Leases = exclusive possession PDF

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Week 5...

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Leases (Part 2): Exclusive Possession Introduction – nature/characteristics of a lease 

Lease = term (maximum duration being certain) that confers on T a right to exclusive possession of land (rent usual but not a legal requirement):  Lord Templeman Street v Mountford (1985) - Heavy emphasis on exclusive possession.

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As an estate (proprietary right) - Both Parties to lease have property rights that can be transferred - Where Ian sells to Phil/Pr – Tiff’s lease has the potential to continue to be enforceable (usually a licence does not: exceptionally see (a) Binions v Evans (1972) (contractual licence + constructive trust); and (b) proprietary estoppel licence and s 116 LRA 2002)

Lease/Licence Distinction 

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The agreement that gives T rights to live in Ian’s flat may be by - Either a licence Or a lease - Lease = proprietary right (estate) - Licence = personal right – permission to use the land (maybe via contract)  Status or permission be in hold of the land  Based on an agreement How will T know if she has one or the other? - Exclusive possession Distinguishing between a licence and a lease has generated a great deal of case law (less so recently)

Statutory Context: security of tenure legislation applied to leases not licences 

Why might Ian prefer to create a licence (rather than a lease) for T to occupy the flat? - To escape security of tenure legislation that applies to leases but not licences  Since around 1915, so-called “Rent Acts” – legislation giving security of tenure to tenants (but not licensees) – protecting rent rises, prescribing court procedures for termination – (protectionism/restriction on freedom of contract?) - But Housing Act 1988 allows for six-month (“assured shorthold”) tenancy with less security for T; so, these days there is less incentive for Ian to create licence rather than tenancy  Assured short tenancy  after the expiration of the 6 months, the landlord could give the tenant statutory 2 months’ notice to quit.  Provision says that if this notice was given and tenant refused to then landlord could apply to court, and the court MUST give an eviction notice. -

Landlord and Tenant Act 1985 – gives landlord certain repairing obligations.  Does not apply if the occupant has a license.

Exclusive Possession: Meaning 

T’s right to control the property including entry on to the land - Right to exclude others/strangers including landlord (Ian) – she has exclusive control of the land.

 If there were exclusive possession, then the grantor would have no right to enter and such work would have to be undertaken by the lessee.  Lord Templeman in Street  Shell-Mex v Manchester Garages (1972) - SM leased particular land to MG but retained control over the layout of the garage - This level of control was the reason why MG had exclusive occupation, but no exclusive possession was found to be created. - Agreement allowed Shell to keep control over layout of garage = therefore no exclusive possession/lease 

Depends on having right to exclusive possession (EP) rather than being in exclusive occupation  Watts v Stewart [2016] EWCA Civ 1247, Sir Terence Etherton MR - But c.f. Lord Templeman’s use of language in Antoniades (1990)

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Exclusive possession- concept figures in other contexts of ownership: and adverse possession; fee simple estate Contrast exclusive possession and more limited land law rights - Easement; or  One can have limited rights over someone’s land but they’re not exclusive.

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- Licence to offer front of house rights at a theatre:  Clore v Theatrical Properties (1936) - The lessee had ‘front of the house’ rights at a theatre – the right to sell refreshments and programmes and to manage cloakrooms - Held to be no more than a license to enter the land for the specified purposes. - The right was exclusive in the sense where nobody was to compete however it was insufficient to give exclusive possession. Distinction between exclusive occupation and exclusive possession: - Right with exclusive possession to exclude everyone else from the land, including the landlord. - Exclusive Possession = who has the right to possess the property exclusively. - Exclusive occupation = the occupier is the only person living there and the only person entitled to do so. It has never been conclusive of a lease. A LEASE REQUIRES EXCLUSIVE POSSESSION. Establishing Exclusive Possession 

Finding exclusive possession: a question of fact in each case – objective assessment of terms of the document/surrounding circumstances (mode of occupation; preagreement discussions) - Centre piece: start on the agreed terms of the parties. - Scrutinise the agreed terms and whether this would give the right to exclude others from the land (would it give exclusive possession?)

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Distinguishing between lease and licence usually determined by looking at effect of the agreement not the intention of the parties  Somma v Hazelhurst (1978) Cumming-Bruce LJ (overruled by Street), [1978] 1 WLR 1014  Involved a ‘license’ to a couple to occupy a single room.  The owner reserved a right to occupy the room, together with a right to put in a new person if one o the couple were to leave.

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 CoA held that this precluded exclusive possession, but this was overruled in Street.  CoA recognised that the subjective intention of the parties was to create a license, not a lease. Lord Templeman emphasised in Street [1985] AC 809 at p. 825:  “The court should, in my opinion, be astute to detect and frustrate sham devices and artificial transactions whose only object is to disguise the grant of a tenancy and to evade the Rent Acts.”

- Sea – change:  Street (1985) (HL) – Lord Templeman  Street = Solicitor, he rented some rooms to Mrs Mountford.  She claimed for protection under the Rent Act.  Street said they had signed a license agreement. He knew he was right – he was a lawyer.  Mountford claimed she had exclusive possession of the land.  It was titled a license agreement and clauses have said that there were no circumstances to create a lease.  Mountford tried using the statutory provision to challenge increase in rent he proposed.  HoL: Street was wrong – Lord Templeman concentrated on the objective intention of the parties. A lease requires an agreement of a certain term, provided rent and requires exclusive possession. -

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Street applied to all forms of tenancies. Although it retains its status as the leading authority, it may underplay the extent to which intentions can still be taken into account. Lord Templeman was empathetic that exclusive possession is conclusive.

- Pre-Street – courts recognised that licence might exist where occupier had EP:  Marcroft Wagons v Smith (1951) 

Distinguishing between lease and licence usually determined by looking at effect of the agreement not the intention of the parties - Notice the importance in Bruton v LQHT (2000), per Lord Hoffmann “As observed by Lord Clarke a tenancy agreement has to be interpreted in the same way as any other written contract, so the precise rights and obligations of the parties under it must depend on the terms which the parties have agreed and the circumstances in which they were agreed. However, in some circumstances, there may be principles of law which result in the parties' intention being frustrated or modified, and, as is clear from the reasoning in Street v Mountford [1985] AC 809, the legal consequences of what the parties have agreed is a matter of law rather than dependent on what the parties intended.” Mexfield, Lord Neuberger at [17]  If what we find is objectively what the parties must have intended because of the grant of exclusive possession then the occupation becomes a lease, not a license.  Doesn’t matter what you call your agreement; if it grants the occupant exclusive possession for a term at a rent it is a lease.

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So, language/labels less important than the effect of the agreement in creating exclusive possession  Street;  Watts v Stewart [2016] EWCA 1247

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Might parties stated Intention/label be more persuasive in determining lease/licence in a commercial agreement between parties of equal bargaining power?  National Car Parks Ltd v Trinity Development [2001] EWCA Civ 1686 at [28] & [29] (Arden LJ)  Clear Channel UK v Manchester CC [2005] EWCA Civ 1304 at [28] & [29] Jonathan Parker LJJ) - Involved the right to erect advertising hoardings which constituted as a license as it was expressed in terms of areas larger than the concrete bases.

The courts try to look for the objective intention of the party. So, objectively if the parties have been advised and their objective intention is not to create a lease, the court might give higher credence to that particular intention.  Brooker v Palmer [1942] 2 All ER 674 - An owner agreed that his cottage to be occupied rent-free by persons made homeless by wartime bombing. - CoA held that this created a mere license, terminable by the owner at any time.  Marcroft Wagons Ltd v Smith [1951] 2 KB 496 - A landlord allowed the daughter of a deceased tenant to stay temporarily after her mother’s death, whilst refusing a new tenancy. - Court found licenses where exclusive possession was given in a family arrangement.  Radaich v Smith (1959) 101 CLR 209 (High Court of Australia) - Windeyer J emphasised that the intention that was relevant was the intention to give exclusive possession.

Exclusive Possession: sole occupation Exclusive occupation would make the person living there a lodger as they are sharing the house with the landlord.  

Ian enters into a written agreement with Tiff With a single occupier Lord Templeman (Street) saw the essential distinction as between “lodger” and “tenant” - What makes an occupant a lodger?  Exclusive occupation. - Does Street therefore create a clear-cut demarcation/test – so that Tiff is either a tenant or a lodger? - Or is there middle ground between the two?  Brooker v Ayers (1987)  Hadjiloucas v Crean (1988)?

e.g. when you book a hotel room, you have exclusive occupation to the room for your time of stay BUT the hotel has a copy of the key and has unlimited access to your room too. - if you’re at a hotel, you’re a lodger as the hotel is providing services for you.  Camden LBC v Shortlife Community Housing Ltd (1992) 25 HLR 330; Cowan [1993] Conv 157 - Millet J was willing to take the circumstances of a grant by a local authority to a housing association into account.

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Although the extent of the rights of the occupier is important, it is far from clear that factors, such as the intention to redevelop the premises in the near future, should be relevant after Street.

 Vandersteen v Agius (1992) 65 P&CR 266 - The resident owner provided cleaning and secretarial services. - The owner was doing no more than a person unconnected with the land could have contracted to do; she was treated as acting as paid assistant rather than as owner.  Dellneed Ltd v Chin (1986) 53 P&CR 172 - The parties adopted a Chinese custom whereby an inexperienced person run a restaurant for a period of three years, with the owner giving advice, as necessary. - Millet J found that the occupier was doing more than merely managing on the owner’s behalf: exclusive possession was granted, resulting in a lease. - It was stressed that the occupier did not retain keys and could enter only with the agreement of the occupier. Establishing Exclusive Possession  

What terms in Ian and Tiff’s agreement might indicate the presence or absence of EP? What if Ian retains right to enter the property – - Unrestricted/Unlimited = licence?  Occupant is a lodger; the access jeopardises EP. - Limited right to enter (inspection/emergency) – arguably emphasises exclusive possession so = lease? - Lord Templeman in Street - No hard and fast rule? - To provide cleaning between 10.30 and 12 noon:  Aslan v Murphy [1990] 1 WLR 766  In order to make the occupier look like a lodger, he was required to vacate the premises for 90 minutes each day  The owner retained a key and was to clean the room and provide bed linen.  CoA held that the term about vacating the room was not intended to be acted upon and was to be ignored as a sham.  The retention of the key enabled unrestricted access – inconsistent with exclusive possession.  On the facts, the services were minimal, so this did not negate exclusive possession – there was a lease.  Aslan treats the actual provision of services as more important than the terms of the agreement.  Markou v De Silvaesa (1986)  By the terms of the agreement, the occupiers were required to leave the premises whenever landlord required them to do so.  There were provisions for cleaning and other terms in the agreement  No exclusive possession therefore unrestricted access were determinative in finding no EP.  Court stressed that there must be unrestricted access in order to show that the occupier was a lodger. -

Or repair

What if the landlord promises services but does not deliver them?

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Argue this in an essay, depending if you’re in favour of the landlord or the occupier.

What impact might the following terms have on finding that exclusive possession exists: - Provision of Services – e.g. cleaning:  Negate EP  Marchant v Charters (1977)  Aslan (1990)  Markou v Da Silvaesa (1986)  Huwyler v Ruddy (1995)  A written agreement that the landlord would provide services  He didn’t provide services  Occupants had EP as the services have not been provided.  Court argued differently: occupant has not received services but under the terms of the agreement, the occupant could insist on the provision of the services which would give the landlord unrestricted access which negates EP.  Therefore the occupant remained a lodger, provided that he was still at liberty to insist on the services. - Moving occupier to another room:  Westminster City Council v Clarke [1992] 2 AC 288  The claimant’s 31-room hostel for single homeless men had a warden.  A team of social workers assisted the occupiers, many of whom had severe problems.  The claimants operated an 11pm curfew and reserved power to move the occupiers from room to room and to enforce sharing.  HoL held that these terms were essential for the Council to discharge its duties to the homeless and to maintain control over the activities of the occupiers.  Therefore, they were lodgers and not tenants. - Introducing other occupiers:  Antoniades (1990)  There was a term which reserved the right to the landlord of a small one-bed flat to introduce another occupant  Didn’t provide EP  If, for example, there is more than one occupant, and if one of those occupants leave, the landlord stipulates that they will find a replacement person to live there and so the occupants who remain don’t have EP as they have no control nor any right to exclude the new party. - Requiring the premises to be vacated:  Aslan (1990) - Right to retain a key – ask why?  Aslan v Murphy (Lord Donaldson)  The reason is important.  If the reason is for the landlord to enter and leave at will, it shows no EP.  If the reason is for emergencies then the landlord does not have unrestricted access; they can only enter during these times and with notice to the occupants. -

Reserving right for Ian to use premises:

 Antonaides (1990) Lord Oliver Exclusive Possession: multi-occupation Difficult to apply Lord Templemans approach in Street about this concept of EP. Multi-Occupancy: couples/students – what if Ian rents the flat to a couple or a group of students? - Does the couple/group have EP? Do they each have a different licence. - If they have a collective right to possess the flat, there can be a lease in favour of the whole group.  Lodger/Tenant distinction inapplicable?  Brooker v Ayers (1987)  Hadjiloucas v Crean [1988] 1 WLR 1006  2 ladies took an unfurnished flat together, there being separate agreements with each of them.  1 left after a few months and was the owner replaced her position with someone else  CoA considered that the facts could justify a license but sent the case back for a more detailed investigation.  Ask: do multiple residents share a single right to exclusive possession?  The law approaches this by asking if they are joint tenants of the right?  AG Securities v Vaughan (1990) - HoL reaffirmed the dominance of exclusive possession in this case. - Lord Templeman appears to accept that separate obligations are consistent with a joint tenancy, although Lord Oliver seems to assume that a joint tenancy entails joint liability for rent.  Joint tenancy is a term of art (one we will meet again when looking at co-ownership) – here it does not mean the type of right (ownership/lease), but a way of holding the right. Joint tenants vs tenant in common  Group of occupiers must have single right to exclusive possession as “joint tenants” (joint ownership: see co-ownership lectures) - If there is to be a lease, they must collectively have a single right to EP.  Joint Tenancy of the right to exclusive possession exists where the following ‘four unities’ exist: - Possession – right to occupy as single property - Interest – same period/obligations (rent) - Time – acquiring rights at same time from Landlord - Title – single rather than separate agreement with Landlord If they’re missing any one of these unities, they do not have a tenancy and therefore no lease. 

 A-G Securities v Vaughan (1990) (group of flat sharers)  Flat with 4 professionals coming and going at different times of the 4-bed house. They each had their own room.  As one left, a newcomer would enter into a new 6-month agreement with the owner.  Entered into different license agreements.  Agreed period and was different for each of them.  Court: they don’t have EP as a group; they don’t have the 4 unities.  No collective right to EP, no collective obligation to pay the rent, therefore no lease.

 No individual occupier could be treated as enjoying exclusive possession of the flat, nor was it possible to regard all 4 as jointly enjoying exclusive possession.  HoL: they were licensees.  Antoniades v Villiers (1990) (couple) - Antonadies – a generous approach in finding that the couple’s separate agreements to be interdependent rather than independent?  Attic flat, which was fairly small, one bedroom  Landlord insisted to the couple to sign separate documents with identical terms  Each occupant was to pay half the rent  Other clauses: landlord could get someone else to replace one of them if one leaves.  They don’t have a joint tenancy; no unity of possession, separate interests, signed at different times, separate documents. Therefore, each had a license  HoL: 2 separate agreements that were interdependent; same terms for the couple. One wasn’t going to move in without the other.  If one of them goes away and the other introduces a third-party, where would they sleep? No space for a second bed. Implication is that they would share the same bed.  Court: there was EP despite separate agreements. They didn’t look closely at the rent. Where the flat is unsuitable for 2 people unless they are living together as a couple, then it is very easy to conclude that they are taking the flat together. Thus it must be a lease.  Mikeover v Brady (1989) - couple with separate agreements – each had liability only to pay half rent. Lack of joint obligation therefore meant no unity of interest, so licensees  couple who were living in a one bed house  female party left  The flat was of such a size as to be suitable only for those ‘personally acceptable to each other’  landlord only accepted half the rent from the remaining male  CoA: took this as an indication that one of the factors in PITT was missing; no joint tenancy. Mikeover illustrates the possibility of creating licenses by negating one of the 4 uni...