LW303- Land Law

Possessory Property Rights-

These are the rights that can confer the power to take and maintain possession and control of
the land.

Freehold and Leasehold Estates:

 The estates can be owned by more than one person simultaneously and that give the
owner(s)significant control over the land in question.
 They also confer a right to possession.
But freehold and leasehold estates aren’t the only type of property interests that confer
possessory rights to the owner. There are various equitable estates such as a life interests or
a beneficial interest under a trust also confer significant amount of control for what is done
to a particular plot of land.
 It also gives owner the right to trade the property rights in land – legal system that
maximizes what is called “ exchange value” of the land. In other words, this legal
system enables the owner to maximize the monetary value of the property rights.

There is no such thing as an absolute ownership of the land. There is current ownership and
consecutive possessory property rights.

A person with a right to physical possession of land has a powerful right to exclude other
people from accessing and using their land but that rights is qualified in important ways.
Qualified entitlement allows the owner of the lend to exclude others from exploitation of the
land and the qualified entitlement to control what happens on a particular plot of land and
there is alienate or transfer ownership.

Possessory property rights confer a right to immediate physical possession of land but of
course that right to immediate physical possession can be shared simultaneously amongst
different people ( like married couples or people that live in the same house). In each scenario
people who have rights to immediate physical possession would have the same entitlement -
in other words they have concurrent rights in the sense that the rights are the same and they
exist alongside each other. But English land law also recognizes the possibility that two or
more people might have consecutive possessory rights over the same plot of land.

A life estate or a life interests is an interest in property that only lasts for as long as a
particular person is alive.

Non-Possessory Rights-

It is the rights in relation to a plot of land over which the rights holder has no right to
exclusive possession or control of the land ( e.g.: right that a third-party person has to cross
land over which I hold the legal title (an easement)).

Property rights are not only binding between the two people who were the parties to the
creation of the rights. In more legal language, this means that possessory property rights and
non-possessory property rights can bind successive owners of the land in question.
The existence of multiple simultaneous property rights leads to somewhat complicated
conveyancing formalities. As a general rule, if a person wants to transfer the land or to create
an interest in it the owner of the land must use a written deed, and various types of
transaction must also be registered.

Leads to somewhat complicated conveyancing formalities

Produce a tension between:

 Whether a purchaser of land should be bound by interests that a previous owner

granted; and

 Whether a person with pre-existing property rights in land should be able to enforce
those rights not only against the person who granted those rights but also against
successive owners of the land

Exchange Value of Land

This refers to the idea that, the legal system should contain rules designed to maximize the
price that a person can get when a person grants or sell a property right in land- this means a
system that is design to “simplify and facilitate transactions”.

Lord Upjohn: “It has been the policy of the law for over a hundred years to simplify and
facilitate transactions in real property” (National Provincial Bank Ltd v Ainsworth (HL)
[1965] AC 1175 at 1233)

On the other hand , the use value of the land relates to the extent that property rights serve
some fundamentally useful purpose or extent to which the property rights satisfy some
essential human requirement. The most obvious way in which land has an identifiable use
value is in the way that land provides each and every one of the people with a home.
However, if a legal system protects a person’s rights to a home above all other potential
interests the rules might prevent a bank taking possession of a home to recover an unpaid
debt or might prevent a landlord taking possession of a home if a tenant doesn’t pay rent.

Rules design to Facilitate Conveyancing

■ There can only be two legal estates in land (s. 1(1)(a) of the Law of Property Act
1925)
– A fee simple absolute in possession (a “freehold” estate)
– A term of years absolute (a “leasehold” estate)
■ A limited number of rights that can take effect as “legal interests” (s. 1(2)) ( legal
mortgagee)
■ All other estates, interests and charges in or over land take effect as equitable interests
(s. 1(3))
The Numerus Clausus Principle

This means that a landowner can enter into any transaction that they want in relation to land.
A subsequent purchaser of a freehold title to land would not have to do the thing that the
owner promised.
A current owner should not be able to create too many obligations that might restrict what a
future landowner can do.

Why? An unlimited range of obligations that would restrict what a subsequent landowner can
do might make land a less attractive commodity to trade.

Leasehold Estates in Land

Registeration of the Land

The principal statute is the Land Registeration Act 2002 , thw objective underfinning was that
conveyancing transactins would all take place electronically. The system of registeratİon of
title is administered by the Land Registery and one can request information in relation to any
registered freehold title or leasehold title from a logal Lnad Registery office and the register
records the “title” in relation to the registed freehold and leasehold estates. It means that, it
records the ownership of all sorts of property rights in relation to land.
The registerarion of title is sometimes compulsory. The legislation made registeration
compulsory because one of the underlying aims was to ensure that the ownership of all land
in England and Wales is recorder eventually on a central register, so the legislation contains
incentives to ensure that ownership is registered.
The Land Registeration Act 2002, sections 7 and 24 is the crutial provisisons about it.These
sections öake it compulsory among other things to register a transfer of a freehold estate and
a grant of a lease if the term of the lease lasts more than 7 years. Once title or ownership has
been registered then. Most subsequent trasnactions or dispositions involving the land in
question must be registered to be legally effective.

A leasehold estate, one of the recognised estates in land capable of being legal (s 1(1)(b)
LPA 1925), is inferior to the freehold estate because:

1. It endures for a smaller ‘slice of time’ than the freehold estate; the former having
a fixed and certain duration, where the latter is perpetual in duration, only coming to an
end when there are no heirs to inherit it (see chapter 5); and

2. The possessory rights enjoyed by the holder of a leasehold estate (the tenant) are
more limited than those enjoyed by a freehold estate owner, since a leasehold estate is
subject to limitations placed upon it by the superior estate holder (the landlord).
The leasehold estate is technically known as a term of years absolute, but is more
commonly referred to as a lease or tenancy. These terms are often used interchangeably but
in the case of Bruton v London & Quadrant Housing Trust [2000]a distinction was made
between a ‘term of years’, which confers a proprietary estate, and a ‘lease’, which is a mere
contractual agreement.
The Essential Characteristics of a Lease

Defined by Lord Templeman in Street v Mountford [1985], these are:

• certainty of term; and

• exclusive possession; and
• rent (this has since been deemed as not essential to establishing a lease (Ashburn
Anstalt v Arnold [1989])).
Without certainty and exclusive possession a lease will not exist.

Certainty of term

There must be:

 • a fixed and certain maximum duration: Lace v Chantler [1944]. Provided the

maximum duration is known when the lease is granted, it is irrelevant that the lease
may, in fact, terminate earlier due, for example, to the presence of a break clause
within the terms of the lease; and
 • a certain start date. Where nothing is specified it is assumed the lease commences
upon the tenant taking possession. The start date can be delayed for up to 21 years: s
149 LPA 1925.
The term itself can ‘include a term of less than a year or for a year or years and a fraction of a
year or from year to year’: s 205(1)(xxvii) LPA 1925.

 What if the Term Appears Uncertain?

The courts have shown willing to resolve the uncertainty by implying a periodic tenancy (see
‘Periodic tenancy’ for further discussion as to what this is), where:

 • the tenant has taken possession; and

 • has started paying rent by reference to a period.
(Prudential Assurance v London Residuary Body [1992].)

The period implied will be calculated on the basis upon which the rent itself has been
calculated, irrespective of how it is being paid: Martin v Smith (1874). The issue of
uncertainty will thus be resolved since the law regards a periodic tenancy as a lease for a
period (the fixed and certain term), followed by another lease for that period and so on until
the lease is terminated in the appropriate way. Although, remember this approach is by no
means automatic and the parties’ intentions will be taken into account: Javad v Aqil [1991].

A recent Development in Resolving Uncertainty

In Mexfield Housing Co-operative Ltd v Berrisford  [2011], the Supreme Court found that an
uncertain term should be treated as a lease for life and thus converted into a term for 90 years
under s 149(6) LPA 1925. The reasoning was based upon the approach taken pre-1926 to
such uncertain terms. The approach adopted in Prudential (see ‘What if the term appears
uncertain?’) was explained by the fact that the tenancy for life argument had neither been
raised nor considered in that case.
Exclusive Possession

This is the ability to exclude all others from the property, including the landlord. Without it a
lease cannot exist. Possession of the land would instead be based upon a licence, ie personal
permission that creates no proprietary interest over that land. Exclusive possession is thus a
key factor when distinguishing between a lease and a licence.

Attempts to Disguise the Creation of a Lease as a Licence

Landlords have often tried to disguise the creation of leases, in order to avoid the numerous
statutory benefits that a tenant enjoys, by attempting to create agreements between
themselves and the occupiers of their land which appear to prevent exclusive possession from
arising. At face value, this would suggest that such occupiers were licensees rather than
tenants. The courts have been eager to detect such sham or pretence agreements which
disguise as a licence something that in reality should be a lease, and thus ensure the occupiers
receive the benefits to which they are entitled.

In deciding this issue, the courts must go beyond the form of the agreement, and rather look
to the substance of the transaction: Street v Mountford [1985]. By looking at the reality of
the arrangement, a court will then be better placed to assess whether the wording of the
agreement, and the clauses that have been inserted, accurately reflect the nature of the
arrangement or whether they have been inserted merely to act as a smokescreen to disguise as
a licence what is, in reality, a lease.

What Factors will a Court take into Account When Deciding Whether Clauses
Attempting to Exclude Exclusive Possession are Real or Pretence?

• The relationship between prospective occupiers (where more than one).

• The course of negotiations.
• The nature and extent of the accommodation provided.
• The intended/actual mode of occupation.
(Stribling v Wickham  [1989].)
Remember, this list is not exhaustive and other factors may be relevant depending upon the
circumstances of each case.

Case Law Examples which Demonstrate this:

Antoniades v Villiers [1990] 1 AC 417

A clause which stated the licensor was unwilling to grant exclusive possession and able to
share, or invite others to share, the property with the licensees, was held a sham. The
following were some of the key factors to influence the court.

• The occupiers were a quasi-matrimonial couple, who had specifically asked for a double
bed and clearly intended to occupy the property as a family home, thus making it unrealistic
to introduce strangers to share with them.
• The accommodation was a small one-bedroom flat; too small for others to share with the
couple. This was evidenced by the fact that when they had a friend to stay, the conditions
were very cramped.
• The clause to introduce others specified no maximum number. If real, any number of
persons could be introduced to share with the couple. This was clearly unrealistic.
• The clause to introduce others had never been exercised.
Aslan v Murphy [1990] 1 WLR 766
A ‘licence agreement’ was held to be a lease. A key influence behind the decision was the
nature of the accommodation. As a basement room 4ft 3ins by 12ft 6ins, the ability of the
licensor to introduce others to share with the occupant was clearly not operational.

Contrast the above with the following case.

AG Securities Ltd v Vaughan [1990] 1 AC 417

A clause stating that a maximum of three other persons could be introduced to share the
property with the licensee was held to be real and reflect the reality of the arrangement.

The court was influenced by the fact that:

• each occupant signed an agreement, which incorporated a clause that a maximum of three
other people could be introduced to share the house with them. This was a realistic clause in
relation to the shared occupation of a four-bedroom house;
• this clause was actually exercised, indicating that it was not a mere pretence;
• the occupants were strangers who arrived at the property willing, presumably, to share with
other persons they did not know, unlike the couple in Antoniades v Villiers [1990].

Exceptions

Does the Presence of Exclusive Possession Necessitate the Finding of a Lease?

No. In Facchini v Bryson  [1952], confirmed in Street v Mountford  [1985], circumstances

were highlighted whereby the factual enjoyment of exclusive occupation falls short of any
conferment of a right to exclusive possession since overall control remains with the owner of
the property. These exceptions include:

 • occupancy based upon acts of friendship or generosity where there is no intention to

create legal relations: Marcroft Wagons Ltd v Smith [1951];
 • occupancy based upon family relationships: David v LB Lewisham (1977), although
a family relationship between the occupant and the grantor will not automatically
preclude the creation of a lease; it will depend upon the circumstances: Nunn v
Dalrymple  (1990);
 • occupancy based upon service as an employee, where the provision of
accommodation is for the better performance of the employee’s duties: Norris v
Checksfield  [1991];
 • occupancy as a lodger, where the provision of regular services, such as changing bed
linen and cleaning the accommodation, prevents exclusive possession from
arising: Marchant v Charters  [1977]. This is provided that such clauses have not
been inserted into the agreement to act as a smokescreen disguising the creation of a
lease. In Aslan v Murphy  [1990], the agreement stipulated that services would be
provided, suggesting no exclusive possession for the occupant. The reality, however,
was that in fact no services were ever provided and the clause had been inserted
merely to camouflage as a licence what, in reality, was a lease.
Multiple Occupation

Where more than one person is occupying the property on the basis of a lease, their
occupation must either be on the basis of:

 • each having separate leases; or

 • having a joint tenancy between themselves.

Individual Leases

Each occupant must have exclusive possession of a defined area, over which he has the
ability to exclude all others, including the other occupants of the property; possible, perhaps,
where each occupant can claim a lease over his own bedroom in the property, with a licence
to share the common parts. This possibility was recognised in an obiter statement in AG
Securities Ltd v Vaughan [1990].

Joint Tenancy

In situations where the property is such that individual leases are not possible, occupants will
have to claim they have a joint tenancy; that together they are seen as a single entity entitled
to exclusive possession of the whole. For this to exist, certainty of term and exclusive
possession is not enough. The occupants must also share the four unities as stated in AG
Securities Ltd v Vaughan [1990].

These are:

• Possession: all occupiers are entitled to possess the whole of the property;
• Title: all occupiers obtain their interest in the property by virtue of the same
document. Technically, this requires all occupants to sign one single agreement.
However, the courts are aware that landlords sometimes ask occupants to sign
separate agreements purely to try and defeat unity of title and thus prevent a joint
tenancy from arising:

Antoniades v Villiers [1990] 1 AC 417Despite the couple signing separate

agreements, the court found unity of title. The reality was that one occupant would not
have signed his agreement without the other also signing hers. The agreements were
thus interdependent and could therefore be seen as a single transaction.
• Time: occupants must obtain their interest in the property at the same time; and

• Interest: occupants must occupy the property with the same rights and obligations,
for which they are jointly liable.

Mikeover Ltd v Brady [1989] 3 All ER 618Each occupant was found to be liable for
just his own monthly payment. Therefore, no unity of interest was found to exist and
occupancy of the accommodation was based upon a licence.
Types of Leases

Fixed Term Tenancy

A lease granted for a fixed term at the outset, for example a ten-year lease. The lease will not
terminate until the end of the fixed term, subject to the presence of break clauses allowing for
early termination, or a breach of covenant, which could lead to termination of the lease by
forfeiture (see ‘Forfeiture’).

Periodic Tenancy

A lease that is granted initially for a certain period (eg weekly, monthly, yearly) with the
period automatically recurring until the lease is brought to an end, either by serving the
appropriate notice period or through procedures following a breach of covenant. Typically
the notice period has to equate to the period of the lease, for example a monthly periodic
tenancy requires one month’s notice. However, a yearly periodic tenancy requires six
months’ notice and a periodic tenancy over a dwelling house requires a minimum of four
weeks’ notice (Protection From Eviction Act 1977). Notice periods can also be specified by
the parties themselves.

Remember, a periodic tenancy may be implied when a person takes possession and pays rent
by reference to a period (see ‘Certainty of term’).

Tenancy at Will

A personal relationship between the parties whereby a person is allowed to take possession of
a property as a tenant but the agreement is such that either party can terminate the tenancy at
will. Should the tenant start paying rent whilst in possession, a periodic tenancy may be
implied, but only where there is sufficient intention between the parties.

Tenancy at Sufferance

Where a tenant remains in possession once his lease has expired with neither the consent nor
dissent of the landlord. If, and when, the landlord consents, a new tenancy will be created.
However, in the meantime the possession of the property will not amount to a trespass as the
initial possession was lawful.

Tenancy by Estoppel

Arises in situations where the landlord has represented that he will grant a lease and the
tenant has, quite reasonably, relied upon this representation to his detriment.

Formalities for Creation

Capable Grantor

As a general rule, a person purporting to grant a lease must be capable of doing so. However,
this principle has been undermined by the decision in Bruton v London & Quadrant
Housing Trust [2000] where a lease was recognised as having been created even though the
grantor had no proprietary estate out of which to grant the lease.
Formalities for an Agreement to Grant a Lease

In some cases, and especially for long leases, the parties may first enter into an agreement to
create the lease. The formalities required differ depending upon the duration of the lease
intended.

Proprietary Status of an Agreement to Grant a Lease

The valid contract, provided that it is one capable of specific performance, transfers an
equitable interest in the land to the transferee (the prospective tenant). Since equity views  as
done that which ought to be done, equity views the contract as having already been
performed. As such, in the eyes of equity, the transferee at this stage already has an equitable
lease: Walsh v Lonsdale (1882).
Formalities for the Grant of a Lease

Is an Equitable Lease as Good as a Legal Lease?

An equitable lease can, of course, be converted into a legal lease by an order of specific
performance. In the meantime, equity will uphold the rights of the parties as though the legal
lease had already been granted. However, this does not make an equitable lease as good as
having the legal equivalent, for the following reasons.

• The existence of an equitable lease is dependent upon the contract being capable of
specific performance. This will not always be the case, as shown in Coatsworth v
Johnson (1885). (This case has already been discussed in chapter 2.)
 • Before the system of registration was introduced, it was easier to enforce legal
proprietary interests against third parties than equitable ones (see chapter 2). Whilst
this distinction between legal and equitable proprietary interests has been eroded to
some extent by the system of registration, there are still some clear examples of when
legal proprietary interests are easier to enforce against third parties than equitable
equivalents (see chapters 3 and 4 on enforcement of proprietary interests).
• An equitable lease is based upon the existence of a contract, which is not
a conveyance. Thus on the creation of an equitable lease, the leaseholder will not
receive certain benefits that he would have received had there been a conveyance.
This is clearly visible when looking at the law of easements (see chapter 12).
 • In leases created before 1996, the burden and benefit of tenant covenants will only
pass to a successor in title where there has been a legal assignment of a legal lease.
This clearly will not occur if the lease is merely equitable in nature (see chapter 7).
• A person who acquires merely an equitable lease, may be bound by other equitable
interests created earlier over the property, since generally where the equities are equal,
the first in time prevails: Barclays Bank v Taylor [1974].

Formalities for the Assignment of an Existing Lease

The formalities required for transferring an existing lease from one party to another differ
depending upon whether the lease in question is legal or equitable in nature
Enforcement of Leases Against Third Parties

Unregistered Land

Termination of Leases

Expiry

A fixed term lease will come to an end upon expiry of the term for which it was granted. (It
cannot be brought to an end earlier than the term envisaged in the lease unless there exists
some provision in the lease to do so, ie a break clause, or there has been some breach of a
covenant in the lease allowing for forfeiture (see ‘Forfeiture’).)

Notice to Quit

The parties to a periodic tenancy may give a notice to quit to bring the tenancy to an end.
(See ‘Periodic tenancy’ for specific notice periods.) Where it is a joint periodic tenancy,
notice to quit given by one of the joint tenants will be effective on all: Hammersmith &
Fulham LBC v Monk  [1992].
Surrender

This is where the landlord and tenant can agree that the tenant is going to give up the lease.

Merger

This occurs where the tenant obtains the freehold estate so that the freehold and leasehold
estates become merged.

Repudiatory Breach

In rare cases where a landlord may be in breach of his obligations, the tenant can accept the
breach and walk away from the lease: Hussein v Mehlman [1992].

Forfeiture

Available as a remedy when a tenant is in breach of a covenant under a lease. It results in the
lease being terminated. Two different procedures for forfeiting a lease exist depending upon
the nature of the covenant that has been breached (see Figures 6.6 and 6.7). However, in
common to both procedures:

• forfeiture is (generally) only an available remedy where there exists an express

forfeiture clause (although note equitable leases where one is implied);
• the landlord loses his right to forfeit where he has waived his right, ie:
o – he is aware of the existence of the breach, either himself or through an agent;
and
o – he does some unequivocal act which recognises the continuation of the
lease, for example accepting rent: Central Estates (Belgravia) Ltd v Woolgar
(No 2) [1972].
• Remember, where the breach is of a continuing nature, a waiver on one occasion
will not preclude forfeiture for that breach where it continues in the future;
• a court order must be obtained where seeking forfeiture of a residential property (or
one of mixed use: see Patel v Pirabakaran  [2006]): s 2 Protection From Eviction
Act 1977. Where there is no one lawfully residing at the property, the landlord may
peaceably re-enter without first obtaining a court order.
When is a Breach Capable of Remedy?

In Expert Clothing Service & Sales Ltd v Hillgate House [1986], the court accepted that
capability turned on whether the harm caused to the landlord by the breach is capable of
remedy, rather than whether the breach itself can be remedied. Consequently, most covenants
are capable of remedy. This view has been endorsed in Akici v LR Butlin [2006].

Exceptions, however, exist. A breach of an alienation covenant is still considered incapable

of remedy: Scala House and District Property v Forbes [1974]. Some breaches of user
covenants where the property is used for immoral purposes are also considered incapable of
remedy where a stigma has attached to the property: Rugby School (Governors) v
Tannahill[1935]. However, if the immoral user is stopped quickly enough, so that no stigma
has attached to the property, the breach may be considered remediable: Ropemaker
Properties Ltd v Noonhaven Ltd [1989].
When is a Breach Capable of Remedy?

In Expert Clothing Service & Sales Ltd v Hillgate House [1986], the court accepted that
capability turned on whether the harm caused to the landlord by the breach is capable of
remedy, rather than whether the breach itself can be remedied. Consequently, most covenants
are capable of remedy. This view has been endorsed in Akici v LR Butlin [2006].

Exceptions, however, exist. A breach of an alienation covenant is still considered incapable

of remedy: Scala House and District Property v Forbes [1974]. Some breaches of user
covenants where the property is used for immoral purposes are also considered incapable of
remedy where a stigma has attached to the property: Rugby School (Governors) v
Tannahill[1935]. However, if the immoral user is stopped quickly enough, so that no stigma
has attached to the property, the breach may be considered remediable: Ropemaker
Properties Ltd v Noonhaven Ltd [1989].
Case Facts Principle
AG Securities v Four separate licence agreements had been Look to the nature of the
Vaughan signed on different days relating to the accommodation and the relationship
[1990] 1 AC occupancy of a four-bedroom flat. Each between the occupiers when
417 agreement stipulated for different payment considering whether a clause
amounts and each excluded exclusive excluding exclusive possession is real
possession and stipulated sharing with a or a sham. All four unities must exist
maximum of three other people. Held to for a joint tenancy to arise.
be licences.

Antoniades v A cohabiting couple signed separate but Look to the nature of the
Villiers [1990] identical licence agreements accommodation and the relationship
1 AC 417 contemporaneously giving them the right between the occupiers when
to occupy a small one-bedroom flat. The considering whether a clause
agreement stipulated exclusive possession excluding exclusive possession is real
had not been granted and the licensor had or a sham. Signing separate
the ability to invite others to share the flat. agreements will not defeat unity of
Held to be a lease. title provided the agreements can be
seen as interdependent.

Aslan v Licence agreement in respect of a tiny Look to the nature of the

Murphy [1990] basement room, to which the licensor accommodation when considering
1 WLR 766 retained keys. The agreement excluded whether a clause excluding exclusive
exclusive possession and required the possession is real or a sham. There is
occupant to vacate the premises for 90 no magic in the retention of keys.
minutes each day. It was held to be a Look at the purpose for which keys
lease. have been retained.

Bruton v A licensee of a block of flats purported to An apparent distinction exists

London & give a homeless person a licence over one between a lease, which amounts to a
Quadrant of the flats. The House of Lords found the mere contractual arrangement, and a
Housing Trust homeless person to have a ‘lease’ since he term of years which is a proprietary
[2000] 1 AC enjoyed exclusive possession for a term at interest.
406 a rent.

Prudential A ‘tenancy’ had been granted over a strip There must be certainty of term for a
Assurance Co of land until such time as it would be lease to exist. Where the term appears
Ltd v London required back for the purpose of widening uncertain, if the tenant has taken
Residuary Body the road. Whilst it was held that this was possession and started paying rent by
[1992] 2 AC an uncertain term, the House of Lords reference to a period, a court may be
386 upheld the finding of a periodic tenancy. willing to imply a periodic tenancy
has been created

Street v Occupancy was based upon a ‘licence Where an agreement satisfies the
Mountford agreement’ which gave M, in return for a characteristics of a lease (exclusive
[1985] AC 809 weekly ‘licence fee’, exclusive occupancy possession, certainty of term, at a
of a self-contained flat. Despite the rent) a tenancy will be found (subject
agreement containing a clause stating a to exceptions). One must look to the
tenancy was not intended to arise, M was substance of the transaction and not
found to have a tenancy. just its form.
Walsh v A seven-year lease was granted to W in Where a valid contract to grant a
Lonsdale writing but not by deed. W went into lease exists that is capable of specific
(1882) 21 Ch D possession and started paying rent and an performance, as equity sees as done
9 issue arose which required determining that which ought to be done, this
whether his occupation was based upon a arrangement creates an equitable
legal periodic tenancy or a seven-year lease. Where a conflict exists
equitable lease. He was held to occupy on between law and equity, equity
the basis of the latter. prevails.

Key Facts
• A lease is one of the estates in land capable of being legal: s 1(1)(b) Law of Property Act
1925 (LPA 1925).
• Without both certainty of term and exclusive possession there can be no lease (Street v
Mountford [1985]), although the presence of both does not necessarily mean that a lease
exists. Exclusive occupation could be based upon a licence (Facchini v Bryson [1952]).
• In addition to certainty of term and exclusive possession, a joint tenancy requires the four
unities (AG Securities Ltd v Vaughan [1990]).
• Formalities for the creation of a legal lease differ depending upon the duration of the lease.
• Where these formalities have not been met, an equitable lease may exist provided there is a
valid contract capable of specific performance (Walsh v Lonsdale (1882)).
• An equitable lease is not as good as the legal equivalent.
• The most common types of leases are fixed term and periodic.
• The process of terminating a lease by forfeiture differs depending upon the type of covenant
breached. In each case, whether the property is residential or commercial will dictate the
actual procedure to follow and may influence the tenant’s (and any sub-tenant’s) ability to
seek relief.

 Covenants in Leases

Leasehold covenants are promises that are made between a landlord and his tenant,
regulating the relationship between them and the way in which a leasehold estate is enjoyed.
Both the landlord and the tenant will enter into a variety of covenants for the benefit of the
other party.

The covenants may be either express or implied. The nature and extent of liability imposed
by express covenants will be a matter of negotiation between the parties. Implied covenants,
which can occasionally be expressly excluded from the lease(where it is allowed), may
impose burdens on either the landlord or the tenant. An example of a landlord’s implied
obligation is a covenant to allow the tenant quiet enjoyment, ie to allow the tenant to take
exclusive possession of the property without any interference. An example of a tenant’s
implied obligation is a covenant not to commit waste.

Covenants, whether express or implied, may be either positive (eg to repair) or negative (eg
prohibiting change of use to the property).

Covenants to Repair

These may be express, burdening either the landlord or the tenant or, in some circumstances,
both. For example, the landlord may promise to keep the exterior of the property in good
repair whilst the tenant promises to do the same with the interior.

An implied obligation to repair can also be imposed upon a landlord (see ‘Implied covenants
to repair’), but not a tenant.
Express Covenants to Repair

The Extent of Liability Imposed

The following should be borne in mind when considering the scope of an express covenant to
repair.

• The exact wording of the covenant may give guidance. For example, a covenant that
stipulates the covenantor must ‘keep the property in good and substantial repair’
(rather than merely ‘maintain the property …’) requires him to put the property into a
good state of repair at the start of the lease term and maintain such a state throughout
the term (see Credit Suisse v Beegas Nominees Ltd [1994]).
• Whilst an express covenant to repair will inevitably require some element of
renewal, to replace whatever is in a state of disrepair, liability should not extend to
renewal of virtually the whole of the property in one go: Lister v Lane [1893].
Ultimately, it is a question of degree and looking at how much of the property is to be
affected by the repair required: Ravenseft Properties Ltd v Davstone (Holdings)
Ltd [1980]. There may also be a linked issue of costs. Where the costs of the repair
work required are close to the overall value of the property as it existed before it fell
into disrepair, the work required may fall outside the ambit of the covenant: Brew
Brothers v Snax (Ross) Ltd  [1970].
• Whilst an express covenant to repair should not impose an obligation to make new
improvements to the property, for example putting in a damp proof course where none
previously existed, an improvement may occur as a by-product of the repair itself, for
example replacing a broken boiler with a modern version: Pembury v Lamdin [1940].
• An express covenant to repair should not itself impose an obligation to correct
design faults with the property, as originally constructed: Post Office v Aquarius
Property Ltd [1987]. However, if that fault causes disrepair to the property which can
only be fixed by correcting the design fault from which it flows, the correction of that
design fault may fall within the ambit of the covenant to repair.

The Standard of Repair Required

The standard is to be determined according to the age, character, and locality of the
property at the time that the lease was granted: Proudfoot v Hart (1890). The repair works
should be to a standard fit for a reasonably like-minded tenant of the type likely to take a
lease of that property.

When does Liability Arise?

Under a tenant obligation, liability arises as soon as the property falls into a state of disrepair,
even where the tenant is unaware of this. Whereas, under a landlord obligation, since a
landlord generally has no access to the property, liability will arise only once he has been
given notice of the disrepair.

The Effect of a Fair Wear and Tear Proviso

An express covenant to repair may exempt a tenant from liability for fair wear and tear.
However, if this fair wear and tear leads to other disrepair to the property, which itself falls
into the ambit of the express covenant to repair, and the only way to correct this
consequential disrepair is to correct the fair wear and tear from which it flows, a tenant may
be required to do so, despite the existence of the fair wear and tear exemption: Regis
Property Co Ltd v Dudley [1959].

Implied Covenants to Repair

These burden the landlord and override any express obligations to the contrary. They include:

• where a house is let furnished, an obligation to ensure that the house is fit for human
habitation at the start of the lease term: Smith v Marrable (1843);

• the Homes (Fitness for Human Habitation) Act 2018 implies into leases for less
than seven years (both private and social) an obligation upon landlords to ensure that
their properties are fit for human habitation at the start of the lease and throughout;

• ss 11–14 Landlord and Tenant Act 1985: an obligation for the landlord to keep in
repair the structure (something essential to a building’s appearance, stability, or
shape: Re Irvine’s Estate v Moran (1992)), exterior (including drains, gutters, and
external pipes) and installations of a house, for the supply of water, gas, electricity,
and for sanitation and heating. It does not extend to the correction of design faults
with the property (Quick v Taff-Ely BC [1986]) unless the design fault is itself
causing disrepair to the structure, exterior, or installations of the house. If the only
way to fix this disrepair is to correct the design fault from which it flows, a landlord
will be obliged to do so under this Act: Staves & Staves v Leeds CC (1990).

The obligation only applies to leases of dwelling houses granted on/after 24 October 1961 for
a term of less than seven years. The landlord’s liability will only arise once he has notice of
such disrepair: O’Brien v Robinson [1973]. Upon notice, he will be liable not only for the
disrepair to the structure, exterior, or installations as appropriate, but also for any disrepair
that is consequential to this, provided he has notice of such consequential damage and
provided the tenant has acted promptly in notifying the landlord so as to mitigate the loss.

In determining the standard to which the landlord is required to repair, regard must be had to
the age, character, and prospective life of the dwelling house and its locality.

Specific Remedies for Breach of Repairing Covenants

Forfeiture

Available to the landlord and has the effect of bringing the lease to an end.

Damages

Under s 18 LTA 1927, damages must not exceed the amount by which the value of
the reversion in the premises is diminished owing to the existence of the breach. Damages
are not recoverable where the premises are to be demolished or intended structural alterations
would render the repairs valueless.
Specific Performance

Specific Performance is available to a tenant: Jeune v Queens Cross Properties [1974].

Where the breach is of a landlord’s implied covenant to repair under ss 11–14 and s 17 LTA
1985 provides for the availability of this remedy.

It is more rarely given in favour of the landlord; perhaps where the lease does not provide for
the alternative remedy of forfeiture: Rainbow Estates Ltd v Tokenhold Ltd  [1999].

Covenants not to Assign or Sub-Let the Property

Where a lease is silent as to whether a tenant can assign or sub-let the property, a tenant may
do either freely. However, most leases contain either an absolute or qualified covenant not to
assign or sub-let the property.

Absolute Covenants

These prohibit any assignment or sub-letting of the property, subject only to the landlord
changing his mind upon request.

Qualified Covenants

These allow an assignment or sub-letting of the property but only with the landlord’s consent.
They are interpreted strictly by the court. A qualified covenant precluding sub-letting the
whole of the property without the landlord’s consent will not prohibit the sub-letting of part
of that property: Wilson v Rosenthal  (1906).

 When considering the issue of consent, you must take into account the following points.

• A landlord must not unreasonably withhold consent: s 19(1)(a) LTA 1927, which
overrides any express provision to the contrary.

• Apart from refusal on grounds of discrimination (eg race or sex) guidance as to what
will be unreasonable must be taken from case law.

• In International Drilling Fluids Ltd v Louisville Investments (Uxbridge)

Ltd [1986], it was declared that the purpose of a qualified covenant is to protect the
landlord from having his premises used/occupied by an undesirable tenant in an
undesirable way. The grounds for refusal must have something to do with the
relationship of landlord and tenant, for example refusing because the tenant is already
in serious breach of another covenant in the lease.

• In addition, you should consider:

o – the effect a refusal will have on the tenant. Where the detriment caused to
the tenant far outweighs any benefit the landlord is gaining by refusing
consent, such refusal may be considered unreasonable; and
o – in respect of commercial leases granted on/after 1 January 1996, whether the
ground(s) given for refusal is one identified in the lease. If yes, refusal cannot
be considered unreasonable: s 22 LT(C)A 1995 which adds s 19(1A) to
the LTA 1927.
 • Ultimately, the burden of proof rests with the landlord: s 1(6) LTA 1988.

The Consequences

• Assigning or sub-letting the lease without first seeking consent, where such consent
is required, will amount to a breach of the qualified covenant, even if the landlord
could not have reasonably refused consent: Eastern Telegraph Co Ltd v Dent[1899].

• Where consent has been sought but refused, the tenant really has three options:

o – accept the landlord’s refusal and abandon any attempt to assign or sub-let;

o – ignore the refusal and go ahead with the assignment or sub-letting anyway.
Whilst the disposition itself would (usually) be effective (Old Grovebury
Manor Farm Ltd v W Seymour Plant Sales & Hire Ltd (No 2) [1979]), it will
be in breach of covenant and thus the tenant will risk proceedings for damages
or, more seriously, forfeiture. Arguably, the proposed assignee or sub-tenant
would not wish to go ahead with the disposition where they know it is in
breach of covenant since, with such knowledge, they would be unlikely to
succeed in getting relief in any subsequent forfeiture proceedings

o – seek a court declaration that the consent is being unreasonably withheld,

which will take time and money.

Enforcement of Leasehold Covenants

Enforcement Between the Original Parties to the Lease

Enforceability of covenants between the original parties to the lease (see Figure 7.1) is based
upon their contractual relationship to one another; the parties have privity of contract.

Liability extends to all the covenants in the lease, regardless of whether or not they touch and
concern the land, and such liability continues, in principle, for the entire duration of the lease
term.

Enforcement Between Successors in Title to the Original Parties to the Lease

When either the lease or the reversionary interest is passed on to a successor in title, will the
benefit and burden of the covenants in the lease pass to that successor?

• Leases originally created on/after 1 January 1996 are governed by the LT(C)A 1995.

• Leases originally created before this date are largely governed by the Law of Property Act
(LPA) 1925.

Remember that ss 17–20 LT(C)A 1995 apply equally to pre- as well as to post-1996 leases.
 When the Original Tenant (T) Assigns his lease to his Assignee (A), Will the Burden of
Covenants Entered into by T pass to A?

Pre-1996 lease Post-1996 lease

T remains liable throughout the entire T will automatically be released from
duration of the lease term, as originally liability for all tenant covenants upon
envisaged, on all the covenants of the lease assignment (s 5 LT(C)A 1995), unless:
due to privity of contract:
Thursby v Plant (1668). This continuing 1. the breach is of a purely personal
liability is reinforced by s 79 LPA 1925. T covenant to him: BHP Petroleum GB Ltd
retains the right to pursue breaches v Chesterfield Properties Ltd [2000]; or
committed by the landlord,before the 2. the breach was committed
assignment to A took place: City & whilst T was the tenant: s 24 LT(C) A
Metropolitan Properties Ltd v Greycroft 1995; or
Ltd [1987]. 3. the assignment was an
excluded assignment under s 11 LT(C)A
1995; typically one in breach of covenant.
T’s liability continues until a non-excluded
assignment occurs, at which point T’s
liability will cease; or
4. T entered into an
Authorised Guarantee Agreement (AGA)
under s 16 LT(C)A 1995, whereby he
guarantees the performance of the
covenants by his immediate assignee only.

In respect of either a pre- or post-1996 lease, remember the following two points.

• Where T retains liability, either on the basis of privity of contract under a pre-1996 lease,
or, for example, an AGA under a post-1996 lease, he cannot be held liable for a breach of
covenant, where such covenant had been varied after the assignment took place and the
variation was such that the landlord had an absolute right to refuse: s 18 LT(C)A 1995. Note,
however, liability for increased rent following activation of a foreseen rent review clause:
Friends Provident Life Office v British Railways Board [1996].

• To pursue T for rent or any other fixed charge owed by A, L will first have to serve upon T
a default notice, governed by s 17 LT(C)A 1995. The notice must be served within six
months of the monies becoming due, notifying T of the amount owing and the fact that T is to
be pursued for this sum. This procedure prevents L from allowing a debt to increase whilst T
has no knowledge of the breach or indeed the fact that he is to be held responsible for the
sums owed.

What could T do if Held Liable for a Breach Committed by A?

Whether a pre- or post-1996 lease, the following options are available to T.

• Employ the Moule v Garret (1872) principle: where you are compelled to pay damages for
the legal default of another, you can go against that other to recover the sums you paid.
 • Recoup sums paid via an indemnity covenant. These are only exercisable against your
immediate assignee. Thus if A assigned the lease to A2, who commits a breach for which T is
held liable, T would utilise his indemnity covenant to recoup the money from A, who would
do the same to recoup the money from A2. Where there is a complete chain of indemnity,
ultimately the person left out of pocket should be the person who has committed the breach
(here A2). However, if there is a break in the chain, for example A is insolvent or has
disappeared, T would not be able to skip over A and try and claim monies back from A2: Re
Mirror Group (Holdings) Ltd (1993). Indemnity covenants may be express or, in the case of
pre-1996 leases only, implied:

– into assignments of leases over unregistered land for valuable consideration: s 77

LPA 1925; and

– into assignments of leases over registered land, regardless of value: Sch 12 para
20 Land Registration Act (LRA) 2002.

• Where there has been full payment of monies requested in a s 17 LT(C)A 1995 default
notice, request an overriding lease under s 19 LT(C)A 1995. The request must be made in
writing and within 12 months of the payment being made. L would then have to grant an
overriding lease, within a reasonable time. The term of the overriding lease would be equal to
that of the remaining term of the lease plus three days and on essentially the same terms. The
effect of the overriding lease would be to put T in the position of A’s immediate landlord and
thus give T landlord powers over A, including the right to forfeit the lease. T’s overriding
lease would then become a lease in possession which T could then assign (or sub-let) to a
more attractive tenant, less likely to breach the covenants in the future. In doing so, not only
does T get rid of the defaulting tenant but it also enables him to recoup some of the money he
may have paid out for a breach he did not commit.

A’s Position Post-Assignment.

A—Post-Assignment

Pre-1996 lease Post-1996 lease

As A (generally) does not enjoy a privity of As A (generally) does not enjoy a privity of
contract relationship with L, he will only be contract relationship with L he will only be
liable if the burden of the covenants passed liable if the burden of the covenants passed
to him under Spencer’s Case (1583). To do to him under s 3 LT(C)A 1995. This will
so: pass the burden of all tenant covenants
except those expressed to be personal to
1. The covenant must ‘touch and concern’ the original party (s 3(6) LT(C)A 1995).
the land, ie affect the landlord and tenant in
their capacity as such: Breams Property
Investment Co Ltd v Stroulger [1948]; and

2. There must be privity of estate, ie a

direct relationship of landlord and tenant
must exist between the parties L and A:
Purchase v Lichfield Brewery Co [1915];
and
3. There must have been a legal assignment
of a legal lease.

In respect of either a pre- or post-1996 lease, remember the following.

• Although A will generally not enjoy a privity of contract relationship with L, such a
relationship will arise if A enters into the covenants directly with L after the assignment takes
place thus creating a contractual relationship between them (as illustrated under a pre-1996
lease in the case of Estates Gazette Ltd v Benjamin Restaurants Ltd [1994]).

• Where the burden of the covenants has passed to A, he cannot be made liable for breaches
that occurred before the assignment to him, unless such breaches are of a continuing nature
(eg a breach of a covenant to repair), in which case A’s liability for that breach will
commence from the date of the assignment: Grescot v Green (1700) (pre-1996 lease); s 23
LT(C)A 1995 (post-1996 lease).

• Where a landlord has the choice as to whether to pursue T or A for the breach, he is free to
choose either party, or both simultaneously, provided that he does not obtain double recovery.

When the Original tenant (T) Assigns his Lease to his Assignee (A), Will the Benefit of
Covenants T Enjoyed Pass to A?

Explains T’s and A’s positions regarding the benefit of covenants post-assignment.

Position of T and A regarding the benefit

POSITION OF T
Pre-1996 lease Post-1996 lease
T retains the right to pursue breaches When the benefit of covenants passes from
committed by the landlord, before the T to A under s 3 LT(C)A 1995, T retains
assignment took place: City & Metropolitan the right to pursue breaches committed by
Properties Ltd v Greycroft Ltd [1987]. the landlord whilst he was tenant: s 24
LT(C)A 1995 (unless the right to do so has
been expressly assigned to his successor,
A).
POSITION OF A
A will only be able to pursue those breaches A only acquires the right to pursue
committed by the landlord after the breaches that occur after the assignment to
assignment has occurred, provided he can him has taken place, unless the right to
establish the benefit of the covenants passed pursue pre-assignment breaches has been
to him by meeting the Spencer’s Case expressly assigned to him: s 23 LT(C)A
(1583) requirements. 1995.
When the original landlord (L) assigns his reversionary interest to his assignee (L2), will
the burden of covenants L entered into pass to L2?
Table 7.4 explains L’s position post-assignment.
Table 7.4 Position of L—post-assignment
Pre-1996 lease Post-1996 lease
L remains liable throughout the entire L remains liable until such time as he is
duration of the lease term, as originally released from liability under s 6 LT(C)A
envisaged, on all the covenants of the lease 1995. The procedure for seeking release is
due to privity of contract: Stuart v Joy governed by s 8 LT(C)A 1995, although
[1904]. This continuing liability is release is not possible where the
reinforced by s 79 LPA 1925. assignment is an excluded one under s 11
LT(C)A 1995. Even where a release has
been successfully obtained, it will not be
effective in respect of:

1. purely personal
covenants: BHP Petroleum GB Ltd v
Chesterfield Properties Ltd [2000]; or
2. breaches that were
committed by L whilst he was the landlord:
s 24 LT(C)A 1995.

What Could L do if Held Liable for a Breach Committed by L2?

Whether a pre- or post-1996 lease, the following options are available to L:

• use the Moule v Garret (1872) principle as discussed earlier; or

• recoup sums paid using indemnity covenants, as discussed earlier. This is only possible
where they have been expressly provided for.

Explains L2’s position post-assignment.

Position of L2—post-assignment

Pre-1996 lease Post-1996 lease

As L2 does not enjoy a privity of contract As L2 does not enjoy a privity of contract
relationship with T, he will only be liable if relationship with T, he will only be liable if
the burden of the covenants passed to him the burden of the covenants passed to him
under s 142 LPA 1925, which passes the under s 3 LT(C)A 1995. This will pass the
burden of covenants having reference to the burden of all tenant covenants except those
subject matter of the lease. This means the expressed to be personal to the original
same as ‘touch and concern’: Hua Chiao party (s 3(6) LT(C)A 1995).
Commercial Bank Ltd v Chiaphua
Industries Ltd [1987] (see Spencer’s Case
(1583)).
In respect of either a pre- or post-1996 lease, remember that where the burden of the
covenants has passed to L2, he cannot be made liable for breaches that occurred before the
assignment of the reversion to him, unless such breaches are of a continuing nature (eg a
breach of a covenant to repair), in which case L2’s liability for that breach will commence
from the date of the assignment (Duncliffe v Caerfelin Properties Ltd [1989] (pre-1996
lease); s 23 LT(C)A 1995 (post-1996 lease)).
 When the Original Landlord (L) Assigns his Reversionary Interest to his Assignee (L2),
Will the Benefit of Covenants L Enjoyed Pass to L2?

Explains L’s and L2’s positions regarding the benefit of covenants.

Position of L and L2 regarding the benefit

POSITION OF L
Pre-1996 lease Post-1996 lease
L loses the right to pursue any breach of Where released from the burden of
tenant covenants upon assignment; even in landlord covenants under s 6 LT(C)A
respect of those breaches committed whilst 1995, L would also cease to be entitled to
he was the landlord. The benefit to do so the benefit of covenants under the lease,
passes to his successor upon assignment save the right to pursue those breaches that
under s 141 LPA 1925: Re King [1963]. occurred before he ceased to be so entitled:
s 24(4) LT(C)A 1995 (unless that right has
been expressly assigned to his successor,
L2).
POSITION OF L2
L2 will acquire upon assignment the benefit L2 will not be able to pursue breaches of
of all covenants which have reference to the tenant covenants that occurred before the
subject matter of the lease (s 141 LPA assignment unless either:
1925) including the right to pursue breaches
that occurred before the assignment took 1. the right to do so had
place: Arlesford Trading Co Ltd v been expressly assigned to him upon the
Servansingh [1971]. assignment of the reversion: s 23 LT(C)A
1995; or
2. the breach was of a
continuing nature in which case he could
pursue but only as from the date of
assignment.

Sub-tenants

What is the Position of ST?

Explains the position of ST.

Position of ST

Pre-1996 lease Post-1996 lease

In principle, L cannot enforce covenants ST could be held directly liable to L for a
directly against ST as there is neither privity breach of a restrictive covenant: s 3(5)
of contract nor privity of estate between LT(C)A 1995. (Satisfaction of the other
them: South of England Dairies Ltd v requirements under Tulk v Moxhay (1848)
Baker [1906]. Instead, L would have to seek is not required.)
remedy against T, assuming ST’s breach put
T in breach of a covenant in his headlease.
T might then be able to recoup his losses
from ST, assuming an express indemnity
covenant existed between them.
However, direct enforcement between L and
ST is possible where the requirements under
Tulk v Moxhay (1848) are met.
Remember, notice will be satisfied under Tulk v Moxhay (1848), by virtue of s 29(2)(b)
LRA 2002 where registered land, and by the sub-tenant being deemed to have either actual or
constructive notice where unregistered land (Hall v Ewin (1887)).

Revision Tip
The case law concerning enforcement of leasehold covenants highlighted earlier is used to
provide authority for principles of law. It is unlikely, therefore, that you need to concern
yourself with revising the facts of these cases.

Key cases
Case Facts Principle
Brew Brothers Ltd v Snax Seepage from drains Where the cost of repair
(Ross) Ltd [1970] 1 QB 612 damaged foundations of a works amounts to a
property, causing a wall to significant proportion of the
tilt. Repairs held outside the value of the property itself,
scope of the tenant’s express the works may be deemed to
covenant to repair, since fall outside the ambit of a
would have cost the same as repair covenant.
the value of the premises if
totally rebuilt.
Lister v Lane [1893] 2 QB A tenant was held not liable Where works would affect
212 to rebuild a house which the whole or substantially
had to be demolished due to the whole of the building,
its wooden foundations making the building
having rotted. different from the one
demised, such works are
likely to fall outside the
ambit of a repair covenant.
Post Office v Aquarius Basement built with porous Repair does not require the
Property Ltd [1987] 1 All cement so basement flooded correction of design faults
ER 1055 when water table rose, unless the design fault
though this caused no causes further physical
physical damage to the damage to the property and
building. Tenant not liable the only way to correct this
to correct the design fault. physical damage is to
correct the design fault from
which it flows.
Quick v Taff-Ely Borough Lack of insulation around Repair does not require the
Council [1986] QB 821 single-glazed windows correction of design faults
caused condensation unless the design fault
resulting in damage to house causes further physical
contents and decoration. damage to the property and
Landlord not liable to repair the only way to correct this
this design fault with the physical damage is to
windows. correct the design fault from
which it flows.
Ravenseft Properties Ltd v Stone cladding on a block of Whether repair falls into the
Davstone (Holdings) Ltd flats cracked and was in ambit of an express
[1980] QB 12 danger of falling off the covenant to repair is a
building, due to a failure to question of degree. Where it
install expansion joints. involves giving the landlord
Tenant was held liable back something wholly
under his covenant to repair. different from that which he
The work required repair to demised, it will fall outside
only a trivial part of the the ambit.
building in total and the
improvement would not
change the nature of the
building.

Key facts

• Leasehold covenants are promises made between a landlord and tenant. They can be express
or implied; positive or negative in nature.

• An express covenant to repair should not include work that renews virtually the whole of
the property in one go, brings completely new improvements to the property, or requires the
correction of design faults with the property unless such faults are causing physical damage
to the property which itself falls within a covenant to repair.

• Certain repair obligations are impliedly imposed upon a landlord by common law and
statute, notably the Landlord and Tenant Act (LTA) 1985.

• Remedies available for breach of a repair obligation include forfeiture, damages, and
specific performance.
• Covenants not to assign or sub-let may be absolute or qualified. Where qualified, a landlord
must not refuse consent unreasonably: s 19(1)(a) Landlord and Tenant Act 1927.

• Covenants are enforceable between the original covenanting parties based upon the
contractual relationship they share.

• The enforcement of covenants between successors in title depends upon whether the burden
and/or benefit of the covenants have passed. Rules governing this differ depending upon
whether the lease was created before or after 1 January 1996 when the Landlord and Tenant
(Covenants) Act 1995 (LT(C)A 1995) came into force.
Licences and Proprietary Estoppel

A licence can be described as permission given by one person (the licensor) to another (the
licensee) allowing that other to enter the licensor’s land which, without such permission,
would amount to a trespass: Thomas v Sorrell  (1673). It may extend beyond permitting mere
entry and give the licensee occupational rights over the land in question.

Thomas v Sorrell (1673) Vaughan 330: a licence “properly passeth no interest, nor alters or
transfers property in anything, but only makes an action lawful, which without it had been
unlawful” (per Vaughan CJ at 351)

A licence does not convey a proprietary interest over the land where it is exercised: Ashburn

Anstalt v Arnold [1989]. Rather, it creates a mere personal right between the person giving
the permission, the licensor, and the person receiving that permission, the licensee. Licences
lack the legal category of permeance and stability for them to take effect as a property right.
Also the licensor can easily revoke the permission granted. As a personal right, it is not
capable of:

• being transferred to another; or

• being binding upon a third party.

National Provincial Bank Ltd v Ainsworth [1965] AC 1175: “before a right or interest can be
admitted into the category of property, or of a right affecting property, it must be definable,
identifiable by third parties, capable in its nature of assumption by third parties, and have
some degree of permanence or stability” (per Lord Wilberforce at 1243

(Clore v Theatrical Properties (1936).)

However, the law has developed so that, in some circumstances, a licence can be enforced
against both the licensor and a third party purchaser. This, therefore, provides some licences
with characteristics of a proprietary nature: see ‘Licences coupled with an interest’.

Categories of Licences

Bare icences

When do They Arise?

When the licensee is given permission to be, or enter, on the land of the licensor without the
need to provide the licensor with any consideration. They may be created:

 • expressly, for example by giving an invitation to another to attend your house for
dinner; or
 • impliedly, for example it is generally accepted that people have an implied licence to
walk through your garden gate and along your garden path up to your front door.

By acquiring a bare licence, the licensee is prevented from being a trespasser on the land, so
long as he does not exceed the scope of the licence.

This is the most basic type of licence and there are no formality requirements with which the
parties must comply before making a valid bare licence.

o The scope of a bare licence is also very limited – in other words, when you (the licensor)
invite someone (the licensee) to play table tennis in your garden, that
person does not automatically have permission to go inside the house.

 In fact, if they did, they would be a trespasser. Of course, in most circumstances,

people would willingly allow their guests to go inside the house so their guest would
not be committing a trespass in these circumstances.

o The licence or can revoke a bare licence at any time, provided that they give the licensee
reasonable notice and a reasonable amount of time to leave the premises.
Termination

A bare licence may be revoked by simply telling the licensee to leave and then giving him a
reasonable time to do so (Greater London Council v Jenkins [1975]). What amounts to a
reasonable time will vary according to the circumstances but in all cases only if that
reasonable time expires and the licensee remains on the land does he then become a
trespasser.

Enforcement Against Third Parties

A successor in title to the licensor is just as capable of revoking a bare licence as the original
licensor. Thus, such licences have never been held as binding upon third parties.

Licences Coupled with an Interest

When do They Arise?

In circumstances where a proprietary interest has been granted and, in order for that interest
to be exercised and enjoyed, access on to land of another must also be given. The licence
giving such access arises as a consequence of the proprietary interest that has been
granted  and thus can be seen as ancillary to that interest. For example, such licences arise
with the granting of profits à prendre . A right to take something from the land of another
can only be exercised where it is accompanied by a licence to enter that land.

Although originally the interest did not need to be proprietary (Hurst v Picture Theatres
Ltd [1915], where the right was contractual to watch a film), later cases now restrict the
interest to be a recognised proprietary interest: Hounslow LBC v Twickenham Garden
Developments Ltd  [1971].

Termination

As long as the proprietary interest remains, the licence that accompanies it is irrevocable.

Enforcement Against Third Parties

As this licence effectively shadows a proprietary interest, it is regarded as having the same
enforceability as the proprietary interest to which it is attached, thus binding not only the
original licensor but also his successors in title: Webb v Paternoster(1619).

Contractual Licences

When do They Arise?

This is a licence that is given upon the licensee entering into a valid contract and providing
some form of consideration. Such licences may arise, for example, when you pay for
admission to a cinema or pay for a ticket to a racecourse.

o This is a licence that has the core features of a contract. In other words, a
contractual licence will arise when a landowner (the licensor) grants another person (the
licensee) permission to use the landowner’s land for a specific purpose and the licensee gives
consideration. The other core features of a contract must also be present (i.e. an offer,
acceptance, and intention to create legal relations). No other formality requirements apply to
the creation of a contractual licence.

o It is important to note that a contractual licence does not bind a third party (Ashburn
Anstalt v Arnold [ ] Ch 1 – if, for example, I own the freehold title to a plot of land and I
allow a lodger to live in my spare room in return for the payment of rent, a contractual
licence will probably have been created between myself and the lodger. However, if I transfer
my freehold title to the land while the lodger is living there, the new owner will take free
from the licence. In other words, the new freehold owner would not have to honour the pre-
existing licence granted to the lodger.

o It is generally quite easy for a licensor to revoke a contractual licence. At common law, a
licensor can revoke a licence at any time, provided that they give the licensee reasonable
notice and a reasonable amount of time to leave the premises. Equity, however, affords a
licensor slightly more protection and may imply a term into the contract that prevents the
licensor revoking the licence before the term expires.

o A contractual licence will arise, for example, when a person buys a cinema ticket or when a
person buys a ticket to park their car on someone else’s land.

Termination

Although revocation may equate to a breach of contract, it may be permitted with reasonable
notice, with a remedy lying in damages: Wood v Leadbitter (1845).

However, as an interest in land is usually seen as unique (see the Equity and Trusts book
accompanying this series for further detail on equitable remedies) it may be that the breach
will be remedied by the grant of an injunction. See, for example, Winter Garden Theatre
(London) Ltd v Millennium Productions Ltd [1948] where the House of Lords recognised
that an injunction could be awarded to prevent a premature termination of a
contractual licence in circumstances where it was intended to be irrevocable until a purpose
had been fulfilled or a period of time completed.

In some circumstances, where the licensee has not yet taken possession of the land, an order
for specific performance may be awarded where the licensor is refusing entry to a licensee
who has a contractual right to enter.

Verrall v Great Yarmouth BC [1981] QB 202

The National Front had contracted to hire a hall for its annual conference. When the Labour
council sought to revoke the licence, an order for specific performance was granted. Damages
were deemed inadequate as the National Front had not been able to find an alternative venue.
With the intervention of equity, the contractual licence was enforced and thus could not be
revoked at will.

Despite this intervention of equity, you must appreciate that this does not mean that all
contractual licences will now be prevented from being revoked by the licensor when he
wishes. Remember that the provision of equitable remedies is subject to discretion and will
only be provided in circumstances where damages for breach of contract appear inadequate.
The question will be one of construction of the contract and whether, upon true construction
of the contract, it was intended to be irrevocable (Megarry J in Hounslow LBC v
Twickenham Garden Developments Ltd  [1971]).

Where equitable remedies are not available, an action for assault may be brought in the event
of being forcibly ejected from the land or refused entry on to it.

Enforcement Against Third Parties

Traditionally, it was considered that contractual licences are not enforceable against third
parties: King v David Allen & Sons[1916].

However, with the intervention of equitable relief making some contractual licences
irrevocable in certain circumstances, this view has been subject to challenge. See, for
example, Binions v Evans [1972], in which Lord Denning declared contractual licences as
binding upon third parties by relying upon a constructive trust being triggered in order to
prevent a fraud or unconscionable behaviour.

Indeed, some challengers have gone as far as to suggest that the use of equitable remedies,
both to prevent premature revocation of contractual licences and to ensure their performance
in accordance with the terms of the contract, not only makes contractual licences enforceable
against third parties but also confers a proprietary status upon them.

Final clarification on the issue of enforceability against third parties was found in the case
of Ashburn Anstalt v Arnold [1989], where the court clearly found that contractual licences
cannot bind successors in title. Since enforceability against third parties is an essential
characteristic of a proprietary interest, this case also determined that contractual licences do
not have proprietary status. This is perhaps a sensible decision, as to rule otherwise might:

• blur the boundaries between licences and proprietary interests such as leases and
easements; and

• lead to some land becoming inalienable by a subsequent increase in the number of

proprietary interests existing over it.

Ashburn Anstalt v Arnold [1989] declared the true basis for the decision of finding the
licence binding in Errington v Errington & Woods [1952] was the presence of an estoppel
or constructive trust.

Estoppel Licences

When do They Arise?

These are licences used by the courts to protect licensees where it would be contrary to
justice to allow strict legal principles to be applied. The licensee must establish that an
estoppel has arisen giving rise to an equity in his favour. In effect, the licence is made
irrevocable and thus binding upon third parties. This result may be achieved by giving the
licensee a recognised legal or equitable proprietary interest (eg freehold title/a tenancy/an
easement) or an irrevocable licence under a constructive trust.

An estoppel licence is a form of proprietary estoppel. We will cover proprietary estoppel in

the teaching weeks related to co-ownership.
o An estoppel licence might arise where a landowner makes a representation (e.g. by
giving another person permission to come onto the landowner’s land).

The landowner will be prevented from revoking the licence if the licensee relied on the
landowner’s representation to their detriment (see Inwards v Baker [1965] 2 QB 29).

What are the Requirements to Establish an Estoppel has Arisen?

According to Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982], these are as
follows.

1. An assurance/representation by the landowner:

o by words or by conduct;
o relating to a property right. How precise the nature of the property right,
and indeed the land over which it is being claimed, needs to be has been
the subject of discussion in two leading cases: Cobbe v Yeoman’s Row
Management Ltd  [2008] and Thorner v Major [2009]. In the former
commercial case, whilst the identity of the property had been certain,
there was complete uncertainty as to the nature of the property right
promised to Cobbe. (Furthermore, since the parties had intentionally not
entered into a binding contract, it was not deemed unconscionable for the
landowner to go back upon its assurance.) Whereas in the latter domestic
case, the property right was held to be ‘clear enough’, despite being
drawn from inferences and, although the precise extent of the farmland
over which the right was being claimed had not been agreed in advance,
it was understood to be whatever the extent of the farm at the time of the
landowner’s death.

2. Reliance:
o ie that the claimant changed their position as a direct result of the assurance.
With no such causal link, no estoppel will arise: Coombes v Smith [1986];

o  which must be reasonable and will be presumed unless the party contesting
the estoppel can show otherwise: Greasley v Cooke [1980].

2. Detriment:

o to be judged at the moment when the person who has given the assurance
seeks to go back on it: Gillet v Holt[2000];

o which may include financial expenditure (eg building a bungalow: Inwards

v Baker [1965]) or a quantifiable financial loss (eg reduction in
wages: Suggitt v Suggitt [2012]) or a change to circumstances (eg Crabb v
Arun DC[1976] where land, providing an access route, was sold following
assurances that access would be available over alternative property).

3.   Unconscionability:
o not enough merely to disappoint the expectations of another—rather, it must
be unjust for the landowner to deny the assurance(s) made by relying upon
his strict legal rights;
 o the conduct must ‘shock the conscience of the court’, Walker LJ in Cobbe v
Yeoman’s Row Management Ltd[2008].
Remember, in Gillet v Holt [2000] Walker LJ, in approving these requirements, noted that
the court must look at the matter ‘in the round’ and that unconscionability would be the
central factor.

The Remedy?

Establishing an estoppel gives rise to an ‘equity’ which is an inchoate equitable proprietary

right to go to the court to seek a remedy. This inchoate right will crystallise into a specific
interest once the court order has been made.

It is up to the court to determine the nature of the remedy to be awarded. Often, this will
simply involve giving effect to the assurance, and indeed no award should exceed that
assurance: Orgee v Orgee [1997]. Sometimes, the court’s approach is to compensate for the
detriment suffered. With either approach, the basis of the award should be ‘the minimum
equity to do justice’ (Crabb v Arun DC [1976]) with the court ensuring that there is
proportionality between the detriment and remedy awarded: Jennings v Rice [2003]. This
might require the court to do nothing at all, as in Sledmore v Dalby [1996], or could go as far
as entailing the transfer of the fee simple, as in Dillwynn v Llewellyn (1862).

Enforcement Against Third Parties

Section 116 Land Registration Act 2002 provides that an equity by estoppel ‘has the effect
from the time the equity arises as an interest capable of binding successors in title’. Thus, the
inchoate and uncrystallised ‘equity’ can bind a third party where it has been protected in the
appropriate way.

1.  Where title to land is registered, it will be protected and enforceable against a

third party where a notice has been entered on the charges section of the register. It
is also potentially enforceable as an overriding interest under Sch 3 para 2 should
actual occupation and the various conditions under this provision be satisfied .

2.  Where title to land is unregistered, the enforceability of the equity against a

third party will be dependent upon the doctrine of notice .
What is also clear is that once the court has granted a remedy, any subsequent enforcement
against a third party will depend upon the nature of the remedy granted.

Case Facts Principle

Ashburn Anstalt v Arnold A shop was purchased for Contractual licences are not
[1989] Ch 1 the purpose of development. proprietary interests and
It was sold to the purchaser cannot bind third parties.
expressly subject to a However, where the facts
licence whereby the licensee are such that a constructive
would retain the shop rent trust or estoppel arises,
free until the redevelopment protecting the licence, the
took place. It was held that licence may be enforceable
 the purported licence was in against a third party.
fact a lease and this was
deemed binding upon the
purchaser.
Cobbe v Yeoman’s Row C, a property developer, For an estoppel to arise, the
Management Ltd [2008] reached an oral agreement property right being
UKHL 55 in principle with YRM to promised must be
buy its property after which sufficiently certain. There
C spent considerable sums must be unconscionability
obtaining planning to rely upon an estoppel
permission. The owner than arising. (Here, the parties
refused to proceed on the having entered into a
agreed terms. The House of ‘gentleman’s agreement’
Lords held that C was not had not shown any intention
entitled to any remedy based for the agreement to be
upon proprietary estoppel. binding and thus there was
nothing unconscionable
about YRM going back on
its assurance.)
King v David Allen & Sons A contractual licence was Contractual licences are not
[1916] 2 AC 54 granted to allow the licensee capable of binding a third
to affix posters to the wall party.
of the licensor’s cinema.
The right to do so was found
not to be binding against a
third party.
Pascoe v Turner [1979] 1 A man encouraged his Where a licence protected
WLR 431 mistress to make by an estoppel has been
improvements to a house on infringed, the appropriate
the assurance that it would equitable remedy will be
be hers. When the man tried determined in accordance
to evict her, the court found with making sure that
that an estoppel had arisen justice is achieved for the
and ordered that the wronged party.
freehold in the property be
transferred to her. The
assurance that she had acted
upon to her detriment was
met.
Thorner v Majors [2009] D had worked on P’s farm For proprietary estoppel to
UKHL 18 unpaid for almost 30 years. arise, assurances given must
D was attempting to claim be ‘clear enough’ and must
title to the farm through relate to identified property.
proprietary estoppel. There
had been no express
statement that D would
inherit. Rather, D relied
 upon inferences and the fact
that P handed D a bonus
notice relating to two
policies on P’s life saying
‘That’s for my death duties’.
This combination had given
rise to an estoppel.
Verrall v Great Yarmouth An attempt to revoke a An order for specific
BC [1981] QB 202 contractual licence granted performance may be
to the National Front in awarded where a licensor is
respect of hiring a hall for refusing entry to a licensee
its annual conference, was who has a contractual right
met with an order of to enter.
specific performance against
the licensor to enforce the
licence.
Winter Garden Theatre A contractual licence to An injunction could be
(London) Ltd v Millennium present plays in the awarded to prevent a
Productions Ltd [1948] AC licensor’s theatre was premature termination of a
173 deemed to be revocable contractual licence in
upon giving reasonable circumstances where it was
notice. intended to be irrevocable
until a purpose had been
fulfilled or a period of time
completed.

Key Facts

• A licence is permission given by the licensor to the licensee to allow the latter to enter the
land of the former which, without such permission, would otherwise amount to a trespass.

• A licence should be distinguished from a lease .

• Different types of licences will have different rules in relation to the original parties and
successors in title.

• A bare licence is revocable by the licensor and does not bind a third party.

• A licence coupled with an interest, ie a profit à prendre, may be irrevocable and may bind a
third party whilst the interest remains.

• Contractual licences are licences that arise under the terms of a contract. Revocation may
lead to breach of contract and the intervention of equity to enforce the licence for the benefit
of the licensee. Modern orthodoxy suggests such licences cannot bind third parties unless
protected by an estoppel or constructive trust.
• An estoppel licence arises as a result of a representation by the licensor and a detrimental
reliance by the licensee. It is binding between these two parties but is also capable of binding
a third party.
• The key requirements to establishing an estoppel are:
– assurance;
– reliance;
– detriment;
– unconscionability.

• To satisfy the equity arising by estoppel, the courts have discretion as to the remedy to
award but are guided by principles of proportionality and awarding the minimum to do
justice.
• The inchoate equity arising by estoppel may be binding upon third parties.