Occupation Agreement between Raj and Joyce and Decisions Involving Repair Obligations in Short Leases - Assignment Example

199333 LL C/N INTRODUCTION TO THE LAW OF PROPERTY RESEARCH EXERCISE 2 SEMESTER 2007/8 Part A (70% weighting) (i) In late 2005 Raj allowed hissister-in-law Joyce, to take up occupation, at a consideration of £600 per month, of the first floor apartment in a house of which Raj is the freeholder. Raj at first was reluctant to agree to this because he intended to let this apartment on a long lease for a capital sum, however because Joyce was homeless, Raj felt he had to help accommodate her. Raj and Joyce signed a written agreement headed “Occupation Agreement”, which contained the following terms: - - The occupier hereby acknowledges that no lease has been created by this agreement but rather a licence. Raj is the licensor and Joyce is the licensee. - The licensor is entitled to nominate any third party to share occupation of the apartment. - The licensee is obliged to keep the apartment in good repair and installations therein in proper working order. - The licensee shall pay the fee of £600, in advance, on the 28th of each and every month. - This licence agreement shall be for a fixed-term of 4 years commencing on 1st October 2005. - The licensee shall vacate the apartment, each and every Sunday morning between the hours of 9 am and 11 am, in order that the licensor can clean the apartment and check on the general condition of the same. - If the apartment is not kept in repair, or, the installations therein not kept in proper working order, or the licence fee, or any part thereof, be unpaid for 21 days, the licensor can terminate this agreement. You are a trainee in the firm of solicitors consulted by Joyce. Your principal has asked you to research and prepare a report of 1,000 words outlining the legal principles as to the legal nature of the occupation agreement between Raj and Joyce (but she does not want you to comment on whether any statutory protection is available for the agreement) You should include with your report (but not counting in the word limit) a list of all cases consulted (with references) and, if appropriate, statutory provisions that are closely relevant to the case, so that your principal can follow these up and give the appropriate advice. (ii) Your principal has also asked you to do a separate piece of research, unconnected with the situation above, to produce a report of 500 words on decisions in the cases in the last ten year in which the courts have considered and/or applied s.11 Landlord and Tenant Act 1985. Part B (30% weighting) Explain precisely (in 500 words), in relation to both A (i) and A (ii), what was your research strategy and how you carried out the research, explaining the database searches that you made. Include (but not counting in the word limit) a bibliography of all books and databases used to carry out the research. Report on Occupation Agreement between Raj and Joyce Distinction Between Lease or Licence With a lease the occupier will have exclusive occupation and no services will be included in the money paid and the landlord is not able to terminate the agreement at short notice. Licences by comparison do not convey exclusive occupation on the licensee and the landlord is free to allow other persons to move into the property. The inclusion of services such as cleaning or the paying of utility bills by the landlord would also lead to the inference of a licence. For a lease to have been created Joyce would have full ownership rights1 as this is not the case the courts are more likely to infer the creation of a licence. In Shell-Mex & B P Ltd v Manchester Garages Ltd [1971]2 the distinction between leas and licence was made by examining where the control lies. It was stated that if the landlord remains in control then only a licence is created and the licensee would have to rely on proprietary estoppel to prevent the licence being brought to an end3. Formalities for Creation of a Lease The Law of Property Act 1925 s205 includes a lease as a conveyance of land. Not all leases require a deed. Under s54(2) of the 1925 Act leases that are for less than 3 years do not require a deed. A lease is usually created where a landlord grants the tenant the right to exclusively possess the land for a fixed or ascertainable period of time. The landlord retains the reversionary estate at all times. It is possible to grant a lease when no consideration has been given as was the case in Ashburn Anstalt v Arnold [1989] Ch1 however it is usual for consideration to be paid in the form of rent. Where the landlord is proposing on leasing the property for more than 3 years there must be evidence in writing and a legal deed has to be created. Prior to 1989 the requirement for the deed was covered by s40 of LPA 1925. Leases created after 1989 are governed by the Law of Property (Miscellaneous Provisions) Act 1989 s2. It could be argued that as the agreement is for 4 years that a lease has been created, however, the tenants do not enjoy exclusive possession and therefore it is more likely that the courts will hold that a licence has been created. Licences Licences do not afford much by way of protection for the licensee as the licence can be revoked at short notice even if there is no breach of the contract4. Licences only convey a personal permission to occupy without exclusive possession. In Street v Mountford [1985] AC 809 Lord Templeman made the comment that a lease is created where the tenant has the right to ‘call the land his own’. Windeyer J also made the point in Radaich v Smith [1959] 101 CLR that ‘exclusive possession provides the touchstone of a lease’. With a lease the tenant has more rights and is better protected by the law. Tenants are entitled to assign their lease or can sue third parties for trespass onto their property5. Those with a lease are also entitled to protection afforded by the Rent Act 1977 whereas licensees are not. Gray (1993) states that ‘exclusive possession is the essential criterion in distinguishing a lease from a licence and has been so since medieval times6’. Vaughan C J made the observation in Thomas v Sorrell (1674) 124 ER 1098 that "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." In this Vaughan is reaffirming that a licence does not entitle the licensee to the same rights as a tenant but merely allows the licensee to occupy the property at the will of the landlord. It could be argued from the above that the insertion of the fixed period of 4 years could suggest the intention to create a lease rather than a licence7. However, in Street v Mountford Lord Templeman made the observation that exclusive possession does not always lead to the inference of a tenancy. For a tenancy to be inferred there must be proof of the intention to enter into a legal contractual relationship between the parties. Reference was made by Lord Templeman to the comments of Lord Denning in Facchini v Bryson [1952] 1 TLR 1386 where he stated that a tenancy may be precluded if There has been something in the circumstances, such as a family arrangement, an act of friendship or generosity, or such like, to negative any intention to create a tenancy.’ Using this as a guideline this would mean the accommodation offered on the basis of charity8, friendship9 or of a domestic or quasi familial nature10 will not be classed as tenancies but as licences to occupy. In this particular situation the insertion in the agreement that Raj can allow others to occupy the property and the requirement that the property is vacated every Sunday morning for cleaning and inspection to be carried out means that Joyce does not have exclusive possession and therefore the relationship between the parties is one of licensor/licensee. As such if Raj decided to sell the property Joyce could be made to vacate the property immediately as successors in title cannot be bound by licence agreements11. In Street v Mountfield the court felt that the defendant was making a sham out of a lease by having all the elements of a lease contained within what he alleged was only a licence. The principle of exclusive possession has now been used more widely to determine whether a lease or a licence has been created. It may be that the tenants could rely on the case of Family Housing Association v. Jones12. In this case the Housing Association had let a flat to the defendant on a weekly licence on a temporary basis until the defendant could secure permanent accommodation elsewhere. Unfortunately despite the agreement being drawn up as a licence the defendant enjoyed exclusive possession of the property and was not required by the housing association to vacate the premises on a regular basis nor where any services provided as part of the rental agreement. In this case the court applied the ruling in Street v Mountfield and held that a tenancy had been created by allowing the defendant exclusive possession of the flat. In Family Housing Association v. Jones, Slade L.J. observed that the decision of the court in inferring a lease would make it increasingly difficult for housing associations to be able to supply temporary accommodation for homeless people as the association where duty bound under s65 (2) of the Housing Act 1985 to house homeless people and to give them exclusive occupation. The court followed this decision in the subsequent case of Bruton v London & Quadrant Housing Trust13 which led to a call for a reassessment of the rules regarding estoppel as the housing associations where being placed in untenable positions whereby they were having to grant tenancies to people that had been housed in temporary accommodation. In this case the court stated that the plaintiff did not need to rely on the principle of estoppel as the granting of the exclusive possession was sufficient to give rise to the inference of the creation of a lease. Principles of Proprietary Estoppel Protection of the rights of licensees to prevent landlords from revoking licences at will has been afforded through the principle of proprietary estoppel. Under this principle if the licensee has been given an expectation that the licence will not be revoked and the licensee has relied on this assurance to their detriment the court will deem the licence to be irrevocable14. This principle applies under business occupations15 as well as residential ones16. In order for the courts to make the licence irrevocable there must be proof shown that there was an expectation on the part of the licensee and not just a hope that the licence would not be revoked17. The courts will also require proof that the plaintiff has relied on the promise made to their detriment18. When this has been proven the courts may prevent the landlord from revoking the licence on the grounds that it would be unconscionable to allow him to revoke the licence19. The court has discretion in terms of the remedies available where the landlord is proposing revoking the licence. The courts can make it so the licence is irrevocable for life20. In some cases the courts have ordered a transfer of the freehold.21 The agreement signed between Raj and Joyce has created a licence agreement. This would mean in essence that Raj would be free to terminate this at will. However, as Raj has included a term in the agreement that the licence is for four years if he attempts to terminate the licence before this time Joyce could ask the courts to apply the principle of proprietary estoppel on the basis that she has no where else to live if Raj where to try to make her vacate the property. As she was homeless at the time that Raj offered her the place to rent she might have difficulty in proving that she has acted to her detriment. If she had moved out of a house into the one offered by Raj relying on being allowed to stay there for the next 4 years it would be easier to prove she had acted to her detriment. Report on decisions involving repair obligations in short leases In examining cases where the Landlord and Tenant Act 1985 s11 has been used it is obvious that the application of this section depends on the courts interpretation of the statute and the lease agreement between the parties. In the case of Alker v Collingwood Housing Association [2007]22 the court reached the conclusion that the defendant’s were not liable for failing to repair the property and that the fault lie with the claimant as they had not made the defendant aware of the problem as soon as it had become apparent. In the unreported case of Montoya v Hackney LBC QBD heard 15 July 2005 the court decided there had been no breach of the repair covenant as the damage complained of fell within the exceptions of the Landlord and Tenant Act 1984 s11(3). In the case of Rainbow Estates Ltd v Tokenhold Ltd 199923 the repair covenant was the responsibility of the defendants who were the tenants of the property. The defendants argued that the repairs should be the responsibility of the landlord. The court found for the plaintiffs as the lease agreement entered into by the parties clearly placed the repair responsibility on the defendants and the plaintiff had signed an agreement that meant that they could not enter the property to carry out repairs. In the case of Barrett v Lounova (1982) Ltd [1990]24 the court implied a repair covenant into the agreement despite the fact that no such agreement had been made by the landlord and the tenant. The court felt that such an obligation to repair the exterior of the property should have been impugned into the contract and the landlord was made to repair the exterior. The courts have reduced original awards in some cases where the tenants have been obstructive towards the landlord when they have been trying to repair the property. In the case of English Churches Housing Group v Shine [2004]25 the court reduced the amount of damages that had initially been awarded following evidence adduced by the landlord that the tenant had continually been obstructive by refusing to vacate the premises whilst the repair work was being carried out. The tenant attempted to argue that there was no need for him to vacate so that the work could be done, the judge overruled this saying that regardless of the tenant’s opinion that there was not need to vacate s11 of the LTA entitled the landlord to insist on the property being vacated so that the work could be done. In the case of Ball v Plymouth City Council [2004]26 the court held that the defendant was not liable as the expert evidence of the defendant was conclusive in stating that the problem complained of was not due to inadequate repair. It can be seen from the above that s11 of the LTA can be applied in favour of wither party dependent on the judge’s interpretation of the covenant and the lease agreement. In general the cases researched show that it is the responsibility of the tenant to make the landlord aware of the defects and to take all necessary action to ensure this work can be carried out. Research strategy In order to answer both of the above I consulted several textbooks. In particular I made use of Gray, K, Elements of Land Law. Butterworths, 1993 when looking at the issue of lease or licence. I also used Westlaw in order to access relevant case law in this area. My starting point was to examine the distinction between leases and licences and the leading case of Street v Mountford was particularly useful in defining the differences. The other books I used in this research are listed in the bibliography below. I also accessed several websites. The ones which were used in the final research piece are also listed in the bibliography. Within the research I looked at whether a landlord can terminate a licence at will and what protection is available for the tenant when the landlord proposes doing this. In researching this I looked at the circumstances under which the tenant can prevent the landlord from terminating the licence using the principle of proprietary estoppel. My lecture notes also provided useful information on the distinction between leases and licences and on the conditions in which proprietary estoppel can be applied. For the research on the Landlord and Tenant Act I primarily used Westlaw for the cases and www.opsi.gov.uk for the legislation itself. I compared cases where the Act had been applied and drew my conclusion from these alone. My research would have been more conclusive and accurate if the word limit had been such as to allow further investigation of other cases. The conclusion from the cases highlighted cannot therefore be asserted with full authority as the research was limited by the word count available. In using Westlaw I input the words ‘repair, obligations, short term leases, and s11 Landlord and Tenant Act.’ From the list of cases I selected only those that specifically mention the Act and did not read the ones where the Act was not mentioned. When examining this area I first read the section of the Act in order to determine the realms of the Act that were appropriate. Having established that this section was concerned with repair covenants I used the Westlaw search engine to find cases on this specific area. I found several cases where no mention of the Act was made and discarded these immediately. Of the ones I did find I selected 3 where the judge found for the landlord and only 1 where the decision was in favour of the tenant. This was because in the vast majority of the cases the courts have had a tendency to find for the landlord as opposed with the tenant. Bibliography Bryn Perrins, Understanding Land Law, 3rd Ed, 2000, Cavendish Publishing Ltd Gravells, N P, Land Law Text and Materials, 2nd Ed, 1999, Sweet and Maxwell Gray, K, Elements of Land Law. Butterworths, 1993 Thomas, M, Statutes on Property Law, 8th Ed. 2001, Blackstone’s Transfer of land: The Law of Positive and Restrictive Covenants (1984) Law Commission No 127 Law Commission Report No 238, Landlord and Tenant: Responsibility for State and Condition of Property (1996) http://www.landregistry.gov.uk http://www.propertylawuk.net www.opsi.gov.uk www.westlaw.ac.uk www.bailli.org Table of Cases Addiscombe Garden Estates Ltd. v Crabbe [1958] 1 Q.B. 513 Alker v Collingwood Housing Association[2007] EWCA Civ 343; [2007] 1 W.L.R. 2230; [2007] H.L.R. 29; [2007] L. & T.R. 23; [2007] 25 E.G. 184; Times, February 14, 2007 Ball v Plymouth City Council [2004] EWHC 134 Barnes v Barratt [1970] 2 QB 657 Brent Peoples Housing Association Ltd. v Winsmore [Unreported, County Court, 20 November 1985] as quoted by Gray on p 712, 1993 edition. Clore v Theatrical Properties Ltd. [1936] 3 All E.R. 483 Coombes v Smith [1986] 1 W.L.R. 808 Countryside Residential (North Thames) Ltd v T (a Child) (2001) 81 P&CR 2 (G530) Dellneed Ltd v Chin [1987] 1 E.G.L.R. 75 E.L. Berg Homes Ltd. v Grey (1979) 253 E.G. 473 English Churches Housing Group v Shine [2004] EWCA Civ 434; [2004] H.L.R. 42; [2005] L. & T.R. 7; (2004) 101(20) L.S.G. 35; (2004) 148 S.J.L.B. 476; [2004] N.P.C. 61 Facchini v Bryson [1952] 1 TLR 1386 Greasley v Cooke [1981] 1 W.L.R. 1306 (M&B(L) 580) Inwards v Baker [1965] 2 Q.B. 29 (M&B(L) 584; (G 623) King v David Allen & Sons (Billposting) Ltd. [1916] 2 A.C. 54 (M&B(L) 555) Manchester Airport v Dutton [2000] 1 QB 133 Marcroft Wagons Ltd. v Smith [1951] 2 KB 496 Pascoe v Turner [1979] 1 W.L.R. 431 (H&M 79; M&B(L) 600) Plimmer v Wellington Corporation (1884) 9 App. Cas. 699 (M&B(L) 589; G 641) Prudential Assurance Co Ltd. v London Residuary Body [1992] 2 AC 386 Radaich v Smith [1959] 101 CLR Shell-Mex & B P Ltd v Manchester Garages Ltd [1971]1 W.L.R. 612 Sledmore v Dalby (1996) 72 P&CR 196 (G 650) Street v Mountford [1985] A.C. 809 (M&B(L) 417; G 386) Thomas v Sorrell (1674) 124 ER 1098 Unity Joint Stock Banking Association v King (1858) 25 Beav. 72; 53 E.R..563 Wood v Leadbitter (1845) 13 M. & W. 838; 153 E.R. 351 (M&B(L) 541; G540) Table of Statutes Landlord and Tenant Act 1985 Rent Act 1977 Read More