Leasehold Cases

Nature of a lease
O A lease is both a contract and an estate.
O (i) A lease is a contract for the exclusive
possession and profit of land for some
determinate period (per Lord Templeman
in Prudential Assurance v London
Residuary Body [1992] 2 AC 286, [1992] 3
WLR 279; [1992] 3 All ER 504 HL
O (ii) The estate created by the contract is
called a term.


Law of Property Act 1925
O Reminder: s.1 (1) The only estates in land
which are capable of subsisting or of being
conveyed or created at law are
O (a) An estate in fee simple absolute in
possession;
O (b) A term of years absolute.
O Reminder: s.205 (ix) Land includes land of
any tenure . . .
O NB (i) a lease cannot be granted in perpetuity
O (ii) LPA s.149(6): a lease to someone for
life is converted into a term of 90 years
determinable on the lessees death.


Creation of a leasehold
interest - fomalities
O parol leases are effective to
grant a term of three years or
less
O otherwise, leases must be by
deed.
O a tenancy agreement that is
not a deed is construed as an
agreement to create a lease.


Land Registration Act 2002
O A term of years absolute is registrable as
a separate title, provided that it is a term
of more than seven years (or where an
existing lease is sold, if the lease has
more than seven years to run).

O Grades of leasehold title:
O leasehold title absolute
O good leasehold
O leasehold possessory


Leasehold/Licence Distinction
O A lease creates an estate in land as
well as personal rights between the
lessor and lessee; a licence
createsonly personal rights between
the licensor and the licensee.

O A licence confers a right on the
licensee to do acts which would
otherwise be unlawful.


Types of Licence
O Bare licence
O A licence not supported by a contract
O e.g. going into a shop
O A bare licence can be revoked at any time on
reasonable notice

O Contractual licence
O A licence granted under the terms of a contract
which restricts the licensors right to revoke it
O e.g. going to the cinema, staying in a hotel


Types of Licence cont
O Licence coupled with an
interest

O A licence coupled with a recognised
interest in property
O e.g. a right to enter on anothers land to
catch fish.
O A licence coupled with an interest is
irrevocable.


The distinction between a
lease and a licence to occupy
O In residential property, this is the
distinction between a tenant and a
lodger.

O General principle: a person who has
exclusive possession will be a tenant.

O Street v Mountford (1985)
O AG Securities v Vaughan (1990)
O Aslan v Murphy (1990)


Essential Requirements for a
Lease
OStreet v- Mountford [1985]
A.C. 809

O to constitute a tenancy the occupier
must be granted exclusive
possession for a fixed or periodic
term certain in consideration of
apremium or periodic payments


Certainty
O A term which is certain:

O Certainty of commencement
O Certainty of duration

O Lace v- Chantler (1944) for the duration of the war
O lease for the duration of the second world war was held void as
being of uncertain maximum duration.

Parliament has pushed for certainty of duration in leases
Validation of War Time Leases Act 1944 was enacted to that
converted all war time leases to a term of 10 years with a proviso
that either landlord or tenant could terminate the lease once the
war ended by giving a months notice.
Certainty - cont - Prudential Assurance
Co Ltd v- London Residuary Body (1992)
O An agreement made in 1930 provided that
the tenancy shall continue until .. the land is
required by the Council for the purposes of
the widening of Walworth Road. The
landlords claimed that this purported lease
was void because of the uncertainty of its
term.

O The House of Lords, with Lord Templeman
giving the leading judgement, upheld the
first instance decision that the lease was
void.
Fixed Periodic and Tenancies -
Javad v- Mohammed Aqil
(1991)
The defendant had paid a retainer and was in
possession for a three month period, but the
parties failed to agree terms while negotiating for
a tenancy. It was held that the only sensible
inference was a tenancy at will, there being no
conclusion to the intention to create a legal
relationship
Fixed and Periodic Tenancies
cont
O Fixed and Periodic Tenancies

O Prudential Assurance Co. Ltd v-
London Residuary Body

O A periodic tenancy is a lease for a
period which goes on renewing itself
automatically.

Special Cases
O Leases for life or until marriage are
converted into 90 year fixed terms, (s.149
LPA 1925)

O Perpetually renewable leases are
converted into 2,000 year fixed terms
(s.145 LPA 1922)

Payment of Rent - What is rent? Ashburn
Anstalt v- Arnold (1989)
O Establishes that in English law rent is not
required for the creation of a tenancy

O A lease can still arise where there is
exclusive possession for a term but
without rent.
Exclusive Possession - Street v
Mountford 1985
O The issue in this case was whether the tenant of a domestic
property had a lease or merely a licence. If he had a lease, he was
protected from eviction under the Rent Acts. Needless to say, the
landlord would have preferred that his occupancy was seen as a
licence, as this protection from eviction would not apply. Lord
Templeman defined a lease simply as 'exclusive possession for a
time at a rent'. The earlier considerations of intention and form were
essentially set aside. Accordingly, the tenant had a lease.

O Lord Templeman also pointed out something that should
have been obvious: apart from a few exceptional cases,
unless a person is a leasee, he is a lodger. There are no
intermediate categories of occupancy.

O The test is therefore one of substance not form.

Lodgers - Marchant v Charters
O It was held that the grantee was not a
lodger but the occupier of a service flat
(and therefore under a licence only), since
his landlady performed duties such as
daily cleaning and changing of bed linen.
Owner's Retention of Keys -
Aslan v- Murphy (1990)
O the occupier of a basement room entitled only
to occupy with a one and a half hour gap in
the morning to noon and doing so in common
with "the Licensor and such other Licensees
or invitees as the Licensor may permit from
time to time" and on condition that "the
Licensor is not willing to grant the Licensee
exclusive possession". It was held on appeal
that the licensee was a tenant and that the
sharing provision was unrealistic and a
patent pretence.
Acts of generosity or friendship Rhodes v-
Dalby 1971
O FACTS: Two men were long-standing friends.
One owned a bungalow, but was
going abroad for two years. The two men
signed a document described as a
gentlemans agreement not intended to
create legal relations. Under that agreement
the friend staying in this country took
possession of the bungalow during the two
year absence.He agreed to pay a quite high
rent for being able to live in the bungalow.

O HELD: The arrangement was a licence.

Service occupancy - Crane v- Morris 1965

O FACTS: The defendant was employed
as a farm worker and granted
exclusive possession of a cottage on the farm
upon condition that he remained in the employ
of the plaintiff. The defendant did not pay rent.
When the defendant left the
plaintiffs employment and took up work in a
factory, the plaintiff brought an action to
regain possession of the premises.

O HELD: The defendant was a mere licensee,
not a service tenant

Essential Requirements of a
Lease
O The flat sharing cases:

O Antoniades v- Villiers (1990)
O Co-habiting couple signed separate identical
agreements on the same day allowing them to share
a small flat. An air of total unreality about the
documents being read as separate and individual
licences. There was a lease arrangement.

O AG Securities v- Vaughan (1990)
O Four occupiers signed separate agreements on
different dates for a different period and at a different
rent. There was a licence arrangement.

Legal v Equitable Leases
O Formalities in creating a legal lease:

O Up to three years created orally;
O Over three years and up to seven years
deed, no registration;
O Over seven years deed and completion by
registration


O Agreements for Lease
O Enforceable in equity


Equitable Leases - Walsh v
Lonsdale 1882
O FACTS: A landlord and tenant had entered into a contract for a
seven year lease and the tenant had gone into possession, but the
parties had forgotten to execute the formal deed needed for a valid
legal lease. The rent clause in the contract provided that under the
lease the rent should be per year payable in advance at the
beginning of each year (the precise figure would depend upon the
number of looms run by the tenant for his business). Despite the
absence of a deed granting a legal lease, the landlord demanded
the rent in advance in accordance with the contractual
term. Indeed, he attempted to recover the rent due by exercising his
right of distress. The tenant claimed that as there was no deed and
therefore no proper lease, any rent should be payable in arrear. He
therefore claimed an injunction against the action for distress.

O HELD: The landlord could claim rent in advance. The contract
had created an equitable lease enforceable between the
parties. The terms of this lease would correspond to the terms
of the contract.

Legal v Equitable Leases 2
O Equitable Leases;

O Walsh v- Lonsdale

O Equitable leases of unregistered land are
capable of registration as C(iv) Land Charges

O Equitable leases of registered land are
registrable as notices, (if not registered might
be treated as overriding interests under
Sched.3 para. 2 LRA 2002 if in actual
occupation.


Determination of leases
O by expiry
O by notice to quit (where permitted by the
lease, may be given by either the landlord or
the tenant)
O by forfeiture
O by surrender (but requires consent of lessor)
O by merger into freehold
O by disclaimer (on insolvency of tenant)