A lease is an estate in land of defined duration.
A lease is an estate in land of defined duration. It is capable of subsisting; as a legal estate, but it must be created in the manner required by the law and satisfy the definition of a 'term of years absolute' otherwise it is an equitable interest.1
There are two types of lease; fixed which is self determining 6months, 1 year, 50 years. The vital feature is that it is a fixed maximum duration. Periodic, weekly, monthly, annually, it continues indefinitely until terminated giving notice. A lease is sometimes referred to as hybrid- proprietary interest in land but roots in contractual relationship between landlord and tenant.
There are also 3 essential requirements for a lease, according to Lord Tepleman the lessee or tenant must be granted: exclusive possession, for a fixed or periodic term; and in consideration of a premium (lump sum) or periodical payments.
A licence is different it's a permission to do some act which would otherwise be unlawful in regard to the land of another person. It prevents what otherwise would be a tort i.e. trespass. There are five categories of licence: Bare licence, licence coupled with equity, licence coupled with the grant of an interest, licence & estopppel and contractual licence. The category into which a licence falls has consequences in terms of both revocability and assignability.
The distinction between a lease and a licence - however elusive - is a vital determinant of several legal issues. Lease - licence distinction derives an immediate significance from the fact that a lease normally confers a proprietary estate in land but never a licence.2 Only a tenant has an estate or interest in land, whereas a licence is a right personal to the licensee and cannot be assigned. (Grey).
It's seen that not normally a tenant but a licensee, is subject to the 'short-cut' summary procedure for the recovery of possession. However, there is also a countervailing tendency in modern statute law to treat the contractual licence as on a balance with the leasehold estate. The distinction between tenancy and licence no longer controls the operation of the protective codes regulating secure tenancies.3 A 'secure tenancy' covers, not merely a tenancy but also a licence to occupy a dwelling house as long as the licensee enjoys exclusive possession.4
In recent years it has become established that possession, is not necessarily denied to all kinds of licensee.5 Not just someone who owns an estate in land, but certain catergories of people who hold a licence can claim exclusive possession of land.6 Therefore a licensee can sue in trespass7 and nuisance8, provided in either case the claimant 'is enjoying or asserting exclusive possession of the land'.9
When it comes to recovering land from a trespasser the position of a lease and a licence is, the tenant, as owner of a term of years has a clear right to recover possession from trespassers who invade his land. However the licensee has no legal title to exclude the other 'persons' as he lacks any estate in the land. 10 (Grey).
In recent times the courts have attached an importance to the degree of possessory control exercised over land by a licensee. Therefore a contractual licensee who is in 'effective control' of a site is entitled to obtain an order for possession as against trespassers who have entered that site without consent.11
This is backed by Manchester Airport plc v Dutton12; the court of appeal upheld the right of a contractual licensee to invoke the 'fast possession' procedure in order to recover possession from trespassing protestors on an environmentally sensitive development site. This form of eviction was made available even though the licensee had no right to exclusive possession of the area, had at best merely limited rights of entry for specified purposes, and most surprisingly was not yet in occupation of the sit at all.13 (Grey)
"This equip ration of contract-based and estate-based rights to justify possession has radically closed the juristic gap between many forms of licence and the proprietary estate of the lease."14 (Grey)
The essential difference between a lease and a licence at one time was believed to be that a lease gave the tenant exclusive possession of the property, whereas a licence did not. That is no longer the sole criterion for distinguishing between them though.15
The particular areas of interest to do with licences in recent times have been the overlap with leases. Street v Mountford highlighted the complexity of the use of a licence as a method of circumventing the rent legislation regarding security of tenure.16
Protection was given to the tenants in two key ways, firstly by restricting landlords' right to evict and secondly by restricting their ability to increase rent arbitrarily this was under the Rents Acts. 17
As a result many landlords were anxious to avoid creating a lease, and they attempted to avoid the effect of ...
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The particular areas of interest to do with licences in recent times have been the overlap with leases. Street v Mountford highlighted the complexity of the use of a licence as a method of circumventing the rent legislation regarding security of tenure.16
Protection was given to the tenants in two key ways, firstly by restricting landlords' right to evict and secondly by restricting their ability to increase rent arbitrarily this was under the Rents Acts. 17
As a result many landlords were anxious to avoid creating a lease, and they attempted to avoid the effect of the Rent Acts by creating a licence instead, as licensees were not afforded Rent Act protection.
The distinction between leases and licences is therefore blurred and requires an examination of the principles applied by the courts to determine on which side of the line any particular agreement may fall.18
Since 15th January 1989 it has no longer been possible (except in certain circumstances) to create a Rent Act protected tenancy. The Housing Act 1988 has done away with the Rent Act's system of rent control.19
However containing the new system has similar provisions with regard to security for the tenant.
The landlord is also provided with several broader grounds of possession than under the old Act. It introduced a means of granting short-term tenancies; a type of letting that was extended by the Housing Act 1996 because it proved so popular with the landlords. This now means that a landlord of residential property no longer has to claim that an occupier is holding under a licence to avoid the risk of the tenant acquiring protection under a statutory code. 20This however does not mean that the importance of the distinction between a lease and a licence is in any way diminished.
Granting a licence effectively instead of a tenancy isn't as easy as it sounds. For example if a landlord takes a standard form tenancy and blanks out the word 'Tenancy' and replaces it with 'Licence'. Then he goes through the rest of the agreement substituting the words 'licensor' and 'licensee' for 'landlord' and 'tenant'. Furthermore he adds an extra declaration at the end of the agreement, which states, 'I understand and accept that a licence in the above form does not and is not intended to give me a protected tenancy under the Rent Acts'. 21 (Simon Garner).
Two things can be seen in this agreement; firstly it contains a clear statement that it is intended to create only a licence and secondly changing the labels does not alter the rights and obligations contained in the agreement.22
There is a long-standing doctrine that the superficial label attached by the parties to their transaction is not necessarily definitive of its legal status.23 The descriptive labels applied by the parties themselves have only an influential not a conclusive quality, and the court retains an undoubted jurisdiction to override any 'false label', which doesn't correspond to the inner reality of the transaction in hand. The court may take the view that a supposed 'lease' or 'tenancy' comprises in truth a mere licence. 24 (Grey).
As Bingham LJ graphically pointed out in Antoniades v Villiers, " a cat does not become a dog because the parties have agreed to call it a dog".25
This type of situation is sometimes said to create a dilemma for the courts. Because on the one side there's a long-established principle of freedom of contract and it is said that the courts have no right to interfere purely because they dislike the nature of the deal struck.26 However on the other side it can be said that parties shouldn't be allowed to contract out of a statute and in so doing defeat the aim of parliament.
Street v Mountford showed that whether a transaction is a lease or a licence depends (with slight exceptions) entirely on whether or not there is exclusive possession. The 'intent of the parties' and the label the parties attach to the transaction is irrelevant.27
The standard of exclusive possession has tended to mark off the boundary between a lease and a licence. In the residential context the conferment of a right of exclusive possession for a term has served, in all but exceptional circumstances, to represent the grant of a leasehold estate in land. A tenancy isn't necessarily present wherever someone is, in exclusive possession of land. Because where an occupier is held to be a licensee it will be a result of something in the circumstances, such as a family agreement, act of friendship or generosity, to prevent any intention to create a tenancy.28 In Ward v Warnke (1990) 29, however, it was said that a family relationship is not conclusive of a licence and there may still be a tenancy if the circumstances support this.
According to Lord Templeman there are three categories, which consist of circumstances of legal significance, which would negative a grant of a tenancy: where there is no intention to create legal relations, where there is some other relationship than landlord and tenant and where the grantor has no power to grant a tenancy.30
In Booker v Palmer (1942)31, It was held that the parties here did not intend to contract at all: 'the law does not impute intention to enter into legal relationships where the circumstances and the conduct of the parties negative any intention of the kind.' Also in Cobb v Lane (1952) there was no tenancy because there was no intention to enter into legal relations.
If a occupier is employed by his /her landlord it doesn't mean that the occupier cant be a tenant. This is only if it's not aimed at facilitating the better performance of the employee's contract of service. Where the accommodation might just as readily have been allocated to a non-employee- the courts seem much more willing to identify the status of the accommodation in terms of tenancy. 32 (Grey).
However where an au pair lives in a room in his/her employer's house there is a much stronger connection between the au pair's employment and accommodation. If the au pair is dismissed the landlord/employer will want to employ a new au pair and he/she will also want the room to be available for the new employee. Therefore an employee who is required to occupy his/her employer's premises for better performance of his/her duties ranks as a mere licensee. This type of person is known as a service occupier or a service licensee.33 (Grey)
A tenancy cannot be said to have arisen if it is not within the landlord's power to create a lease. In the case of London Borough of Camden v Shortlife Community Housing et al (1993)34, the question arose whether Camden had granted a lease or a licence to a housing association, which provided housing for young single people in London. By virtue of certain sections of the Housing Act 1980, Camden was forbidden to 'dispose' of land without ministerial consent. Millet J found that on its true construction the agreement entered into was a licence and not a lease. The word 'dispose' includes a lease, but not a licence, and therefore, because Camden did not have the power to grant a lease the housing association had acquired a licence and not a lease. It would be a licence regardless of the fact that the housing association had acquired exclusive possession.35
In many cases, as in Street v Mountford36, none of the exceptions considered above apply, in which case reference to the first step in the analysis will decide whether the occupier has a lease or a licence; whether there is a grant of exclusive possession to the occupier. If there is no grant of exclusive possession, the occupier's claim to be a tenant will fall at the first hurdle.37
In determining whether exclusive possession had been granted the decisive consideration is the degree of control over the premises and their use, which is retained by the owner.
Another further important instance of residential occupation, which coexists with exclusive possession vested in, another is; even if a residential occupier enjoys rights of exclusive occupation for a term, he may still be excluded from the status of tenant if he falls into the category of a lodger. An occupier is a mere 'lodger' "if the owner of premises provides attendance or service which require the landlord or his servants to exercise unrestricted access to and use of the premises". 38
The important factor in distinguishing a lease from a licence consists in the absence of any possession precisely in order to supply services or attendance.39
Provision of attendances and services is not confined to the traditional lodger. In Abbeyfield (Harpenden) Society ltd v Woods (1968)40, the occupier of a room in an old people's home was held to be a licensee despite the fact that he had exclusive possession of his room. Lord Denning decided he was a licensee on the basis that the whole agreement was 'personal in nature', not on the grounds that the occupier didn't have exclusive possession. If this case were to be decided today it would be held that the owner of the old people's home in fact retained a degree of control over the premises such that the occupier could not be said to have exclusive possession.41
The courts look at the grant of exclusive possession (or not in some cases) in a broad way, taking into account the accommodation provided and the surrounding circumstances. A particular example of this is the retention of a key by the owner. A lot of owners in varies cases have argued that the retention of a key denies the occupier exclusive possession, but the courts refuse to take such a simple view.42
Just because a grantor retains keys to the premises doesn't as such contradict the existence of a lease. " A landlord may well need a key in order that he may be able to enter quickly in the event of emergency; fire, burst pipes. He may need a key to enable him or those authorised to read metres or to do repairs which are his responsibility".43
As a result of landlords being tempted to avoid protective legislation the courts have become more vigilant in detecting the presence of sham or pretence terms in occupation agreements 'whose sole purpose is to exploit the vulnerability of those who desperately seek residential accommodation and will sign almost anything in order to obtain it'.44 (Grey).
Therefore theses days when courts are forced with occupation agreements they are wise enough to strip away any contractual term that is clearly improbable or cynically inconsistent with the reasonably practical circumstances of the envisaged occupancy. The discarding of such terms as 'pro non scripto'45 - enables the court to determine whether the remainder of agreed terms genuinely disclose the nature of a lease or tenancy. In Antoniades v Villiers (1990), the House of Lords held that these 'non-exclusive occupation licence' agreements were riddled with 'pretence', but that once the elements of 'pretence' were cut away the documents, when read together, plainly revealed the existence of a term of years granted to the occupiers as joint tenants.46
It's likely that when the unity of possession of two or more persons jointly sharing exclusive possession of premises will be analysed as giving rise to joint tenancy under a lease tenancy under a lease.
Where however, premises are shared by a changing population of previously unassociated individuals-such people are highly unlikely to be able to demonstrate the 'four unities' of possession, interest, title and time, which are necessarily present in a joint tenancy. Because flat-shares don't hold under contemporary agreements and often pay different rents, inevitably disabled from claiming any collective status as joint tenants in respect of the entire flat. They are contractual licensees only.47
Therefore the House of Lords in A.G. Securities v Vaughan and others (1998)48 accepted that four occupiers, who each signed different licence agreements on different dates for varying payments. Which expressly negatived exclusive possession of any part of the premises, could not have a joint tenancy of a four-bedroom flat, which gave them 'in toto' exclusive possession.
It seem that over the years the changes that have taken place in the law to do with leases and licences has helped to clear the blurring line.
Since the Rent Act's system was done away with and landlords were
Provided with several broader grounds of possession; landlords no longer feel as anxious to avoid creating a lease, because lessees are now the same as licensees as in they are both not afforded Rent Act protection.
The courts have also become wiser in recognising sham agreements. By stripping away any contractual term that is clearly improbable with reasonably practical circumstances of envisaged occupancy. Enables them to determine if it's a lease or tenancy.
Also exclusive possession has been seen as having tended to mark off the boundary between a lease and a licence. But in recent years possession has been found not to be deniable to all kinds of licensee's. Certain categories of people who hold a licence can claim exclusive possession of land, therefore licensees can sue in trespass and nuisance if 'enjoying or asserting exclusive possession of the land'.
Overall it can be seen that it has been and will be hard to distinguish a lease from a mere licence. It won't help that the development of licences is entering into the proprietary dimension.
Cheshire & Burn's, Modern Law of Real Property, 16th Edition, 200, Butterworths
2Gray K, Gray S, Elements of Land Law, 3rd Edition, 2001, Butterworths
3 Housing Act (1985), s.79 (3)
4 Westminister CC v Clarke (1992) 2 AC 288
5 Hounslow LBC v Twickerham Garden Development Ltd (1971) CH 233
6 Street v Mountford (1985) AC 809 Per Lord Templeman
7 Mehta v Royal Bank of Scotland Plc (1999)
8 Pemberton v Southwark lbc (2000) 1 WLR 1672
9 Hunter v Canary Wharf Ltd (1997) AC 655
0Gray K, Gray S, Elements of Land Law, 3rd Edition, 2001, Butterworths
1 Gray K, Gray S, Elements of Land Law, 3rd Edition, 2001, Butterworths
2 Manchester Airport Plc v Dutton (2000) 1 QB 133 AT 147F - G
3 Gray K, Gray S, Elements of Land Law, 3rd Edition, 2001, Butterworths
4 Gray K, Gray S, Elements of Land Law, 3rd Edition, 2001, Butterworths
5 Wilkie M, Cole G, Landlord and Tenant Law, Macmillian Law Masters, 4th Edition, 2000, Macmillan
6 Gray K, Gray S, Butterworths Core Text Series Land Law, 1999, Butterworths
7 A Practical Approach to land lord and tenant
8 Wilkie M, Cole G, Landlord and Tenant Law, Macmillian Law Masters, 4th Edition, 2000, Macmillan
9 Garner S, A Practical Approach to Landlord and Tenant, 2nd Edition, 1998, Blackstone's Press Limited
20Garner S, A Practical Approach to Landlord and Tenant, 2nd Edition, 1998, Blackstone's Press Limited
21 Garner S, A Practical Approach to Landlord and Tenant, 2nd Edition, 1998, Blackstone's Press Limited
22 Garner S, A Practical Approach to Landlord and Tenant, 2nd Edition, 1998, Blackstone's Press Limited
23 Antoniades v Villiers (1990) 1 AC 417 at 466h - 467a Per Lord Oliver of Aylmerton
24 Gray K, Gray S, Elements of Land Law, 3rd Edition, 2001, Butterworths
25 Antoniades v Villiers (1990) 1 AC 417 at 466h - 467a Per Lord Oliver of Aylmerton
26 Garner S, A Practical Approach to Landlord and Tenant, 2nd Edition, 1998, Blackstone's Press Limited
27 Sexton R, LLB Learning Texts Land Law, 3rd Edition, 1998, Blackstone's Press Limited
28Gray K, Gray S, Butterworths Core Text Series Land Law, 1999, Butterworths
29 Ward v Warnke (1990),22 HLR 496
30 Street v Mountford (1985) AC 809 Per Lord Templeman
31 Booker v Palmer (1942) 2 All ER 674
32 Gray K, Gray S, Elements of Land Law, 3rd Edition, 2001, Butterworths
33 Gray K, Gray S, Elements of Land Law, 3rd Edition, 2001, Butterworths
34 London Borough of Camden v Shortlife Community Housing et al (1993) 25 HLR 330
35 Garner S, A Practical Approach to Landlord and Tenant, 2nd Edition, 1998, Blackstone's Press Limited
36 Street v Mountford (1985) AC 809 Per Lord Templeman
37 Street v Mountford (1985) AC 809 Per Lord Templeman
38 Street v Mountford (1985) AC 809 Per Lord Templeman
39 Gray K, Gray S, Butterworths Core Text Series Land Law,1999, Butterworths
40Abbeyfield (Harpenden) Society ltd v Woods (1968) 1 WLR 374
41 Garner S, A Practical Approach to Landlord and Tenant, 2nd Edition, 1998, Blackstone's Press Limited
42 Gray K, Gray S, Butterworths Core Text Series Land Law, 1999, Butterworths
43 Aslan v Murphy (no 1 & 2) Duke v Waynne (1989) 3 ALL ER 130
44 Gray K, Gray S, Butterworths Core Text Series Land Law, 1999, Butterworths
45Antoniades v Villiers (1990) Per Lord Jauncey of Tullichettle
46 Antoniades v Villiers (1990)
47 Gray K, Gray S, Butterworths Core Text Series Land Law, 1999, Butterworths
48 AG Securities v Vaughan (1988) 3 All ER 1058
