DENNING LAW SCHOOL – ABDULQADIR NAEEM

PROPERTY LAW

LEASE – LICENSE DISTINCTION

A lease is a proprietary right which cannot be revoked at will, it creates a landlord tenant
relationship where basic enmities have to be provided by the landlord. This right attaches to
the land and not to the person.
A license on the other hand is a personal right which can be revoked at will and does not
create a landlord tenant relationship. It is a contractual right which is attached to the person
and not to the land.
Initially the courts adopted a subjective approach, where they would take the title of the
agreement to be the kind of relationship that is upheld. This created injustices since
landlords would almost always title the document as licenses so that they can be revoked
whenever the landlord wanted. Even though the format of the entire agreement would be
of a lease but the title would be changed, hence the tenants would sign such document
believing that they were protected.
The courts noticed this discrepancy and in the case of Street v. Mountford laid out an
objective criteria where the courts would now consider substance over form that is to look
at the entirety of the document and not just the title. They were now to consider whether
the document gives exclusive possession (the “EP”), have a term certain (the “TC”) and a
rent charge (the “RC”). If all three are present then it will be a valid lease.
Exclusive Possession:
The grant of exclusive rights over the property such that even the landlord himself needs
permission to enter the premises. To determine this the courts will consider substance over
form and also see whether any clause that is added is genuine or a sham device. If a clause
is genuine then EP will be negated however, if it is a sham device, then EP will be proved.
In the case of Aslan V Murphy, the courts stated that retention of keys will not negate EP, it
will prove it.
Limited rights of entry such as checking water leakage or doing a welfare check or visiting
once a year will not negate EP but it will further prove EP (Street V Mountford).
If services are provided genuinely such as room cleaning service, laundry service as given by
hotels, then EP cannot be proved, however, if a clause states that service will be provided
but this is a sham device and no service is given then EP will be proven (Desilvesa, Street v.
Mountford).
If an owner gives the tenant such control that even though the owner cannot enter without
the tenant’s permission then this will be considered as EP.
In the case of Faccini V Bryson certain situations were laid out where EP may be proven but
will not be upheld.
1) Where there is no intention to create legal relations. As seen in the case of Jones V
Padvaton and Marcroft Wagons, where the parties were either family or had a
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PROPERTY LAW

friendship and were never under the impression that there would be any legal rights
claimed to the property.
2) If there is a service occupancy where due to the occupation the employee is given a
property to reside in for better performance of services (Norris V Checkfield).
3) Where a public body or a council provides homeless with housing facilities. This is for
public policy reasons since giving leases to the homeless for shelters would not only
be unfair but would also disrupt the housing situation developed for the homeless.
4) Where there is an enforceable sales contract in the possession of a person, and they
begin to reside there, even though there is EP it will not be upheld since he was
interested with selling the property.
5) Where a person is in possession under a defaulted mortgage and begins to reside
there or claim a lease, although there will be EP but it will not be upheld since the
purpose of the property is only to sell.
General Point: Generally, you cannot claim EP for advertisement boards and there is no
exception to it (Clear Channel UK).
TERMS CERTAIN:
This is the maximum duration that has to be mentioned in a lease. If it is specified, then
an earlier termination will also be held as valid.
Lace V Chantler:
The end term of the lease was specified as “when the war ends.” The courts held that
this was an uncertain term and could not be considered as lease.
Ansalt V Arnold:
In this case the landlord specified that there will be a quarters (3 months) notice to be
removed from the property, although there was no maximum duration outline, it was
considered to a lease since the term certain.
Prudential Assurance:
the company agreed with the council to use the property for 30 pounds per annum till
the time they will need to widen the road and include the property, the road widening
never happened and the company enjoyed the property for 60 years at the same rate.
The courts considered that this term was uncertain and therefore did not consider a
lease.
Terms certain is considered as “a judicial gloss” and is heavily criticized. In the case of
Berrisford v Mexfield the courts created an exception where they would automatically
convert a lease to the maximum duration of 90 years which is a lease of life that is
terminable at the occurrence of any uncertain event. This was reiterated in the case of
Hardy V Haseldane but it was also highlighted that such lease cannot be given by
company.
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PROPERTY LAW

In the instance where there is a clause that rent is payable weekly/fortnightly/monthly

Bruton Tenancies:
In the case of Bruton the courts decided that a license holder cannot give a lease.
However, they can give a non-proprietary lease (NPL) which will be a personal right but
will create a landlord tenant relation and will be attached to the person. This is an
extremely criticized case since it completely abolishes the distinguishing factors between
a lease and a license. This creates confusion and cannot ensure for a layman whether
they have entered into a lease or a license.
Walsh v. Longsdale:
This is when an agreement is signed which is a lease but cannot be upheld as a lease,
such as the instances of Facinni. Then there need to be two conditions which are met to
establish a lease:
1) The tenant should have clean hands which means that the tenant is not coming with
any ill-intent or fraud.
2) The money/rent and the possession has been given.
If these two points are met, then it can be considered as a lease.
From the concepts laid out under Bruton and Walsh, the distinguishing factors have
been completely blurred and there is no longer a clear line dividing the two.
Multiple Occupancies:
In order to have a lease which is co-owned jointly under S.1(6) of LPA 1925, four unities
need to be proven:
1) Unity of time
2) Unity of title
3) Unity of possession
4) Unity of interest
This was represented in the case of Antoinades where a husband and wife were made to
sign two different agreements and based on unity of title this could not be held as a valid
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PROPERTY LAW

joint lease. However, the courts in this case decided that this was not because the
landlord was genuine but it was being used as a sham device to disprove a joint lease.
In the case of Mikeover V Brady, the courts decided that if there are multiple tenants
who are made to sign different agreements who are paying different rents, this would
be considered as genuine, and the courts would not consider a joint lease.

Q) In May 2015, Alfie moved to London to start work as a teacher at Abbey Grove, a
boarding school, of which his uncle, Fraser, is the owner. Fraser agreed to allow Alfie to
live in one of two empty houses in Abbey Grove’s grounds for ‘four years or as long as you
are teaching at Abbey Grove’. Fraser hoped that if Alfie lived on the school premises it
would deter local children from committing acts of vandalism as well as ensure that Alfie
was never late for work in the morning. A month later, Fraser recruited three more new
teachers, Rosie, Martin, and Isobel. They also needed somewhere to live. Fraser offered them
the other empty house in the grounds of Abbey Grove. All three signed the same deed with
Fraser. It was headed: ‘License Agreement’, and provided that each of them would pay
Fraser £150 per week as an ‘occupation fee’. The agreement was for two years from the date
the three moved into the house. It also contained a clause by which the occupiers were to let
Fraser’s son, Leslie, stay overnight whenever he came to visit his father. As the house only
has three bedrooms Rosie asked Fraser how this could possibly work. Fraser mentioned that
there was a sofa bed in the living room and added that, as Leslie was working as a surfing
instructor in Western Australia, he was not expected to visit any time soon. The license
agreement also provided for Fraser to retain a key to the house . Advise Fraser, who
wants to know if Alfie, Rosie, Martin and Isobel are licensees or tenants of their respective
houses. (2016 Resit Zone A/B)
Summary of Facts
We understand that Fraser has granted occupational rights on her boarding school
Anney Grove to Alfie, Rosie, Martin and Isobel. In order to determine that whether
these occupational rights will be lease or a license.
Define Lease and license
We would like to point out that a lease is a proprietary right and creates a landlord-tenant
relationship in which the landlord is responsible for providing the tenant with basic facilities.
Whereas, in contrast, a licence is a personal entitlement, for which the landlord is not
required to provide any facilities and which can be cancelled at any moment. A license does
not establish a landlord-tenant relationship. It is a contractual right related to the individual,
not the land. As landlords favored issuing a licence and, owing to greater resources, could
comprehend the distinction better than potential tenants, they used to require tenants to sign a
"licence agreement" despite the fact that most tenants were unaware of its significance,
resulting in social injustice. Initially, the courts adopted a 'subjective approach' in which they
looked at the title of the agreement to determine the nature of the relationship between the
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PROPERTY LAW

parties, even if the format of the agreement was that of a lease, the courts would still examine
the title, which was predominantly that of a licence agreement.
Conditions set out in Street v. Mountford
However, the courts recognized this issue, and in the case of Street v. Mountford, they
established objective criteria where the courts will distinguish whether it’s a lease or a
license. Whereby the rights could only be considered a lease if three conditions were
satisfied, even if the title of the arrangement was licence agreement. Firstly, the courts need
to see whether the document gives exclusive possession (the “EP”) to the tenant. Secondly,
whether it was term certain (the “TC”) and lastly, whether there is a rent charged (the “RC”).
If all these three points are there then it will be considered a valid lease. We shall discuss the
case of A, R,M,I separately.
NOTE (if Multiple Parties involved)
Whenever multiple parties are jointly seeking a lease then if a lease is granted by the
courts it will be co-owned and pursuant to LPA 1925, a trust of land will be created and
the legal owners X and Y would have to be Joint Tenants and a pre-requisite of JT is
the presence of 4 unities of time, title, interest and possession. Therefore before moving
on to discussing EP , we need to determine whether 4 unities were present in the cpntext
of X and Y. we would like to highlight that the courts in determining the 4 unities will
look at the substance and not the form as stated in the cases of Antonaides (where a
couple was made to sing two separate agreements under the sham to negate unity of
title, but the courts considered it a one agreement since the couple had the intent to be
jointly bound by all leasehold obligations and it was absurd as to why 2 agreements are
present) whereas in Mikeover v. Brady (two friends wanted to live together but pay rent
separately so two agreements were signed separately and this would be considered as
two separate agreements negating unity of title).

The second aspect is to prove EP. We will analyze if X has EP over the land occupied. EP
means having full control of the such that the landlord himself cannot enter the premises
without permission of the tenant. In Street v. Mountford it was held that any sort of limitation
on entry or restricted access to the place of the landlord does not negate EP but only furtherer
strengthens EP. It was also held in this case that courts will consider the substance over the
form and see the true essence of the implementation of the clauses. If a clause is a sham, it
shall not undermine EP. Even if the landlord keeps a key of the land occupied that does not
negate the existence of the lease. In the case of Aslan v. Murphy possessing a key was not
sufficient to negate EP and it was held by the courts to consider if the landlord actually made
use of the key without the approval of the tenant. In our case, it appears that possession
has been granted by the landlord however, there are certain scenarios where tenant can
have exclusive possession but the agreement will still be considered as a license and not
a lease.
Argument 1(comes in every question) – Since the title mentions license agreement, EP
should be negated; however, the courts have stated in Street v. Mountford and Aslan v.
Murphy that labels are not conclusive and even if an agreement is labelled as a license, the
courts will look at the substance and not the form; therefore, it should not negate EP.
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Argument 2 – the second argument which can be raised to negate EP is based on the case of
Facchini v. Bryson which states that in a domestic and social context there are no intentions
and if there are no intentions, even if EP is granted that will be invalid, but the presumption is
rebuttable based on the facts. In our case, there is rent being charged and an agreement and
therefore the argument of no intention will be rebutted and EP will not be negated.
Argument 3 – The third argument is that the agreement contains a clause granting the
proprietor an unrestricted right to enter and remain in the home at any time, and that he also
kept a key. We must ascertain whether or not this would invalidate EP. In such cases, the
courts will consider the substance and not the form, and the mere presence of a clause will
not negate EP however, This clause was genuine and not a farce in the present context, as
evidenced by the fact that the proprietor (X) entered the property without permission and did
cleaning and other chores, proving that she had the right to do so which shows that this clause
was a genuine clause and not a sham. Therefore, EP will be negated even if other services,
such as cleaning, are also provided, and this can also neutralize EP if the cleaning services
were provided genuinely. In light of the preceding, we can conclude that EP will be negated;
however, for the sake of argument, we will examine whether or not the third condition of TC
is met.

Now we need to determine that whether the document was TC which means the maximum
duration that has to be mentioned in a lease. The term must start at a time certain and exist for
a definite period (Lace v. Chantler 1944). As per today’s law the maximum duration of the
contract should be certain (Ashburn Anstalt v. Arnold 1989). In our case…
Once TC is proved the next issue is to prove that rent was charged by the landlord. Rent
charged is not an essential characteristic to prove a lease but almost every lease involves
some payment charged by the tenant. However, if a lease is given by contract and not deed,
then without rent the contract will not be enforceable and it will be difficult to establish
intention of lease. In our case,