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CYCLE 3: LEASES

READING LIST LECTURE 1: Gardner, pages 234-242, 247-251, 260-261 Dixon, pages 217-237 Street v Mountford [1985] AC 809 Mexfield Housing Co-operative v Berrisford [2011] 3 WLR 1091 Southward Housing Co-operative v Walker [2015] EWCA Civ 1375, [1]-[95] LECTURE 2: Gardner, pages 242-247, 251-252 Stribling v Wickham [1989] 2 EGLR 35 Aslan v Murphy [1990] 1 WLR 766 Antoniades v Villiers, AG Securities v Vaughan [1990] 1 AC 417 INDEPENDENT STUDY: THE NON-PROPRIETARY LEASE Bruton v London and Quadrant Housing Trust [2000] 1 AC 406 Susan Bright, ‘Leases, exclusive possession and estates’ (2000) 116 LQR 7 Martin Dixon, ‘The non-proprietary lease: the rise of the feudal phoenix’ [2000] CLJ 25 Nicholas Roberts, ‘The Bruton tenancy: a matter of relativity’ [2012] Conv 87

PRE- WORKSHOP TASKS -

Read the independent study material on the non-proprietary lease and watch the supplementary lecture entitled “Non-proprietary lease” Read the judgments of Lord Oliver and Lord Jauncey in Antoniades v Villiers Look at your occupation contract and work out whether you occupy under a lease or licence

WORKSHOP Task 1 Using the lectures and supplementary lecture, construct a diagrammatic guide to leases problem questions. You may find it helpful to cross-refer to the seminar, consolidation and formative problem questions. Check your diagram with your workshop tutor.

Task 2 Work through the following mini problem question. Check your answer with your workshop tutor. Alison, the registered proprietor of the freehold estate in Rosebud Cottage, recently retired from her job as a university lecturer and decided to embark on a round-the-world trip. She left the country earlier this year (1st July) telling Bianca, her daughter, that she could make use of Rosebud Cottage until her return on 1st August next year. Bianca decided to rent Rosebud Cottage to Charlotte. On 10th July, she executed a written document conferring on Charlotte the right to occupy the property to the exclusion of all others for a one-year term, in return for a monthly rent of £800 (market rent). Charlotte has now written to Bianca complaining of a breach of landlord repairing obligations contained in the Landlord and Tenant Act 1985. Bianca seeks your advice as to whether Charlotte is a “tenant” of Rosebud Cottage, benefiting from the protection afforded by the Landlord and Tenant Act 1985. Task 3 Using Lord Oliver and Lord Jauncey’s judgments, tackle the following questions about Antoniades v Villiers: Facts An experienced landlord allowed a man and his girlfriend to occupy four rooms in his  property – the top floor flat, via two separate licence agreements  There were separate beds within the flat, but the landlord knew that they were to live together as husband and wife as he supplied a double bed at their request The landlord, Agis Antoniades, claimed possession of the top flat at 6, Whiteley Road, Upper Norwood, London S.E.19, which premises were owned by him, from the occupants, William Robert Villiers and Sharon Bridger, to whom by the terms of two separate and identical agreements dated 9 February 1985 and signed by them the landlord had granted the right to occupy subject to the terms of the agreements. On 2 July 1987 Judge MacNair dismissed the landlord's claim and gave judgment on the occupants' counterclaim by declaration that each occupied the premises jointly as statutory tenants. Issue Was the presence of separate licence agreements an attempt to circumvent landlord and tenant legislation by avoiding the creation of a lease? Decision-Yes Reasoning A lease was created as all 3 parties intended that exclusive possession should be given to the couple (Joint tenant) I.

Why, on the face of the agreement, did Mr Villiers and Ms Bridger not have exclusive possession of 6 Whiteley Road? a. Intention? - Whole scenario as a whole? b. The couples were inter-dependent->Mr Antoniades – Knew the intention at the time of the contract, the ocuple opt-in for a double bed. The appellant was seeking for a joint room. Lord Oliver

-Letting of residential property of an appropriate rateable value attract the consequences of controlled rent and security of tenure provided by the Rent Acts… - The appellants in this appeal are a young couple who at all material times were living together as man and wife. In about November 1984 they learned from a letting agency that a flat was available in a house at 6, Whiteley Road, London S.E.19, Owned by the respondent, Mr. Antoniades. They inspected the flat together and were told that the rent would be £174 per month. They were given the choice of having the bedroom furnished with a double bed or two single beds and they chose a double bed. So, right from the inception, there was never any question but that the appellants were seeking to establish a joint home and they have, at all material times, been the sole occupants of the flat. Lord Jauncy My Lords, these two appeals which arise out of very different circumstances raise the question of whether arrangements permitting a plurality of persons to occupy furnished accommodation for a financial consideration constitute leases to which the Rent Acts would apply or licences to which they would not. The facts have been fully set out in the speech of my noble and learned friend Lord Templeman and it is therefore unnecessary for me to rehearse them in any detail. II. Why did Lord Oliver and Lord Jauncey consider the clauses/circumstances preventing exclusive possession to be pretence? III. What was the legal outcome of the case? (i.e. were Mr Villiers and Ms Bridger held to possess leases or licences? Why?) Check your answers with your workshop tutor.

SEMINAR Abigail is the registered proprietor of the freehold title to a 2-bedroom cottage: Exmoor Lodge. The cottage has a bathroom and kitchen, but lacks a sitting-room. As work is temporarily relocating Abigail to New York, she decides to rent it out. On 1st September this year, Abigail confers on Connor and Darren, two students at the local university, the right to occupy the cottage from 1st September until 1st July next year (the date on which they complete their studies). Connor and Darren tell Abigail how glad they are to have found her cottage, having searched for a suitable 2-bedroom property for a few months. Abigail enters into an agreement with Connor, signed by both Abigail and Connor, and another in identical terms with Darren, signed by both Abigail and Darren. Clause 3 of each agreement provides that Abigail can introduce another occupant into the cottage. Clause 4 of each agreement provides that each occupant is liable for all gas and electricity consumed in the cottage during their occupation. Clause 5 of each agreement provides that Connor and Darren are jointly liable for the market rent of £1000/month. Late October, Abigail decides to sell the freehold estate in Exmoor Lodge to Edgar. The sale is executed by valid deed, and Edgar is registered as proprietor in early November. Edgar failed to inspect the property before purchase and is now shocked to discover Connor and Darren in occupation. He wishes to obtain vacant possession of the cottage immediately. At no point during Connor and Darren’s two-month occupation prior to sale did Abigail seek to exercise her right under Clause 3 to introduce a new occupant into the cottage. Advise Connor and Darren.

    

Exclusive possession (Street v Mountford) Rent Certain term Under 3 years (registration not required) Not a permanent job -> Therefore not appropriate intention to introduce a new tenant/landlord

CONSOLIDATION QUESTION Andy, who lives in London, owns two furnished houses in Oxford. The freehold estate in each house is registered. On 1st January this year, Andy confers on Bernard exclusive possession of House 1 for two years. As Andy is keen to let the house quickly, he agrees that Bernard need only pay £100 a week; this is three-quarters of the market rent for the house. Andy and Bernard formalise their agreement in a document signed by both of them, and Bernard moves in immediately. On 1st March this year, Andy confers on Chris and Davina the right to occupy House 2. The agreement states that: (i) the right to occupy commences on 1st March; (ii) £100 rent is to be paid weekly; (iii) Andy can serve a notice to quit in the event of non-payment of rent; and (iv) Chris and Davina can serve a notice to quit at any time, provided that notice is given at least one month prior to termination. The agreement is formalised in a single document signed by Andy, Chris and Davina. Chris and Davina move in immediately thereafter. On 1st October this year, Andy sells both houses to Erin. Each transfer is effected by valid deed, and Erin is registered as proprietor of each house on 30th October. Erin didn’t inspect the houses prior to purchase and is surprised to find Bernard, Chris and Davina in occupation. She serves notices on them, telling them to leave by the end of December. Advise Bernard, Chris and Davina. INDICATIVE ANSWER BY C. WALTON Which right does B have over House 1? As B has the right to occupy House 1 it is possible that his right amounts to a lease (a right in rem entailing occupancy). Street v Mountford outlines the content requirements for an occupancy right to qualify as a lease: there must be exclusive possession, a certain maximum term and (arguably, post-Ashburn Anstalt) rent. These requirements are satisfied here. B has exclusive possession for a certain maximum term (2 years) and is paying rent (£100/week). B’s right has the correct content to qualify as a lease. A lease is a potentially legal right in rem (LPA 1925 s.1(1)(b)) which takes effect in law only if created with sufficient formality. As B is not paying market rent the lease cannot fall within LPA 1925 s.54(2) and so must be created by deed to be legal (LPA 1925 s.52(1)). There is no deed, so B’s lease cannot take effect in law. It may, however, be possible for the lease to take effect in equity via the doctrines of Parker v Taswell and Walsh v Lonsdale. Parker will treat A’s failed conferral as A validly contracting with B to confer the lease in the future, provided formalities satisfying LP(MP)A 1989 s.2 can be extracted from the failed conferral. This is so here: there is a written document (s.2(1)), signed by both A and B (s.2(3)) which presumably incorporates all terms (s.2(1)). Parker can therefore discover a valid contract to confer. The discovered contract is specifically enforceable as there is valuable

consideration (B’s weekly rent), damages would be inadequate (the contract’s subject-matter is land) and B’s conscience is intact; Walsh v Lonsdale can therefore generate an equitable right from the discovered contract. B has a 2-year equitable lease. Which right do C and D have over House 2? There are two barriers to C and D’s occupancy right possessing the correct content to qualify as a lease: exclusive possession and certain maximum term. Rent, if required, is present: C and D pay £100/week. Exclusive possession is the legal right to exclude all others; given this, multiple occupants can only be in exclusive possession if viewed in law as a single unit (i.e. joint tenants). Joint tenancy hinges on satisfaction of the four unities of possession, time, title and interest. These are satisfied here: C and D both possess rights over House 2 (possession), their rights vest on the same day – 1 st March (time), there is a single agreement signed by A, C and D (title) and C and D share a single set of legal rights and obligations including joint rent liability (interest). C and D are thus joint tenants, capable of holding the single right to exclusive possession. Is there a certain maximum term? Prima facie there is not, as occupation endures until either A serves notice following non-payment of rent or C and D serve notice. There is no longstop date before which these events must occur, and thus no certain maximum term. The case of Mexfield v Berrisford, however, used a historic common law rule to transform a prima facie uncertain term into a lease for life, applying LPA 1925 s.149(6) to convert the lease for life into a 90-year term. Crucially, the Supreme Court in Berrisford insisted that the common law rule (and so the transformation to a 90-year lease which it enables) is applicable irrespective of the parties’ intentions i.e. even if there is no intention for the occupant(s) to enjoy the premises for life. Berrisford has recently been nuanced by Southward Housing Co-operative v Walker in which Hildyard J held that the Berrisford rule cannot apply where the parties’ “intentions and fundamental aspects of their agreement would be confounded by it.” The agreement between A, C and D indicates that long-term occupancy was not intended: rent is paid weekly and occupancy determined by “notice to quit”. Applying Southward, then, C and D hold a contractual licence. Yet Southward is a High Court decision, and its focus on intention at odds with Berrisford – it is possible, then, that a court would apply Berrisford to generate a 90-year lease. On this hypothetical, the lease would not be legal (there is no deed LPA 1925 s.52(1) or registration LRA 2002 s.27(2)(b)(i)) but could take effect in equity under the doctrine in Walsh v Lonsdale (it is possible to discover (Parker) a valid, specifically enforceable contract). Do B, C and D’s rights bind E? If C and D hold a contractual licence, their right is in personam and so cannot bind E who can evict them. Conversely, if C and D hold an equitable lease they, like B, have a right in rem capable of binding E. There are two priority rules - LRA 2002 s.28 and s.29 - which determine when a disponee is bound by a pre-existing right in rem. S.29 applies whenever the section’s four-part test is satisfied. This is so on our facts as the transfer of the freehold estate in each house to E qualifies as a registrable disposition (LRA 2002 s.27(2)(a)), the freehold estate in each house is registered, the dispositions are in return for valuable consideration as the houses are sold, and the dispositions have been completed by registration as E is registered proprietor of each house. As the test is satisfied, the s.29 priority rule applies: pre-existing rights in rem bind if registered or within Schedule 3. Neither

equitable lease is registered, so the focus is on Schedule 3. Paragraph 1 is inapplicable because limited to legal leases, but as B, C and D were physically present at Houses 1 and 2 at the time of disposition they are clearly in actual (and objectively obvious para 2(c)(i)) occupation for the purposes of paragraph 2. Given this, their rights bind E and she cannot evict them except in accordance with the terms of their leases.

FORMATIVE OPPORTUNITY (see guidance above) Anna is the registered proprietor of various properties, including the freehold in a small house in London: 4 Primrose Drive. Anna agrees that her son, Ben, can make use of 4 Primrose Drive until the property market improves and she can sell the house for maximum profit. The house comprises a kitchen, bathroom, two bedrooms and a living room. Ben decides to rent out 4 Primrose Drive to augment his income. He advertises the property for rent at £1000/month. Charlie is flat-hunting and asks if he can take one of the bedrooms for £500. Ben agrees, subject to Charlie finding someone else to take the other bedroom. Charlie has recently started to date Daphne, and suggests to her that it would be fun for them to move into the house together. Daphne agrees, and Charlie introduces her to Ben as “my new girlfriend”. On 1st September this year, Ben has each of Charlie and Daphne sign separate, but identical, agreements with him, including provisions that: i. ii. iii.

Both Ben and the occupant can serve a notice to quit at any time The occupant is liable to pay £500/month rent Ben will clean 4 Primrose Drive daily at a time between 7pm and 10pm of his choosing

As they sign the agreements, Ben comments: “I wouldn’t have included provision iii) if it weren’t for landlord-tenant legislation, but I’ll certainly do the cleaning now it’s there.” Charlie and Daphne move in immediately. Later that day Ben falls and breaks his leg and is unable to do the cleaning after all. On 1st November, Charlie and Daphne write to Ben complaining of a breach of repairing obligations contained in the Landlord and Tenant Act 1985. Ben seeks your advice as to whether Charlie and Daphne are “tenants” of 4 Primrose Drive, benefiting from the protection of the Landlord and Tenant Act 1985. Advise Ben.

KEY STATUTORY PROVISIONS Law of Property Act 1925 S.1(1) – Holds that a term of years is a potentially legal estate S.52 – Establishes that a deed is required for a lease to take effect in law S.54(2) – Establishes an exception to the requirement of deed in s.52 in respect of leases which don’t exceed three years and take effect in possession at best rent. Such leases take effect in law even if created verbally (“by parol”)

S.149(6) – Transforms a lease for life into a 90-year lease determinable on death Land Registration Act 2002 S.27(2)(b)(i) – Provides that leases of more than 7 years must be registered to take effect in law Schedule 3(1) – Establishes that legal leases not exceeding 7 years override...