Difference Of Leases And License

Front 1

Strange exception: Double Step

Back 1

Berrisford v Mexfield - Supreme Court took an odd approach.

Uncertain terms can be converted into “leases for life” - then leases for life are converted by s.149(6) LPA 1925 into a lease of 90 years.

Saves uncertain term leases.

Front 2

Prudential Assurance v London Residuary Board

Back 2

Overruled Ashburn Anstalt v Arnold - terms cannot be partially certain nor partially uncertain

Front 3

Pretences / Sham devices can be ignored

Back 3

Antoniades v Villier (1990)

Clauses inserted intentionally to avoid creation of lease and where either party do not intend to rely on the practice of the clause

Examined through the circumstances of the case and confirmed by the parties’ subsequent conduct.

Front 4

Leases generally create legal estates

Back 4

But this was contradicted in Bruton v London and Quadrant Housing Trust

More on this later

Front 5

Bruton: the decision

Back 5

HoL held a tenancy arose - Lord Hoffman stated that a lease:

“...is not concerned with the question of whether the agreement creates an estate or other proprietary interest which may be binding upon third parties.”

Front 6

Properties of Leases:

Back 6

One of the two estates under s.1 LPA 1925 - TOYA

Can be both legal and equitable and depending on the length of time - protected and created in different ways

Front 7

Leading authority on Leases:

Back 7

Street v Mumford (HoL)

Front 8

Street v Mumford (HoL)

Back 8

Where the arrangement in question was intended to create legal relations, and the occupier was granted a right in exclusive possession of the premises for a fixed or periodic term at a rent.

Anything else is a license.

Front 9

Leases generally create legal estates

Back 9

But this was contradicted in Bruton v London and Quadrant Housing Trust

More on this later

Front 10

Exclusive Possession

Back 10

Required in Leases - but very well may be given through licenses too

Question of Fact: surrounding circumstances, cause of negotiations, nature of property and actual mode of occupation

Front 11

Exclusive possession without Lease

Back 11

Lord Templeman acknowledges several scenarios including:

Occupation based on charity Watts v Stewarts (2016)

No intention to create legal relations

Mortgagee going into possession of the property under the terms of a mortgage.

Front 12

Exclusion Possession:

Landlord can reserve some limited rights

Back 12

Examples:

Aslan v Murphy - right to retain keys

Front 13

Necessitates owner’s entry

Back 13

If the terms necessitates the owners’ entry - it could not be a lease

Appah v Parncliffe - owner provided services of cleaning, bed making and provision of linen

Front 14

Pretences / Sham devices can be ignored

Back 14

Antoniades v Villier (1990)

Clauses inserted intentionally to avoid creation of lease and where either party do not intend to rely on the practice of the clause

Examined through the circumstances of the case and confirmed by the parties’ subsequent conduct.

Front 15

Example of Pretence Clause:

Antoniades v Villiers (1990)

Back 15

Unmarried couple made to sign separate agreements for a single bedroom they were intending to stay jointly in.

Agreement included clause to allow landowner to nominate another occupier - no purpose or merit other than to interrupt the four unities

Clauses were struck out - agreements given effect without such clauses.

Front 16

A Term Certain

Back 16

Must be possible to identify the duration / length from the beginning:

Lace v Chantler - “unless the war ends” was uncertain

Prudential Assurance v London Residuary Body - “until the widening of the roads” was uncertain

Front 17

Strange exception: Double Step

Back 17

Berrisford v Mexfield - Supreme Court took an odd approach.

Uncertain terms can be converted into “leases for life” - then leases for life are converted by s.149(6) LPA 1925 into a lease of 90 years.

Saves uncertain term leases.

Front 18

Double step - possibly limited

Back 18

Affirmed in Gilphin v Legg (2017) - affirmed Southward Housing’s approach.

Berrisfield exception only applies where parties did actual intend a lease for life.

Front 19

Perpetually Renewable Leases

Back 19

By effect of Schedule 15, of LPA 1922 - these are converted into 2,000 year leases.

Front 20

Prudential Assurance v London Residuary Board

Back 20

Overruled Ashburn Anstalt v Arnold - terms cannot be partially certain nor partially uncertain

Front 21

Rent:

Back 21

Fitkriston v Panayi (2008) - “best rent” means market value.

Courts generally do not intervene - freedom of contract, Rent need not be adequate - Thomas v Thomas (£1)

Front 22

No Necessity for Rent:

Back 22

Leases may exist as a matter of law without rent: Ashburn Anstalt v Arnold - this is affirmed statutorily on s.205(1)(xxvii) LPA 1925

However, Street v Mountford Lord Templemen appears to say Rent is a necessary requirement

Front 23

Licenses (on the other hand)

Back 23

May be considered non-proprietary promises, sometimes established contractually or orally.

They do not bind third-parties (Lord Denning doubted this [Errington v Errington] but the law was later reverted)

Front 24

Olden description of License:

Back 24

The olden yet illustrative description of a license: Thomas v Sorrell - “A license property passeth no interest, nor alters or transfer property in anything, but only makes an action lawful which without it had been unlawful.”

Front 25

Licenses do not bind third-parties:

Back 25

King v David Allen

Criticized: Lord Denning allowed contractual licenses to bind third-parties (Errington v Errington)

Non-proprietary leases (Bruton tenants) don’t bind third-parties: Bruton v London and Quadrant HT

Front 26

Leases can override: Licenses cannot

Back 26

Legal leases, 7 years or less, can override under Schedule 3 para 1 LRA 2002

Interest holders get overriding protection actual occupation is proven - Schedule 3 para 2 LRA 2002

Front 27

Leases determined by substance:

Back 27

Street v Mountford affirms it’s a matter of substance and not mere labelling.

Bingham LJ expressed in Antoniades v Villiers (1990) “A cat does not become a dog because the parties have agreed to call it a dog.”

Front 28

Heavily criticized: Bruton Tenants

Back 28

Bruton v London and Quadrant Housing Trust - criticized

“House of Lords handed down an undoubtedly significant and controversial decision”

Front 29

Bruton: The Issue

Back 29

Leaseholds are proprietary rights in land.

Could a landlord and tenant relationship arise even though the landlord (a mere licensee himself) did not own the freehold estate that the leasehold came from.

Front 30

Bruton: the decision

Back 30

HoL held a tenancy arose - Lord Hoffman stated that a lease:

“...is not concerned with the question of whether the agreement creates an estate or other proprietary interest which may be binding upon third parties.”

This goes against nemo dat quod non habet (no one gives what he does not have)

Front 31

Bruton: The Reasoning

Back 31

It shows that Lord Hoffman acknowledges a “lease” is only a contractual state of affairs between landlord and tenant and it’s binding nature on third-parties depends on the circumstances

Front 32

Bruton: Confusion

Back 32

The decision shows a possibility of a “non-proprietary lease” or “contractual lease” i.e. a lease between parties but not in the proprietary sense.

(Which are exactly what licenses are supposed to be)

This goes against the very distinction drawn between Leases and Licenses in Street v Mountford - proprietary nature

Front 33

M. Dixon in Modern Property Law

Back 33

The “non-proprietary lease” is a strange creature of English Law, we might suggest, it already has a name: a license!

Front 34

Bruton considered in Kay v Lambert

Back 34

Lord Scott (others agreed) that non-proprietary lease have no proprietary character at all and ungoverned by any principles of leaseholds.

It may be conceded that Bruton was decided based specially on its own facts

Front 35

One author in Martin Dixon’s textbook thinks:

Back 35

It was not regarded as a contractual license so as to allow some obligation such as repairing obligations” and the like.

It “appears as a sleight of hand, not justifiable as a matter of property law, but to be seen as a device to give certain contractual licensees similar rights as if they were tenants.”

Front 36

Bruton: perhaps a mode of estoppel

Back 36

Very recently in Gilpin v Legg (2017) - the judge seems to regard Bruton as an authority for creating a lease by way of estoppel, rather than the more radical solution put forward to the case itself

(Seems to protect the homeless, especially when exclusive possession raises difficulty where accomodations are shared)

Front 37

Bruton: perhaps a mode of estoppel

Back 37

Very recently in Gilpin v Legg (2017) - the judge seems to regard Bruton as an authority for creating a lease by way of estoppel, rather than the more radical solution put forward to the case itself

(Seems to protect the homeless, especially when exclusive possession raises difficulty where accomodations are shared)

Front 38

In light of S Murdoch who argues:

Back 38

Tenancies cannot be “conferred by a grantor who does not himself have an estate except by the application of a doctrine of estoppel.”

Front 39

In light of S Murdoch who argues:

Back 39

Tenancies cannot be “conferred by a grantor who does not himself have an estate except by the application of a doctrine of estoppel.”

Front 40

My own submission:

Back 40

Bruton appears to be a case decided on its own facts. Perhaps “non-proprietary leases” are a dubbing to have it appear more authoritative as to main the obligation in question.

But without proper guidance, the line between a license and lease appears blurred.

Front 41

BINNION v EVANS

Back 41

Widow of employee stayed in company’s premise

Employee died - company took pity, allowed widow to stay - but later wanted to sell to third party

Told thirdparty must let lady stay, third party agreed but tried to expel her.

Held: unconscionable to kick lady out, constructive trust in favour of lady

Front 42

Lloyd’s v Dugdale & Ashburn Anstalt

Back 42

Both held that Lord Denning in Errington was wrong - reinstated the law in King v David Allens - licenses can not bind third parties

Shows court’s attitude to hold that licenses are not proprietary in nature and should not so easily bind third parties.