The Nature of Lease

CHAPTER 1: INTRODUCTION

Over the decades, the extensive debates on license and leases has been very much rooted in the heart of English land law due to it similarities, nonetheless, it come into sight that one major different which is the right gained under each is dissimilar. The nature of lease, in gist, is proprietary whereas a license is otherwise.[1] Furtherance of each would be laid down as below which then signify the repercussion of one getting a proprietary interest. Likewise, it appears to be a strong pointer in the question, which has explicitly seeking for a detailed discussion in advising Chester whether has he been furnished with any proprietary right to avoid from the eviction from the cottage by the new owner, Paul. The crux of this issue mainly lies on the few questions below and each to be rigorously assessed. i. Whether Chester has been granted a proprietary right by lease? ii. In the event of Chester failing to claim under the aforesaid issue, is what he being granted is merely a licence? iii. Would a licence render Chester no way to bind Paul? iv. If it is otherwise, can he claim for his right under via the ‘just and fair' principle - ‘Equity' ( Proprietary Estopel ) v. Subsequently, the upshot of Chester's claim.

1.1: A small glance on the nature of lease

In considerate with putting a glance on the nature of lease, one would have appreciated in the course of advising Chester, it is appreciated that Chester must has acquired proprietary interest via any recognised mechanism in order to stay in that cottage.[2] It would be step worthy to primarily invoke the provision laid down in S1 (1) of the Law of Property Act 1925[3], it reads as, a lease confers a proprietary status in the land. This simply means it is capable of binding third parties. In the occasion if Chester managed to prove the establishment of a lease and so it grants Chester some protection by The Rent Act 1977[4] and The Housing Act 1996[5] from being abused by the landlord of his fundamental rights. Nonetheless, if it happened to be an unfortunate event for Chester hit the failure to establish a lease with Noakes. Apparently, in such circumstances, Chester is so being unprotected and has no choice but to leave Paul's cottage.

1.3: A glimpse on the repercussion of a ‘Licence'

Furthermore, it has to be understood that, failure on lease may deliver Chester only a rise on ‘licence' which is personal in nature.[6] As taken place in Clore v Theatrical Properties, it has grounded on a view that a licence is therefore not transferable or to bind a third party as it is plainly a permission to enter another property. In this case, if Chester failed to prove an existence of licence between him and Noakes and so being, he is a trespasser. Even though, if it is so happened for Chester to have a licence, it still cannot bind Paul at the first glance since Paul is a third Party, a bona fidei one, unless it falls under the exception laid down by case law.[7] As a consequence of realising such possible outcome, Chester hence needs to prove he owns a lease instead of a licence via the maxim of ‘he who asserts must prove' on the elements laid down in Street v Moundfort[8] that will be discussed below.

Chapter 2: The Recipe of Lease

2.1: Hallmark laid down in Street v Mountford Initially, in accordance to S.205 Law of Property Act 1925, it is submitted that a lease simply means a term of years absolute. [9]At first, Chester would of the will to claim himself under a lease which is proprietary in nature. However, in rebutting Chester, Noakes may then challenge Chester by claiming a lease must have done by deed as stated under Somma v Hazlehurst[10] with it being executed. It seems the law has found favour on the defendant at this stage. However, it should never be disregarded, where a more novel case has marked an important print on the history of ‘lease', a statue of ‘lease' has been crafted by the profound judge, Lord Templeman by laying down the hallmark of lease as opposed to Somma v Hazlehurst. This simply indicating that Somma case no longer a good law as the Lordships sat in Street v Mountfort[11] has taken more activist approach by grounding their decision that, a lease must has exclusive possession for a term at a rent.[12] The reasoning of their ratio being is, the equity looks at content rather than the form. It appears Noakes's argument is not a standing still enough. It is primarily to also advise Chester in fitting the dress on the statue of the ‘Lease' in this situation which is, one must have exclusive possession on that land which first found in the case of Fachinni v Bryson[13] .It indicates Chester would bear the burden to prove he has the ability to exclude all others from the cottage inclusive of the landlord. It is argued that, Chester has gained its exclusive possession especially when he was being asked to keep the cottage and garden in good condition. In the analogy of Marchant v Charters[14], it was held that, services provided by the landlord would infringe the exclusive possession hence render no lease. Likewise, in this scenario, Chester was granted such possession exclusively in the cottage and the garden. In fact, it is noted that, the possession has extended from the cottage until the garden. Arguably, Chester could further his strengthen his stand by claiming he has not been interfered by others and carried his side of the agreement for two years. Notwithstanding howsoever being convincing Chester's arguments are, Noakes may nonetheless contend by claiming that, the exclusive possession contention does not hold any water on the grounds that the retention of key by him prior the agreement. This means, Noakes can enter whenever he wished to, hence, it seems Chester has got no exclusive possession. In the light of Huwyler v Ruddy[15], the decision is reached on, anything more than 20 minutes would render no exclusive possession. Moreover, Noakes may has had enter the cottage for more than 20 minutes. On the fact, Noakes expressly stated he will enter the cottage just in case he ever needs to get in. It could be argued to be, at any case, be it emergency or normal course. Hence, Chester may not have exclusive possession. Chester side, at this juncture may seemed to be shaky now. As per Lord Templeman in Street, his lordship has envisaged on the usage of sham device to negate the element of exclusive possession. Therefore, the court is likely disregard the form but the real intention and substance to prevent artificial transaction. The above argument can however be rebutted as the court will look at the intention of the party and the actual usage of the key on whether had it been used regularly or sparingly. In the light of Aslan v Murphy[16], the retention of keys is held to be no affection on the lease as it had not been use to enter the property. In deciding this issue, it seems the key has never been used as described by Noakes as Chester. Looking at the whole course, it is opined that the merely holding on key but not using it will not negate exclusive possession of Chester in that property. Furthermore, another threshold laid down in Street is the requirement of rent. At this point, Chester would strengthen his position by claiming he paid rent to Noakes for two years. Noakes may argue, the nominal rent is not a ‘rent' per se as in the eyes of law but merely a payment for use of the land as illustrated in Holt v Wellington[17]. However, one would also appreciate the fact that, the requirement though laid down in case law but it is there is none in statute, i.e.: S.205 LPA 1925. Therefore, paradoxically, as demonstrated in Ashburn Anstalt v Arnold[18], the hallmark of ‘rent' does not playing a vital role in establishing a lease. This means, a lease can still be successfully established regardless the question of rent. As far as it is observed, it seems the law is more prone to Chester at the first glance. Another element is one of the utmost importance criterion of a lease, it should be noted that, a lease will failed without certainty of term. On the grounds of Lace v Chantler[19], the unforeseeable event would not suffice a certainty of term, for instance, after World War II. Chester could then invoke Arnold Anstalt v Arnold, the similar ‘indefinite' period was held to be certain. Nonetheless, it is severely criticised by Lord Templeman and Lord Browne-Wilkinson. Noakes may nonetheless grab this chance by gainsaying the word ‘indefinitely' doesn't signifying any point of time. Again, the same judge sat in the novel case of Prudential Assurance Co. Ltd v London Residuary Body[20] ruled out, any purported lease with unascertainable duration at the commencement date is void. It is in fact, none of the reasonable man could clearly know the exact duration of ‘indefinitely'. Nevertheless, Chester may raise the argument of a lease can be created for a maximum duration as laid down in National Carriers Ltd v Panalpina[21] . Unfortunately, as per Blackstone, a lease with a term called ‘term' simply because it must have a certain beginning and certain end which in this case, obviously without such duration. On prima facie, the lease is at a higher chance to be failed. However, on the other hand, one would also wisely take the view by invoking periodic tenancy when it appears uncertainty of term. The court of law if imply based on the fact, i.e., if a rent is paid by weekly and so the court would imply it to have a weekly tenancy. As confirmed by Prudential case, periodic tenancy can only be used when it appears rent paying for a period of time and the tenant has moved in occupation. In the fact, it may be found both requirements are satisfied as Chester has been paying rent and moved into the cottage for 2 years. Under such circumstance only a lease would be created. However, it appears no fact delivering us the matter of whether the agreement is done by deed or not. Even if it is not done by deed, as observed from the fact, it is possibly done by an agreement in writing, under Walsh v Lonsdale,[22] the court is willing to perfect the imperfect one to make it an equitable lease subject with not falling under the exceptions and terminated. As a result from a lease, Paul will be bound by the proprietary right under the lease granted. Flip another side of the coin, it could also be viewed on another perspective, in which a challenge maybe object by Noakes by claiming they have no intention to create legal relation as they are both old friends under Marcraft Wagons Ltd v Smith.[23] Noakes was only with the will of being helpful when Chester was out of job and seeking for jobs. Besides, in the light of Norris v Checkfield[24], Noakes can also take the stand of Chester is working under him to look after the garden and the cottage is just for the convenience of job therefore falling under the exception of service occupancy that renders the lease with no effect.Also, It should be appreciated that, be it fall under whichever category, it still render no lease at all. Based on the reason of Chester and Noakes have no intention to create legal relation, it eventually blocks the way of Chester claiming under Contractual Licence and would not have bound the Third Party - Paul, via Binions v Evans[25] . It may only be a bare licence either by expressly or impliedly. Tracking on the footprint of this road, it gives no mercy nor sympathy as to Chester will need to accept the notice to quit by Paul. As illustrated in the case of Greater London Council v Jenkins[26] Since Paul is now the landowner, he has the right to revoke the licence and upon revocation the person must be given reasonable time to leave the land before him being accused as trespasser.

Chapter 3: Would a licence render Chester no way to bind Paul?

Tune back to the previous channel where there is a failure on certainty in term and no longer eligible as a lease unless it fulfilled the three thresholds, In the event the court found Noakes to have intention to create legal relation. Chester may be advised on pursuing his right on contractual licence as an attempt. It is of course, as laid down in Lloyd v Dugdale[27] in which a licence is personal in nature under general circumstances until the application of the gate which was opened by Lord Denning in Binions v Evans, only it binds the third party - Paul. It is identified that, the licence that exists in this case would most probably a contractual licence as they had entered into an agreement to stay in Noakes's property. Crucially, Chester must have established the contract by proving a valid offer and acceptance, intention to create legal relations, sufficient consideration and without any vitiation factors.[28] In a gist, Chester may argue all the elements of contract had been in complied with. The utmost importance one would be, he paid ‘rent' every month for two years which held to be a sufficient consideration.[29] At this juncture, Paul can nevertheless argue that, as laid down in King v David Allen & Sons [30] a contractual licence however does not give rise to bind a third party as it is merely a licence that is personal in nature. At the first glance, Chester gets only a mere permission and thus, Paul as the lawful owner of the land would have the right to revoke the licence. However, look behind the mountain of licence, Chester may contend his situation and distinguish his case from the common situation by claiming his scenario is of the same as Binions v Evans that allows Third Party to be bound by licence. Lord Brown Wilkinson has expressed his view of Binions case in Re Sharpe that it should be limited and apply only when it appears to be same facts. It is worthwhile to glimpse through the fact of Binions as it is vital. A contractual licence has been granted to an old woman after the deceased of her husband by the company, nonetheless, consequently, the house was sold to a third party and that party was informed by the company about the licence lies on the widow. Surprisingly, with the knowledge of that widow, the third party send a notice to quit to the widow wishing her to leave. The man of wisdom, Lord Denning sat in the case and held that, the third party is bound by the licence since the third party know about the interest of that widow but has done so to evict her. The third has been placed a position of a constructive trustee on behalf on that women whom conscious was affected.

CONCLUSION:

In juxtaposing the law with the fact, without any doubt it seems to be similar when Paul was informed with Chester's interest. However, it is imperative to appreciate the different, of two. First and foremost, Chester was not granted to live at the cottage for rent free as the widow. Secondly, Chester was only out of job and he could easily find another job that supports his living unlike the widow left with no one. Moreover, he can pay for 2 years for the cottage has evidently showed his financial stability. It is opined that, on that grounds, there is no unconscionable event happened. Paul is not bound under that contractual licence. Until and unless the court found in favour on Chester, then Paul is bound and in the event he revokes he licence, in the light of Wood v Leadbitter[31], Chester can take contractual action against Paul for damages or injunction.

Claim under the equitable proprietary estoppel

An alternative for Chester if he failed to gain any right via the afore methods, he may take his route on proprietary estopel which land marked in the case of Taylor Fashion v Liverpool Victoria Trustees by Lord Oliver,[32] Chester bears the burden to prove assurance, reliance, and also detriment. Chester could argue that there was an assurance, a clear and irrevocable one. In demonstration of Dodsworth v Dodsworth[33], Noakes has indeed expressly told Chester that he can stay there indefinitely. As laid down in Greasley v Cooke[34] , it is submitted that Chester has suffered detriment by staying at the cottage and more importantly to look after the garden for two years. Nonetheless, the fact that he looks after the garden did not change or alter the significant position of Chester. Therefore, his claim under Proprietary Estoppel is most likely to ground unsuccessfully. In addition, the conscious of him is not affected. It may be criticised to be unjust or too rigid, nonetheless, that is the outcome of the claim. In a nutshell, Chester has failed to comply with three threshold in Street v Mountfort and limited by the exceptions, His attempt on Contractual licence via Binions v Evans exceptions has also ground in failure with no unconscionablility. It appears to be an unfortunate event that he has to leave the property within reasonable time as Paul is not bound by any right.

Bibliography

1. Martin Dixon, ‘Modern Land Law' (6th Edition) 2. Kevin Gray & Susan Gray, “ Elements of Land Law' ( 5th Edition) 3. Victoria Sayles, ‘ Land Law'( 1st Edition) 4. Judith Bray, ‘Unlocking Land Law' ( 2nd Edition) 5. MacKenzie & Philips, ‘Land Law' ( 11th Edition) 6. Professor Cedric D Bell, ‘Land' ( 3rd Edition) 7. Landlord & Tenant Review(2005), Case comment on ‘Advertising Hoardings- Lease or licence' 8. K.R.Handley, ‘Unconscionablility in estoppel by conduct:triable issue or underlying principle?' - Conveyancer and Property Lawyer 2008 I/C: 890812-14-5019 Student ID: UKT/F409036 [1] Martin Dixon, Modern Land Law (6th Edition) p244:”… Yet a licence is a mere personal right, binding only the parties that created it…” [2] For example, Constructive Trust, Propriety Estopel, Creation of leases and etc… [3] S.1(1) Law of Property Act 1925: The only estates I land which are capable of subsisting or of being conveyed or created at law are, (a) An estate in fee simple absolute in possession (b) A term of years absolute. [4] It provides a considerable security of tenure and regulates the level of rental payable by tenants. [5] As amended in 2004 with new housing health and safety rating system. [6] As per Vaughan CJ in Thomas v Sorrell 330 at p.351:”…A dispensation or licence properly passeth no interest, nor alters or transfers property in any thing, but only makes an action lawful, which without it had been unlawful.” [7] Unless, it is a situation similar to Binions v Evans, it cannot bind third party. [8] [1985] AC 809 [9] “…the definition of the expression ‘term of years' includes a term for less than a year, or for a year or years and a fraction of a year or from year to year…” [10] [1978] 1 WLR 1014 [11] [1985] AC 809 [12] The traditional view that the grant of exclusive possession for a term at a rent creates a tenancy is consistent with the elevation of a tenancy into an estate in land. The tenant possessing exclusive possession is able to exercise the rights of an owner of land which is in the real sense his land albeit temporarily and subject to certain restrictions” 1985] A.C. 809 at 816; [1985] 2 W.L.R. 877, HL. [13] [1952] TLR 1386 [14] [1977] 1 W.LR.1181 [15] [1996] 28 HLR 550(CA) [16] [1989] 3 ALL ER 130 [17] (1996) 71 P& CR D40, where payment although described as rent, it was held to be payments merely in respect of care. [18] [1989] Ch 1 [19] [1944] KB 368 at 370-1 [20] [1992] 2AC 386 at 396 A per Lord Templeman [21] [1981] AC 675 at 714B [22] (1882) 21 Ch D 9 [23] [1951] 2 KB 496 [24][1991] 1 WLR 1241 [25] [1972] Ch 359 [26] [1975] 1 W.L.R 155 [27] [2001] ALL ER (D) 306 [28] As per Lord Wilberforce in The Eurymedon [29] Currie v Misa [1875] LR 10 [30] [1916] 2 AC 54 [31] [1845] 153 ER 351 [32] [1982] QB 133 [33] [1973]228 EG 1115 [34] [1980] 1 WLR 1306