2. Rita owns a property which comprises a ground floor shop and a first floor, one-bedroom, flat.

The
flat and shop have separate entrances. In 2007, Rita agreed to grant Audrey a lease of the shop for
three years at an annual rent of £8,000, the rent to be paid in monthly instalments. The agreement
also provided that either party may terminate the lease by giving six months’ notice. The lease was
never signed; but Rita moved in and started paying rent each month.

Last year Rita agreed that her friend’s son, David, a trainee hairdresser, and his girlfriend, Tina, could
live in the first-floor flat. Rita drew up a “licence” agreement and insisted that David and Tina sign
separate copies. The agreements provide that they will each pay £300 per week as an “occupation
fee”; and that they will be able to live in the flat for three years “or until David completes his
training”. The agreement also states that David and Tina must vacate the flat so that it can be
cleaned every Tuesday between 12 noon and 2pm. David and Tina have always preferred to do all
their own cleaning.

Advise Rita about BOTH: (a) how much notice she needs to give Audrey to leave the shop; and (b) the
legal nature of the agreement she has with David and Tina. [2021/22 MA]
 (a)

Rita will be advised as to whether she and Audrey have a lease or license over the shop. A
lease is a proprietary right requiring certainty of duration, exclusive possession and rent
which concluded by Lord Templeman in Street v Mountford 1985. If any requirement is not
satisfied, they will possess only a license to occupy which is a personal right.
The first element, certainty of duration, the duration of the agreement between both parties
need to be certain. There are few arguments that may be advanced for certainty of duration.
Firstly, a fixed term tenancy. In Lace v Chantler 1944, the term of the lease was expressed to
last until the end of World War 2, it was held to be uncertain and hence there are no fixed
term of tenancy. In fact, there are fixed term tenancy between Rita and Audrey, which is 3
years.
Secondly, a periodic tenancy. According to Hammersmith & Fulham LBC v Monk 1992, a
periodic tenancy is a single unbroken term which perpetually elongates itself by the addition
of further periods, unless and until it is ended, with each payment being an endorsement of
the continuing lease. Moreover, the rule in Prudential Assurance v London Residuary
Body 1992 state that periodic tenancies are saved from being of indeterminate duration
because both parties can terminate the agreement on notice expiring at the end of each period.
It is the regularity of payment of rent that determines the length of one period. Evidently,
Audrey paid the annual rent of £8,000 in monthly instalment, so it considered as monthly
periodic tenancy.
Next, exclusive possession is the tenant has the legal right to exclude others from the property
without tenant’s permission include the landowner which explained by Lord Templeman in
Street v Mountford 1985. In here, there is no interruption of Audrey’s exclusive possession
of the shop that he lease with Rita.
Besides that, rent. Although payment of tent is not technically required to create a valid lease
which stated in s.205 (xxvii) LPA 1925, it is require here as there is no fix term. Based on the
facts, Audrey paid annual rent, £8,000, by monthly instalment method to Rita.
Aside from that, there are certain formality for creating a legally binding lease. According to
s.52(2)(d) and s.54(2) Law of Property Act (LPA) 1925, lease for 3 years or less need not
required by law to made in writing, equivalently it can be made by written contract or by
deed. Evidently, it held that the lease between Rita and Audrey is legally binding even though
the lease did not signed because the lease for 3 years can be made by deed.
All in all, it is more likely that the agreement between Audrey and Rita is lease, so Rita need
to give six months’ notice for Audrey to leave the shop within these 3 years.
(b)
Rita will be briefed whether her agreement with David and Tina is a lease or a license.
Certainty of duration, exclusive possession and rent is the three main elements of a lease
aforementioned. In the aspect of certainty of duration, the duration in the agreement “there
years or until David completes his training” is uncertain it is not known at the outset when
David and Tina will leave, similar to Lace v Chantler 1944 as mentioned. Other than fixed
term tenancy, there is periodic tenancy will be considered by taking into account of the
regularity of payment of rent. In here, David and Tina paid £300 per week and hence it is a
weekly periodic tenancy.
Besides that, lease for life. According to s.149(6) LPA 1925, any lease at a rent life shall take
effect as a lease for a term for a term of 90 years, which shall be determined by the death of
the original lease or by one month’s written notice. It is affirmed in Mexfield Housing
Cooperative Ltd v Berrisford 2012 by Lord Neuberger stated that the lease was not void for
uncertain term. Additionally, in Southward Housing Cooperative v Walker 2015, court
held even if the parties anticipated that the defendants in this case would stay at the property
for a long time, it was not their intention that they should be legally entitled to enjoy the
premises for life. In this circumstance, since the maximum David and Tina’s duration is not
known in advance, it is possible that this arrangement could carry out for the rest of their
lives. Following Berrisford, this can be treated as a life tenancy, which converted into a 90-
year lease. If it was not intended that David and Tina could live there for the rest of their life,
there will not be a life tenancy. In short, it is very likely that there was no life tenancy
intended for David and Tina.
In the aspect of exclusive possession, there are no interruption to be found in David and
Tina’s situation. Besides that, rent. David and Tina do pay £300 per week as an occupant fees.
Therefore, 3 main characteristics of having a lease instead of license being fulfilled.
Notwithstanding, there are few factors to negate the lease. In relation to cleaning services that
provided by Rita, it might negate David and Tina’s exclusive possession. In Marchant v
Charters 1977, court ruled that daily cleaning service and weekly provision of clean linen is
considered as license. Lord Denning held that it ultimately depends on the nature and quality
of the occupancy and whether it was intended that the occupier have a stake in the room.
Moreover, in Crancour v Da Silvaesa 1986, Gibson LJ held that exclusive possession was
not present as the agreement required the landlord to provide attendance and services which
would have required unrestricted access to the property. Since the clause construed as Rita
providing them with the option of a cleaning service that they are free to refuse, they have a
stake in the flat and enjoy exclusive possession.
There is another factor to negate a lease is the fact that David and Tina signed separate copies
of the “license” agreement. In Antoniades v Villers, an unmarried couple shared a one
bedroom flat with a double bed. At the insistence of the landlord, they signed separate
agreements. It was held that the artificially was in the pretence that the couple’s occupation
was several rather than joint. Simultaneously, in AG securities v Vaughan, a 4-bedroom flat
rented to 4 persons separately, who signed separate agreements on separate occasions. They
were all held to be licenses, since they had to share the common areas. The court stated that
the arrangement seems to have been a sensible and realistic one to provide accommodation
for a shifting population of individuals who were genuinely prepared to share the flat with
others introduced from time to time who would, at least initially, be strangers to them. There
was no artificially in the contracts concluded to give effect to this arrangement. It is obvious
to be seen that the difference between the case is simply that there was joint occupation in
Antoniades, but not in AG Securities. In here, it is apparent that David and Tina situation is
more likely to Antoniades.
Besides that, rent. David and Tina do pay £300 per week as an occupant fees. Examine the
aspects of formality, if the lease between Tina, Rita and David is just 3 years, the lease is
legally binding since it created by deed. If David didn’t complete his training within these 3
years, they would be required to extend the period of lease. For lease that more than 3 years
but less than 7 years, the lease need to create by deed, following s.52(1) LPA 1925. Aligned
with s.27(2) LPA 2002, lease that more than 7 years it must be granted by deed and be on the
registry. Therefore, applied to current situation, it is more likely that the lease between them
is just 3 years, and the deed that have done would be enough to recognize as a legally binding
lease.
To conclude, the legal nature of the agreement between Rita, David and Tina is lease.
Damp problem with Rhea and Themis
According to s9(a) Home (Fitness for Human Habitation) Act (HFHHA) 2018, this act
only applies to leases and does not apply to licenses. Since the agreement between Rhea,
Themis, and Hyperion has been proven is a lease, HFHHA 2018 would be applied. The
requirement of ‘fit for human habitation’ is defined in s10 Landlord and Tenant Act (LTA)
1985 which is the property is so deficient in one or more of these areas that it is unfit for
occupation in that state. Here, Rhea and Themis’s situation falls under freedom from damp. In
Hall v Manchester 1915, Lord Parker set the standard of fitness as that of the ordinary
reasonable man. Additionally, in Wyse v Secretary of State environment 1984, the court held
that when examining defects in a property, the correct approach is to consider whether the
totality of the defects indicates that the property is not reasonably appropriate for occupation.
Rhea and Themis believe that the damp problem would damage their health, which is not
reasonably suitable for them to live anymore. For Rhea and Themis to claim damages, prior
to the Housing Health and Safety Rating System (HHSRS) introduced by the Housing Act
(HA) 2004, they need to prove that the damp problem is caused by some structural defect
which falls under the landlord’s (Hyperion) obligation to repair. Once it proved, according to
s.9A(5) LTA 1985 and s.1(3) HFHHA 2018, they could sue Hyperion for breach of contract
because the damp problem caused the property not reasonably for occupation. They may also
seek an order for specific performance, compelling Hyperion to fix the damp issues and seek
damages.
Lease or License
There are one legal issues arise whether is the agreement between Rhea, Themis and
Hyperion is leases or license.
According to Street v Mountford 1985, Lord Templeman listed three criteria for a lease to
be enforceable: certainty of duration, exclusive possession and rent. In the aspect of certainty
of duration, three arguments may be advanced. Firstly, a fixed-term tenancy. In Lace v
Chantler 1944, a term ending with World War 2 was held to be uncertain, and therefore, it
may conclude that the duration is uncertain. In this situation, no duration is mentioned; hence,
it is uncertain because it is not known at the outset when Rhea and Themis will leave.
Secondly, periodic tenancy. Periodic tenancies are saved from indeterminate duration because
both parties can terminate the agreement on notice expiring at the end of each period held in
Prudential Assurance v London Residuary Body 1992. In Hammersmith & Fulham LBC v
Monk 1992, a periodic tenancy is a single unbroken term which perpetually elongates itself
by adding further periods, unless and until it is ended, with each payment being an
endorsement of the continuing lease. It is assumed that the regularity of the rent payment
determines the duration of one period. Rhea and Themis pay 1000 pounds per month, and
hence it is a monthly periodic tenancy. Thirdly, a lease for life. Under s149(6) Land
Property Act (LPA) 1925, any lease for life shall take effect as a lease for 90 years,
determinable by the death of the original lessee or by one month’s written notice. It is shown
in Berrisford v Mexfield Housing 2011, and Lord Neuberger held that life tenancy would
be converted to a 90-year lease because the lease of life is uncertain. However, in Southward
Housing Cooperative v Walker 2015, the court held that s.149(6) LPA 1925 did not apply
because the parties did not intend to create a lifelong arrangement. Here, there is no clear
indication that all parties intend to create how long arrangements. If all parties (Rhea, Themis
and Hyperion) intend to create lifelong lease, there would be a lease for life; if not, there is no
lease for life here.
Aside from that, examining the issues by considering the third element – rent. Following
s.205 (xxvii) LPA 1925, the term of years absolute means a term of years taking effect in
possession whether or not at a rent. Although rent is not technically required to create a valid
lease, it is essential here because the certainty of duration is established with a periodic
tenancy, as mentioned. Rhea and Themis paid 1000 pounds per month to Hyperion.
Apart from that, a certain formality exists for creating a legally binding lease. According to
s.52(2)(d) and s.54(2) LPA 1925, a lease for three years or less need not be required by law
to be made in writing; equivalently, it can be made by written contract as well. A lease that is
more than three years, but less than seven years must be created by deed, as stated in s.52(1)
LPA 1925. Under s.27(2) Land Registry Act (LRA) 2002, a lease for more than seven years
must be granted by deed and on the registry. Based on this fact, there is no clarification on the
duration of the lease and how the lease was created and registered. If the registration is not
done, the lease is equitable. For equitable interest, under s2(1) Law of Property
(Miscellaneous Provisions) Act [LP(MP)A] 1989, all dispositions of interest in land must
be in writing. Since a document is being drafted and signed between Rhea, Themis and
Hyperion, they own an equitable right in the lease.
To prove that there is a lease, exclusive possession of the property is a must. A test introduced
in Street v Mountfort 1985 by Lord Templeman states that the legal consequences of an
agreement, once concluded, can only be determined by considering the agreement's effect. If
the agreement met all of the requirements for a tenancy, it created a tenancy, and the parties
cannot change the agreement's effect by claiming that they only created a licence. Based on
the current situation, although the agreement said that it is not a lease, is a license, it is vital to
examine the effect of the agreement to determine it. The other term must be examined before
a conclusion can be made.
In multiple occupiers' cases, examining joint tenancy appears it is essential. In Antoniades v
Villiers 1990, the court ruled that joint tenancy exists by introducing the agreement for no
purpose other than to disguise the true character of the agreement, which it was hoped would
deceive the court and prevent the appellants from enjoying the protection of the Rent Acts.
However, in AG Securities v Vaughan 1990, the court ruled that each tenant has exclusive
possession of only their bedroom, which does not equal a house lease and hence joint tenancy
failed. Based on the facts, Rhea and Themis enjoy exclusive possession by collectively taking
possession of the house, like Antoniades, instead of as individuals, which is similar to AG
Securities. It is enhanced by the fact that Rhea will only enter the agreement if Themis does;
it shows that they both tend to have joint tenancy instead of an individual tenancy.
Notwithstanding, there are a few factors that would negate the lease. Firstly, a separate
agreement is being signed by Rhea and Themis, respectively. Other than Antoniades and AG
Securities, in Mikeover v Brady 1989, the court held that the monetary obligations of the two
parties were not joint. There was, accordingly, no complete unit of interest, and hence there
was no joint tenancy. There is no indication of how Rhea and Themis are obliged to pay the
rent. If Hyperion requires the whole rent to be paid regardless of how many occupants are in
the house, then they have a lease. (Antoniades) If Hyperion collects the rent of individual
portions based on how many occupants are in the house, they possess a license. (AG
Securities and Mikeover). In short, it can be seen that separate agreement issues do not
negate the lease owed by Rhea and Themis.
Secondly, Hyperion has a spare key to the second floor which amounts to the retention of
critical issues that can negate the lease. In Aslan v Murphy 1990, Lord Donaldson held that
the reason behind the retention of the key is essential. If it was for an emergency or to carry
out repairs, exclusive possession is enjoyed, but if it was to provide genuine services, like
cleaning services, exclusive possession is negated. Here, Hyperion used the spare key,
entered the game room and checked the condition of the snooker table on a few occasions
between March and May 2022. Therefore, it is evident that the exclusive possession of Rhea
and Themis is still enjoyed because Hyperion used the key to carry out repairs.
Thirdly, the clause that Hyperion can enter and use the games room at any time on Sundays
which categorised as the situation in which the owner can occupy the properties. In Aslan,
Lord Donaldson MR held that the landlord did not actually attempt to remove the lessee
from the land between the time the landlord occupied the house; hence, it is still a lease.
Moreover, in Duke v Wynn 1988, the court rule that the genuine bargain was that the couple
should be entitled to exclusive occupation until the landlord actively exercised the right to
allow someone else to move in. Since Rhea and Themis did not complain about unannounced
entering the library by Hyperion could defeat their exclusive possession. They allow
Hyperion to enter the game room on one such occasion in May 2022 to play snooker together.
It could be argued that their exclusive possession is intact.