressed intention not to let occupier enjoy the property for life; terminated by landlord in accordance with a provision in the agreement granting him a right to give a notice to quit. Held It wasn’t the intention of the parties that the occupier would be entitled to enjoy the premises for life, so the agreement constituted a license taking effect between the parties according to its terms, rather than being converted to a 90-year lease by s149(6).

Answer 123

Is the present case analogous to Mexfield in that it’s an uncertain term? (Yes) 1) In that case the starting point was the nature and effect of the agreement on its true construction: whether it was for a certain or uncertain term. Answer depends on whether there is a fetter on parties’ ability to terminate so as to prevent it from taking effect as a periodic tenancy (if YES then agreement is treated like a tenancy for an indeterminable term) 2) In this case on a true construction of the agreement it was also for an uncertain term as the right to give notice is dependent on uncertain events Does uncertainty of term mean that a tenancy for life must have arisen by operation of law? (No) 1) Two sub-questions: a. Whether it was the intention of the parties to create a lease for life b. If not, whether contrary intention is overridden by principle of law 2) In Mexfield all of their Lordships agreed that the intention was to create a lease for life, so didn’t have to consider the alternate scenario – but in this case we do, because parties didn’t intend that occupier should legally be entitled to enjoy the premises for life 3) Landlord submits that the SC left open the question of whether the general rule can be overridden by contrary intention, so that it is open to CoA to hold that a lease for life would only arise at common law if on a true construction of the agreement the parties intended it (or at least didn’t not intend it) 4) There is a difference between holding i) that the rule applies even if the parties “had no inkling or intention” to create a lease for life, and ii) that the rule applies even where the parties’ express intention were to the contrary 5) Conclusion: The rule doesn’t depend on parties’ intentions for its application, but the SC in Mexfield left open the possibility that it may be disabled where it contradicts the “fundamental aspects of their agreement” a. This is supported because the origin of the rule must have been to save agreements that would otherwise fail, consistently with maxim against destroying the “essence of their bargain” b. Also, Lace v Chantler expressed reluctance regarding imposing a new bargain that neither party ever intended to enter into 6) Therefore the present agreement didn’t create a 90 year lease and operated as a contractual license on its terms. But if the agreement took effect as a 90-year least, does the provision for notice to quit survive? 1) Occupier submits that a lease for 90 years couldn’t be terminated by notice to quit because it would defeat the “very nature” of the fixed term, but if he is correct, then the effect would be that a rule devised to prevent potentially perpetual tenancies would result in the creation of one. This would be a “preposterous” result. The question is whether the law has an answer – IJO it does.

Answer 124

Landlord allowed tenant into occupation of premises on payment of a sum of money expressed on the receipt to be rent for three months in advance, in anticipation of the parties ultimately being able to agree on the terms of a lease. Then the landlord paid rent twice on a quarterly basis. The parties railed to reach agreement, and landlord commenced proceedings for possession, arguing that it was a tenancy at will. Held (CoA): the tenant’s possession with landlord’s consent coupled with payment and acceptance of periodic rent doesn’t raise a presumption of periodic tenancy as the inference reasonably to be drawn as to the nature of the tenant’s interest depends on a fair consideration of all the circumstances, of which the payment of rent is only one and the fact that the tenant was allowed into possession in anticipation of a lease that later wasn’t concluded was another. The tenant was merely a tenant at will.

Answer 125

This case turns on the distinction between a tenancy at will and a periodic tenancy. Tenant submitted that possession + payment of rent by reference to a quarterly period = presumption in favor of a periodic tenancy that can only be rebutted by an express agreement that it’s a tenancy at will, or alternatively, that it is not rebutted by the fact that the grant of a lease is under discussion in a case where a substantial sum has been paid as rent in advance. Cannot accept: In principle: “a tenancy, or lease, is an interest in land”, and springs (with few exceptions immaterial to the present case) from a consensual arrangement between two parties. “One person grants to another the right to possession of land for a lesser term than he, the grantor, has in the land”. Where parties agree that one party should take possession without agreeing on the more fundamental aspects of the agreement, the law has to step in. Sometimes it will infer a periodic tenancy where rent is periodically collected against possession, but the nature of the agreement depends on the parties’ intentions, and the fact that possession is in anticipation of negotiating larger terms is relevant, and in such circumstances caution must be exercised before inferring an intention to give the occupant more than a very limited interest.

Answer 126

Any lease, at a rent, or in consideration of a fine, for life or lives or for any term of years determinable with life or lives, or on the marriage of the lessee or any contract therefor, or created by virtue of Part V. of the Law of Property Act, 1922, shall take effect as a lease or contract therefor, for a term of ninety years determinable after (as the case may be) the death or marriage of, or the formation of a civil partnership by, the original lessee or the survivor of the original lessees, by at least one month’s notice in writing given to determine the same on one of the quarter days applicable to the tenancy, either by the lessor or the persons deriving title under him, to the person entitled to the leasehold interest, or if no such person is in existence by affixing the same to the premises, or by the lessee or other persons in whom the leasehold interest is vested to the lessor or the persons deriving title under him: Provided that— (a)this subsection shall not apply to any term taking effect in equity under a settlement or created out of an equitable interest under a settlement for mortgage, indemnity, or other like purposes; (b)the person in whom the leasehold interest is vested by virtue of Part V. of the Law of Property Act, 1922, shall, for the purposes of this subsection, be deemed an original lessee; (c)if the lease, underlease, or contract therefor is made determinable on the dropping of the lives of persons other than or besides the lessees, then the notice shall be capable of being served after the death of any person or of the survivor of any persons (whether or not including the lessees) on the cesser of whose life or lives the lease, underlease, or contract is made determinable, instead of after the death of the original lessee or of the survivor of the original lessees; (d)if there are no quarter days specially applicable to the tenancy, notice may be given to determine the tenancy on one of the usual quarter days.

Answer 127

For the purpose of converting perpetually renewable leases and underleases (not being an interest in perpetually renewable copyhold land enfranchised by Part V. of this Act, but including a perpetually renewable underlease derived out of an interest in perpetually renewable copyhold land) into long terms, for preventing the creation of perpetually renewable leasehold interests and for providing for the interests of the persons affected, the provisions contained in the Fifteenth Schedule to this Act shall have effect.

Answer 128

D wrote to C that he was “prepared to grant” C a quarterly tenancy of the premises to commence 25 days later, setting out all essential terms of the proposed tenancy. C agreed in writing to abide by the terms, moved in on the set date, and initially paid rent quarterly, but stopped paying rent two years later. 6 years later, C was given notice to quit, but stayed in possession for another 12 years. C commenced proceedings for a declaration that he was beneficially entitled to the premises by adverse possession. Held (Chancery Division): 1) the tenancy document merely evidenced the terms of the lease and did not create a leasehold estate in law; it was therefore not a “lease in writing” for the purpose of para 5(1) of Schedule 1 to the Limitation Act 1980 2) a lease to commence at a future date is not a lease “taking effect in possession” within s54(2) LPA 1925, and is void for the purpose of conveying a legal estate unless made by deed 3) thus, C’s lease arose not by the tenancy document but by operation of law as a result of his taking possession and paying rent

Answer 129

Lease for 7 years concluded not under seal with obligation that tenant repaint the walls in the seventh year, tenant entered and paid rent for the whole term but didn’t paint. Kelly CB: when a tenant enters under an agreement for a term void at law, he is liable as a tenant from year to year, on all the terms of the agreement applicable to a yearly tenancy. The agreement is void as a lease but is good as an agreement, and may be enforced in equity by a decree of specific performance. Thus, there is consideration, in that the agreement can be enforced. Thus, the question is whether the obligation to paint in the seventh year is applicable to a tenancy from year to year which has in fact continued for this period; yes, because even though during this time he could leave by serving six months’ notice, his occupation under the agreement amounted to a promise that, should he continue to occupy for the entire term, he would perform the obligation in the last year of the period. Pigott B: D was not merely tenant from year to year, but had a right at any time to enforce specific performance of the agreement, and turn it into a lease [what??].

Answer 130

Tenants whose lease expired entered into a compromise agreement with the landlords whereby the latter agreed to grant a new lease at an increased rent. No formal lease was executed, but the agreement was subject to a consent order by the court. The tenants remained in possession and paid rent under the terms of the compromise, but at its expiry did not vacate the premises. Landlords claimed possession. Held: where a person was in possession and occupied premises as a tenant under an agreement the position is the same as if an instrument giving effect to the new tenancy on the agreed terms had been executed; the Walsh v Lonsdale doctrine is applicable. Judgment: in Walsh v Lonsdale, the tenant was only a tenant in equity as there had been no formal lease, but he entered pursuant to an agreement. In that case, it was held that one holding under the agreement was subject to the same right of distress as if a lease had been granted. This maxim is decisive in the present case: “if a person goes in and occupies property as tenant under an agreement, it is taken as if an instrument giving effect to the new tenancy on the agreed terms has been executed”. It is argued that the Walsh principle doesn’t apply to court orders. But in the present case, it’s an agreement embodied in a consent order, and there’s no reason why the Walsh doctrine should apply differently.

Answer 131

Tenant sought specific performance of an agreement to grant him a lease. Held: specific performance is discretionary, and in equity, he who seeks must come with clean hands. Yet, the tenant was in breach of a covenant in the intended lease, so specific performance cannot be granted

Answer 132

When parties contract for the grant of a legal interest, equity, regarding that as done which ought to be done, treats them as if the grant were already executed (Walsh v Lonsdale principle). But the products of this doctrine are not equivalent to the legal interests which they anticipate: 1) They are equitable and not legal (thus bind all the world except a bona fide purchaser of a legal estate in the property in question without notice) 2) They can be relied upon only by one who is in a position to claim specific performance, at the time of formation but also at the time of the question which has arisen. Thus, according to the orthodoxy, the subsistence of estate contracts is circumscribed at the level of contract law in general, and the law on the remedy of specific performance in particular. But how can a property right be constituted in this way? The contractual doctrine of privity is fundamentally at odds with the in rem quality of a proprietary interest; specific performance is at variance with the stability needed in an institution that has to be “definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence and stability” (Lord Wilberforce, National Provincial Bank v Ainsworth).

Answer 133

1) Contracts operate in personam, but estate contracts operate in rem. Yet, on the running of covenants on assignment, orthodoxy has it that the benefits of covenants can run but not the burdens, in the same way that rights under a contract can be assigned and not its obligations. But this orthodoxy is under attack, criticized for its falling short of a legal lease. In two respects the law does treat the running of covenants in the same way in an estate contract and a legal lease: a. S141-142 LPA 1925 apply equally to agreements for a lease and legal leases (on assignment of the reversionary estate, covenants in the ‘lease’ run as to both benefit and burden). b. The notion of ‘touching and concerning’ the land ought not to have a place in equity on the orthodox view, but the effect of the orthodoxy is that privity of estate does not figure in the equitable analysis, which depends on the contract being directly enforceable as such between the parties presently involved 2) Specific performance is discretionary, but the point is that the right endures (though the remedy may not be available under certain circumstances). The reaction to the instability caused by the orthodoxy has been to promote stability at the orthodoxy’s expense. Thus, estate contracts are commonly operated in disregard of the orthodox view (tying estate contracts to the law of contract and specific performance). [Really long and difficult to understand… Didn’t finish]

Answer 134

1) Proprietary rights will not be created if parties did not intend to enter into legal relations; the court will not impute such an intention if the circumstances/conduct of parties negative it (family/charitable motive) 2) Sometimes the law will determine that proprietary rights have been created through informal methods, even though the parties’ intention hasn’t been fully expressed in proper documentation 3) A right that doesn’t display the characteristics of a proprietary right takes effect as a personal right regardless of the intentions of the parties – parties can’t create new proprietary rights (numerus clausus) 4) To what extent can parties create rights of a proprietary character, and determine that they are only personal to the parties (deny proprietary effect)?

Answer 135

1) Two elements of proprietary rights: a. Transmissibility – can be freely alienated in whole and in part b. Durability – can be asserted against people whom the holder has no direct relationship 2) Ownership vs encumbrances: a. Ownership – ‘the greatest possible interest in a thing which a mature system of law recognises’ (fee simple absolute in possession in the case of land) b. Encumbrance – a bundle of rights relating to property that is less than ownership, that Y can enjoy over X’s property that restricts X’s ownership

Answer 136

1) One line of authority suggests that an interest with substantially proprietary character will not be binding on purchasers if parties that established the interest intended to create only personal rights: IDC Group v Clark being the most prominent example, where it was held that though the right granted was capable of being the subject matter of an easement, it was in this case only a license because the agreement said to ‘grant license’ and no experienced conveyancer intending to create rights in rem would have used such wording. 2) Another line of authority, exemplified by Street v Mountford, came to the opposite conclusion – that “the distinction between a lease and a license is a question of substance” a. Note: there’s less authority for the conclusion that what appears to be the case, because all the authority concerns i) no written agreement (obviously the court will apply a test based on substance), ii) terms of agreement are ambiguous (Glenwood v Phillips), iii) parties purport to create a tenancy but characteristics of tenancy are absent (Taylor v Caldwell – this is the numerus clausus principle). None of these has direct bearings on the issue in Street – which was where the characteristics of a tenancy are met, but the written agreement uses the language of a license. 3) So why are leases different?

Answer 137

1) Pattern of authority supports view that as a general rule parties can render personal rights that would normally have proprietary consequences – with the exception of leases. Is this justified? 2) Before Street v Mountford the courts had the opposite position in the lease/license distinction – Lord Denning in Errington v Errington and Woods: whether a transaction took effect as a lease or license was determined (at least in part) by parties’ intentions; Cumming-Bruce LJ in Somma v Hazelhurst: there’s no reason why a landlord shouldn’t be able to grant a license to occupy – if this is what he and the licensee intended, and if they can frame a written agreement so as to demonstrate that it’s not really a lease, then there’s no reason why they can’t achieve that object. 3) Thus by 1970s the law was consistent – in all cases parties’ intentions determine whether personal or proprietary rights were created. Street v Mountford shattered this – why? a. Lord Templeman didn’t directlyh address why the lease/license distinction was different from other distinctions in land law where intentions of parties are most significant factor in the equation b. Rationale: inequality of bargaining power due to housing shortage

Answer 138

1) The difference between leases/licenses and other interests is more apparent than real, because the landlord’s right to forfeit leases assigned in breach of covenant ensures that he doesn’t have to deal with unwanted third parties 2) The court seemed to jump from one category of case to another without thinking through the range of questions that can arise – Taylor v Caldwell holding that an occupier who doesn’t enjoy exclusive possession cannot be a tenant doesn’t logically entail that where all the conditions for the existence of a lease are met, that there must be a lease 3) Street v Mountford approach obscures the real question – “in what circumstances should the law override the expressed intentions of the parties?” 4) “Hard to take at face value” the claim that existence of statutory protection of tenants didn’t influence lease/license distinction 5) The most honest approach would be for courts to recognize more explicitly the basis of their intervention 6) Issues in Street are more akin to exclusion clauses in consumer contracts than the issues in Taylor v Caldwell, so it would be better to look at it as an aspect of consumer law rather than law of property

Answer 139

Most leases are a hybrid of a proprietary estate and a contractual right. On the one hand, the lease is clearly not a simple contractual right. First, it is recognised by s.1(1) of the Law of Property Act 1925 (LPA 1925) as being an estate, which is a statutory embodiment of the numerous clausus. Notably, the numerus clausus is a concept of property law which limits the number of types of rights that the courts will acknowledge as having the character of ‘property’. Secondly, we can contrast the impact that leases have on landlords and third parties with licences, which are contractual and purely personal in nature. On the other hand, the lease cannot be purely an estate because it can be brought to an end by one of the parties unilaterally, is subject to the doctrine of frustration and may be determined by repudiation and acceptance. More radically, Bruton held that a lease can be granted by someone who does not have a proprietary interest in the land. However, the argument that Bruton is authority for an exceptional type of quasi-estate lease is considered and rejected. A better understanding of Lord Hoffmann’s judgment is that it does great violence to established principles of property law and goes against the very purpose of Lord Templeman’s judgment in Street.

Answer 140

Section 1(b) of the LPA 1925 defines a ‘term of absolute years’ as being one of only two types of legal estates. The notion of an ‘estate’ captures the idea that ownership does not attach to land as such but to a notional entity which can be carved up according to various principles, the initial principle being that of time. Section 1(b) mirrors the fact that the numerus clausus lists leases as a property right. Crucially, ownership of an estate (a type of property right) has an internal and external aspect: the internal aspect is reflected in the powers over the land (i.e. a right to use). The external aspect of the right materialises in the ‘right to exclude’ everybody except the right holder, and thus bind the world. Such a right is often termed a ‘proprietary right’ and can be distinguished from a ‘personal right’; the former has the potential to bind a purchaser of land whereas the latter, such as a contractual right, generally cannot. Thus, in Bruton in the Court of Appeal decision, Millet LJ said that ‘the essence of a legal estate is that is binds the whole world, not just the parties to the grant and their successors’. Similarly, in Street v Mountford, the primacy of exclusive possession was emphasised; Lord Templeman held that if exclusive possession at rent for a term did not constitute a tenancy, then the distinction between contractual tenancy and contractual licence become wholly illusory. In contrast, licences do not give the occupier the right to exclusive possession against all persons. In Street v Mountford, Lord Templeman said that the tenants could exercise the rights of an owner of land, ’which is in the real sense his land, albeit temporarily and subject to certain restrictions’ while a licensee ‘can in no sense call the land his own and cannot be said to own any estate in the land.’ Thus, a tenant can prevent a landlord from entering the property, except if the landlord is exercising his limited rights reserved to him by the tenancy agreement to enter and view and repair. As such, the nature of a licence is the opposite of that of a lease because it is purely personal and contractual. For example, in King v David Allen, A granted a contractual licence to display a poster on the wall of a cinema to B. A purchaser of the cinema, C, refused to honour the contract. The licensee, B, was unable to sue C as his right, as a licensee, ‘create[d] nothing but a personal obligation’ (per Lord Buckmaster). By contrast, in Asburn Anstalt v Arnold, the tenant was able to enforce their lease against a purchaser once it was concluded that the defendant had a lease.

Answer 141

Nevertheless, a lease rests, to a large extent, upon the law of contract: it is an agreement between two parties, which can be brought to an end with sufficient notice by the unilateral action of only one party to the agreement. For example, in Hammersmith and Fulham LBC v Monk, the defendant cohabited with a third party under a joint periodic tenancy granted by the council. The third party left the flat and terminated the lease without the knowledge of the defendant. Yet, the council could recover possession from the defendant because the joint periodic tenancy under which the defendant had occupied the flat was capable being brought to an end by the third party, who was also party to the contract. By contrast, a fee simple estate, which is good against all the world and cannot be brought to an end without the owner’s permission. If a lease was purely proprietary then, like the fee simple, it should not be capable of being brought to an end without the lessee’s consent. Yet, reasoning by analogy to principles of contract is justified because it equips landlords with the tools to deal with alleged perpetrators of domestic violence (see Sims v Decorum). The leaving partner can determine the tenancy in its entirety, thus leaving the remaining occupier/s effectively as trespassers and the courts ordinarily must grant possession to the landlord. Further examples of the contractual basis of leases can be found. Like contracts, the rights and obligations of the parties with regards to rent and rent review clauses is determined as a matter of construction of the contract (United Scientific Holdings Ltd v Burnley BC, a lease may be frustrated (National Carriers v Panalpina) and Hussein v Mehlman (county court judgment) provides support for Pawlowski’s argument that leases should be able to be determined by repudiation and acceptance. Moreover, as per s. 205 LPA, rent is not required for a lease. This has been confirmed in Ashburn v Anstalt. Although consideration for a contract need not be monetary, a lease can be made without any inquiry into whether there was consideration in the absence of rent. This is a significant departure from orthodox contractual principles.

Answer 142

Lord Hoffmann appeared to cast aspersions on whether it could be said that a defining characteristic of a lease was that it would bind third party purchasers. He held that a 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 or other proprietary interest which may be binding upon third parties.’ In recognising the concept of the non-proprietary tenancy, Roberts rationalises the ratio in terms of the doctrine of relativity of title. He notes that all title is relative and it is not necessary for a title to be good against the world to be considered proprietary. There are some strengths to this idea of relativity of title. First, there is some judicial support for it. Lord Neuberger in Berrisford v Mexfield Housing Co-Operative Ltd opined that ‘Bruton… was about relativity of title’. Moreover, the House of Lords in Kay v Lambeth LBC, held that an adverse possessor acquires title in the land and is capable of granting a lease as a ‘non-estate’ tenancy. This tenancy, however, would not bind the true owner of land. The tenant would be able to bring an action against the adverse possessor, but could the agreement between them does not grant the tenant a right against the owner. Similarly, Roberts argues, a tenant under a Bruton lease has a proprietary interest in the land good against his landlord and any third parties who derive their interest from the same landlord (for example, by granting a second lease). However, the tenant under a Bruton lease has no right against the owner of the land, his successors in title, or any who derive their title from them (such as a lease granted by the owner). Further, the LRA 2002 recognises that prior to making an application to the Land Registry, the adverse possessor has a title to the land he possesses (sch. 6 para. 9(1)) demonstrating further the relativity of proprietary interests. Equally, Lord Hoffmann did not cite any relevant authorities on this point. Most importantly, the non-proprietary lease is an anomaly and already has a name; it is a licence! Subsequent cases Kay and Green both adopted the reasoning in the House of Lords (as they must) and concluded that the occupier’s lease was a purely contractual arrangement between the intermediate licensor and the occupier that is without proprietary effect against the freeholder or any other third party. Furthermore, Lord Scott in Kay (in the appeal to the House of Lords) made it clear that ‘Bruton tenancies’ had no proprietary character at all and were not governed by any of the principles relevant to leasehold estates. As such, why is this a ‘lease’ at all as opposed to a contractual licence? One difference is that those party to the Bruton tenancy partake of the normal obligations of ‘landlord and tenant’, such as repairing obligations and the like. Thus, although the Bruton lease has no proprietary effect, it would be different from a pure contractual licence. However, this is not justifiable as a matter of property law. Rather, it should be seen as a device to give certain contractual licensees rights as if they were tenants. On this point, it is implied in Green that a personal tenancy will still attract statutory protection under housing legislation. Therefore, the difference between a proprietary tenancy based on title in possession and on a contractual understanding is so slight yet has possible repercussions on the doctrinal coherence between licences and leases and should be confined to the facts of Bruton or overruled.

Answer 143

In English law, the lease is generally a hybrid of contract and estate. It is capable of binding others not privy to the contract, yet is subject to the agreement of others and can be brought to an end by the landlord delivering notice to the tenant. A Bruton tenancy, however, cannot be properly defined as an estate, having been regarded as a ‘non-estate’ tenancy in Kay. Further, the claim that such a tenancy confers a ‘proprietary’ right must be heavily qualified such that we may legitimately ask ‘why is it a lease at all?’ Finally, following Green, it may be possible to grant statutory protection to a licensee. Ultimately, the law should either confine Bruton to its facts or overrule it, thus reinstating the orthodox position that a lease is both a contract and estate.

Answer 144

The formal requirements for the creation of a lease can be divided in three categories: registration, signed writing and deed. Where they are not complied with the claimant will fail to secure a legal lease, however, an equitable lease may well come into existence. This essay will assess whether failure to comply with formality requirements ‘matters’ in three stages: (1) What are these requirements? (2) Does an equitable lease arise where a legal lease fails? And (3) is an equitable lease a satisfactory substitute for a legal lease? It will be seen that an equitable lease cannot replace the legal lease and so it does matter that formality requirements have not been conformed with.

Answer 145

There are two kinds of leases: legal and equitable. Addressing legal leases first, no formalities are required to create a legal lease for a term not exceeding three years, if it takes effect in possession and is at the best rent reasonably obtainable (LPA 1925, ss. 52 and 54(2)). This extends to periodic tenancies, whereby the landlord continues to accept rent once the fixed term has ended. As the period will inevitably be under three years, no paper is needed to create the new tenancy and its terms will almost inevitably be the same as the terms of the preceding fixed term tenancy agreement (Prudential Assurance ltd v London Residuary Body [1992])). All other agreements for a lease may need to comply with s. 2 of the LP(MP)A 1989. This section applies to any agreement for a lease of longer than three years and provides that such a contract can only be made in writing, incorporating all the expressly agreed terms in one document, or in each of a pair of exchanged documents. Further, a lease of longer than three years (and any lease not taking effect in possession, or not at the best rent which can reasonably be obtained without taking a fine) must be by deed (s. 52 LPA 1925). This applies to all conveyances of legal estates (s. 1(1)(b) LPA 1925) and interests (s. 1(2) LPA 1925). A deed is a document which makes clear on its face that it is a deed, is validly executed and is delivered (s. 1 LP(MP)A 1989). Further, there are a number of exceptions to this: leases created by operation of law (s. 52(2)(c)(g)), flexible tenancies (s. 52(2)(da)) and assured tenancies (s. 52(2)(db)). Finally, lease for a term exceeding 7 years must be registered at the Land Registry (LRA 2002, s. 4(1) and s. 27(2)(b)). An expressly created equitable lease arises from a flaw in the execution of a deed of lease. It nonetheless requires signed writing (s. 2 LP(MP)A 1989). Equitable easements which arise by proprietary estoppel do not have such formality requirements.

Answer 146

Where the formality requirements are not observed for the creation of a legal lease, it will fail. However, in many cases an equitable lease can arise. There are two seminal ways in which this can occur. The first is where A comes under a contractual duty to grant B a lease. For example, in Walsh v Lonsdale, L agreed to grant W a lease of a mill. No lease was formally granted. Nonetheless, W started operating the mill and payed rent in accordance with the terms of the contract. Jesse MR concluded that W holds therefore under the same terms in equity as if a lease had been granted. This is because the Judicatures Act of 1873 and 1875 (now the Senior Courts Act 1981, s. 49(1)) required that where the rules of equity and the common law conflicted on the same matter, the equitable rules should prevail. Thus, under the doctrine of anticipation (‘equity looks on as done what ought to be done’), L was under a duty to grant W a lease. Walsh v Lonsdale was followed in R v Tower Hamlets LBC, ex parte von Goetz. G had a ten-year assured shorthold tenancy of a house. Although a written contract had been agreed (so the requirements of s. 2 LP(MP)A 1989 were satisfied), no deed had ever been executed. Mummery LJ rejected the view that the equitable lease could not attract a renovation grant under the Local Government and Housing Act 1989 since she had ‘for all practical purposes an interest as good as a legal interest’. However, this option does not help a claimant whose legal lease failed because it lacked signed writing. It only assists the claimant where there was signed writing but not a deed as the requirements under s. 52 LPA applies solely to conveying or creating a legal estate. Thus, s. 2 of the 1989 Act, repealing s. 40 of the LPA 1925, abolished the equitable doctrine of past performance with respect to dispositions of interests in land.

Answer 147

The second way in which an equitable lease can come into existence is by virtue of proprietary estoppel. In Lloyd v Dugdale, the court recognised the requirements for an estoppel were met. The key issue was whether this estoppel could bind Lloyd (and thus be proprietary as opposed to personal in nature). The first point was not analysed in the case, but the decision was made in the shadow of the coming into force of s. 116 LRA 2002, which unequivocally settles that ‘in relation to registered land, an equity by estoppel… has effect from the time the equity arises as an interest capable of binding successors in title’. The law commission report no. 27 at para. 5.29 clarifies that s. 116 is designed to settle the uncertainty. Further, Dugdale settles the matter for unregistered land also because it decides that estoppels are proprietary in principle, not that they are proprietary because of land registration rules. However, under s. 20(1) LRA 1925, Lloyd took the land subject only to registered minor interests and overriding interests. There was no entry on the register protecting the estoppel, which, as Dixon notes, was ‘hardly likely given that as in most cases the claimant did not know until trial whether he had an interest to protect’. Ultimately, D was held to not have actual occupation. Nonetheless, the case illustrates that an equitable lease can arise by estoppel in the absence of formality requirements, though it needs to be registered or protected by actual occupation to bind a third- party purchase.

Answer 148

In both cases, if an equitable lease is found the problem of registration does not arise. Equitable leases can be registered by notice, but there is no requirement that they are so registered. In City Permanent Building Society v Miller the Court of Appeal found that a grant necessarily implies the acquisition of a legal property right: if B has an equitable lease, he or she has not been granted a lease by A; A is instead under a duty to make such a grant. Therefore, provisions such as s. 4 of the LRA 2002, which require the registration of legal leases, do not apply to equitable leases, on a true construction of the statute. However, as Dugdale shows, where the estate is not registered, it may defeated by the rules of priority under the LRA 2002 (the then LRA 1925).

Answer 149

The mere existence of the equitable lease does not necessarily imply that it is irrelevant whether one complies with the formality requirements for two main reasons. First, there are circumstances where there might not be an equitable lease. So, for instance, if there is no signed writing, the claimant has not paid any rent yet and the requirements for proprietary estoppel are not met, then it is unlikely that either of the mechanisms discussed above will assist the claimant in establishing an equitable lease.

Answer 150

Secondly, and more importantly, there is no guarantee that an equitable lease will be binding upon third parties. If the title to the land is registered, the equitable tenant’s interest will almost certainly be overriding if the tenant is in actual occupation (Sch. 3, para 2 LRA 2002), otherwise it must be protected by entry of a notice on the Title Register. If the land is unregistered, the equitable lease must be protected by registering a Class C(iv) land charge (s. 2(4)(iv) LCA 1972).

Answer 151

Thirdly, a contract for lease can effectively be converted into a legal lease through the remedy of specific performance. However, because specific performance is an equitable remedy it is also a discretionary remedy and there will be circumstances in which the court will be unwilling to grant it. In particular, a successfully claimant must come to equity ‘with clean hands’ (Everet v Williams), willing and able to perform their side of the bargain.

Answer 152

Fourthly, if the agreement for lease pre-dates 1 January 1996, there is some doubt as to whether the burden of the covenants can pass on assignment. This is because there is no privity of estate, since this depends on a legal relationship. Due to the wording of ss. 141 and 142, the benefits and burdens of all covenants which touch and concern the land pass to any lessor, whether legal or equitable. As far as the equitable tenant is concerned, the benefit of covenants which touch and concern may pass, but it seems that the burden may not.

Answer 153

Finally, unlike a legal lease created by deed, a contract for lease is not a conveyance for the purposes of the LPA 1925. Consequently, the rights and privileges granted to the tenant will be limited to those set out in the contract and none will be incorporated by virtue of s. 62 LPA 1925.

Answer 154

It is clear that although equitable leases mitigate the negative effects of a failure to comply with formality requirements, they by no means imply that it does not ‘matter’ that the claimant failed to establish a legal lease. The equitable lease, though better than nothing, is not equivalent and does not put the claimant in the same position as he would have been had he secured a legal lease.

Answer 155

Remember that reversionary leases require deed (Tower Hamlets) therefore not caught by exception in s. 54(2) Could be saved by Walsh v Lonsdale + actual occupation (Sch. 3 para 2, provided in A.O, unless would not be clear upon reasonably careful inspection OR party asked by purchaser and failed to inform them of their interest) mention constructive trust (but if no evidence purchaser paid reduced price then shut it down) Mexfield can save a lease where there is an uncertain term unless contrary intention (Southward Housing v Walker). If there is Mexfield lease, then as a 90 year lease (over 7 years), requires registration and must be made by deed! periodic tenancies fall within s. 54(2) (provided other requirements met) as periods will be shorter than 3 years. If legal, then will fall within Sch. 3 para 1.

Answer 156

court held that the occupier was a tenant not a licensee. Camelot was engaged to find guardians for a former elderly people's home owned by Bristol City Council. Roynon moved in as a guardian in 2014. When Camelot sought possession, Roynon claimed to have a tenancy, despite his written occupation agreement being described as a "licence". The court attached importance to the fact that Roynon had exclusive possession of two rooms and a key to them; his name was also on the doors and he had stayed in the same rooms for three years without being asked to move. He was therefore a tenant. NB contrast with Camelot Guardian Management Ltd v Khoo [2018] and Ludgate House Ltd v Ricketts (Valuation Officer) [2018]

Answer 157

guardian Heiko Khoo occupied three rooms in a building owned by Westminster City Council. The agreement granted Khoo the right to "...share living space in a building". The fact that he was shown a particular room, asked to occupy it and had occupied it ever since did not mean that the words of the agreement should not be given their ordinary meaning. The agreement spelled out that its purpose was to grant a non-exclusive licence to share occupation for security and to protect against trespassers and damage. It was essential to this purpose that the arrangement should not be a tenancy. The fact that Camelot in practice did not move guardians around did not mean it did not intend to honour this purpose. It was therefore a licence.

Answer 158

Organisations offering guardian services promote a further advantage: properties used wholly or partly for the purposes of living accommodation will not be subject to non-domestic rates. In this case, the court concluded that a property accommodating a considerable number of guardians was not being used as "living accommodation" and was still subject to non-domestic rates. In reaching that conclusion, it held that the occupiers were only licensees.

Answer 159

So far, the only conclusion that we can reach is that cases turn on their own facts. The likely outcome of any specific case is therefore currently unclear. What is more certain is that with an increasing number of guardian providers operating in the UK, we are likely to see further developments in the law in this area. My view is that we need to reinstate the division which is of real significance to purchasers + the grantor must be able to grant a licence which is revocable though grants exclusive possession - to grant a lease would be to frustrate the parties' intentions!!

Answer 160

accepted that equitable relief from forfeiture was not limited to cases where the applicant had proprietary rights over land, but extended to those with "possessory rights" that were non-proprietary, thus blurring the distinction (at least in respect of equitable relief) between leases and licences. So it is that the Law Commission opens this issue with an analysis of its proposals for reform of the leasehold estate and its work aimed at reviving commonhold. As this first piece demonstrates, there appears to be a real appetite for reform. NB Dixon struggles with the idea of "possessory rights" which are not proprietary. Possession, properly regarded, is not merely a description of a state of affairs but a term of art implying proprietary status. Thus non-proprietary rights which are "possessory" is a stretch for me.

Answer 161

Forfeiture is a term usually associated with leases where a landlord is able to terminate a lease; similarly, relief from forfeiture is a remedy available to a tenant in certain circumstances to prevent this from happening. What is less well known is that relief from forfeiture is not just confined to the landlord and tenant relationship, but can extend to other contractual arrangements where proprietary or possessory rights exist. The recent Supreme Court ruling in The Manchester Ship Canal Company Ltd v Vauxhall Motors Ltd [2019] is the first case where relief from forfeiture has been extended to a possessory right over land and highlighted the fact that relief can be available on forfeiture of a licence. The Supreme Court dismissed MSCC’s appeal and held that the courts can grant relief from forfeiture in relation to possessory rights over land when two conditions are satisfied in the contract: The contract grants either proprietary or possessory rights over land – in this case, Vauxhall had virtually exclusive possession of the Spillway and was clearly intended to be in control of the maintenance and operation of it; to deprive Vauxhall of its drainage right for failure to pay £50 would be unjust. The termination provision must have been included in the contract as security for the attainment of a particular result – in this case, the payment of the annual fee.

Answer 162

1. The contract grants either proprietary or possessory rights over land – in this case, Vauxhall had virtually exclusive possession of the Spillway and was clearly intended to be in control of the maintenance and operation of it; to deprive Vauxhall of its drainage right for failure to pay £50 would be unjust. 2. The termination provision must have been included in the contract as security for the attainment of a particular result – in this case, the payment of the annual fee.

Answer 163

This ruling does not necessarily mean that relief from forfeiture will apply to all licences; the facts in this case were unusual as few licences are granted in perpetuity, plus the considerable rights granted in relation to the Spillway would usually be included in a more formal deed of easement rather than a licence. However, this case highlights the fact that landowners should always be careful when negotiating agreements granting rights over their land. Thought must be given as to what rights are intended to be granted so that possessory rights are not granted by accident. The drafting of termination provisions must also be considered in light of the comments in the judgment. Whilst a licence can still prevent a licensee from gaining a proprietary interest in the land, this case has established that licensees occupying under the terms of a licence may be able to benefit from relief from forfeiture, which is not something they would previously have been aware of.

Answer 164

Dutton allowed a contractual licence to transcend its traditional status of a mere contractual right and take on the more expansive status of a property right, so as to be effective against third parties in general. Dutton held that a contractual licensee (‘licensee’), whether or not she/he is in factual possession of the land the subject of her/his licence, will have access to a right of possession against trespassers if such a right is necessary to give effect to her/his contractual rights of occupation.

Answer 165

Momentarily putting to one side the Court’s underlying reasoning in Dutton, that case produced a desirable result—the fortification of a licensee’s contractual right with an ad hoc possessory right—for a number of reasons. 1. Firstly, a licensee’s contractual rights are given real force rather than left nugatory: just as in Dutton, if X has a licence to lop trees on Y’s land, but Y fails to remove trespasser Z from the land, an ad hoc right of possession against Z allows X to enjoy her/his contractual right to lop the trees. 2. more broadly, contractual rights and property rights are both essential to an efficient economy: the former create trust between parties in business dealings by ensuring their expectations are met, while the latter ensure that parties are able to retain the spoils of their transactions without the trouble, for example, of theft. Hence X’s ad hoc possessory right complements her/his contractual right, promoting economic efficiency: X will not hesitate to pay Y for the right to lop the trees if she/he knows her/his right will be realised. Without a possessory right to support her/his contractual right, however, an economically inefficient outcome would arise wherein X is reluctant to transact with Y even though she/he is willing to pay for the right to lop the trees. Doubtless X can sue Y for breach of contract, but this too is inefficient: X, unable to sue Z for trespass, must (1) initiate legal proceedings against Y and (2) wait on an already recalcitrant Y to sue Z for trespass before (3) X can finally enjoy her/his contractual right to lop the trees. Although X’s contract is economically valuable in that it can be sued upon, its fundamental purpose is not realised. With an ancillary right of possession, however, X can directly sue Z for trespass and more speedily enjoy her/his contractual right. UK law had traditionally refused to provide a licensee out of possession, beaten to the land by trespassers, with an ad hoc possessory right to supplement her/his contractual right of occupation. This anomaly leaves a licensee’s contractual rights seemingly ineffective simply because she/he is unable to take possession of the land before trespassers can, and therefore lends support to the adoption of Dutton as the law in Victoria and indeed Australia. Before rushing to adopt Dutton, however, there is one important question: is the current common law of Australia capable of giving effect to the contractual rights of a licensee beaten to the land by trespassers, without adopting Dutton?

Answer 166

A licensee not in possession may be able to seek an injunction, grounded in the tort of interference with contract, to prohibit trespassers from interfering with her/his contractual rights.6As this tort can, however, only be established where the trespassers knew of the licensee’s contractual rights and intended to interfere with those rights, an injunction may rarely be available to a licensee:7although Z may have intended to prevent X from lopping trees, Z may not have intended to interfere with X’s contractual rights per se. The Australian common law, within the bounds of its existing principles of contractual interpretation,8may already be able to afford a licensee with a possessory right ancillary to her/his contractual rights of occupation. I propose that it is open to Australian courts to imply into a licence a right of the licensee to exercise, as agent of the licensor, the licensor’s right of possession against the specific trespassers already on the land at the time the licence is granted. An implied right of agency is justified as it is only fair to assume that a licensor intends that the licensee actually enjoy her/his contractual rights. With the licensee acting as the licensor’s agent, it would technically be the licensor exercising the right of possession. That is, the right of possession would still vest in the licensor, but could be enforced by the licensee: strictly speaking, the licensee herself/himself would have no property rights. An implied contractual right of agency, true to principles of contractual interpretation, would merely give effect to the contract itself rather than recognise new ad hocrights. An implied right of agency may appear to simply involve a roundabout application of Dutton, in that it is a right against third parties. There are, however, key differences between an implied right and a property right which Duttonconfers upon a licensee.

Answer 167

Firstly, as above, a licensee’s right of agency would only bind specific third parties (trespassers) already on the land: X would be able to sue Z who is already on the land at the time X’s licence is granted, but X would be unable to sue a new trespasser who appears after X’s licence is granted. Dutton, on the other hand, confers rights against third parties in general: X is able to sue not only Z, but also new trespassers. It must be recognised that a right enforceable against third parties is not necessarily a property right. Indeed, applying Blackstone’s definition of property—‘despotic dominion which one man claims over the external things of the world, in total exclusion of the right of any other individual in the universe’ (Commentaries vol 2,2) —a licensee’s implied right of agency would not be a property right because it binds only specific third parties who are interfering with her/his right of occupation at the time the licence is granted rather than third parties in general. The licensee’s right of agency is not a right of exclusive possession in rem: the essence of a property right.11It is merely in personam:against identifiable individuals.1

Answer 168

Secondly, as the licensee’s rights are determined as at the time the licence is granted, they are circumscribed invariably because they bind only the specific individuals already on the land. Thus, the licensee’s implied right of agency cannot expand to bind future third parties whom, for example, the licensor herself/himself may have willingly invited upon the land.

Answer 169

Thirdly, the licensee’s implied right of agency is not invoked ad hoc by third parties’ interference with the licensee’s rights of occupation, but comes into existence together with the licence granted to the licensee. Contrasted with the traditional view that a licensee has (a) a right of occupation arising from contract and (b) a right of possession arising only from the act of possession,13an implied right of agency would arise solely from the contractual licence, whether or not the licensee is in possession

Answer 170

(1) while on the one hand keeping shut the closed number (numerus clausus)14of legally recognised property rights, it expands the sphere of contractual rights by violating the doctrine of privity whereby only those parties to a contract can be bound by that contract. One may note, however, that no new rights against third parties are created: rather, the licensee’s right of agency merely entitles her/him to enforce the licensor’s existing rights against third parties. (2) Another perceived flaw is that an implied right of agency, as defined above, is unable to bind trespassers who appear on the land after the licence is granted, but before the licensee takes possession. On the other hand it is arguable that a licensee should give effect to her/his own licence, to the extent that she/he is able, by taking prompt possession of the land upon grant of her/his licence. Such a licensee at least has a chance of taking possession, unlike a licensee who is beaten to the land.

Answer 171

Although the result in Duttonwas desirable, it manifestly contradicted UK domestic precedent (Hunter v Canary Wharf Ltd) by providing a licensee not in possession with rights against third parties. Crucially, the majority reasoning of Laws LJ, on which this result was reached, also appears to have several deficiencies.

Answer 172

Firstly, Laws LJ’s remark, that it is only logical for a licensee out of possession to have the same rights as a licensee in possession, obliterates the long-standing distinction between a right of possession and a right of mere occupation (Emma Lochery, 'pushing the boundries of Dutton?) Despite the former being an interest in land and the latter a mere personal permission to enter the land for a specific purpose (as emphasised by Chadwick LJ's dissenting judgment in Dutton), Laws LJ conflates the two, failing to recognise each right’s distinct source. (NB cite Swadling here). His amalgamation of possession and occupation implies that a licence can even bind a licensor’s successors in title if necessary to give effect to a licensee’s rights of mere occupation, which is an absurd proposition.

Answer 173

Secondly, Laws LJ did not distinguish degrees of possession. What degree of possession must the licensee have to be entitled to sue trespassers? Using the example of a single cinemagoer who holds a ticket (licence) to watch a film, but is only one of many such licensees, Dobbs notes it is unreasonable for the single cinemagoer to be afforded rights in personam against a trespasser. The cinemagoer may have rights a a trespasser, however, where she/he has hired the entire cinema for herself/himself.

Answer 174

Thirdly, it is unclear from Laws LJ’s judgment what specific degree, if any, of interference with the licensee’s contractual right is sufficient to invoke an ad hoc possessory right. Is it sufficient for the trespasser merely to interfere with the licensee’s right of occupation, or must she/he render the licensee’s right useless? Laws LJ leaves this question unanswered and thus leaves uncertain the scope of a licensee’s ad hoc possessory right, in terms of how many trespassers it could cover.

Answer 175

Laws LJ’s reasoning renders the tort of interference with contract partially irrelevant. Given that on Laws LJ’s reasoning a licensee may sue any third party without rights of possession equal or superior to her/his own, why should a licensee sue trespassers for interference with contract when she/he can simply sue them in trespass? That is, Laws LJ’s reasoning implies that a third party need not satisfy a fault element in interfering with the licensee’s contractual rights of occupation: presumably even an unintentional trespasser could be vulnerable to a licensee’s action in trespass.

Answer 176

Lastly, where a licensor fails to remove trespassers from her/his land, a licensee can always compel the licensor to give effect to her/his obligations by suing for breach of contract (despite, as above, this process being inefficient). One cannot help but detect a hint of ‘discretionary remedialism’ (Birks) in the judgment of Laws LJ, who seems to have decoupled the remedy of an order for possession from its prerequisite liability: a trespasser’s intentional interference with the landowner-licensor’s possession rather than the licensee’s occupation (Swadling). With respect, it was not open to Laws LJ to affirm an order for possession for a mere licensee. Laws LJ’s reasoning, being preoccupied with providing a licensee with a possessory right against trespassers, has opened up a number of ambiguities in the law concerning a licensee’s rights against third parties.

Answer 177

the decision in Bruton seemed to contravene the deeply-entrenched principle of nemo dat quod non habet— a person cannot give something he does not himself have.

Answer 178

‘ leases ’created in such circumstances confer merely personal, contractual rights on the tenant, rather than a proprietary estate in the land. Whilst this may appear to be a neat reconciliation, it suffers from at least two limitations. 1. unclear how the purely contractual lease fits into the general scheme of property law. For example, how, if at all, does it differ from a contractual licence? and does its creation require a deed? 2. Secondly, and more fundamentally, it is not obvious that this explanation of Bruton confers on the contractual tenant (T) an appropriate bundle of rights. It is axiomatic that, being purely personal, T ’ s contractual lease would bind his immediate landlord (L), but not the real owner (O) or other third parties. But what happens if the same landlord (L) purports to lease the same land to a second tenant (T2)? Whilst both tenants ’rights are clearly vulnerable to the real owner ’ s paramount title, it is far from obvious from Lord Hoffmann s analysis how the tenants ’mutually incompatible non-proprietary personal rights might rank inter se. The absence of clear rules for resolving such disputes could lead to the undesirable situation of two parties, both with contractual rights to use the land, having to fight for their respective positions in an unregulated legal free-for-all. She distinguishes between a proprietary overworld (paramount legal title) and underworld (vulnerable to another's paramount legal title)

Answer 179

premised on the doctrine of relativity of title. There are four strands to the argument: 1. The Bruton tenant ’ s lease should be re-conceived as a relative proprietary interest in the land. 4 Being proprietary, the lease is potentially enforceable against third parties, including subsequent tenants of the same landlord. 2. The relativity of title analysis of Bruton is consistent with the nemo dat principle. 3. There are remarkable similarities between the doctrine of relativity of title, as applied to leasehold interests, and the parallel — but historically distinct — doctrine of ‘ tenancy by estoppel ’ . Tenancy by estoppel case law provides a rich resource for enhancing our understanding of the Bruton tenancy. 4. Beyond the facts of the Bruton case, relativity of title reasoning should be applied to other areas of property law that would otherwise operate as unregulated ‘ proprietary underworlds ’ . 'Thus understood, Bruton stands as a landmark which, although once condemned by its critics, now deserves listing as a Grade 1 national monument for its role in opening property lawyers ’minds to the importance and utility of relativity of title reasoning'

Answer 180

(a) assuming that English law adheres to the nemo dat principle, LQHT (a mere licensee), cannot confer a property right on Bruton; therefore (b) Bruton ’ s so-called ‘ tenancy ’is necessarily a merely personal right; and (c), this being so, the ‘ tenancy ’is in reality indistinguishable from a contractual licence, and should be recognised and labelled as such. (worth noting that even as a contractual licence, it would display two proprietary characteristic: (i) Bruton would — according to the controversial decision in Manchester Airport v Dutton [ 2000 ] — have standing to sue in trespass, which had traditionally been reserved to those holding proprietary interests (see further Vehicle Control Services Ltd v HM Revenue and Customs Commissioners [ 2013 ] and W Swadling , ‘ Opening the Numerous Clausus ’( 2000 ) 116 LQR 354 ); and (ii) Bruton ’ s contractual licence would be capable of becoming proprietary via the doctrine of ‘ feeding ’an estoppel should LQHT subsequently acquire a proprietary interest in the future. For Dixon, it is a defining feature of modern leases that they confer both personal and proprietary rights on the tenant. Accordingly, Lord Hoffmann ’ s rationalisation of the outcome on the basis that Bruton ’ s lease was non-proprietary is perceived as a ‘ contradiction in terms ’ .

Answer 181

Dixon ’ s criticisms fall away — once it is understood as a case concerning relativity of title. On this analysis, Bruton ’ s lease was proprietary, and not merely contractual. Various academics i.e. McFarlane, Roberts and Hinojosa have made this argument and Neuberger in Mexfield housing noted that 'the Bruton case was about relativity of title which is the traditional bedrock of English land law'

Answer 182

At the outset, it is important to realise that the nemo dat principle, which for Lord Hoffmann prevented Bruton ’ s lease being proprietary, is no barrier to the establishment of a relative proprietary right. A distinction needs to be drawn between derivative and original titles. Nemo dat is concerned with the former, but not the latter. On the Bruton facts, it is clear that Gary Bruton was unable to derive a property right from LQHT if the latter did not have a property right itself. However, it is quite possible for property rights to arise by way of original acquisition, from the fact of possession, rather than derivatively via the transfer of rights from another. For example, it is well-documented that a squatter acquires a possessory title (a legal fee simple) from the point at which he goes into adverse possession. 42 His title derives from no-one; rather his right is new and original, having arisen out of the fact of his taking possession. The squatter ’ s title is a relative one. Being inferior to the real owner ’ s title, it exists in a second-tier world — what is termed here the proprietary underworld — but the squatter ’ s title is nonetheless proprietary. Thus, even though the nemo dat principle may prohibit Bruton from acquiring a title derivately from LQHT ’ s licence, the principle is immaterial to the acquisition of a second-tier original and relative title. thus, a weakness in Dixon's analysis is that he overlooks the fact that the tenant might have acquired an original, relative title, rather than necessarily a derivative one! Goymour argues that Dixon's view rests on a one-dimensional view of property whereby title must derive from the owner's relativity; Bright also rejects this explanation of Bruton on the basis that English law is premised on the acquisition of title derivatively (AND NOTE THAT THIS IS MORE IN LINE WITH AIM OF LRA!!) - relativity of title is a doctrine which predates LRA 1925, although it is conceptually sound, is it in line with either Parliamentary intention or pragmatism? Re Parliamentary intention - perhaps - evidence that adverse possession is recognised, but arguably this should be scrapped + exception in that it is justified by reference to land being next to abandoned! Whereas here, clear intention to reclaim the lan and granting a property right would contravene parties' intentions!! Re pragmatism, seems like fostering community is good but contravenes the alienability of land. This principle should not pursued in a blinkered way. Indeed, Art 8 can defeat registered purchaser (albeit very narrow and proprietary estoppel and constructive trusts illustrate that there are countervailing considerations, namely certainty is not analogous to justice, and the former should not supplant the latter.

Answer 183

These are termed here ‘ non-consensual original acquisition ’and ‘ consensual original acquisition ’ , respectively.

Answer 184

Non-consensual original acquisition is the archetypal mode of acquiring an original title, and is epitomised by the law of adverse possession. It is the fact of possession which itself generates the squatter ’ s title. Upon this happening, there are two competing fee simple titles to the land (belonging to the squatter and the paramount owner respectively), to which the law gives relative rankings. The priority of relative and competing non-consensual original titles is determined on a ‘ first in time ’basis. Thus, the squatter ’ s title is inferior to the real owner ’ s title, but is enforceable against everyone else in the world. ``` Being proprietary, the squatter ’ s fee simple bears some important key features: it can be alienated (by an outright conveyance, or via the creation of a lease or mortgage over the estate), registered (in the ‘ possessory ’class of title), 45 and it gives the squatter standing to sue in trespass anyone entering the land without permission (excepting the real owner, and those acquiring title via the real owner). ``` NB Elizabeth Cooke, in a chapter tellingly entitled ‘ Whatever Happened to Relativity of Title ? ’ , to suggest that relativity of title ‘ is no longer …an important concept ’. In time, she suggests, the squatter may cease to be regarded as having a fee simple, or any property right at all. Goymour disagrees! 'relativity of title remains of fundamental importance in English law, not only as a means of regulating the proprietary underworld that squatters inhabit, but also because it operates in other spheres, for example in cases of consensual original acquisition

Answer 185

Where someone goes into exclusive possession of land with the owner ’ s consent, but in circumstances which do not confer on him a derivative title, the possessor might nonetheless acquire what is termed here a consensual original title. It seems immaterial to the generation of a possessory fee simple title whether the possessor occupies the land adversely (in the case of a squatter), or with the owner ’ s consent; in either case, in the absence of a derivative title stemming from the owner ’ s rights, an original, relative title should arise out of the fact of possession. There are at least two possible counter-arguments: (1) it might be argued that, by definition, it is impossible to be in exclusive possession when one cannot exclude the real owner; however, this argument does not prevent a squatter being in exclusive possession (see JA Pye (Oxford) Ltd v Graham) and should be equally irrelevant in the consensual possession context; (2) it is arguable that, because the possessor is there with the owner ’ s consent, his title inevitably derives from the owner, and is therefore derivative. The better view, however, is that unless the owner gives the possessor a derivate interest (such as a lease), the owner has done nothing more than put the possessor into a position whereby the latter can acquire his own original title.

Answer 186

First — and most straightforwardly — Lambeth Council, as owner of Flat 2, Oval House, held the superior fee simple throughout the Bruton saga. 2. LQHT ’ s title — being original and relative — would have been enforceable against everyone except the Council and anyone deriving title from the Council 3. Bruton ’ s proprietary title is derivative, it nonetheless derives from a merely relative title — that of LQHT. Accordingly, Bruton ’ s lease exists in the same relative proprietary underworld as LQHT ’ s fee simple, and, as such, is intrinsically vulnerable to the Council ’ s paramount rights. 'Lord Hoffmann ’ s conclusion that Bruton ’ s rights were merely contractual was, with respect, too conservative. If either LQHT or Bruton (or both) took possession of the flat, Bruton acquired proprietary rights as well. These rights are fully-fledged property rights, but, being located beneath the paramount ownership rights of the Council, they take effect in the so-called proprietary underworld.'

Answer 187

the doctrine gives legal effect to leasehold agreements in cases where the purported landlord lacks a proper derivative title out of which the tenancy might be granted. Mumery LJ says 'the parties are instructed ‘ to treat an imaginary state of affairs as real ’ , and where ‘ the consequences of treating that imaginary state of affairs as real must also be imagined as real ’ (Bell) But Goymour challenges this conception of estoppel tenancies, by revealing that they are best understood not as figments of the imagination, but as real tenancies that operate as relative property rights. NB: In Bruton, the HL considered and dismissed the argument that Bruton enjoyed a tenancy by estoppel because the only question actually raised in Bruton was whether, for the purpose of implying statutory repairing obligations, Bruton held a lease. Having determined (a) (controversially) that leases need not be proprietary; and (b) that Gary Bruton enjoyed a non-proprietary contractual lease, their Lordships considered it unnecessary to find any tenancy by estoppel.

Answer 188

conclusion of this section: Two important conclusions may be drawn from this brief exploration of the tenancy by estoppel doctrine. First, bar a few niggling discrepancies, estoppel tenancies can be explained in relativity of title terms. Secondly, there is obvious merit in integrating the two sets of rules into a coherent body of law, along the lines already suggested. Doing so enables a more complete and more refined picture to be formed of tenancies, like Gary Bruton ’ s, that are not derived from the real owner ’ s title, and which exist in the proprietary underworld as relative proprietary interests.

Answer 189

Thus, the foregoing analysis establishes that it is possible to regulate the proprietary underworld by recognising relative titles, and that there is precedent for doing so in the tenancy by estoppel doctrine. However, the question remains whether such regulation is desirable as a matter of policy. At least three reasons combine to suggest that it is. (1) First, at least some form of legal regulation of the proprietary underworld is needed - such underworlds are common in London. - It is axiomatic that there should be clarity as to the rules governing these cases, rather than leaving the court to decide them on an ad hoc and instinctive basis. (2) there is no need to write the rule-book from scratch in order to achieve this clarity: the doctrine of relativity of title, when combined with the rules on estoppel tenancies, provides a ready-made matrix of property law rules which can be implanted straightforwardly into the proprietary underworld. (3) the doctrine of relativity of title not only provides a means by which property disputes might be clearly resolved; with its focus on protecting possession in this context, it provides a desirable set of rules. As has long been recognised in the chattels context, it is in the interests of preserving a peaceful society that possession, however obtained and even where the possessor is not the true owner, is safeguarded against the unauthorised incursions of strangers. 91 Without the relativity of title doctrine, strangers could lawfully take property from any non-owning possessor. This would inevitably lead to a free-for-all in the proprietary underworld — a situation which should be neither encouraged nor permitted.

Answer 190

Consequently, increasing numbers of squatters will choose to live ‘ outside the [registration] system ’ , in the proprietary underworld. But even though such squatters may never become owner, they nonetheless hold relative proprietary interests, which should be properly recognised as being fully alienable, and — crucially — enforceable against everyone bar the owner and the owner ’ s disponees Indeed, squatters ’relative titles are recognised by schedule 6 of the Land Registration Act 2002 itself: paras 5(4)(c), 9(1) and 11(2).

Answer 191

1. The nemo dat principle dictates that A cannot generally confer proprietary enjoyment on B which he does not himself have. 2. However, the nemo dat principle presents no barrier to the possibility that B might acquire an original, relative proprietary interest by virtue of his going into possession — whether he takes possession with or without the true owner ’ s consent. Any title B thereby acquires ranks below the paramount owner ’ s title in terms of its priority, and therefore exists in the proprietary underworld. The twin doctrines of relativity of title and tenancy by estoppel, when taken together, provide a rich account of the nature and content of B ’ s rights. 3. In situations where A has already granted a proprietary interest (such as a lease) to X, the nemo dat principle does not prevent A from granting an equal and competing derivative right to B. In such a case, X ’ s and B ’ s rights, being inconsistent, cannot co-exist in the same proprietary world; instead they co-exist as relative titles, with the established rules on priority determining whose right exists in the proprietary overworld, and whose is pushed down into the proprietary underworld. 4. It is important, as a matter of policy, that proprietary rights which inhabit the relative proprietary underworld are recognised as being proprietary and are properly regulated as such. 'Whilst the doctrine was overlooked in their Lordships ’ explanation of their decision in Bruton, the wider Bruton story provides a fitting backdrop — and a compelling social case — for reviving property lawyers ’awareness and understanding of relative titles. It is for this reason that Bruton deserves recognition as a landmark case.'

Answer 192

Z will want to show that A, B and C have a contractual licence because, as per Fox LJ in Ashburn Anstalt, ‘a mere contractual licence to occupy land is not binding on a purchaser of land even though he has notice of the licence.’ Notwithstanding the label ‘licence agreement’, Street v Mountford is authority for rule that 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 (per Lord Templeman). A lease, by contrast, is a legal estate in land which is usually capable of binding third parties (except in the case of a Bruton lease, with which we are not concerned). Each element will be examined in turn. In the present case, there is multiple occupancy of the house by A, B and C. The right to exclusive possession of the property can be held by multiple occupants if they are joint tenants, as seen by the couple in Antoniades v Villiers, provided the four unities are satisfied: possession, title, time and interest (AG Securities v Vaughan per Fox LJ sitting in the CA). First, Lord Templeman (Lord Ackner agreeing) in the joint House of Lords case Antoniades/Vaughan, drew a distinction between the four tenants of the house, each entitled to one room and sharing the common parts, coming together and agreeing to exclude anyone else from the flat and each having exclusive possession of the flat jointly whereby death of one tenant would not affect the remaining tenants from excluding a fourth person. In the present case, there is no evidence that house number 1 is internally divided which suggests that A, B and C can make full use of the property and that X intended that they be free to do so. Though they have separate rooms, meaning that they do not physically occupy the whole property, there is no sharing covenant such as that found in Antoniades which restricts how they may use the living rooms etc. Moreover, the very nature of the property (i.e. a house) lends itself to exclusive possession to a greater extent than an apartment or student accommodation in which there is clear separation between the various rooms. Equally, if A, B or C were to die, on the face of the agreement, the remaining occupiers would not be able to exclude a third occupier since a room would have become available (as per clause (b)). However, this reserved right is much narrower than the sharing covenant in Antoniades and Stribling v Wickham. In the latter case, four rooms were occupied by three friends and landlord reserved the right to place other licensees at his discretion. In the present case, there are only three rooms for three occupiers. It is therefore more analogous to Somma, in which it was physically impracticable to introduce another occupant because both beds were in a single room. Secondly, the interest of the co-owners must arise out of the same instrument for title. We are told that A, B and C sign separate licence agreements. This is not fatal to the existence of a joint tenancy where the different agreements are ‘interdependent’ (Antoniades per Lord Templeman). Whether the agreements would have been signed independently from one another in part depends on the nature of the relationship between A, B and C. The fact that they are friends (they ‘wanted to live together’) makes it more likely that one agreement would not have been signed without the other. It can therefore be contrasted with Westminster CC v Clarke, in which the licensees were strangers. Nonetheless, the present case is weaker than that in Antoniades in which the couple were living as husband and wife. On the other hand, the fact that the agreements are identical provides countervailing evidence that a joint tenancy was intended but is masked by a sham. Although Stribling illustrates that this is not decisive (the three friends had identical agreements but the court held that there were only licences, the present case can be distinguished from Stribling because in the present case A, B and C are still in possession of the house. Thirdly, the present case clearly satisfies unity of time because on 1 January 2017, X agreed with A, B and C that they could reside in the house from 1 March 2017. It must be noted that in Mikeover, two parties entered into the an agreement at the same time, yet the contemporaneous nature was not enough to render it a lease. Fourthly, the fact that each month, A makes a single payment to X on behalf of B and C. Thus, the present case can arguably be distinguished from Mikeover Ltd v Brady, in which the obligation to pay separate monthly sums, being several (as opposed to joint obligations) destroyed unity of interest in order to create a joint tenancy. Yet, in Mikeover the use of single check was not sufficient to amount to joint tenancy as it was merely a matter of convenience. Nonetheless, we can infer from the fact that A, B and C wanted to live together and signed the separate ‘licence agreement[s]’ on the same that they negotiated as a single entity rather than three individuals. Slayer held that Lord Templeman was There is clearly rent (£500 each month per occupier, though this is jointly paid by A). In addition, both s. 205(1)(xvii) LPA 1925 and Ashburn Anstalt provide authority for the claim that rent is not a strict requirement. The agreement satisfies the requirement for certain term (Lace v Chantler) because both the date of commencement and duration (2 years from the 1 March 2017) are clearly stated. X is the registered freehold proprietor and so is a capable grantor of the lease and we can infer that A, B and C are above 18 to hold a legal estate in land (s. 1(6) LPA 1925) and suffer from no mental illness. For a legal lease to be granted, ordinarily a deed must be used (s. 52 LPA 1925). At first glance, the lease falls within the exception in s. 54(2) LPA 1925, as it is for under three years and is at the best rent. However, another condition is that it should take effect in possession. The present lease is reversionary because it takes effect two months after they sign it and we know from Tower Hamlets that reversionary leases can only take effect if made by deed. Notwithstanding the lack of a deed, the lease may take effect in equity following Walsh v Lonsdale if the licence agreement complies with the requirements in section 2 LP(MP)A 1989 (in writing, incorporate or refer to a document that incorporates all the agreed terms and must be signed by or on behalf of the parties). This is to give effect to the doctrine of anticipation which states that ‘equity looks on as done what ought to be done’. Equitable leases are not overriding (City Permanent BS v Miller). However, provided A, B and C are in actual occupation (there is no evidence either way), and they (a) did not fail to disclose their interest to Z if asked (no evidence of this) and (b) their occupation would not have been obvious upon reasonably careful inspection of the land at the time of Z’s purchase of the land and Z did not know about their interest, Z will not be able to claim possession of the property. If the formalities in s. 2 LP(MP)A 1989 have not been complied with, then A, B and C will have a contractual licence which will not bind Z since contractual licences are personal in nature (National Provincial Bank v Ainsworth). Z will take the property free from their interest as there is no evidence to support a potential constructive trust (Ashburn Anstalt).

Answer 193

With respects to J and K On 1 August 2017, X agreed in writing with J and K that they could immediately and exclusively occupy the other house (‘house 2’) from year to year at a rent of £1,300 per month. X agreed with J and K that he would not serve a notice to quit unless and until X’s daughter needed somewhere to live. There are no issues with rent and exclusive possession (£1,300 per month/’exclusively occupy’). The question arises whether there is a certain term (Lace v Chantler). The present lease is an expressly granted periodic tenancy (‘from year to year’). Neuberger confirmed that ordinarily periodic arrangements determinable by either party (e.g. at a quarter’s notice) can give rise to a valid difficulty. However, the present case is analogous with Berrisford v Mexfield, in which Mexfield could only terminate in arrears of rent (an uncertain event) because X can only serve a notice unless and until X’s daughter needs somewhere to live. Thus, the landlord’s power to serve notice to quit is ‘fettered’ as it is for an uncertain period (Mexfield per Neuberger LJ). In Mexfied, the Supreme Court held that under common law any uncertain lease would be converted to a lease for life, which is converted into a lease for 90 years (s. 149(6) LPA 1925) subject to the landlord’s right to determine on the tenant’s death. This rule can only apply if J and K are individuals and not companies using the premises for business purposes (more likely to be individuals). Although Lady Hale (at 93) and Lord Dyson (at 117) said that all uncertain terms were ‘automatically’ transformed into leases for life/90 years, this absolutist approach was doubted in Southward Housing v Walker. In the latter case, Hilyard J held that though the rule in Mexfield does not depend on the intentions of the parties, it may be disabled where it contradicts some ‘fundamental aspects of their agreement’ i.e. a provision which grants the landlord the power to serve a notice. In the present case, X’s provision ‘to serve notice unless and until X’s daughter needed somewhere to live’ evinces a clear intention to retain a power to serve notice, contrasting with the minimal power to serve notice only in arrears of rent in Mexfield. Therefore, no such 90-year lease can be implied. If part of the lease, then they would have a contractual licence. If not part of the lease, then like Prudential, where the fetter was not part of the lease and so not binding, a periodic tenancy would arise. If J and K have a contractual licence, then it cannot bind Z (Ashburn Anstalt). If J and K have a periodic tenancy, then it would bind Z; s. 54(2) will apply since the maximum period of the lease is less than three years (it is a monthly tenancy) and it will bind Z as an overriding interest as per Schedule 3 para. 1 LRA 2002. If the courts conclude that Mexfield does apply, then Z would not be bound because J and K’s lease is neither registered (necessary for all leases over 7 years as per LRA 2002, s. 4(1) and s. 27(2)(b)) nor made by deed (s. 52 LPA 1925).

Answer 194

Although the statement should be true, the law is less clear. First, part of the confusion stems from disagreements over whether the conventional view of property (which takes root in National Provincial Bank ltd v Ainsworth) or a non-conventional view of property (relativity of title) should be adopted. While the former would maintain the distinction, the latter dispenses with a strict dichotomy and regards proprietary and personal rights as on a continuum. It will be argued that the former approach is preferable. Secondly, one qualification to the statement is that most leases are in one sense both proprietary and personal: they are estates in land (per s.1(b) LPA 1925) but they also establish personal obligations between the lessor the lessee via the contract or oral agreement. Notwithstanding this qualification, they are not solely personal, which would be a ‘contradiction in terms’ (Dixon). However, Lord Hoffmann and Lord Hobhouse’s judgments in Bruton challenge this clarity. Yet, we can maintain clarity by explaining that case by reference to estoppel by grant or a purposive statutory interpretation. Between these two options, the latter represents the best way forward, as recognised by the Law Commission Report No 297. Thirdly, the reasons for regarding licences as personal outweigh the arguments in favour of recognising (at least some of) them as proprietary. Once again, however, the law is not so clear.

Answer 195

Invoking a proprietary right asserts a relationship between a person (A) and a thing (T). Crucially, the exigibility of a proprietary right is defined by the location of the thing (Birk). By contrast, the exigibility of a personal right is defined by the location of the person. A personal right is therefore best characterised as ‘an obligation’ (Birks), or a relationship between persons (A and B). However, it not true that B’s proprietary right will always bind C. C may have a defence, such as the lack of registration (per s. 29 and s. 30 LRA 2002). Secondly, it is not true that if B only has a personal right then B will never have a claim against a third party (C). B cannot assert against C the personal right. Yet, that does not prevent B having a different right that binds C, for example a constructive trust (Lyus v Prowsa) or a new direct right against C arising by proprietary estoppel. This clear distinction rests, in part, on a conventional view of property. Lord Wilberforce in National Provincial Bank Ltd v Ainsworth held that a proprietary interest is always ‘definable, identifiable by third parties, capable in its nature of assumption by third parties and have some degree of flexibility.’ Hinojosa expands upon this, identifying the twin indicia of ‘assignability and benefit’ and ‘enforceability of burden’. Yet, Gray and Gray have criticised the circularity of the definition whereby proprietary rights are those which are binding on third parties and such rights are those which are traditionally identified as proprietary. This has led some academics, such as Goymour, Hinojosa and Gray to favour the relativity of title approach. This non-conventional view of property places emphasis on degrees of control. Further, it is argued that the LRA does not completely supplant traditional land law principles. Whilst this latter point may be true (i.e. an adverse possession arguably confers a watered-down title from the moment at which the possession begins), extending the theory beyond its residual role would, and has in the cases of Bruton and Dutton, render the distinction between leases and licences doctrinally incoherent. Further, it would, as Bright has argued, drown out other key principles such as nemo dat quod non habet and is not necessary given that there are alternative means to achieve the underlying policy considerations of protecting particular licensees without blurring the distinction (discussed more fully below).

Answer 196

Section 1(b) of the LPA 1925 defines a ‘term of absolute years’ as being one of only two types of legal estates. The ‘essence’ of a legal estate, as noted by Lord Millet in the Court of Appeal in Bruton, ‘is that is binds the whole world, not just the parties to the grant and their successors’. We must qualify this: where the lease falls within s. 27(2)(b) LRA 2002 (i.e. over 7 years in duration), it must be registered or C will have a non-registration defence (s. 29 LRA 2002). A further qualification is that certain tenancies are not an estate, i.e. tenancies at will or by estoppel. Yet, these would not be called leases without qualification. Indeed, both are a kind of licence: the former is a kind of licence which pre-empts the creation of a lease and the latter is an estoppel by grant, which prevents the licensee from derogating from their grant (Routley). Subject to the qualifications mentioned, we can helpfully contrast the lease with the licence. Indeed, in Street v Mountford, Lord Templeman held that if exclusive possession at rent for a term did not constitute a tenancy, then the distinction between contractual tenancy and contractual licence become wholly illusory. Thus, even if leases were personal in nature, they are proprietary today. Equally, the lease can give rise to personal obligations. In fact, a lease usually gives rise to numerous contractual rights: the right to exclusive possession for a limited period, contractually agreed covenants and additional personal rights against the lessor. Further, some leases may not arise purely by contract, as in the case of periodic tenancies and oral leases of less than three years and take effect in possession for the best rent reasonably obtainable (ss. 52 and 54(2) LPA 1925). Such personal obligations however are not in conflict with the proprietary nature of the lease. The classification of the lease as proprietary addresses the content of the right and extend to the world at large. The personal obligation (i.e. those arising from the contract) tell us about the acquisition of the right and subsist concurrently between the lessor and lessee. The House of Lords decision in Bruton, however, challenges the claim that leases are necessarily proprietary. Lord Hoffmann held that a 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 or other proprietary interest which may be binding upon third parties.’ However, this reasoning is, as Dixon argues, a ‘contradiction in terms’. It flies in the face of the lord Templeman’s judgment in Street and subsequent Court of Appeal declarations that a lease necessarily involves an estate in land (Lord Greene MR in Milmo v Carreras and Lord Neuberger in Re Friends Provident). The only way to argue that the Bruton lease is proprietary is to abandon the conventional understanding of property and adopt relativity of title. This is how Roberts and Goymour rationalise the ratio. Yet, as Roberts notes, the crucial factual question is whether the Trust did in fact possess the land. Therefore, in addition to the reasons discussed above, we should reject the theory of relativity because the rights of the occupier, such as Mr Bruton, ought not to precariously depend on the position of the other party. Therefore, a better solution is to either justify the decision by reference to an estoppel by grant (Routley) or by reference to purposive statutory interpretation (McFarlane and Simpson). On the one hand, the latter approach may result in strained interpretations of statutes. For example, in Bruton, the word ‘lease’ was used, which generally means that a property right has been given. On the other hand, it recognises that the way forward lies not with the courts but in statute. The Law Commission has proposed establishing a single social tenure, consisting of a ‘secure’ and ‘standard’ contracts (No 297). Such contracts would benefit landlords by clearly stating what the rights and obligations are. Further, such an approach would permit the courts to focus on the doctrinal definition of a lease.

Answer 197

Licences are the most prominent example of a personal right. The starting position is that licences are a mere permission which make lawful that which otherwise would be unlawful (Thomas v Sorrell per Vaughan CJ). This is clearest in the case of a bare licence, i.e. where A invites B to have dinner in A’s home. In this scenario, however, B merely has what Hohfeld would term a ‘privilege’. However, there is no corresponding duty on A not to revoke. Where a third party acquires the land, this impliedly terminates the bare licence. Since A was under no obligation to B to not to revoke the licence (Wood v Leadbitter), the licence cannot be proprietary. In National Provincial Bank v Ainsworth, a wife could bring proceedings against trespassers. However, this right stemmed not from her licence, but from her possession, or ‘dominion’ (Lord Upjohn), an independent property right. The court rejected such licences from being regarded as property rights, which Lord Wilberforce regarded must be ‘definable, indefinable by third parties, capable in its nature by assumption by third parties, and have some degree of permanence’. Clearly such permissions lack the requisite ‘permanence and stability’. The law is justified in not recognising such privileges as property rights, since doing so would prevent A from freely inviting people onto their land without creating property rights that would burden A’s quiet enjoyment of their possession (contrary to A1P1) and possibly interfere with their right to a home (contrary to Article 8 ECHR). It would also burden the land without any countervailing benefit, undermining the land’s alienability (a core tenet of the 1925 and 2002 LRA) and deterring purchasers from buying the land which is now worth less due to the encumbrances. Further, these encumbrances correspond with greater transaction costs due to the need to investigate each interest, and as argued by Coase, such transaction costs ultimately limit the ability of the market to achieve a wealth-maximising allocation of rights. Turning to statutory licences and licences coupled with a grant, it is the accompanying interest which gives it proprietary characteristics. First, statutory licences do not operate as a standard interest in land. For example, if B has a statutory right under s. 30 Family Law Act 1996, B’s failure to protect that right by entering a notice on the register prevents B from asserting that right against C. Yet, even if a standard equitable interest in land is not registered, it can defeat C’s lack of registration defence if it is coupled with actual occupation (Schedule 3 para 2 LRA 2002). Secondly, licences coupled with a grant, such as a profit a prendre, only bind third parties because of the accompanying property right (James Jones). The law is, unfortunately, less clear in the case of contractual licences and estoppel licences. In the case of contractual licences, there is inconsistency with regards to whether the B can enforce A’s duty not to interfere with B’s use of the land against a third party. In Manchester Airport plc v Dutton, Laws LJ held that the licensee who was not in possession could obtain an order for possession against trespassers before they had entered occupation. Although confirmed by Lord Neuberger in Mayor of London v Hall and ors, the reasoning in Dutton is unconvincing. First, it defies precedent. No reference was made to Hill v Tupper which provides a clear exposition of the difference between a personal right and a property right and it flies in the face of Hunter v Canary Wharf, in which licensees not in possession had not rights against third parties. Secondly, as Lochery argues, Laws LJ’s argument that it is only logical for a licensee out of possession to have the same rights as a licensee in possession obliterates the distinction between a right of possession and a right of mere occupation. Indeed, such a distinction was made clear in National Provincial Bank v Ainsworth, mentioned above. The wife could bring proceedings against trespassers because she had a separate right to the contractual licence, possession! Further practical difficulties arise with this analysis, namely what degree of possession is required? When will such a right ‘effectively amount’ to possession? This invites the drawing of arbitrary lines. In addition, Laws LJ’s judgment renders the tort of interference with contract partially irrelevant and ultimately has a hint of ‘discretionary remedialism’ (Birks), having decoupled the remedy of an order for possession from its prerequisite liability. Once again, this inconsistency can be explained by reference to relativity of title. We can argue that Manchester Airport could enforce possession against those with lesser title (i.e. the trespassers). Yet, one justification for the existence of relativity of title in the context of adverse possession is the recognition that, as Hume notes, ‘men generally fix their affections more on what they are posses’d of than what they never enjoyed… it would be a great cruelty to dispossess a man of anything than not to give it to him.’ The weight of this argument has been curtailed by the LRA 1925 and 2002. However, where there is possession, as in the case of NPV v Ainsworth and no countervailing registered interest, Hume’s argument carries weight. To disrupt the wife’s possession of the house in NPV v Ainsworth would cause greater distress to her than preventing the trespasser from claiming their right. In Dutton, however, the land was not occupied, so the case should have been distinguished. With regards to third party purchasers, since Asburn v Anstalt, the contractual licence is now firmly out of the territory of property. Licences did once hover ambivalently on the threshold of property. Although King v David Allen held that a licence was not an interest in land as far back as 1916 (per Lord Buckmaster), Errington v Errington sought to depart from this orthodoxy. Denning LJ concluded (Somvervell LJ agreeing) that because of Equity, a contractual licence cannot be revoked by breach of contract (and specific performance may be available) – neither the licensor nor his successors in title could ignore the contract except a purchaser for value without notice, thus conflating the availability of a remedy for the right’s enforcement with its nature. This view was reluctantly applied by Lord Browne-Wilkinson in Re Sharpe and by Lord Denning in DHN, but ultimately rejected by Ashburn v Anstalt. Support for rejecting the claim that contractual licences are non-proprietary can derive support from statute too: s. 4(1) LPA 1925 prevents the creation of proprietary interests which did not exist before 1926. Yet, the courts have been reluctant to address the full implications of s. 4(1) LPA, since it was not cited in Ashburn v Anstalt. Hill argues that in light of this, not much significance should be attached to s.4(1). Yet, this is short-sighted. S. 4(1) is a statutory confirmation of the numerus clausus principle. Rudden challenges the principle’s efficiency, claiming that where parties are unable to create their desired property right, they would resort to complicated legal mechanisms rendering the law incoherent. Indeed, McFarlane agrees that recognising a right may in fact be beneficial for purchasers, as a defined right causes less uncertainty, citing the example of restrictive covenants. However, unlike restrictive covenants, contractual licences undermine security of tenure without a countervailing benefit to the land. Furthermore, B has adequate protection without elevating the contractual licence which would make it prima facie binding on C. Proprietary estoppel and the constructive trust were less prevalent when Lord Denning passed his judgment in Errington v Errington. Moreover, A1P1 and Article 8 ECHR may provide additional protection, provided that the licensor is a public authority (interpreted broadly), and a licensee can benefit from the Eviction Act 1977. Finally, contractual licences which do grant exclusive possession would be a lease (Street v Mountford). Whilst each mechanism has its limitations (i.e. the narrow interpretation of the constructive trust in Chaudhary v Yavuz; the elements of proprietary estoppel; ‘exceptional’ circumstances in the case of human rights per Lord Neuberger in Pinnock), together they provide ample protection. Section 116(b) LRA therefore must be interpreted as not elevating the contractual licence to proprietary status, confirmed by the Law Commission 271 para 5.32-5.37. Finally, estoppel licences present an exception to the rule that licences are not personal. In registered land, s. 116(1) LRA 2002 provides that an equity by estoppel is capable of binding purchasers, provided of course that it is combined with actual occupation (Sch 1, para 2 and Sch 3, para 2 LRA 2002). We could argue that it is the estoppel that grants the licence its proprietary effect. Yet, why should a licence arising through proprietary estoppel operate differently to a contractual licence? Although the Law Commission and Preedy v Dunne confirmed that is the effect of a licence arising via proprietary estoppel. Thus, greater coherence could be found by adopting McFarlane’s view that s. 116(a) should be interpreted so as to mean that a right is capable of binding C when the nature of the right is proprietary; thus, a licence arising by estoppel would not bind C.

Answer 198

The law should move towards re-establishing a clear distinction between leases and licences. The arguments in favour of adopting relativity of title were considered and rejected. Thus, cases such as Bruton and Dutton which appear to rely on this notion of relativity of title have blurred the line. At best, these cases invite reconsideration of the importance of the distinction between leases and licences and alternative foundational conceptions of property. At worst, they are instances of discretionary remedialism. In the case of leases, it is argued that Parliament should give effect to the Law Commission’s proposal for establishing a single social tenure. In the case of licences, it is argued that licensees are given adequate protection. Overextending proprietary rights to licences, including contractual and estoppel licences, would unduly blur the important line between what should give rise to a personal right and what should give rise to a property right.

Answer 199

There are two prevalent definitions of a ‘proprietary’ right. The first takes root in National Provincial Bank ltd v Ainsworth, and is defined by Lord Wilberforce as ’definable, identifiable by third parties, capable in its nature of assumption by third parties and have some degree of flexibility.’ Under this definition, most leases are proprietary. Unfortunately, Lord Hoffmann and Lord Hobhouse’s judgments in Bruton do great violence to orthodox land law principles, by establishing a ‘contractual/non-estate lease’. However, this is, as Dixon has noted, a ‘contradiction in terms’. Alternatively, we can support the statement that all leases are proprietary by invoking the relativity of title doctrine, as Goymour, Hinojosa and Roberts do. However, this approach raises doctrinal and practical concerns. This essay argues that a better solution lies in statutory reform. With regards to the second part of the question, it is essential that a lease is for a term of certain maximum duration. Despite academic and judicial criticisms of the rule, there are important doctrinal, historical and practical reasons for its continued existence. Nonetheless, once again, the solution to the issues raised by the rule’s existence can be found in statutory reform.

Answer 200

ection 1(b) of the LPA 1925 defines a ‘term of absolute years’ as being one of only two types of legal estates. The ‘essence’ of a legal estate, as noted by Lord Millet in the Court of Appeal in Bruton, ‘is that is binds the whole world, not just the parties to the grant and their successors’. This adheres to a conventional understanding of a proprietary right, which asserts a relationship between a person (A) and a thing (T). Crucially, the exigibility of a proprietary right is defined by the location of the thing (Birk). By contrast, the exigibility of a personal right is defined by the location of the person. A personal right is therefore best characterised as ‘an obligation’ (Birks), or a relationship between persons (A and B). Therefore, we can helpfully contrast the lease with the licence. Indeed, in Street v Mountford, Lord Templeman held that if exclusive possession at rent for a term did not constitute a tenancy, then the distinction between contractual tenancy and contractual licence become wholly illusory. Thus, even if leases were historically personal in nature, they are proprietary today. The statement must be qualified, however. The fact that leases are proprietary is only half the story. The lease can give rise to personal obligations. In fact, a lease usually gives rise to numerous contractual rights: the right to exclusive possession for a limited period, contractually agreed covenants and additional personal rights against the lessor. Further, some leases may not arise purely by contract, as in the case of periodic tenancies and oral leases of less than three years and take effect in possession for the best rent reasonably obtainable (ss. 52 and 54(2) LPA 1925). Such personal obligations however are not in conflict with the proprietary nature of the lease. The classification of the lease as proprietary addresses the content of the right and extend to the world at large. The personal obligation (i.e. those arising from the contract) tell us about the acquisition of the right and subsist concurrently between the lessor and lessee. On the other hand, we can altogether challenge the statement by pointing to the House of Lords decision in Bruton. Lord Hoffmann held that a 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 or other proprietary interest which may be binding upon third parties.’ However, this reasoning is, as Dixon argues, a ‘contradiction in terms’. It flies in the face of the Lord Templeman’s judgment in Street and subsequent Court of Appeal declarations that a lease necessarily involves an estate in land (Lord Greene MR in Milmo v Carreras and Lord Neuberger in Re Friends Provident). The only way to argue that the Bruton lease is proprietary is to abandon the conventional understanding of property and adopt relativity of title. This is how Roberts, Hinojosa and Goymour rationalise the ratio. The benefit of adopting this approach is that it avoids the circularity of what constitutes a ‘proprietary right’ under the conventional approach by placing emphasis on degrees of control. By way of example, the House of Lords in Kay v Lambeth LBC held that an adverse possessor acquires title in the land and is capable of granting a lease as a ‘non-estate’ tenancy, which would bind everyone except the real owner of the land (and those who derive title from that owner). The same reasoning applies to tenants under a Bruton lease. Crucially, this approach permits the courts to protect those who qualify for statutory protection (i.e. s. 11 of the Landlord and Tenant Act 1985). Doctrinally, adopting relativity of title more broadly may blur the line between personal rights (i.e. licences) and proprietary rights (i.e. leases). Beyond Bruton, Dutton has also been criticised on the basis that Laws LJ granted a contractual licensee a proprietary right (see Swadling). Once against, this decision can be explained by reference to relativity of title, since the contractual licensees had better title to seek possession than the trespassers. However, this has the effect of undermining the numerus clausus, which has important policy considerations underpinning its existence (i.e. limiting the rights the burden the land and that might affect a purchaser). It also, as Bright has argued, downs out other key principles such as nemo dat quod non habet. Practically, Robert concedes that the crucial fact is whether the Trust did in fact possess the land. Therefore, the occupier’s right is precariously dependent on the position of the other party, which may lead to arbitrary differential statutory protection for a factor which is beyond the occupier’s control. Therefore, a better solution is to either justify the decision by reference to an estoppel by grant (Routley) or by reference to purposive statutory interpretation (McFarlane and Simpson). Focusing on the second (for reasons of space), a setback of McFarlane and Simpson’s proposal is that it may lead to stretched statutory interpretations. For example, in Bruton, the word ‘lease’ was used, which generally means that a property right has been given. However, the Law Commission has proposed establishing a single social tenure, consisting of a ‘secure’ and ‘standard’ contracts (No 297). Such contracts would benefit landlords and occupiers by clearly stating what their rights and obligations are. Further, such an approach would add much needed clarity to the by reinstating the rule that all leases are proprietary.

Answer 201

The general position is that a lease must be for a certain maximum duration. As the Supreme Court recognised in Mexfield, the 1925 supports this rule. S. 205(1)(xxvii) defines a term of years as liable to determination and s. 149(6) converts a life tenancy to a term of years of 90 years, converting an uncertain duration into a certain duration. The case law has generally adhered to the rule. In Lace v Chantler Lord Greene MR held that a term ‘must be expressed either with certainty and specifically by reference to something which can, at the time when the lease takes effect, be looked to as a certain ascertainment of what the term is meant to be.’ Thus, in that case, the lease was void because it was for the duration of the war. It was ‘impossible to say how long the tenancy would last’. Fox LJ in Asburn Anstalt v Arnold, however, upheld a lease in which the occupier was allowed to remain until they had provided the landlord a quarter’s notice. He held that this, in effect, mitigated the ‘vice of the uncertainty in relation to the duration of the term’, which was that the parties did not know where they stood. Nonetheless, this was subsequently overruled by Lord Templeman in Prudential on the basis that certainty of term was one of the hallmarks of a lease. Therefore, though Lord Browne-Wilkinson Lord Browne-Wilkinson described the rule as an ‘ancient and technical rule of law’ which has ‘no satisfactory rule of law or useful purpose’, it remains a central tenet of the lease. A counter-argument might point to periodic tenancies. Lady Hale noted that periodic tenancies pose ‘something of a puzzle’ to the law which otherwise insists on a certain maximum term. Yet, as subsequently noted by her Ladyship, ‘in one sense the term is certain’, since it will last for a maximum duration of the period (i.e. a week, month etc.) Though this may be the case in theory, in practice, since the lease automatically renews until one party gives notice to quit, the maximum term is uncertain. Crucially, this does not curtail the lessor’s freedom indefinitely, however, as they retain the power to give notice when they want. Moreover, where there is an uncertain term (i.e. those found in clause 6 of the occupation agreement in Mexfield), the court may imply a 90 year term subject to determination by death of the tenant, provided that this is not inconsistent with the intentions of the parties (cf Southward). This raises the final question as to whether this rule should apply. Lord Neuberger opined that there was ‘no apparent justification’ but that he would not support jettisoning it in Mexfield. Similarly, Lady Hale memorably described rules as having an ‘Alice in Wonderland quality’. Further criticisms of the rule include the fact that it limits the contractual freedom of the parties for little apparent benefit (argued by counsel in Mexfield) and, as noted above, the rule appears inconsistent with the existence of periodic tenancies. However, Low argues that judicial criticism of the rule is misplaced, at least with regards to the way in which the rule interferes with the autonomy of the parties. As low points out, however, ‘it has long been recognised that contracting parties may not create property rights willy nilly as they fancy which thereafter bind their successor.’ In addition to the practical concerns set out by Lord Neuberger for keeping the rule (i.e. its antiquity, the fact that it is implicit in the definition of a term of years for the purposes of the LPA 1925 and because it was accepted, albeit reluctantly, by the House of Lords in Prudential), the rule ultimately concerns a fundamental element of property law, namely the numerus clausus. One counterargument might point to Bruton, in which the House of Lords recognised that it is possible to create a lease that is not a legal estate. It might be argued that the certainty rule should similarly be regarded as part of the requirements for a proprietary lease (by virtue of s. 1(1)(b) LPA 1925), rather than an essential characteristic of leases as such. Yet, having rejected the correctness of Bruton on doctrinal and practical grounds, such an argument (in the author’s opinion) puts too much weight on unstable ground. Finally, McFarlane notes that the rule is necessary for the lessor to know if and when he will be able to assert his right to exclusive possession. Uncertainty of term would undermine this right to exclusive possession. Moreover, as Williams notes, the rule reflects the fact that there is no such thing as a perpetual fee simple. Thus, the owner of land in fee simple cannot grant a perpetual right in land: nemo dat quod non habet. The solution to avoid the injustice that would have arisen in Mexfield, namely that Mexfield would have been able to remove Ms Berriford contrary to the terms of its agreement with her, is to push for legislative change. This solution was proposed by Lord Hope in Mexfield. However, in Southward, the court rejected the argument that the current statutory regime is discriminatory, and so contrary to their human rights. Though this argument was rejected, because Parliament has a wide margin of discretion to giver certain tenants more limited, as a matter of policy, rather than legality, there is an argument for extending the current statutory protection.

Answer 202

The claim that all leases are proprietary is clearly false in light of Bruton. Attempts to reconcile the claim with Bruton by way of relativity of title are conceptually and practically unappealing. A better solution is to recognise the importance of the distinction of the proprietary status of leases and reinterpret Bruton as justified by reference to a purposive statutory interpretation, thereby ensuring statutory protection without compromising doctrinal cohesion. Since this approach may stretch statutory meaning, the Law Com’s proposal should be implemented. In addition, the rule for a certain maximum duration should be retained. Judicial and academic criticisms are overstated. One again, the possible injustice that might arise from the rule’s operation can be most appropriately addressed by implementing a specific statute, extending statutory protection to tenants of fully mutual housing co-operatives.

Leases Flashcards

(226 cards)