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Leases Cases •

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Bruton v London v Quadrant Housing Trust - Mr Bruton occupied a flat in Brixton. The flat was owned by Lambeth Borough Council who had granted a licence to London & Quadrant Housing Trust which permitted the Trust to provide accommodation to homeless people. Mr Bruton claimed that his agreement with the Trust was in the nature of a tenancy rather than a licence and that the Trust was in breach of its implied obligations to repair under the Land Lord and Tenant Act 1985. The Trust argued that since they had no legal estate in the property, as they were only licensees themselves, they had nothing from which they could grant a tenancy. Held: Mr Bruton was a tenant. The agreement fulfilled all the criteria to create a tenancy since it conferred exclusive possession for a certain period in return for rent. It did not matter that the Trust held no legal estate in the property. Lord Hobhouse: “The case of Mr Bruton depends upon his establishing that his agreement with the Housing Trust has the legal effect of creating a relationship of tenant and landlord between them. That is all. It does not depend upon his establishing a proprietary title good against all the world or against the Council. It is not necessary for him to show that the Council had conveyed a legal estate to the Housing Trust.” -

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Characteristics of a lease

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Street v Mountford

- The document signed by the occupier stated that she understood that she had been given a licence, and that she understood that she had not been granted a tenancy protected under the Rent Acts. Exclusive occupation was in fact granted. Held: This was a tenancy not a licence. Generally speaking, exclusive possession for a fixed or periodic term at a stated rent creates a tenancy. It was for the parties to set out the terms of their agreement, but for the court to evaluate the legal effect. Three categories of case might negative the creation of a tenancy: the absence of an intention to create legal relations; some additional independent relationship which can give an alternate explanation; or the absence of a power to create a tenancy. - Lord Templeman said: ‘My Lords, Mr. Street enjoyed freedom to offer Mrs. Mountford the right to occupy rooms in the agreement on such lawful terms as Mr. Street pleased. Mrs. Mountford enjoyed freedom to contract or not to contract and both parties exercised that freedom by contracting on the terms set forth in the written agreement and on no other terms. But the consequences in law of the agreement, once concluded, can only be determined by consideration of the effect of the agreement. If the agreement satisfied all the requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agreement by insisting they only created a licence. The manufacture of a five pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.’

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Certainty of duration cont.

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Lace v Chantler (1944)

- The freeholder purported to let the house to the tenant ‘for the duration of the war’ Held: The term was uncertain, and therefore no lease was created.

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- Lord Green MR said: ‘The intention was to create a tenancy and nothing else. The law says that it is bad as a tenancy. The court is not then justified in treating the contract as something different from what the parties intended, and regarding it merely as a contract for the granting of a licence. That would be setting up a new bargain which neither of the parties ever intended to enter into. The relationship between the parties must be ascertained on the footing that the tenant was in occupation and was paying a weekly rent. Accordingly, it must be the relationship of weekly tenant and landlord and nothing else.’

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Confirmed by HL

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Prudential Assurance Co Ltd v London Residuary Board - The parties signed a memorandum of agreement to let a strip of land from 1930 until determined as provided, but the only provision was that the lease would continue until the land was needed for road widening and two months’ notice was given. The land was never used for road widening and notice to terminate was given on the basis that it was a periodic tenancy. Held: A lease on these terms was of uncertain duration and therefore void. The land was held instead on a yearly tenancy created by the payment and acceptance of rent. - Ratio Lord Templeman said that there had been ‘500 years of judicial acceptance of the requirement that a term must be certain applies to all leases and tenancy agreements’ and ‘When the agreement in the present case was made, it failed to grant an estate in the land. The tenant however entered into possession and paid the yearly rent of £30 reserved by the agreement. The tenant entering under a void lease became by virtue of possession and the payment of a yearly rent, a yearly tenant, holding on the terms of the agreement so far as those terms were consistent with the yearly tenancy.’

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Alternative contractual approach:

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In re Midland Railway Co Agreement (1971) - The lease agreement created a term for six months from 10 June 1920 and was to continue from half year to half year until determined. It was to be determined by three months’ written notice given by either party to the other provided that the landlords should not exercise that right unless they required the premises for their own business. The successors to the landlords served a six months’ written notice to quit under the Landlord and Tenant Act 1954 although they did not require the premises for their undertaking. - Held: The landlords’ appeal failed. The notice to quit was invalid and of no effect because the landlords did not require the premises for their undertaking. Russell LJ said that Lace v Chantler did not apply to a periodic tenancy: ‘we are persuaded that, there being no authority to prevent us, it is preferable as a matter of justice to hold parties to their clearly expressed bargain rather than to introduce for the first time in 1971 an extension of a doctrine of land law so as to deny the efficacy of that bargain.’

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Alternative contractual approach:

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These cases overruled by Prudential (1992)

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Usual but not essential characteristic of lease

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Ashburn Anstalt v Arnold (1988) - Various leases of properties had been granted. Legal and General occupied the property under an arrangement under which they paid no rent. The landlord sought possession, saying that the agreements were licences not tenancies because of the absence of rent. - Held: The payment of rent is not an essential qualification for a tenancy agreement. The tenants occupied the land with an overriding interest. Their right to occupy premises until the owner gave one quarter’s notice certifying he needed the premises for redevelopment created a tenancy binding on third parties. The term was not uncertain so as to defeat the lease.

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- These cases overruled by Prudential (1992) •

Supreme Court decision in:

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Mexfield Housing Co-operative Ltd v Berrisford [2011] - The tenant appealed against an order granting possession. The tenancy, being of a mutual housing co-operative did not have security but was in a form restricting the landlord’s right to recover possession, and the tenant resisted saying that it was worded to create a lease for life (applying the LRB case). - Held: The tenant’s appeal succeeded. Despite the agreement being from month to month, it was clearly intended only to be determinable under the relative provisions. A periodic tenancy with an invalid fetter on the landlord’s right to determine should be treated in the same way as a tenancy for a fixed, if indeterminate, term.

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Exclusive possession- old test

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Old approach

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Form over substance

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Somma v Hazelhurst - A young unmarried couple H and S occupied a double bedsitting room for which they paid a weekly rent. The landlord did not provide services or attendance and the couple were not lodgers but tenants enjoying exclusive possession. - Held: The agreements granted licences only rather than tenancies because the landlord reserved the right to allow others to share the property, and the arrangements were created by separate agreements which could be ended seperately.

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Joint occupation and exclusive possession

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AG Securities v Vaughn - In Antoniades, the two tenants occupied an attic, living to-

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gether. Each had at the same time signed identical agreements purporting to create licences. The landlord had reserved to himself the right to occupy the property and to allow others to occupy it so as to create no more than a licence. Held: Behaviour by the parties after a tenancy areement was not relevant in construing the tenancy agreement, but can be used to see whether the document properly reflected what the parties intended. Such surrounding circumstances include ‘any relationship between the prospective occupiers, the course of negotiations and the nature and extent of the accommodation and the intended and actual mode of occupation.’ The documents were interdependent, and in fact the tenants had enjoyed exclusive occupation. The clause allowing additional occupiers was a sham. The two agreements had to be read together. The parties could not contract out of the Rent Acts, and clause 16 did not reflect the true position and that accordingly clause 16 should be struck out. - In A G Securities, four tenants of a property had signed separate documents at different times. They now claimed to have one joint tenancy rather than licence agreements as claimed by the landlord. - Held: The court will look to the substance and reality of the transaction entered into by the parties, not just the apparent form.

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Compare AG Securities with:

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Antoniades v Villers

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Joint occupation and exclusive possession - This case decided that where there are separate obligations upon licensees to pay licence fees to a landlord, a joint lease could not be found. It is submitted that this case is wrong, as it is a Court of Appeal decision which undermines House of Lords (now Supreme Court) authority on the distinction between leases and licences, such as in AG Securities v Vaughan [1990].

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Stribling v Wickham

- Agreement for individuals to share a flat gave rise to licences and not leases /react-text react-text: 1364 Since the original agreements had been entered into, however, two of the original occupiers had moved out, and in each case although the remaining occupants had chosen their new flatmate, it seemed to have been accepted that the landlord had the final say in whether he or she would be approved. /react-text - react-text: 1366 Parker LJ observed that it would be difficult to see how the mechanics of a joint tenancy might work where one or more tenant could move out and be replaced during the currency of any agreement. If this point is taken then it seems likely that the courts will usually construe any arrangement as creating only a licence where it is envisaged that any of the parties might move out. •

Lodgings and the provision of services

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Aslan v Murphy

- Mr Murphy occupied a basement room owned by Mr Aslan. It was a small room measuring 4ft 3in by 12ft 6 in. The agreement stated that the licensor was not willing to grant the licensee exclusive possession of any part of the room and that the licensor may permit others to use the room. The rent was referred to as a licence fee. The agreement also reserved Mr Aslan the right to retain keys. Mr Aslan was to provide services in the form of cleaning the room, rubbish collection, provision of and laundering of bed linen. However, in practice no others were permitted to enter the room and no services were actually provided. Held: - Mr Murphy was a tenant rather than a licensee. The provisions relating to exclusive possession, permitting others to use the room and the provisions for services were a pretence for the sole purpose of defeating the Rent Act. The agreement was wrongly described as a licence. The retention of keys by a landlord will not automatically negate exclusive possession.

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Crancour v Da Silvaesa/ Markou Da Silvaesa - This case concerned two appeals from occupants of individual furnished rooms within the same house owned by Mr Da Silvaesa. The occupation arose from agreements described as licenses. Through these licences, Mr Silvaesa retained an absolute right to enter at any time and was to provide services in the form of cleaning, rubbish collection, provision and laundering of bed linen. The occupants sought to argue that the agreements created a tenancy. Held: The agreements were licences not leases. Gibson LJ: - “The agreement does require the landlord to provide attendance and services which require the landlord and his servants to exercise unrestricted access to and use of the room. Possession and control of the room are reserved by clause 2 of the agreement to the landlord for the purposes of discharging the obligation to provide attendance and services and that shows, in my judgment, that exclusive possession was not given.”

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Lodgings and the provision of services

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Huwyler v Ruddy

- Under the agreement (which was made in 1985) provision was made for attendance or service, which amounted in practice to about 20 minutes a week, but this was later run down, so that by the time the landlord sought possession (in 1994), hardly any attendances were being provided. Indeed, a "modus vivendi" was reached between the plaintiff (landlord) and defendant (occupier) that the defendant would do his own cleaning. - The CA held that the occupier was a licensee. - Although the attendances took only 20 minutes per week, the attendance or services did require the landlord to exercise unrestricted access, in the sense adopted by Ralph Gibson LJ in Street v. Mountford: - Unrestricted access’ simply meant the LL could access premises without occupier being there to let him in.

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Vandersteen v Agius - An appeal from a district judge on a taxation was by way of re-hearing; A County Court Judge was not restricted to following the discretion as exercised on the first hearing.

- Non-residential - LL would clean for yearly sum - LL reserved right to enter and view the property •

Retention of keys by LL

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Aslan v Murphy - Occupiers claimed that they had secure tenancies. The owner said that they were mere lodgers. In Murphy (1), the landlord said that the occupier must share possession with other occupiers if required. He now said that he had retained a key and that this contradicted any grant of exclusive posssession. - Held: Lord Donaldson MR said: ‘A landlord may well need a key in order that he may be able to enter quickly in the event of emergency – fire, burst pipes or whatever. He may need a key to enable him or those authorised by him to read meters or to do repairs which are his responsibility. None of these underlying reasons would of themselves indicate that the true bargain between the parties was such that the occupier was in law a lodger. On the other hand, if the true bargain is that the owner will provide genuine services which can be provided only by having keys, such as frequent cleaning, daily bed-making, the provision of clean linen at regular intervals and the like, there are materials from which it is possible to infer that the occupier is a lodger rather than a tenant. But the inference arises not from the provisions as to keys but from the reason why those provisions formed part of the bargain. ‘

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Further examples of looking for the ‘true bargain’ between the parties

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Duke v Wynn - An agreement provided the “licensee” could use the room only between midnight and 10.30am and noon and midnight.

- Family in a three bedroom house - Stated that agreement was not a lease - Reservation of right to enter to clean - Reservation of right to introduce other occupants •

Exclusive possession and special cases where no lease

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Employees

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Smith v Sedgehill Overseers (1875) - The colliery owned 346 cottages which it kept for occupation by the colliers according to the discretion of the owners, who generall gave preference to married workers. A collier who was married but for whom a cottage could not be found was provided with an additional allowance for rent for alternative accomodation. It was not absolutely necessary for their work that an collier should occupy one of the cottages. Norent was paid, and but for the allowance there was no other variation in their terms. The terms of employment were on one week’s notice and no separate or additional notice was given to terminate the occupation when the employment terminated. Rates were paid by the owners without any accounting with the workers. - Held: The appellant colliers were occupiers of the cottages, and were entitled to have their m=names inserted in the rate book. Where a person who is in fact a servant is in part remunerated for his services by being allowed to occupy a house, then he is prima facie a tenant.

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Friends/Family

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Faccini v Bryson - The court held that in all the reported cases where it was held that an agreement was a licence rather than a tenancy: ‘In all the cases where an occupier has been held to be a licensee there has been something in the circumstances, such as a family arrangement, an act of friendship or generosity, or such like, to negative any intention to create a tenancy. In such circimstances it would be obviously unjust to saddle the owner with a tenancy, with all the momentous consequences that that entails nowadays, when there was no intention to create a tenancy at all.’ - Lord Denning went on to consider whether the document was a sham: ‘The occupation has all the features of a service tenancy, and the parties cannot by the mere words of their contract turn it into something else. Their relationship is determined by the law and not by the label which they choose to put upon it.’ And ‘It is not necessary to go so far as to find the document a sham. It is simply a matter of finding the true relationship of the parties. It is most important that we should adhere to this principle, or else we might find all landlords granting licences and not tenancies, and we should make a hole in the Rent Acts through which could be driven – I will not in these days say a coach and four, but an articulated vehicle.’

- Ask: ‘Is there something in the circumstances, such as a family arrangement, an act of friendship or generosity or suchlike to negative any intention to create a tenancy?’ - per Lord Denning at 1389 •

Errington v Errington & Woods (1952) - A father-in-law purchased a house for his son and daughter-in-law to live in. The house was put in the father's name alone. He paid the deposit as a wedding gift and promised the couple that if they paid the mortgage instalments, the father would transfer the house to them.

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The father then became ill and died. The mother inherited the house. After the father's death the son went to live with his mother but the wife refused to live with the mother and continued to pay the mortgage instalments. The mother broug...