Leases and Licences

AG Securities v Vaughan [1990] , facts =

four individual occupiers shared four-bedroom flat under four separate 'licence' agreements with owner - each of different date, different monthly rent, for different periods.

how does a court distinguish between a genuine transaction and a sham?

i) by looking at the substance and reality of the transaction ii) looking at the surrounding circumstances iii) looking for misleading terms

Lessor =

landlord

term of years absolute =

one of two major estates in land 'capable of subsisting or of being conveyed or created at law'

Prudential Assurance Co Ltd v London Residuary Body [1992] =

principle and precedent dictate that it is beyond the power of the landlord and the tenant to create a term which is uncertain

what is the nature of a lease?

proprietary interest (property estate over land) and contractual interest (document regulated contractually)

BUT there is no requirement to execute a deed for leases 'taking effect in possession' for a term not exceeding three years', this is defined in ...

s 54(2) LPA 1925

Lessee/leaseholder =

tenant

s 1(1)(b) LPA 1925 =

term of years absolute

Why might a landlord create mislabelled lettings?

to avoid statutory responsibilities

when does the distinction between the lease/licence become more problematic?

with multiple occupation

Are there registration requirements to a leasehold estate?

yes

Lord Templeman, Street v. Mountford quote:

' 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 that 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.'

Mexfield Housing Co-operative Ltd v Berrisford [2011] =

'Following the decision of the House of Lords in the Prudential case [1992] 2 AC 386, the law appeared clear in its effect, intellectually coherent in its analysis, and, in part, unsatisfactory in its practical consequences' (Lord Neuberger) - essentially even if there is not certainty of terms then the tenant may still be afforded protection

2. s 52(1) LPA 1925 =

'all conveyances of land or of any interest therein are void for the purpose of conveying or creating a legal estate unless made by deed'

1. s 53(1)(a) LPA 1925 =

'no interest in land can be created or disposed of except by writing and signed by the person creating or conveying the same...'

iii) looking for misleading terms...

- Antoniades v Villiers [1990] Lord Templeman - Court must look beyond parties' expression of intention and must 'pay attention to the facts and surrounding circumstances and to what people do as well as to what people say' - Any elements of 'pretence' will then be eliminated - 'Licence' agreements, referring to 'licensor' and 'licensee'; owner reserved right 'at any time' to use premises

ii) looking at the surrounding circumstances...

- Court will, if necessary, give consideration to 'how the arrangement works in practice' - Esso Petroleum Co Ltd v Fumegrange Ltd (1994) - Court is entitled, even obliged, to take agreement 'otherwise than at its face value' - Hadjiloucas v Crean [1998]

How are periodic tenancies made?

- Express - implied

Express =

- Granted by express words - Where the precise duration of the period is not explicitly stated, the period is determined by reference to the period with reference to which the rent is payable

Walsh v Lonsdale, facts =

- L granted W a seven year 'lease' in writing - W's rent payable annually in advance - No deed executed -->equitable seven year lease - W entered into possession and paid rent in arrear --> appearing to become yearly periodic tenant at common law L demanded year's rent in advance, W refused - W brought action claiming specific performance of informal lease

what requirements are needed to create a lease?

- Parties must be legally competent - Subject matter must be clearly defined - Goldsworthy Mining Ltd v Federal Commissioner of Taxation (1973)

Hammersmith and Fulham LBC v Monk [1992] =

- Periodic tenancy = term of years - Periodic tenancy is 'founded on the continuing will of both landlord and tenant that the tenancy shall period' - Non-continuation of periodic tenancy (by giving of notice) terminate tenancy by effluxion of time 'in the same way as a tenancy for a term of years'

is there a fixed maximum duration of the lease?

- Term may be of any length Boylan v Mayor of Dublin [1949] per Black J - lease for three days; National Carriers Ltd v Panalpina (Northern) Ltd [1981] - cottage let to holiday-maker Guinness Book of Records 1993 (Facts on File 1992) - lease granted on 3 Dec 1868 in respect of plot for sewage tank, County Meath, Ireland: 10 million years. - only requires the duration of the lease is certain from the outset

what is important about the start time of the lease?

- Term must commence at certain time - No valid agreement for lease to start at some unspecified future date. If start date is not specified, it may be inferred that time commences on taking of possession

Formal requirements for transfer of legal lease:

- Transfer (or assignment) of any legal lease - regardless of duration - must be effected formally by deed - Assignment by mere signed writing takes effect as equitable assignment

Creation of an equitable lease occurs...

- if it is granted out of an equitable estate - Failed to comply with formality requirements - Failed to comply with registration requirements

What is an example of a difference between being a lease holder or a licensee?

- protective legislation (eg Rent Act 1977) benefits tenant but not licensee - dictates whether your interests may bind a future purchaser of the freehold estate of the land

The court may require different formalities regarding...

- the nature of the agreement - the length of the period

How does one terminate a lease?

- through the duration running its course also through e.g. - Effluxion of time - Activation of 'break clause' - Notice to quit - Forfeiture - Surrender - Repudiatory breach - Termination on statutory grounds - Merger

Is registration compulsory?

- yes for some situations there is compulsory registration ...or you can voluntarily register unders 3(1)(a)-(3) LRA 2002 only in respect of estate granted for term of which > seven years remain unexpired

in absence of express agreement for notice to quit for a periodic tenancy then...

...In absence of express agreement between L and T, length of notice required depends on nature of periodic tenancy - One-year tenancy requires ≥ half a year's notice - Doe d Rigge v Bell (1793) - All other periodic tenancies require at least one full period's notice - Javad v Mohammad Aqil [1991]

What are the effects of failure to register for a compulsory requirements?

1. Failure to register = s 7(1) and (2)(a) LRA 2002 - transaction will be void and the lease title will revert back to the transferor who will hold it on trust for a transferee and the transferee only has an equitable title 2. Failure to register = s 7(1) and (2)(b) LRA 2002 - " and will only end up with an estate contract 3. Failure to register = s 27(1) LRA 2002 4.Failure to register = s 27(1) LRA 2002

Compulsory registration when...

1. Transfer of existing lease over unregistered land which has more than seven years to run = triggering event s 4(1)(a) LRA 2002 2. Newly created leasehold estates out of unregistered estate - term of years absolute of more than seven years = triggering event s 4(1)(c) LRA 2002 3. Lease granted out of registered estate - term of years of more than seven years = 'registrable disposition' s 27(2)(b)(i) LRA 2002 4. Transfer of registered leasehold estate s 27(2)(a) LRA 2002

essential criteria for a lease:

1. exclusive possession 2. for a fixed or renewable period of time 3. in return for a premium or periodic payments

How many formal requirements for creation of a lease are there

3

In some circumstances, there will be no lease or tenancy because:

Accommodation based on friendship or generosity - Marcroft Wagons Ltd v Smith [1951] Context of 'a family arrangement, an act of friendship or generosity, or such like' - Street v Mountford

2 aspects to exclusive possession =

Bruton v London & Quadrant Housing Trust [2000] per Lord Hoffmann - key elements: 1. exclusory power 2. immunity from supervisory control of the freehold owner

Walsh v Lonsdale, ratio =

CA held: 'equity regards as done what ought to be done', required that the lease should take effect on the terms originally intended

Street v. Montford [1985] per Lord Templeman =

Courts must 'be astute to detect and frustrate sham devices and artificial transactions whose only object it to disguise the grant of a tenancy and to evade the Rent Acts'

3. s 1(2) LP(MP)A 1989 =

Deeds and their execution

proprietary perspective =

Differs from freehold only in respect of duration of territorial control - nemo dat quod non habet

How will they be registered?

Each independently registered estate will have unique title number and its own register of title

Exclusive possession may not exist when...

Freeholder has unlimited right of access or any intensive supervisory control over occupier's activities - Westminster CC v Clark [1992] Owner retains keys in order to enjoy occasional access for reasons of his own convenience not for reasons of maintainance - Garland v Johnson (1982)

AG Securities v Vaughan [1990] , held =

HL held: no collective claim to tenancy - their rights and obligations were initial separate and could not by some 'legal alchemy' ever become joint - per Lord Bridge

Lace v Chantler [1944] =

Importance of the the certainty of term

Implied =

Javad v Mohammed Aqil [1991] CA - inference to be drawn from periodic payment of rent is that parties intended to create periodic tenancy - Court must examine intentions of the parties in all the circumstances to determine whether it is 'right and proper to infer...that the parties had reached an agreement for a periodic tenancy' - Longrigg et al v Smith (1979)

Lease =

Lease or tenancy confers proprietary estate enforceable against everyone including landlord

Licence =

Licence confers personal permission to occupy (not a proprietary estate)

Rent was described as one of the hallmarks of tendency of residential accommodation in which case?

Lord Templeman in Street v Mountford [1985]

i) by looking at the substance and reality of the transaction...

Lord Templeman in Street v Mountford [1985]: Any document 'which expresses the intention, genuine or bogus, of both parties or of one party to create a licence will nevertheless create a tenancy if the rights and obligations enjoyed and imposed satisfy the legal requirements of a tenancy'

Because of this, legal periodic tenancy can be created without any formality if period is no more than three years; instead it may be created by...

May be created by oral grant or implied from conduct e.g. paying monthly rent

Is there compulsory registration for leases less than 7 years?

No voluntary or compulsory registration But still capable of binding a purchaser as overriding interests

Notice to quit periodic tenancy may be given to....

Notice may be given by L or T

Notice to quit fixed-term tenancy is only effective when...

Only effective if parties have expressly agreed this, otherwise lease continues until term expires

Exclusive possession is necessary but not enough in itself...

Parties must have intention to enter into binding legal or contractual relationship - Street v Mountford [1985]

exclusive possession =

Possession extends beyond mere physical occupancy - it includes conscious will to control that occupancy and defend it against all others - Many contractual licensees / lodgers enjoy exclusive occupation but have no tenancy

But in what case was rent considered as not essential (australian case only persuasive)

Radaich v Smith (1959) per Windeyer J

What is the statutory position on rent?

Rent irrelevant to statutory definitions of 'term of years' - s 205(1)(xxvii) LPA 1925; s 132(1) LRA 2002 - no having rent will not defeat an action

No tenancy can exist without exclusive possession =

Street v Mountford [1985] per Lord Templeman

how long to periodic tenancies continue on for?

They continue indefinitely until determined by the giving of appropriate notice to quit

'lease for life' =

This contravenes the requirement that leases must be of maximum fixed duration ...but legislation now automatically converts the lease for life into a 90 year term - - s 149(6) LPA 1925 (as amended)

periodic tenancies =

a term of years of which the period is determined by the regularity of the payment of rent, which can continue indefinitely - they are not subject to all the formalities that fixed term tenancies are

term of years =

commonly known as 'leasehold estate' - 'Lease', 'tenancy', 'term of years' have tended to be used interchangeably

Contractual perspective =

contractual regulation by the state

leasehold is commonly reffered to as a term because...

duration is limited

certainty of term for period tenancies -

eg weekly, monthly, yearly tenancies ...Continues indefinitely until duly determined by notice to quit - meaning that no maximum term can be predicted at outset - this is called a periodic tenancy (one period = 1 month)