Judicial Decisions since 1945 - Essay Example

Have judicial decisions since 1945 sharpened or blurred the distinction between a lease and a licence The distinction between leases and licences stems from the distinction between the rights in rem and the rights in personam. Apart from various registration and procedural matters, leases and licences also have a more fundamental difference. Leases clearly make the tenant an owner, albeit temporarily, unless a contrary intention is evidenced in the agreement between the landlord and tenant. In order to understand and evaluate the role of post 1945 cases, some reference need to be made of earlier cases which have formed the basis of what the law is as it stands in the post Street V. Mountford era. The licence has normally been seen as mere permission to use someone's property and seems to be terminable at will while the lease seems to engulf within its concept various statutory and equitable rights. In addition to this there seems to be differing schemes protecting both the landlord and the tenants found in the distinction of the equitable and legal leases. In the words of Vaughan CJ in Thomas v Sorrell (1673), "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". Simply speaking the licence is devoid of any ability to grant the possessor of that licence any interest in the land. The distinction becomes extremely important as if an interest in land is found to be a lease then one is protected by the Rent Acts, while the licence seems to encompass only limited rights as according to the terms of the arrangement between the parties with minimal state intervention. One could explore the requirements as they evolved under the concept of a lease to evaluate this very important distinction between a lease and a licence. It is one of the fundamental themes in accepting what a lease is that the period identified in the arrangement between the landlord and the occupier is for a fixed term. In Lace V. Chantler [1944], it was held that a lease for the duration of a war was not a certain period as one could not surely envisage when the war would be over, thus this would be a licence revocable when the war would be over. However, even a short term, for instance a month to month agreement would seem to be satisfying the requirements of the LPA 1925 as each party holds power by notice to determine the continuity of the lease at the end of each month and this saves the arrangement from being uncertain. (Prudential Assurance Co. Ltd v London Residuary Board [1992]) Even time sharing agreements have been held to be tenancies recently (Cottage Holiday Associates Ltd v. Customs and Excise Commissioners [1983], Smallwood V. Sheppards [1895]). Perhaps even here, the underlying fact remains the intention of the party which could be evidenced by virtue of the mode of payment and the time period even though this is not an essential element (Ashburn Anstall v. Arnold [1989]). The concept of exclusive possession is also a very important one in the determination of a lease. Essentially, where the occupier could exclude anyone at all and is free to use the land as he wants subject to certain restrictions, this arrangement could easily be termed as a lease. Where a landlord had rights reserved to enter the premises, empty meters and change linen, it was held to be a licence (Appah v. Parncliffe Investments [1964]. A similar analogy could be drawn with the occupation of rooms in hotels and motels. It is normally quite clear to the occupier that he does not have the rights of a tenant with regards to the room he is occupying and his rights only stem from and are limited to the service contract concluded between him and the hotel, etc. Hence, the traditional distinction between a lease and a licence lays in the grant of a term at a rent with exclusive possession as enunciated above but all of the above assertions are not conclusive and the distinction between a lease and a licence, while still of importance, is sometimes extremely difficult to conclusively assert. In 1904, Lord Davy had summarized the basis of the distinction very succinctly in the following words: "It is not however a question of words but of substance. If the effect of the instrument is to give the holder an exclusive right of occupation of the land, though subject to certain reservations or to a reservation of the purposes for which it may be used, it is in law, a demise of the land itself" In this case the agreement was held to be a lease. However in Taylor V. Caldwell (1863) the fact that the music hall let at 100 pounds each day but for specified purposes made it a licence. In 1874 it was decided in light of residential accommodation that if one received attendance or services by the landlord requiring him to access the land unrestrictedly, then it was simply a licence. (Allan V. Liverpool Overseerers] In the cases of service occupiers also, even in 1854, in the case of Mayhew V. Suttle, it was held that the occupation even with exclusive possession did not create a tenancy and was restricted by virtue of the relationship of master and servant. "Where the occupation is necessary for the performance of services, and the occupier is required to reside in the house in order to perform those services, the occupation being strictly ancillary to the performance of the duties which the occupier has to perform, the occupation is that of a servant." In 1899, in the case of Lynes v. Snaith it was stated that if an agreement contained within it the provision of exclusive possession then it was necessarily a lease. There have been however, some very interesting cases, in Marcroft Wagons V. Smith [1951], Lord Scarman pointed out in relation to the distinction under consideration that even though exclusive possession normally indicates towards the creation of a tenancy but if one is granted that right by default, in this case through succeeding her dead mother, then it would turn to the facts of each case whether the landlords intended to create a legal relationship with the occupier even if they had accepted rent for a time being from that occupier on the same terms as the previous occupier who was a tenant. Up until now, the general trend of the courts seemed to be that even though exclusive occupation, a certain time period did prove to be strong proponents of an indication of a lease but there were many instances, especially where the provision of rent was not available. Lord Templeman has once said: "There can be no tenancy unless the occupier enjoys exclusive possession; but an occupier who enjoys exclusive possession is not necessarily a tenant." Another case where a couple was allowed to live in the father's house was also held to be a licence (Errington v Errington [1952]). Denning LJ placing reliance on the earlier case of Booker V. Palmer (stated above) said: "We have had many instances lately of occupiers in exclusive possession who have been held to be not tenants, but only licencees. When a requisitioning authority allowed people in to possession at a weekly rent:When a landlord, told the tenant on his retirement that he could live in the cottage rent free for the rest of his days.when a landlord on the death of the widow of a statuary tenant, allowed her daughter to remain in possession paying rent for six months," etc, "the result of all these cases is that, although a person who is let into exclusive possession, is prima facie to be considered a tenant, nevertheless he will not be held to be so if the circumstances negative any intension to create a tenancy. Words alone may not suffice. Parties cannot turn a tenancy into a licence, merely by calling it one. But if the circumstance and the conduct of the parties show that all that was intended is that the occupier should be granted a personal privilege, with no interest in the land, he will be held to be a licencee only." The courts seem to prefer to go beyond the written and signed agreements to find out what was the intention between the parties. Hence, subjecting the whole notion of the distinction of a lease and a licence to the ability of the individual judge to interpret and his inclination towards a certain stance taken in or by the law. The interpretation of the notion of the intention behind what has been written and signed or what the set requirements of finding a lease are, has made room for a lot of ambiguity as by its nature, interpretation tends to be extremely subjective even if it seems the most just way to deal with such situations. However, it is also pertinent to mention that in most cases where the courts have negated the existence of a lease in favour of the finding of a licence, there has been some personal element, i.e. some act of generosity or friendship, or some kind of a family arrangement like in Errigton V. Errington. Lord Templeman has summarised the propositions discussed above in Street V. Mountford [1985], a case considered to be the authority on the distinction between a lease and a licence, to be dependant upon three axis: 1. Intention to create legal relations. 2. Special circumstances which prevent exclusive occupation from creating a tenancy. 3. The professed intention of the parties. A licence was held to be found when a farm worker was allowed to remain rent free in his cottage after retirement in 1951. (Foster v. Robinson [1951]). In cases involving a room at an old people's home and where a homeless family was allowed to stay rent free have been held as licences. In Murray Bull and Co V. Murray [1953], even though the judge there had found a mere licence by virtue of the agreement, Lord Templeman thought the case was wrongly decided by virtue of the arrangement contained within the agreement. He states: "The conduct of the parties showed an intention to contract and there were no relevant special circumstances. The tenant holding over continued by agreement to enjoy exclusive possession and to pay a rent for a certain term. In those circumstances he continued to be a tenant notwithstanding the professed intention of the parties to create a licence and their desire to avoid a controlled tenancy." Jenkins J, in the case of Addiscombe Garden Estates Limited V. Crabbe [1958] states that even though the draftsman had very carefully avoided using the title of a tenancy agreement or that of the landlord and tenant but: "The whole document must be looked at: and if, after it has been examined, the right conclusion appears to be that, whatever label may have been attached to it, it in fact conferred and imposed on the grantee in substance the rights and obligations of a landlord, then it must be given the appropriate effect, that is to say, it must be treated as a tenancy agreement as distinct from a mere licence." Thus from the same judgement we can reach to the conclusion that: "Exclusive possession is of first importance in considering whether the occupier is a tenant: Exclusive possession is not conclusive because an occupier who enjoys exclusive possession is not necessarily a tenant." The same conclusion has been reached in many other cases where there was exclusive possession. Examples are Abbeywood Society Limited V. Woods [1968], Issac V. Hotel de Paris Ltd [1960]. The concept of privileges also discussed above has been subjected to lengthy judgements and arguments contained within. Lord Denning has been one of the most potent contributors in the field. In the case of Shell Mex and B.P. Limited V. Manchester Grages Ltd. [1971], Lord Denning said that: "We have to see whether it is a personal privilege given to a person or whether it grants an interest in land. At one time it used to be thought that exclusive possession was a decisive factor. But it is not so. It depends on broader considerations altogether." There also has been a similar judgement in Heslop v. Burns [1984]. According to Lord Denning in Merchant v. Charters that none of the factors like exclusive passion, rent, furnished apartment, provision of services, etc are exhaustive indicators of a tenancy but what needs to be looked at are all of the circumstances. "The answer depends on the nature and quality of the occupancy." But in order to determine the quality and nature of the occupancy he said that we needed to look at the following things: 1. Whether the occupier has a stake in the room 2. Whether he has exclusive possession at a rent and at a fixed rate In Street, Lord Templeman looked at the decision of Somma V. Hazelhurst [1978] with some hostility stating that even though the landlord had asked both people who formed part of the couple to sign separate agreements at a weekly rent and provided separate beds for them as a licence and not a tenancy. He stated that the court should be astute and alert to detect and frustrate sham devices such as the Hazelhurst case. In conclusion even though we can state quite confidently what are the requirements, the presence of which would clearly indicate the presence of a tenancy and will allow us to identify sham devices employed by the parties but these requirements remain very subjective and allow too much judicial intervention, hence, blurring the true law governing the distinction between leases and licences. It can be said that in the era where exclusive possession meant that the courts felt inclined towards finding a tenancy, the law was much more clear and discernable. Today even though we know that we are to ask whether the occupier had exclusive possession, if yes, then whether there was an intention to create legal relations, and what are the circumstances giving rise to the exclusive possession of the occupier, and whether the occupier has enough power to use the land as he wishes by, for instance being able to grant a sub-tenancy, and finally are there any exceptional circumstances, we do not know how to react to the answers given by these questions for sure and in the end it boils down to the discretion afforded to the individual judge. An interesting case on the distinction between a lease and a licence is the case of Bruton v. Quadrant Housing Trust [2000]. The HOL stated that the ability to create an estate in the land is the usual but not the essential consequence of a lease. This seems to have eroded any safeguard that the law had been able to retain from the discretion of the judges. Further, cases like Manchester Airport plc V. Dutton complicate the law even further especially in connection with the distinction drawn between tenancies at will and licences. The case law after 1945 has essentially only given us certain periods of certainty but in general has witnessed haphazard approach with judges being inclined to find tenancies without resorting to attempt to reach even slightly watertight principles that could be relied upon. Today, it seems that a tenancy would be found if the judge somehow manages to find somewhere in the background to the agreement in hand, an intention between the parties to create a tenancy. It needs to be asked however, that if we are to resort to the above stated strategy, then what is the value of the agreement that the parties agree to, usually in written, in compliance to the law set down by parliament Bibliography Gray, K.J and Gray, S.F. Elements of Land Law (London: OUP, 2004) Burn, E.H. Maudsley and Burn's Land Law: Cases and Materials. (London: OUP, 2004) Dixon, M Principles of Land Law. (London, Cavendish, 2002) Sparkes, P. A New Land Law. (Oxford: Hart, 2003) Gravells, N.P. Land Law: text and Materials (London, Sweet & Maxwell, 2004) Smith, R. Property Law: (Harlow: Longman, 2003. Equity, Maitland (Cambridge University Press,1936) Abbey and Richards, A Practical Approach to Conveyancing (Blackstone Press, 2001) Woodfall, Law of Landlord and Tenant, (Sweet & Maxwell, looseleaf) Read More