Leases Essay Question

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Leases are a relationship between a landowner and someone who the landowner allows to occupy the land. The definition of a lease is explained in s.1(1) of the Law of Property Act (LPA) 1925. As demonstrated by the case of Bruton, not all leases have to be estates or interests in land.

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If no lease is present, but the tenant has permission to occupy the land, they may have a licence which is merely permission to occupy the land. Licences do not have much statutory protection as leases do and are often incapable of binding third parties.

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For a lease to exist, certain requirements must be met, one of them being certainty of term. There must be a certain beginning and an ascertainable end upon creation. The Supreme Court recently reviewed the rules on certainty of term in the case of Mexfield in which the parties had purported to create a lease for life.

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A lease can either be a fixed term lease or a periodical lease, both of which the requirement for a certainty of term is fundamental.

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Within this essay, the facts of both Bruton and Mexfield shall be looked at in relation to their significance as well as their outcomes and issues raised within the judgments. To analyse the outcomes of these fundamental decisions, the views of commentators shall also be discussed.

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In this case, a local authority granted to a housing trust a licence to use their property as short term accommodation for homeless people. The housing trust entered into an agreement with Bruton to allow exclusive possession of a flat on a temporary basis. Bruton brought an action against the housing trust to enforce implied covenants for repair (s.11 Landlord and Tenant Act 1985). The point of law was whether, upon its true construction, the agreement created a licence or a lease (significance is that a licence is mere permission to be on land and does not confer the same rights as a lease). Held, that there was no doubt from examining the intention of the parties that the agreement had the essential characteristics of a lease (Street v Mountford followed in relation to exclusive possession and periodic payment).

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Lord Hoffman gave the leading judgment in this case, holding that the fact the landlord did not have a proprietary right was irrelevant as exclusive possession is essential to a lease, so it didn’t matter that the occupation of Bruton was merely intended to be a licence. The nature of the agreement as opposed to the landlord was the key aspect to decide whether a lease existed for the purposes of the Landlord and Tenant Act 1985.

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There was a difference between the judgements of the Court of Appeal in this case and the House of Lords. The Court of Appeal took the more traditional view (Millet LJ mainly) that it is not possible to constitute a tenancy unless it creates a legal estate in land, whereas the House of Lords took a more relaxed approach and put forward the view that a tenancy is a binding agreement giving right to exclusive possession. This would be a purely personal right (contractual) and would not bind third parties. The decision seems to have adopted a narrow understanding of exclusive possession (see generally Michael Lower, 2010).

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The case of Kay demonstrated limitations of Bruton. In this case, if the Housing trust had been acting as an agent of the local authority then it may have been able to bind, however this was not the case. Bruton doesn’t give rights, therefore it is not possible to bind non-contracting parties (Islington v Green). It appears that the type of proprietary right established in Bruton is not so different from a licence which is just mere permission. This was questioned by Mark Pawlowski in his 2006 article on the matter.

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This case involved a lease that was not for a fixed term, it was “from month to month until determined”. There was no express maximum duration and fettered ability for Mexfield to terminate the lease whereas Berrisford would have no problem terminating. It was questionable as to what the status of Berrisford was and whether or not she could bind third parties. At common law she would have had an implied periodic tenancy (Prudential) according to how the rent was paid, however, the House of Lords came up with an entirely different decision in which the intentions of the parties were irrelevant. It was held that the parties had purported to create a tenancy for life, which, under s.149 (6) Law of Property Act 1925 cannot exist. Lord Neuberger converted it into a 90 year lease.

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It was clear that the House of Lords had disregarded the intentions of the parties, as the implications of a 90 year lease seem unfair, for example Berrisford would not be able to enforce any repair obligations under the Landlord and Tenant Act s.11 as it doesn’t apply to leases exceeding 7 years (Hunter & Crown highlights the unfairness of this).

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According to Pawlowski, Berrisford produced an odd result, as instead of giving effect to the parties’ intention, the outcome imposed a bargain which neither had intended to make. From this, it can be argued that the decision in this case would not be helpful to future case as the facts and the actual decision do not match.

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The case of Bruton may have created confusion between personal tenancies (rights purely contractual) and legal tenancies with estate in land. Will more of these contractual rights be created? The problem is that there seems to be less statutory protection and it is not binding on third parties (similar to a licence).

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The case of Mexfield also seems to have created confusion, and seems to limit the ruling on periodic tenancies. It poses a danger of future decisions that should imply a periodic tenancy to impose a 90 year lease.