Relevance of these essential elements?
… let’s look more closely at each in turn!
Element 1: Exclusive possession (Slide 27)
The fundamental characteristic of a lease and key distinguishing feature in the lease/licence divide (which we discuss below). So, what does exclusive possession look like?
Exclusive possession = rights of temporary ownership of the land; the right of the tenant to exclude others from the land (including the landlord subject to the terms of the lease).
Lord Templeman in Street noted:
The tenant possessing exclusive possession is able to exercise the rights of an owner of land, which is in the real sense his land albeit temporarily and subject to certain restrictions. A tenant armed with exclusive possession can keep out strangers and keep out the landlord unless the landlord is exercising limited rights reserved to him by the tenancy agreement to enter and view and repair.
Why is exclusive possession so important?
The lease/licence distinction: a key battleground
Why does the lease/licence divide matter? T
How does the court determine if exclusive possession exists? (Slide 28)
Court will consider all the facts of the case: the dealings between parties, the nature of the land, the manner of occupation.
Central task of the court = to construe the true/genuine agreement or bargain existing between the parties. This includes looking beyond any labels used e.g. ‘licence’ / ‘licensee.’ The court is prepared to disregard labels if, on true reading, an agreement gives rise to a different arrangement. Thus what is called on its face a ‘licence agreement’ may nevertheless be found to be a ‘lease’. Lord Templeman in Street:
[The parties] cannot turn a tenancy into a licence merely by calling it one.
Key case here = Street v Mountford (1985)
Street v Mountford – Mr Street entered into an agreement with Mrs Mountford under which Mrs M was to have exclusive possession of 2 rooms in a property owned by Mr S. The agreement was described as a ‘licence agreement’ and contained a clause which provided that the agreement ‘does not and is not intended to give … a tenancy.’ Mrs M applied to register for a fair rent (such rent controls were only possible if the agreement was a lease). Mr S sought a declaration that Mrs M was a licensee only. HL held: Mrs M was a lessee (tenant) despite the agreement being referred to as a ‘licence agreement.’
Exclusive possession: some common scenarios
(i) Lodgers: Lodgers are those sharing occupation with others and usually receive some services (often called ‘attendances’ e.g. laundry). Lodgers cannot prevent others (e.g. landowner) entering the property; do not enjoy exclusive possession and therefore are licensees only.
(ii) Provision of services by landowner: if a landowner provides attendances/services e.g. cleaning, rubbish collection, meals, this is key evidence that no exclusive possession exists as this is inconsistent with a lease: Markou v De Silvaesa (1986).
(iii) Shams: the court is alive to the use of shams/pretences to allow a landlord to escape her responsibilities. The court will construe all circumstances to determine the true bargain i.e. whether in agreement in substance is a lease or licence:
Key cases = Aslan v Murphy (1990) + Antoniades v Villiers (1990)
Aslan v Murphy – Mr Murphy lived in a small room in a basement owned by Mr Aslan under what was called a ‘licence agreement’ which stated explicitly that Mr M did not enjoy exclusive possession. Under the agreement, Mr M was to pay a ‘licence fee’, was prohibited from using the premises daily from 10:30am to noon, Mr A retained a key to the property, reserved the right to admit others to share the basement room and Mr A agreed to provide services: housekeeping, rubbish collection, laundry. In fact, no services were provided and Mr A did not ask Mr M to share the basement with others. Held: this apparent ‘licence’ was a pretence to avoid the statutory benefits given to tenants/lessees. The true bargain here was a lease. Mr M was a lessee.