“The right to busy land in return for payment is consistent with the grant of a rental or a contractual license, nevertheless, the effects of the two options are really different” ( 1 )The ground for this difference is because under the Land Registration Act 1925, merely a rental is a legal involvement in land and is capable of enrollment. This affords the leaseholder a significant figure of rights including the ability to delegate the involvement. In contrast, a license is basically simply a personal right and can be revoked by a licensor much more easy than finding a rental. Licensees are besides non protected by the Rent Act 1977 and this means that leaseholders have a much more unafraid security of term of office. It is indispensable to set up the tribunals reading as to whether a rental or a license has been granted as it can avoid possible dearly-won differences in the hereafter.
Law prior to Street V Mountford
In the instance ofLynes Vs Snaith [ 1989 ] 1 QB 486that courts decided that the fact that the suspect had sole ownership of the belongings concerned, was declarative of the presence of a rental and non simply a license. The instance ofFacchini a Bryson [ 1952 ] 1 T.L.R. 1386restated this place and held that,“provided the other indispensable features of a rental were present, the grant of sole ownership determined once and for all that the resident was a tenant.”( 2 ) This remained the legal place refering to rentals until the mid-Nineteenth century, when the tribunals proceeded down a different path. There were a series of legislative alterations in the mid 1970’s that resulted in the place of leaseholders being much strengthened in comparing to their licensee opposite numbers. As a consequence landlords, devised a method of short-circuiting the statute law by guaranting that they merely granted licensees over their belongings. Landlords created a device called a “non-exclusive business agreement” to avoid supplying there renters with the increased protection of the new statute law. These understandings basically were a statement by the renter that they were non entitled to sole ownership of the belongings concerned and they agreed to portion the belongings with any individuals whom the landlord decided to put at that place. Surprisingly, the tribunals upheld one of these understandings in the instance ofSomma V Hazlehurst and Savelli [ 1978 ] 1 WLR 1014. It was stated in the judgement of this instance by Cumming-Bruce L. J. that,“We can see no ground why an ordinary landlord…should non be able to allow a license to busy an ordinary house. If that is what both he and the licensee intended and if they can border any written understanding in such a manner as to show that it is non truly an understanding for a lease…” ( 3 )
Principles Established
In the instance ofStreet V Mountford ( 1985 ) A. C. 809, it was established that the make up one’s minding factor in finding whether a rental or a license was created was the fortunes underlying the understanding and non either the content of the understanding itself or the purpose of the parties concerned. Lord Templeman commented in his judgement that,“where the lone fortunes are that residential adjustment is offered with sole ownership for a term at a rent, the consequence is a tenancy” . ( 4 )Three trademarks of a rental were enunciated in this instance and they were every bit antecedently mentioned: sole ownership of the belongings, for a fixed or periodic clip and at a rent. If these conditions were present, irrespective of the content of the understanding between parties, the consequence was a occupancy. However, the presence of sole ownership in the agreement will be the determinant factor. This is the indispensable feature to find whether a occupancy has been granted. The substance of the dealing as a whole must be examined to bring out if the resident concerned has an existent right to sole ownership. Assuming the resident has sole ownership, he will be presumed to be a renter in the absence of any factors to the contrary. The most of import thing to take from the Templeman judgement is that “…the trial ( used to set up whether a rental or a license existed ) was one of fact non form” ( 5 )
It should be borne in head that this instance did non wholly sideline the parties’ purpose when they entered into the dealing. “The purpose of the parties is of import in make up one’s minding whether or non they intended to come in into legal dealingss, or whether the dealing was a mere household agreement or an act of friendly relationship or generousness. This differentiation as raised inFacchini V Bryson [ 1952 ] 1 TLR 1386is still every bit applicable to modern understandings, as it is one of the cardinal demands of contract jurisprudence and without it, no contract can be.
How jurisprudence has developed later
There has been a big figure of of import instances in this country, that have clarified the legal place as respects to the differentiation between rentals and licenses as expressed inStreet V Mountford.The payment of rent has been held to non be an indispensable feature of a valid enforceable rental. Since common jurisprudence and the definition of a rental in the Law of Property Act 1925, does non province that a rental has to be for a peculiar rent, it follows that this should non be held as an indispensable constituent, that could forestall an agreement being defined as a occupancy. This attack was demonstrated by the instance ofAshburn Anstalt v Arnold [ 1989 ] Ch 1. In this state of affairs the tribunals decided that an understanding affecting a concern busying a premises rent-free but paying outgoings was a rental and non a license. Another affair to be considered in this instance was that of uncertainness of continuance. Fox LJ stated in his judgement that the agreement,“could be brought to an terminal by both parties in fortunes which are free signifier uncertainness, in relation to the continuance of a term that the parties do non cognize where they stand. Put another manner, the tribunal does non cognize what to implement. That is non the place here.” ( 6 )Another interesting instance isStribling V Wickham [ 1989 ] 211 HLR 381. In this state of affairs there were several factors the tribunal took into consideration when make up one’s minding that the agreement was a license and non a rental. The most influential factor, was that the three residents were each separately responsible for the payment of their proportion of the rent. The other consideration the tribunal reviewed was how the business of the occupants was terminable. The fact that the landlord, or any one of the occupants was able to stop the business, by giving the other party 28 yearss notice was viewed as important to the result of the instance.
The instance ofOgwr BC V Dykes [ 1989 ] 1 WLR 295has demonstrated that in certain state of affairss sole ownership is non sufficient to make a occupancy. In this state of affairs, the residents had in fact been granted sole ownership of the belongings, nevertheless it was granted this by the local authorization, pursuant to their statutory responsibilities. It was held that the statutory responsibility under which the local authorization was runing was sufficient to refute the given that a occupancy had been created.
The state of affairs associating to a multiple tenancy understanding was looked at by the tribunals inAG Securities V Vaughan [ 1990 ] 1 AC 417.This instance involved a landlord who had granted four people, four separate understandings to busy a belongings, which he owned. The consequence would be, they jointly would hold sole usage of the belongings. The tribunal decided that the four understandings were independent of one another and that the right of sole business was non conferred on any one individual. Situations of this sort can bring forth complex legal issues and finding the issue of sole ownership is more hard in agreements of this sort.“In the context of multiple or shared business, legal word picture of the agreement is non a simple pick between license and occupancy: the residents may be licensees ; they may be joint renters of the whole belongings ; or they may be parallel renters, each resident holding a occupancy of a separate portion of the property.” ( 7 )
The tribunals held inWestminster City Council v Clarke [ 1992 ] 2 AC 288that in state of affairss where a local authorization is under an duty to supply support for a peculiar person, the intervention of the agreement needs to be viewed in visible radiation of these duties. In this instance the tribunal was non prepared to deduce that a rental had been created in favor of the suspect, because of his homeless background and the fact that the local authorization had provided him with sole ownership of the belongings out of a statutory duty. A similar state of affairs existed in the instance ofCamden LBC v Shortlife Community Housing Ltd [ 1992 ] 90 LRG 358and the consequence was besides the same in this instance. In Gray v Taylor [ 1998 ] 1 WLR 1093 the Court of Appeal held that in a state of affairs affecting a almshouse, despite the fact that sole ownership had been granted, no occupancy had been created.
It was held inMikeover Limited V Brady [ 1989 ] 3 ALL ER 618,that“two indistinguishable understandings which conferred on the residents the joint right of sole business did non make a joint occupancy because the duty of each licensee to pay portion merely of the rent was truly intended to be wholly independent of the duty of the other licensee” ( 8 )This instance shows the tribunals reluctance in certain state of affairss to deduce a occupancy unless it is clearly evident that one exists when all the fortunes of the understanding are analysed.
The one factor that has been confirmed throughout the last 20 old ages, is the necessity of sole ownership for a rental to come into being. The instance ofDellneed Ltd V Chin [ 1986 ] 53 172is merely one illustration of the tribunals continuing this specifying rule.
Decision
The jurisprudence environing the distinction between rentals and licenses has been in a changeless province of flux for the past hundred old ages, but at that place does now look to be wide understanding as to precisely what will represent a rental and what will non. The consequence of the Rent Act 1977 and assorted amending statute law, on individuals involved in residential agreements for adjustment has been markedly reduced since the debut of the Assured Tenancy and the Assured Shorthold Tenancy by the Housing Act 1988. This has had the consequence of cut downing the antecedently strong rights of renters, particularly affecting security of term of office. There are nevertheless many occupancies that were created prior to the Housing Act 1988 and those will still be afforded the protection of the old statute law. The consequence of the current legal stance on the difference between the creative activity of rentals and licenses is still of great importance to concerns and it is an country that has been invariably litigated over since the Templeman judgement.
Footnotes
- Land Law: Text and Materials ( 2neodymiumEdition ) – Nigel P. Gravells ( Sweet and Maxwell, 1999 ) p361
- Land Law: Text and Materials ( 2neodymiumEdition ) – Nigel P. Gravells ( Sweet and Maxwell, 1999 ) p363
- Somma V Hazlehurst and Savelli [ 1978 ] 1 WLR 1014 at 1024-25
- Street V Mountford [ 1985 ] AC 809 at 426
- Megarry and Wade – The Law of Real Property ( 7ThursdayEdition ) – Charles Harpum, Stuart Bridge and Martin Dixon ( Sweet and Maxwell, 2008 ) p737
- Ashburn Anstalt v Arnold [ 1989 ] Ch 1 at 716
- Land Law: Text and Materials ( 2neodymiumEdition ) – Nigel P. Gravells ( Sweet and Maxwell, 1999 )p385
- Land Law: Text and Materials ( 2neodymiumEdition ) – Nigel P. Gravells ( Sweet and Maxwell, 1999 )p385
Bibliography
Cheshire and Burn’s Modern Law of Real Property ( 17ThursdayEdition ) – E. H. Burn and J. Cartright ( Oxford University Press, 2006 )
Megarry and Wade – The Law of Real Property ( 7ThursdayEdition ) – Charles Harpum, Stuart Bridge and Martin Dixon ( Sweet and Maxwell, 2008 )
Land Law: Text and Materials ( 2neodymiumEdition ) – Nigel P. Gravells ( Sweet and Maxwell, 1999 )
Landlord and Tenant ( 3rdEdition ) – Mark Pawlowski and James Brown ( Oxford University Press, 2005 )
www.lexisnexis.co.uk
www.lawtel.co.uk
