Decision of the House of Lords in Street V Mountford

Decision of the House of entitles in Street V MountfordThe decision of the House of Lords in Street v Mountford in 1985 represented a sea-change in the approach of the dallys (metalworker R, Property Law 6th edition (2009) p. 354, Longman Press). Discuss in the context of the courts approach to the distinction amongst requires and licences.IntroductionMany cases prior to Street v Mountford1 had attempted to identify the difference among a right to possess place down and a person-to-person right to occupy primer. Lord Denning explained the difference as the char operationer and quality of the occupancy.2 In other words, a legal right of pocket monomania of the land for a term3 would constitute a lease, and a mere permission to use land would amount to a licence. The exclusive monomania test formal by the House of Lords in Street v Mountford, per Lord Templeman, was that an house physician would non be a tenant if he had no exclusive possession for a definite duration. This case has now been regarded as having marked a sea-change in land law.The distinctions to be drawn between leases and licencesThere are indisputable reasons why the courts take aim sought to distinguish between licences and leases. Different statutory protections exist for both. The real problem, however, is in how the courts have attempted to draw the line between leases and licences, particularly in the light of the exclusive possession test4. The courts first concern would be that the term licence is too broad it covers approximately all types of permission. When we use the term licence in relation to land, however, we mean, not merely a personal right to occupy the land simply excessively, a right to use the land in any way. However, such right can be distinguished from a proprietary right5. In licences, the individual safekeeping the licence (i.e. the licensee) has, in general, no right to exclude others from the land (including the landowner). A difficulty therefore arises in circumstances where the licensee has the full right (including where s/he has been granted exclusive possession) to occupy the land. In this context, as shall be discussed below, Lord Denning stated that exclusive possession does not inevitably equate to the grant of a lease, particularly if the parties did not intend to create a tenancy. Although the test in distinguishing between licences and leases does assist in practice, such test is not as sincere (at least in theory) as one might first expect.Difficulties in distinguishing between leases and licencesAccording to Lord Templeman, the exclusive possession test is conclusive a person granted exclusive possession must have a lease. However, it does not necessarily mean that one has a lease even though the courts have tended to adopt this approach. Furthermore, it is not easy to fancy the exclusive possession test in practice. The first problem for the courts to consider would be when the grant of a right to occupy la nd should amount to a grant of a lease for possession. The same problem also arises in the definition of certain duration.An underlying issue arising out of the first problem would be for the courts to distinguish between possession and line6. The sum of possession and occupation are not exactly the same. The inconsistent use of the term occupation and the term possession in the Street v Mountford judgment somewhat confused the understanding of the concepts of exclusive occupation and exclusive possession. Lord Templeman also failed to distinguish whether those concepts were statements of legal entitlement or statements of fact. Nevertheless, according to the judgment read as a whole, the term occupation should refer to the fact that an occupier merely enjoys the occupation of the land. The term possession should refer to those situations where the occupier has the right to enjoy land and exclude all others (including the landowner) from the land. Lord Templeman sought to distingu ish leases and licences in the following waysOccupation is not sufficient for the occupier to grant a lease exclusive possession is essential.No lease is granted when there is no exclusive possession. Even though an occupier has exclusive possession the landowner and the occupier may have no intention to create a legal affinity or the intention may be negatived by the facts of the case those occupations should not amount to the grant of lease. The latter(prenominal) factor is sufficient to distinguish between lodgers and tenants in circumstances such as renting a hotel room.In the absence of those negative factors, the possession held by the occupier should amount to exclusive possession.When the occupier has been granted exclusive possession for a certain period and at a rent, the grant of a lease should be presumed.Although the occupier has exclusive possession and the right to exclude all others from the land, the right granted might be considered to be something other than a lease such as fee simple ownership.Prior Street v Mountford, the element of exclusive possession was not a requisite requirement to be considered.7 However, Lord Templeman confirmed that the consideration of exclusive possession was necessary and conclusive. He further developed the principle expounded by Lord Denning the nature and the quality of occupation is essential to determining whether the occupation is a lease or a licence.8 Lord Denning stated that although exclusive possession could be considered as the main element in deciding whether an occupier has granted a lease, it does not necessarily mean that an occupier who grants exclusive possession is not necessarily granting a lease. Nevertheless, a person in occupation has no tenancy if he has no exclusive right in the land. Lord Templeman explained that the intention of creating a legal relationship is also important to distinguishing between a lease and a licence. However, the subjective intention between the occupier an d landowner is irrelevant the court should look at the objective agreement, i.e. whether the parties intended to create a legal relationship. First, the parties cannot assume that the label attached to the agreement will be conclusive.9 Secondly, the parties agreement cannot act as a device in order to disguise10 the grant of a tenancy.11 Thirdly, specific provisions within the agreement may be ignored by the court if the environ circumstances suggest that those provisions could not have been intended to form part of the agreement.12 It has been held that a time limitation may apply (in this case between 1030am to noon) in respect of exclusion of persons from a property.13 Finally, if the occupier shares occupation with others, the court may read the relevant agreements together and divvy up those agreements as one transaction, even if the facts suggest that those occupiers relationships are interdependent.14The House of Lords reaffirmed these principles in the latter case Burrow s v Brent LBC15. In that case, the landowner granted a possession order against the tenant for un remunerative rent. They agreed temporarily not enforce the order and to pass on the tenant to remain in occupation if she paid a sum equivalent to the rent due. Applying those principles to this situation, it was held that the parties had not intended to create a legal relationship, and the tenant therefore was considered a tolerated trespasser.Lord Millett16 also confirmed the principle that exclusive possession on its own is not sufficient for the granting of a lease, but that occupation with the identification of a legal relationship between the occupier and the landlord is an essential consideration. Lord Millett therefore regarded Street v Mountford17 as a significant authority for the proposition that a person in occupation or possession may be regarded as merely a licensee if there is no legal relationship. Notwithstanding the fact that the debate intimately the definition of l egal relationship will be ongoing, the differences between leases and licences may be distinguished by the degree of possession. If soul who is purely retentiveness a personal right to occupy land without a legal relationship, then such right will, in most cases, be a licence. Alternatively, if someone grants a right to exclude all others from the land in question, including the landlord, for a certain period of time, then such right may be called a lease.The terminology problem of the words possession and occupation appear to have been solved by the cases which were decided after Street v Mountford18. The debate surrounding the meaning to be given to certain duration, however, still remains alive. Lord Denning posed what would the court do if the occupier has been granted exclusive possession of land without certain duration?19 In law, if a landlord grants an occupier (who pays rent) exclusive possession of a property without certainty of duration, the occupier will have a semim onthly tenancy (demonstrated by the payment of a periodic rent) rather than a licence.20 This case reaffirmed that the element of exclusive possession is the most important consideration to the granting of a lease.Nevertheless, the distinction between the tenant (leaseholder) and the lodger (licensee) is very significant21. Case law has established that the distinction will arise from the fact that an agreement might allow a landowner to exercise unrestricted rights to use or access property, and not simply from the provision that the landowner provides service to such property.22 An extra consideration for the courts, established by one particular case, was to examine the extent of the right which the landowner actually has to exercise.23 By reference to that approach, it will become go along whether there is a tenant or a lodger to property.24Another significant impact which Street v Mountford25 has made in the context of judicial proceeding has been in relation to the duties of local authorities to provide accommodation for the homeless under the Housing Act 1985 (now Part VII of the Housing Act 1996). The motor inn of Appeal has held that although an occupier has been granted exclusive possession, a local authority might have had provided accommodation pursuant to its statutory duties towards the homeless which will have the effect of negating the intention of creating a legal relationship between the parties.26 However, if the accommodation was provided by a housing association or an judicature other than the local authority (even on referral from the local authority), the background of homelessness will not negative the intention of creating a tenancy as such an association or organisation does not exercise any statutory duty.27 Therefore, the House of Lords affirmed that the duties of local authority were held to negative the intention of creating a lease even though the occupier was granted an exclusive possession of the property.28In the case Bur ton v London and Quadrant Housing Trust, since the agreement in question stated that the housing charge had no legal title to the property and the parties had attempted to create a licence rather than a lease, the Court of Appeal held that there was no lease because the housing trust had no legal title to the property. However, the House of Lords found that legal title was not relevant.29 Nonetheless, the distinction between licence and lease in this context (under statutory duty) has been reduced by the Housing Act 1996, section 216(3), Schedule 17, para 3.Having regard to the Housing Act 1996, the Court of Appeal held that granting exclusive possession under the statute would not amount to the creation of a lease. This rule also applies to the relationship between beneficiaries and trustees the trustee has the power to grant the right, but the grant of a lease may intrude upon the trustees duties.30ConclusionAlthough the rules of Street v Mountford31 apply in cases of residentia l occupation, certain principles deriving from it such as the distinction to be drawn between lodger and tenant may not be applicable in certain circumstances. The basic elements of exclusive possession and the nature and quality test will, however, be applicable in the commercial occupation context. Nevertheless, we should note that Street v Mountford32 was a case of a angiotensin-converting enzyme occupier. Multiple occupation may, therefore, lead to a more complicated situation, which Lord Templeman has not discussed.(2,333 words)BibliographyTextsGravells N P, let down Law Text and Materials (1999) Street Maxwell, LondonDixon M, Principles of Land Law (2002) Cavendish Publishing Ltd, LondonOakley A J, Megarrys Manual of the Law of Real Property (2002) Street Maxwell, LondonClarke A and Kohler P, Property Law comment and Materials (2005) Cambridge University Press, CambridgeArticlesWilkinson H, The lease licence distinction. Again? (2001) NLJPawlowski M, Contractual licences , personal tenancies and tenancies at will (2001) L T Review 2001, 5(6), 117-118Colbey R, Detecting a sham (2001) NLJMorgan J, The changing meaning of dwelling-house (2002) CLJ 61(2), 312Grundy N and Joss N, Landlord and tenant update (2006) SJ 805Peachey L, Elements of a tenancy cognizant and assured shortholds (2007) HLM 14 5(5)CasesErrington v Errington and Wood 1952 1 KB 290Radaich v Smith (1959) hundred and one CLR 209 at 222Marchant v Charters 1977 3 All ER 918Street v Mountford 1985 AC 825Markou v Da Silvaesa (1986) P CR 204Brooker Settled Estates Ltd v Ayers (1987) 54 P CR 165AG Securities v Vaughan (1988) 56 P CR 168Hadjiloucas v Crean 1988 1 WLR 1006Ogwr BC v Dykes 1989 1 WLR 295Aslan v potato (No. 1) 1990 1 WLR 766Antoniades v Villiers 1990 1 AC 417Duke v Wynne 1990 1 WLR 766Family Housing connective v Jones 1990 1 WLR 779Prudential Assurance Co. Ltd v London residual Body 1992 2 AC 386Westminster City Council v Clarke 1992 2 AC 288Burrows v Brent LBC 1996 1 WLR 144 8Gray v Taylor 1998 1 WLR 1093Family Housing tie beam v Jones 1999 3 WLR 150Ramnarace v Lutchman 2001 UKPC 251Footnotes1 Street v Mountford 1985 AC 8252 Marchant v Charters 1977 3 All ER 9183 Radaich v Smith (1959) 101 CLR 209 at 2224 The lease licence distinction. Again? (2001) NLJ5 Contractual licences, personal tenancies and tenancies at will (2001) L T Review 5(6), 116-1186 Elements of a tenancy assured and assured shortholds (2007) HLM 14 5(5)7 Hadjiloucas v Crean 1988 1 WLR 10068 Errington v Errington and Wood 1952 1 KB 2909 Duke v Wynne 1990 1 WLR 76610 Detecting a sham (2001) NLJ11 ibidem12 Aslan v Murphy (No. 1) 1990 1 WLR 76613 Antoniades v Villiers 1990 1 AC 41714 AG Securities v Vaughan (1988) 56 P CR 16815 Burrows v Brent LBC 1996 1 WLR 144816 Ramnarace v Lutchman 2001 UKPC 2517 Ibid.18 Ibid.19 Ibid.20 Prudential Assurance Co. Ltd v London Residuary Body 1992 2 AC 38621 The changing meaning of dwelling-house (2002) CLJ 61(2), 31222 Markou v Da Silvaesa (1986) P CR 20423 Ibid.24 Brooker Settled Estates Ltd v Ayers (1987) 54 P CR 16525 Ibid.26 Ogwr BC v Dykes 1989 1 WLR 29527 Family Housing Association v Jones 1990 1 WLR 77928 Westminster City Council v Clarke 1992 2 AC 28829 Family Housing Association v Jones 1999 3 WLR 15030 Gray v Taylor 1998 1 WLR 109331 Ibid.32 Ibid.