Land Law – Licences and Leases 4.11.14
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Important to remember the difference between licenses and leases – for the exam you must
understand the difference between a proprietary right and a non-proprietary right.
One of the best examples of this is the license.
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Simply if we have land owned by A it could be a fee simple or term of years then there is
NO right for B to enter on to land in the possession of A without A’s permission
Avoiding action for trespass B needs a LICENCE – if he has permission it is a licence but this
does not make it a proprietary interest.
Helps avoid actions for trespass and nuisance – tendency in literature to state if it’s not a
proprietary right it is unimportant but it is – it will stop someone being accused of trespass
or nuisance as they have this half-way house right of licence.
Reading is on hand-out for you.
Classic law is it’s only a license – not a proprietary interest. Is it registerable in unregistered
land? No, if it’s not a proprietary interest it is not registerable.
Debate between whether something is a license or lease and whether it is potentially
registerable as an overriding interest.
Case law examples:
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Need a license to occupy any property even for a limited time – in Hurst v Picture
Theatre [1915] the claimant was watching a film in a cinema and stated he had a license
to be there when the cinema staff attempted to throw him out. Sued and won
compensation.
License to run a school: Re Hampstead Garden (1995) concerned headmasters to fuse
schools – court ruled one headmaster had a right to stay on the property and the other
didn’t.
Erecting advertising hoarding - Kewall Invsts v A Maiden [1990]
Using buildings as a social club - Onyx v Beard [1996]
Using buildings for this purpose requires a license – what might breach the terms of the
license? Damage to property, excessive behaviour – license is terminated as it is a
contract with implied terms of good faith and behaviour.
License only gives you permission to do what the license says
Parking cars - Batchelor v Marlowe (2001)
Some argue this should be a proprietary right but right to park in a particular space in
residential accommodation can be incredibly valuable. Thus, important to know whether
you can park your car there; can you claim it as part of your proprietary interest? Right
will make your property much more valuable, meaning it can be proprietary.
If a license though, exclusive parking will dissolve on the transfer of land. Don’t make the
mistake of thinking land is just about actual land.
Can’t deal with a parking space if a license only – only valuable if turned into a
proprietary right in the form of a lease. Are capable of being leased, can have a lease or
license of anything capable of being proprietary.
LICENCE - WHY NOT A PROPRIERTARY RIGHT?
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Street v Mountford [1985] (KEY)
L Templeman
“A licence in connection with land while entitling the licensee to use the land for the
purposes authorised by the licence does not create an estate in land”.
Not a legal lease – will look at how he came to this factually.
The Calgarth [1927]
Scruttton LJ “when you invite a person into your house to use the staircase, you do
not invite him to slide down the banisters”.
Idea is if the man falls of the bannisters with no permission, can he sue for this?
Relatively new tort, occupier has no duty of care here so no. A licensee only has the
terms as the license goes, whereas the leaseholder has set criteria. Pure matter of
contract.
o If there’s a contract between A with the original title and B if the transaction is
proprietary any transaction is capable of binding.
If the transaction between A and B is proprietary
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it is capable of binding A’s successors in title
if it is merely a licence it is only enforceable between A and B themselves
can bind third parties
The lease/licence distinction also affects other important issues
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Landlord’s possession of his property
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Protection of business tenants
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Duties of landlord/licensor to repair property
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Generally speaking only a leaseholder can sue in tort for NUISANCE and TRESPASS TO LAND,
although in limited circumstances a licence may give rise to a remedy
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Also, the distinction can affect the right to claim damages for negligence if the duty relied
upon by the claimant depends on whether the claimant is a tenant or a licensee.
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Need a lease to sue in tort for nuisance and trespass to land but then there are still
circumstances where fundamentally only the owner of a lease can sue in tort. Difference
between a license and a lease can also affect negligence.
In Appah v Parncliffe InvestmentsLtd [1964] a woman claimed damages in negligence against
the owner of the house in which she had a room. Her belongings were stolen from her room
because the lock on the door was broken.
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If she had a lease and had been a tenant which she wasn’t landlord would have been under
no duty to take reasonable care of her belongings – the lock would have been her
responsibility. She would have had exclusive possession of her room and the need to
maintain her own lock. But she only had a license meaning the defendant had a duty to her
to ensure the lock on her door worked, he owed her a duty of care – won damages against
him.
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Why should it matter? But NB – licences covers a very wide range of factual circumstances.
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At one end of the scale, a licence is the reason a B the milkman does not commit
trespass when he leaves a pint of milk outside A’s front door, nor does B commit
trespass when he pays to go into A’s cinema.
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At the other end of the scale, a licence may be a lease-substitute, giving B the right
to occupy A’s property, or an easement-substitute, giving A the right to use a
footpath over A’s land. Most important easements are where they can potentially
turn into leases. Why important to make it a proprietary interest? It doesn’t have to
be registered because of actual occupation under LRA 2002 Schedule 3. License is
legal, lease is proprietary. If proprietary and protected by actual occupation.
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While the courts have no problem in holding that the first two examples do not bind
A’s successor in title C, they have struggled with what happens when C has notice of
B’s agreement with A, but still seeks to take the land free of it.
Classic Argument in any Land Law Exam:
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Lease/Licence Distinction
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Where the alleged “licence” gives B occupation rights, it may be crucial to
decide if in fact the interest granted by A is better regarded as a lease. The
lease (“term of years”) is an interest in land. It is one of the 2 interests which
are legal estates and therefore capable of substantive registration. As such,
the lease can be assigned (transferred) by B. Also, if A transfers his interest to
C, B can enforce the lease against C.
And for B to succeed in showing that he has a lease, not a licence, is crucial to
his entitlement to statutory landlord/tenant protection,
e.g. rent control, or the right for the holder of a lease over 21 years to purchase
the fee simple (Leasehold Reform Act 1967, Leasehold Reform, Housing and
Urban Development Act 1993)
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Leases as legal interests are better protected than licenses. If you have a lease
there are many more advantages than a license – much better if you can get
your claimant to have a lease rather than a license.
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If not registerable voidness rule has no effect whatsoever, in registered land
there is a very small opportunity for this under s116 but more importantly in
registered we deal with the potential notice problems through overriding.
Case Law:
Street v Mountford [1985]
This case was decided against the background of landlords in the 1970s who tried to get out
of new statutory rights given to tenants of furnished property by drawing up Licence
Agreements, which were not covered by the statutory scheme.
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Government in 1970s was trying very hard to give rights to poorer people who were
allegedly tenants – the way landlords tried to get through this was by stating their
renting out of their properties weren’t a tenancies but license agreements
uncovered by the statutory scheme.
In March 1983 S granted M the right to occupy furnished rooms for £37 per week,
terminable on 14 days’ notice
In August M registered an application under the Rent Act 1977 to have her rent
reduced to a “fair rent”. S opposed it on the ground that M merely had a licence to
occupy The CA held M was a licensee, by construing the agreement, which said
M went to local Citizens Advice Bureau and realised she had rights to reduce her
rent under the rent act 1977. Landlord said she couldn’t as she was not a tenant.
Court of Appeal agreed she was a licensee.
Agreement she signed:
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“I, M agree to take from S the single furnished room . . . at a licence fee of £37 per
week. . .
2. No one but M may occupy or sleep in the room without prior permission and this
personal licence is not assignable
3. S has the right at all times to enter the room to inspect its condition, read and
collect money from meters, carry out maintenance works, install or replace furniture
or for any other reasonable purpose.
4. Prompt payment of the licence fee must be made every Monday in advance
This licence may be terminated by 14 days, written notice
I, M understand and accept that a licence in the above form does not and is not
intended to give me a tenancy protected under the Rent Acts”
Clear intention of both parties that these rights are merely personal
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In the CA, Slade LJ said that an occupier granted exclusive possession for a term
(and remember that weekly will do for a legal lease), will nevertheless be a
licence if
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“there is manifested the clear intention of both parties that the rights granted
are to be merely those of a personal right of occupation and not those of a
tenant”
The HL rejected this view, and said that whether or not there was a lease or
licence was not a matter of what the parties labelled their agreement, but the
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actual effect of it. (read judgment in detail, no indication of coercion over the
contract, very strong political case but there was no weight in M’s favour).
L Templeman explained that
An occupier of land for a fixed or periodic term at a rent is a tenant (name of
the holder of the lease), providing the occupier is granted exclusive
possession.
Quashed Court of Appeal’s judgment and ruled in favour of M disregarding the
actual contract.
Lodgers are not given exclusive possession, even if they occupy a room on
their own, because the landlord provides attendance or services which may
require access to the room.
L. Templeman went on;
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“If on the other hand, residential accommodation is granted for a term at a rent
with exclusive possession, the landlord providing neither attendance nor services,
the grant is a tenancy; any express reservation to the landlord of limited rights to
enter and view the state of the premises and to repair and maintain the premises
only serves to emphasise the fact that the grantee is entitled to exclusive
possession and is a tenant. . .
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 only created a licence.
Technically when living in halls of residence you’ll be given services – no way
you’re a tenant here.
If the agreement you sign reserves to the potentially landlord the right to
inspect the state of your room maybe it’s a lease, but it’s all down to the factual
situation creating difficulties. Must say in an exam if this may be a lease, if this
may be a license – cannot definitively pinpoint sometimes.
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 only created a licence.
KEY Quote from Lord Templeman:
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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”.
English courts are going to be very precise in the analysis of such agreements –
can call it a license but if it’s actually a tenancy it’s a tenancy.
If a lease why does it become something separate?
Freedom of contract is subsumed to traditional concepts of what constitutes the
proprietary interest called the lease.
When there is no duress the freedom of contract has been taken away over
concepts of lease and license.
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L Templeman was careful to point out that there can be exceptional cases
where the prima facie intention to create a leased is negative, notwithstanding
that the occupier enjoyed exclusive possession.
Examples from the case law of these exceptional cases:
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Where parties intended no legal relationship at all
o · Vendor/purchaser relationship where V lets P into occupation
before the sale is completed – doesn’t this fall under problem questions
over actual occupation?
Master and servant service occupation
o · A requisitioning authority with no power to grant a tenancy
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Gray v Taylor [1998] CA held that the right of exclusive possession in
an almshouse (set up by charities for care purposes), charities
believed they could make money through the sale of these, but
‘tenant’ granted the house by the charity refused to leave. Court
stated the charity’s allowing of the man to use the house did not
create a tenancy – the right to possession was referable only to the
relationship between the charitable trust and the beneficiary
occupant, and the grant of a tenancy might obstruct the duties of
the Trustees.
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Basic idea of EP setting up a tenancy rather than a license.
Recent application of Street v Mountford
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Clear Channel UK Ltd v Manchester City Council [2005]
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The claimant (CC) constructed and maintained advertising displays.
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In August 2000, CC and the defendant council (MCC) entered an
agreement allowing CC to set up concrete bases for the
advertisements. No formal agreement was ever concluded relating
to the erection and maintenance of the displays.
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CC and MCC agreed that their rights and obligations were contained
in a draft agreement sent by MCC to CC in March 2001. This listed
13 locations for the bases but did not define them precisely. It also
stated that CC could only use each site for display and for no other
purpose. Also CC had to bear all costs connected with the
installation and maintenance of the sites.
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No express grant of easement or right of way, meant agreement
was poorly granted.
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MCC submitted that on its true construction the agreement referred
only to larger undefined areas of land owned by the Council, and
that one could not spell out of it the grant of a right of exclusive
possession over the specific areas of land occupied by the concrete
bases.
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The Court of Appeal agreed with this construction, noting;
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“It contained no express grant of any easement or right of way to
and from the sites for the purpose of erecting, repairing and
removing the displays, which was an obvious and surprising error,
and very poor drafting, if the area of any demise was intended to be
limited to the concrete bases.”
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The agreement provided;
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'This Agreement shall constitute a licence in respect of each Site
and confers no tenancy' on [the claimant] and possession of each
Site is retained by [the Council] subject however to the rights and
obligations created by this Agreement.'
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MCC purported to determine CC’s licence with effect from 10
November 2003. CC contended that the contract created a tenancy
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The Court of Appeal stated that;
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“ Where a contract was negotiated between substantial parties of
equal bargaining power and with the benefit of full legal advice and
where it contained not merely a label but a clause which set out in
unequivocal terms the parties' intention to its legal effect, the case
admitted of only one result, namely that the Council had granted the
claimant a licence.”
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Constituted a license and conferred no tenancy.
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Both had legal advice, wasn’t just a label lease was unequivocal and
admitted between parties of equal bargaining power. When do you
become a commercial party of equal bargaining power? Crucial to
show this. Raft of automatically implied rights you don’t have as a
license.
Bruton v London & Quadrant Housing Trust [2000] 1 AC 406.
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The housing trust was granted a licence to use a block of flats owned
by the local authority to arrange temporary accommodation for the
homeless. Desperate to get people off the street and it was agreed
they could use block of flats to house the homeless.
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The local authority were banned by statute from granting the Trust
any estate or other proprietary interest in the flats. Terrified of
London land being bought up.
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The Trust entered an agreement with B which read in part;
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“Occupation of Short-Life Accommodation. As has been explained
to you the above property is offered to you on a weekly Licence. The
Trust has the property on licence from the council who acquired the
property for development . . and pending this development, it is
being used to provide temporary housing accommodation. It is
offered to you on condition that you will vacate upon reasonable
notice, which will normally be less than 4 weeks. You understand
and agree that while you are living in the property, you will allow
access at all times during normal working hours to the staff of the
Trust . . .”
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B didn’t pay rent and claimed the roof leaked when challenged under
householders and tenant act. Argued he had a lease as a tenant. B
claimed that the Trust was in breach of an obligation to repair the
flat, which only applied if he had a lease rather than a licence.
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It was argued for the Trust that there were special circumstances
which should allow the court to construe the agreement as a
licence, despite the grant of exclusive possession for a term at a
rent. Never intended to make him a tenant even though he lived
there. Trust had agreed with the Council there’d be no legal
tenancies, signed agreement in every particular over the taking of a
lease.
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HL acknowledged that Street v Mountford allowed for such
circumstances, but that they did not exist in Bruton. This was
despite the fact that the Trust was a socially responsible landlord,
performing socially valuable functions, the Trust had agreed with
the council not to grant tenancies, Mr Bruton had agreed that he
was not to have a tenancy and the Trust and the Trust had no
estate out of which it could grant one”.
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L Hoffman felt that none of these stopped the agreement being a
tenancy, so severely restricted the freedom of the Trust and other
charities like it to organize their housing stock to reflect the
immediate needs of the homeless.
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(This impact has been somewhat reduced for local authorities by the
removal of secure tenancy status from tenancies granted pursuant
their statutory duties).
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One of the most interesting aspects of this decision is that it allowed
a lease to be created vis a vis the Trust, even though the Trust had
no estate out of which to grant it.
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Millet LJ in the CA
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“As a lease is an interest in land, it must be able to be enforced
against third parties, and it could not be in a case where the landlord
making the agreement had no legal estate and did not pretend to
have one "
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Criticism of Bruton- review these
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It would appear to invent a new “non-proprietary” lease, flying in
the face of centuries of land law, which had regarded the lease as
proprietary, which is why it is so important to distinguish it from the
licence - a distinction which underpinned Street v Mountford itself
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