The Right to Exclusive Possession - Essay Example

The agreement between, Botolphs Investments plc and Alfred Micawber although en d “license” is not the only factor capable of characterizing the terms and conditions of the agreement and certainly does not preclude the possibility that it is tenancy agreement. In the words of Lord Jauncey in Bruton v. London and Quadrant Housing Trust: “…it is the legal consequences of the agreement which is determinative rather than the label which the parties have chosen to attach to it’’.1 Lord Hoffman goes on to confirm that it is important to examine the characteristics of the actual agreement rather than focus on the label. He emphasized that: “The meaning of the agreement, for example, as to the extent of the possession which it grants, depend upon the intention of the parties, objectively ascertained by reference to the language and relevant background . . .But the classification of the agreement as a lease does not depend upon any intention additional to that expressed in the choice of terms. It is simply a question of characterising the terms which the parties have agreed. This is a question of law.”2 Traditionally in determining whether or not the arrangements between Botolphs Investments plc and Alfred Micawber constitute a tenancy or a license it will be necessary to look a the factual background and discern whether or not the intent of the arrangements was to give Alfred Micawber exclusive possession of the shop. If so, the agreement was a tenancy rather than a license.3 Lord Denning stated in Shell-Mex & BP Ltd v Manchester Garages Ltd [1971] 1 WLR 612 that: “Broadly speaking, we have to see whether it is a personal privilege given to a person (in which case it is a licence) or whether it grants an interest in land (in which case it is a tenancy). At one time it used to be thought that exclusive possession was a decisive factor. But that is not so. It depends on broader considerations altogether. Primarily on whether it is personal in its nature or not.”4 This submission by Lord Denning was merely an extension of his ruling in Isaac v Hotel de Paris Ltd [1960] 1 WLR 239 where he broadly held that exclusive possession was not the only consideration.5 Although the law changed somewhat it has once again been restored to the resolution of the question of exclusive possession. In Street v Mountford Lord Templeman delivering the opinion of the House of Lords reinstated the previous test by holding that: “In my opinion the agreement was only ‘personal in its nature’ and created ‘a personal privilege’ if the agreement did not confer the right to exclusive possession of the filling station. No other test for distinguishing between a contractual tenancy and a contractual licence appears to be understandable or workable.”6 The right to exclusive possession is the pivotal test for which to determine whether on not the agreement between Botolphs Investments plc and Alfred Micawber constitutes a tenancy as opposed to a license. National Car Parks Ltd v Trinity Development Co. (Banbury) Ltd [2001] EWCA Civ 1686 it was held that it was in fact the substance of the actual agreement that would determine the nature of the agreement rather than its form.7 The agreement for discussion contains the following: "(i) this licence is personal to the licensee." "(ii) this licence confers no exclusive right for the licensee to use and occupy the premises." "(iii) the licensee shall permit the licensor to enter the premises with necessary workpersons and equipment in order to carry out any work deemed necessary." Although the agreement expressly states that the licensee will not occupy the premises exclusively it is clear from the factual background that the licensee is occupying the premises for a specific purpose and the licensor reserves the right to enter the premises purely for maintenance purposes. As explained by Lady Justice Arden, exclusive possession means: “…a right to keep out strangers and a right to keep the landlord out unless the landlord was exercising a limited right reserved by the agreement to enter for maintenance and repair.”8 Based on this statement it is clear that Alfred Micawber’s occupation is exclusive since the landlord retains the right to enter only for the purpose of maintenance and repair. A clause permitting a landlord to enter premises for a limited purpose is treated as evidence of exclusive possession by the tenant.9 Moreover the requirement to give three months notice and the payment of a monthly fee all indicate a right to exclusive possession and the creation of a tenancy. As lord Buxton explained: “…if the parties had in fact agreed upon exclusive possession, they cannot offset that agreement simply by labelling the agreement in a certain way or by saying that that is not what they have agreed.”10 There is nothing in the arrangements between Botolphs Investments plc and Alfred Micawber capable of nullifying it as a tenancy. For instance there is no right reserved by Bobolphs to change Micawber’s occupation without notice to him. Nor could Bobolphs require that he share his shop with another person. This kind of clause or understanding would support the contention that the arrangements between them are merely a license.11 At the end of the day the primary question with regard to exclusive possession the determining question is whether or not the licensee’s occupation is such that he is required to share his accommodations or the premises let to him.12 There is no evidence that Alfred Micawber is required to share the shop or any part of it with anyone other than permitting workmen in for necessary maintenance and repairs. If the nature of the actual license agreement is such that if functions as a tenancy then there can be no doubt that the arrangements despite its title will be regarded as such in law. Lord Templeman said in Street v Mountfort that: “.... The consequences in law of the agreement, once concluded, can only be determined by consideration of the effect of the agreement. If the agreement satisfied all the requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agreement by insisting that they are only creating a licence. The manufacture of a five-pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.”13 The agreement required monthly payments which is consistent with a tenancy agreement together with a requirement for notice in the event either party wanted to end the tenancy. Moreover, as previously stated the agreement made provision for exclusive possession providing only for the landlord to enter the premises for the purpose of conducting repairs. This kind of provision is quite common in tenancy agreements. Had the agreement called for Micawber to occupy the premises subject to the landlord’s right to possession and control the license would in fact be a license.14 Had the agreement not required a fixed monthly rental payment no doubt it would have been far more difficult to claim that the agreement was not a license since it has been held that where there is no rent there is no lease.15 It is obvious that Micawber and Bobolphs entered into a tenancy agreement despite the label accorded the agreement and if either party insist that the agreement be interpreted as such, based on the authorities cited above their arguments would succeed. Degree of Accuracy required upon notice to Terminate a Tenancy following the House of Lords Decision in Mannai investments co ltd. v eagle star life assurance co ltd.[1997] UKHL 19 Although the House of Lords was prepared to over look an error in a notice to terminate a tenancy in Mannai Investments Co. Ltd. v Eagle Star Life Assurance Co Ltd.[1997] UKHL 19 the Law Lords made it clear that the notice must comply with the terms of the tenancy agreement. Lord Hoffman went so far as to say: “If the clause had said that the notice had to be on blue paper, it would have been no good serving a notice on pink paper, however clear it might have been that the tenant wanted to terminate the lease. But the condition [in the case under consideration] related solely to the meaning which the notice had to communicate to the landlord..."16 In the Mannai Investments Co. Ltd case the tenant had intended to serve the requisite notice to terminate the tenancy on the landlord. However, he had erred and calculated the time to fall short by one day, but his intention was clear. Lord Steyn explained that: “The question is not how the [recipient] landlord understood the notices. The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual scene. "17 In interpreting the approach taken by the House of Lords in Mannai Investments the House of Lords held in Lay v Ackerman [2004] EWCA Civ 184 the first step was to consider whether a mistake had been communicated in the information provided for in the notice. If there was a mistake the next step would be was to consider whether or not a reasonable man in similar circumstances would have understood the notice as it was intended to be understood. The final step would involve considering whether or not: “…the notice would have been understood as conveying the information required by the contractual, statutory or common law provision pursuant to which it was served.”18 The Court of Appeal however, held in Speedwell Estates Ltd. v Dalziel [2002] 1 ALL ER 55 that the objective test would only be applicable if the statutory or contractual requirements for giving notice are complied with.19 In this case the tenant had failed to provide the particulars of his residence which was specifically provided for in the agreement and such failure was fatal to his notice since it did not comply with the contractual requirements.20 In another Court of Appeal decision a tenant was permitted to break a lease notwithstanding that he had miscalculated the end of the leases ten year term. The Court of Appeal upheld the notice on the basis that the tenant intended to end the lease within the time frame provided for in the tenancy and had merely fell short on his computation of time.21 In Claire’s Accessories v Kensington High Street Associates [2001] PLSES 112 it was held that the Mannai defence would not be available to a landlord who failed to serve notice at the place prescribed for said notice in the tenancy agreement.22 The decisions following the Mannai case demonstrate that the courts are prepared to allow a notice to contain inaccurate information. That is, providing that upon a reasonable interpretation of the contents of the notice and the surrounding facts the party giving the notice intends to comply with the substance of the contractual and statutory provisions for notice. However, the courts will not give effect to a notice that does not comport with the form and manner required by contract or statute for giving notice. Methodology The first step in this research was to gain some background knowledge of the laws relating to tenancies and licenses. Cheshire & Burn’s Modern Law of Real Property (15th edition) provided a good starting point as it provided the general principles of law distinguishing licenses from tenancies. Mark Thompson’s Modern Land Law, 2006 edition provided updated case law on the distinction between tenancies and licenses. After reading a synopsis of the relevant cases the next step in the research process was selecting the cases that were relevant and determining which ones were best suited for the discussion. Beginning with Glenwood Lumber Co. Ltd v Phillips [1904] AC 405 I worked my way forward to National Car Parks Ltd v Trinity Development Co. (Banbury) Ltd [2001] EWCA Civ 1686. By this method I was able to trace the historical developments in respect of the distinguishing factors in regards to tenancies and licenses. While all the cases did not mirror the facts of the case for discussion, they were chosen on the basis that in principle they involved similar circumstances and were therefore relevant. Electronic searches were conducted, but nothing of value was found. Therefore all of the cases referred to were hard copies of law reports found in the library. Particularly useful cases were Bruton v. London and Quadrant Housing Trust [1999] 3 All E.R. 481, Street v Mountford [1985] AC 809, AG Securities v Vaughan/Antoniades v Villiers [1990] 1 AC 417 and National Car Parks Ltd v Trinity Development Co. (Banbury) Ltd [2001] EWCA Civ 1686. Researching the degree of accuracy required upon notice to terminate a tenancy following the House of Lords Decision in Mannai investments co ltd. v eagle star life assurance co ltd.[1997] UKHL 19 involved searching for and reading a hard copy of the Mannai case. After gaining a full understanding of the House of Lords’ decision in this case and noting the salient points I turned to text book discussions on the case. Mark Thompson’s text on Land Law was a good starting point. However an electronic search of the case Mannai investments co ltd. v eagle star life assurance co ltd.[1997] UKHL 19 was of greater use as it listed cases that referred to the House of Lords decision in the Mannai case. The case of Lay v Ackerman [2004] EWCA Civ 184 came up electronically and I followed up via hard copy research. This particular case was very useful since it not only clarified the position taken by the courts with respect to the provision of notice to terminate a tenancy it took pains to clarify and expound upon the decision reached by the House of Lords in the Mannai case. The case of Speedwell Estates Ltd. v Dalziel [2002] 1 ALL ER 55 also expounded upon the decision in Mannai case and the nature of that explanation was included in the report. Claire’s Accessories v Kensington High Street Associates [2001] PLSES 112 was a very useful case as it demonstrated the boundaries set by the court in facilitating the Mannai defence. As in all discussion involving Land Law and its principles there is a lot of material and it is often an onerous task deciding which cases are relevant and which ones are not. In the end I tried to sort out the cases that were closely tied to the discussion as was possible. Works Cited AG Securities v Vaughan/Antoniades v Villiers [1990] 1 AC 417 Ashburn Anstalt v Arnold [1988] 2 All ER 147 Bruton v. London and Quadrant Housing Trust [1999] 3 All E.R. 481 Claire’s Accessories v Kensington High Street Associates [2001] PLSES 112 Garston v Scottish Widows [1998] 2 ALL ER 73 Glenwood Lumber Co. Ltd v Phillips [1904] AC 405 Isaac v Hotel de Paris Ltd [1960] 1 WLR 239 Lay v Ackerman [2004] EWCA Civ 184 Mannai Investments Co. Ltd. v Eagle Star Life Assurance Co Ltd.[1997] UKHL 19 National Car Parks Ltd v Trinity Development Co. (Banbury) Ltd [2001] EWCA Civ 1686 Shell-Mex & BP Ltd v Manchester Garages Ltd [1971] 1 WLR 612 Speedwell Estates Ltd. v Dalziel [2002] 1 ALL ER 55 Street v Mountford [1985] AC 809 Westminster City Council v Clarke [1992] AC 288 Read More