Lease Licence in UK Law

This matter was expressed most happily by Buckley L.J. in Shellmex v Manchester Garages (1971) 1 W.L.R. 612 at p. 619 as follows:- "it may be that this is a device which has been adopted by the plaintiff company to avoid possible consequences of the Landlord and Tenant Act, 1954, which would have affected a transaction being one of landlord and tenant; but, in my judgment, one cannot take that into account in the process of construing such a document to find out what the true nature of the transaction is.

One must look at the transaction as a whole and at any indications that one finds in the terms of the contract between the two parties to find whether in fact it is intended to create a relationship of landlord and tenant or that of licensor and licensee. One has first to find out what is the true nature of the transaction and then see how the Act operates upon that state of affairs if it bites at all.

For this purpose, the court can look at all the relevant circumstances, including the subsequent conduct of the parties (see per Lord Jauncey in Antoniades v Villiers, above, at 475).

The statute provides that a disclaimer operates to determine the interest of the tenant in the disclaimed property but not so as to affect the rights or liabilities of any other person. Thus when the lease is disclaimed it is determined and the reversion accelerated but the rights and liabilities of others, such as guarantors and original tenants, are to remain as though the lease had continued and not been determined.

In all the cases where an occupier has been held to be a licensee there has been something in the circumstances to negative any intention to create a tenancy, such as a family arrangement, an act of friendship or generosity, or such like. In such circumstances it would be obviously unjust to saddle the owner with a tenancy with all the momentous consequences that that entails nowadays when there was no intention to create a tenancy at all.

The question in every such case must be one of fact, viz., whose position in relation to occupation is paramount, and whose position in relation to occupation is subordinate; but, in my opinion, the question must be considered and answered in regard to the position and rights of the parties in the premises in question, and in regard to the purpose of the occupation of those premises.

If the defendant's negligence consists of an omission, for example to provide proper equipment, given proper instructions or advice, causation depends, not upon a question of historical fact, but on the answer to the hypothetical question, what would the plaintiff have done if the equipment had been provided or the instruction or advice given. This can only be a matter of inference to be determined from all the circumstances.