#1981 - Leases Contract Andor Property - Land Law

Leases: Contracts and/or Property?

Property?

• LPA 1925 s.1

  • (1) Only estates in land capable of subsisting or being conveyed by law are

    • (a) An estate in fee simple absolute possession

    • (b) A term of years absolute

  • (2) Only interests over land which are capable of subsisting or of being conveyed or created at law are—

    • (a) An easement, right, or privilege in or over land for an interest equivalent to an estate in fee simple absolute in possession or a term of years absolute;

    • (b) A rentcharge in possession issuing out of or charged on land being either perpetual or for a term of years absolute;

  • Statute implies through these sections that lease is a property right

• Smith: However, has long been recognised that leases are invariably contracts

  • Albeit special in that a proprietary interest is conferred on the tenant.

  • However, do constitute some exceptions to modern contracts b/c these rules are more recent and worked out after leases have been worked out.

    • Millet LJ in Ingram v IRC [1998]:

      • Is easy to make too much of contractual nature of relationship

        • While many leases = contracts

          • Does not follow that can simply treat leases as if contracts and no more.

What contract rules have been applied to leases?

• Repudiatory Breach

  • Hussein v Mahlman [1992]: L leased house to T, and for 15 months of three year lease, failed to keep covenant to repair leading to serious defects in house. T tried to terminate lease for repudiatory breach.

    • Seldey QC:

      • Serious breaches of certain duties interfere with central purpose of contract

        • Meaning that T ought to be able to accept repudiatory breach and end contract.

• Misrepresentation and Mistake

  • Hammersmith and Fulham LBC v Monk [1992]: D was a co-habitee of flat with X granted by lease of HF. X left the flat and asked to be re-homed, agreeing with HF to terminate the lease w/o D’s consent. D refused to leave flat.

    • Lord Bridge:

      • No reason why question re: leases should receive any different answer in the context of the contractual relationship of landlord and tenant

        • than that which it would receive in any other contractual context.

      • To hold that A could not determine the contract at the end of any year without the concurrence of B would imply a potentially irrevocable contractual obligation

        • which would be such an improbable intention to impute to the parties

          • that nothing less than the clearest express contractual language would suffice to manifest it.

    • Lord Browne Wilkinson:

      • Law has flirted with the approach where joint tenants are separately considered insufficient and only together constitute the “owner” of the estate

        • However, law has adopted a contractual rather than property based reasoning subsequently.

  • Smith: although this approach has been met with reservation.

• BUT Breach of covenants are treated as independent and therefore won’t amount to grounds for termination

  • Smith: this is a large contrast with normal contract rules

    • Liverpool CC v Irwin [1977]:

      • Thus, if L is in breach of his covenant to repair

      • This does not mean that T can stop paying the rent

        • And indeed, T not paying the rent is no defence to L not keeping up repairs.

    • Only exception seems to be where breach is so serious is amounts to being repudiatory per Hussein v Mahlman [1992](above).

Leases as contracts without property?

• What does “exclusive possession” required for a lease arise from?

  • Brunton v London & Quadrant Housing Trust [1999]: L had no estate in the land, only a license. L made clear to T that is had a mere license and that he would have to leave on reasonable notice. T tried to imply that lease had come about and thus imply covenants of repair into agreement.

    • Lord Hoffmann:

      • Exclusive possession came from agreement between two parties

        • The agreement gave Mr Bruton the right to exclusive possession: he did not have to share possession with anyone else

          • L’s lack of title was therefore not relevant

    • Millet LJ (Maj in CoA overruled by HoL) :

      • Exclusive possession comes not from what is agreed, but the rights that L can grant:

        • “If the grantor has no power to exclude the true owner from possession,

          • he has no power to grant a legal right to exclusive possession and his grant cannot take effect as a tenancy”

• Differing views on what a lease is

  • Brunton v London & Quadrant Housing Trust [1999]:

    • Lord Hoffmann:

      • Lease is a description of relationship between person designated “landlord” and person designated “tenant”

        • It is not concerned with the question of whether the agreement creates an estate or other proprietary interest which may be binding upon third parties

      • A lease may, and usually does, create a proprietary interest called a leasehold estate or, technically, a "term of years absolute."

        • But it is the fact that the agreement is a lease which creates the proprietary interest.

          • Is putting cart before the horse to say that whether the agreement is a lease depends upon whether it creates a proprietary interest.

    • Millet LJ (in CoA, overruled by HoL)

      • Lease = legal estate in land (per LPA 1925?)

• What is the impact of...