#5351 - Leases - Land Law

LEASES

The essence of a lease: the use of another’s land, usually for a specific time, in return for the payment of rent. The Law Commission has described it as temporary ownership. A feature of all leases is that they can be sold and assigned to purchasers, though invariably the consent of the landlord is needed. Leases can be viewed as relationships as much as estates. A concept of an estate is enjoyment by time, whether a specified period (leases) or indeterminate (freeholds).

There are two forms of tenancy that are not enjoyed by reference to time: they are tenancies rather than estates:

• Tenancy at will- If the owner of a land allows another into possession without stipulating any period, the courts regard the possessor as a tenant at will. This means that the possessor is not a trespasser.

• Tenancy at sufferance- Designed for a case where the tenant ‘holds over’ the termination of a lease. If the landlord objects to the holding over then former tenant becomes a trespasser.

Both of these can be terminated by either party without prior notice.

The lease is one of the two legal estates that are recognised by s1 Law of Property Act 1925. The reason is due to the essence of the lease itself. It would be impracticable if the lease could not bind subsequent purchasers. The better view is that the two types of tenancies are not estates and so outside the scope of s1.

A. THE ESSENTIALS OF LEASES

1. Leases - contract or property?

• Law of Property Act 1925 s 1: Only estates in land capable of subsisting or being conveyed or created at law is a fee simple absolute in possession or a term of years absolute (lease).

• Hussein v Mehlman [1992] 2 EGLR 87 at 88f-90j: D granted P three year tenancy with benefit of covenant to repair. P treated breach of covenant as repudiatory breach of letting contract and sought to terminate by giving up possession and returning the keys. Sedley QC:

  • The estate in land is not the foundation of the landlord/tenant relationship but an incident of it; the foundation is the contract to give consideration in return for the exclusive right to occupy land.

  • Decisions of the Courts point in favour of termination of contract by frustration and repudiation; has been an express decision to the effect that can be rescinded where induced by fraud (CA).

  • Decides that a contract of tenancy can be repudiated by breach of contract. Appreciates implications:

    • If the obligation to pay the rent is as fundamental as the obligation to keep the house habitable, it will follow that a default in rent payments is a repudiatory breach on T’s part;

    • That the above may follow is not a reason for ignoring binding authority;

    • Effect of such acts may be modified by statute or a provision in the contract itself.

• Hammersmith and Fulham LBC v Monk [1992] 1 AC 478: D & F were granted a joint periodic tenancy of a flat, terminable on four weeks notice. F moved out and made an agreement with council that if she terminated tenancy she would be re-housed by them; F terminated without knowledge or consent of D. Council sought possession.

  • Lord Bridge:

    • Approached case on the footing that the answer was to be found in the law concerning contract; there to be no special treatment just because agreement gave rise to landlord/tenant relationship;

    • Application of ordinary contract principles leads one to expect that a periodic tenancy granted to joint tenants must be terminable at common law by appropriate notice given by any one of them whether or not the other concurs; nothing in property law to refute this expectation.

    • The fact that law regards period tenancy as one single term in no way affects the principle that continuation beyond the end of each yet depends on the will of the parties that it should continue, agreement being implied from the omission to serve notice to quit.

  • Lord Browne-Wilkinson:

    • Noted that tension in this case was generated by the nature of a lease itself:

      • Revulsion against unilateral termination is based in property law and the notion that one’s proprietary right in an object should not be terminated without his consent;

      • Contract based reaction is to require common intention for continuation of tenancy.

    • Thought that nature of the contract not altered by the fact that they were trustees; F was therefore able to terminate the entire thing by giving notice to quit.

• Chesterfield BC v Bailey [2011] EW Misc 18 (CC) at [37]-[66]: D & F were granted joint tenancy of property; relationship broke down, F doing nothing for a while. F then later terminated joint tenancy and council brought possession proceedings as against D (living in property with two sons).

  • Denied claim of the council on basis of insufficient notice, but considered Article 8 obiter.

  • Any person at risk of being dispossessed of his home at the suit of LA should in principle have the right to raise the question of the proportionality of the measure, and to have it determined by an independent tribunal in the light of article 8, even if his right of occupation under domestic law has come to an end.

  • If the court concludes that it would be disproportionate to evict a person from his home notwithstanding that he has no domestic right to remain there, it would be unlawful to evict hi.

  • Q: is whether the eviction is a proportionate means of achieving a legitimate aim; exceptionality is not the test. Where (as here) the person has no right in domestic law to remain in occupation of his home, the proportionality of making an order for possession at the suit of the local authority will be supported not merely by the fact that it would serve to vindicate the authority's ownership rights; in this case not proportionate.

• Sims v Dacorum BC[2013] EWCA Civ 12: Husband and wife had secured joint periodic tenancy of a property; they subsequently split and W gave notice to quit. Issue as to whether should be allowed to appeal to the Supreme Court to claim that should have right to sole tenancy because ECHR required it (and that Hammersmith v Monk is incompatible). Mummery LJ:

  • Incompatibility argument is ill-founded for several reasons:

    • In this case council has done nothing to interfere with his right given that it was W that gave notice;

    • Not clear that the rule is incompatible anyway given that entered into a joint bargain;

    • Termination of a joint bargain was allowed by the very nature of the bargain made;

    • Margin of appreciation.

  • If the law needs to be reviewed with a view to possible amendment, that is not a matter for the Supreme Court, whose proper constitutional function is to declare and apply the law. It is not so supreme that it can legislate for changes in the law; that is the function of Parliament.

  • Basically thinks that the appeal would be a waste of public money.

• National Carriers Ltd v Panalpina [1981] AC 675: Right to use warehouse was demised for 10 years. Only route of access was blocked up for 20 months due to demolition of another property. D claimed frustration (rejected).

  • In principle the doctrine of frustration is applicable to leases, although will be extremely rare:

    • Lord Hailsham expresses hope that fact that no reported case has been decided in the affirmative on this point, that will be sufficient to deter those eager to litigate.

  • Have to accept that must apply because to refuse to do so seems out of sync with authority and encourages fine distinctions and perplexities,

• Ingram v IRC [1997] 4 All ER 395 at 400-01, 419-427 (NB: Millett LJ affirmed in HL [1999] 2 WLR 90): J carried out a number of transactions in an attempt to reduce inheritance tax due upon death. Main question was whether she, as principal, could direct a nominee to grant a lease to her.

  • Nourse LJ:

    • Cannot sensibly allow a person to assume the burden of an obligation to someone whose only function was to hold the benefit of it for the other. That is no less whimsical a transaction than the grant of a lease to yourself.

    • A person cannot grant a tenancy to himself: for the simple reason that every tenancy is based on an agreement between two persons and contains covenants between them.

  • Millet LJ (minority):

    • There is no doubt that a lease is property being a legal estate in land. It may be created by grant or attornment as well as by contract and need not contain any covenants at all.

    • It is easy to make too much of the contractual nature of the relationship. The feature of a tenancy which distinguishes it from a licence or merely contractual right of occupation is the lessee's right to exclusive possession. But this right is a consequence of the ownership of the legal estate; it is not merely a contractual right, or it could not be the distinguishing feature.

    • In so far as a lease is a conveyance, that is to say in so far as it lies in grant, there is no difficulty in the proposition that a man can vest a term of years in a nominee for himself.A trustee does not contract as an agent for a beneficiary, but a principal.

    • Thus rejects the idea that no rational system of law could sensibly allow a party to assume an obligation to a party whose only function was to hold the benefit of the obligation for the benefit of the person subject to it.

• Bruton v London and Quadrant Housing Trust [2000] 1 AC 406; cf Millett LJ in CA, [1998] QB 834: Housing trust was granted a licence to use properties as temporary homeless accommodation. Trust undertook to ensure that no occupier acquired security of tenure without approval and that no occupier should acquire rights when in occupation; granted them a ‘license’. P tried to claim that he was a tenant;...