NOTES OF CASES
| Date | 01 March 1988 |
| Published date | 01 March 1988 |
| DOI | http://doi.org/10.1111/j.1468-2230.1988.tb01753.x |
NOTES
OF
CASES
LEASES, LICENCES
AND
THIRD PARTIES
LICENCES present a number
of
problems for contemporary English
land law. Two difficulties in particular stand out. First, as a result
of statutory schemes which provide security of tenure for both
residential and commercial tenants, but generally not for licensees,’
the boundary between leases and licences has become of prime
importance.’ Second there is uncertainty as to the effect of licences
on third parties. One of the most hotly debated controversies in
modern land law has been the question of whether or not a
contractual licence may bind
a
purchaser of an interest in the land
to which the licence
relate^.^
The recent Court of Appeal decision in
Ashburn
Anstulf
v.
Arnold4
is unusual in that it discusses both of these issues. The
case revolved around an agreement entered into in May 1973 by
Matlodge, the freehold owners
of
commercial premises with
registered title, and Arnold, the defendants. Clause
5
of
the
agreement provided;
“From and after completion Arnold shall be at liberty to
remain at the property as Licensee and trade therefrom until
29th September 1973 without payment of rent or any other fee
to Matlodge save that Arnold shall pay all outgoings
so
long as
it is in occupation of the property. From and after September
29 1973 Arnold shall be entitled as Licensee to remain at the
property and trade therefrom on the like terms save that it can
be required by Matlodge Ltd to give possession on not less
than one quarter’s notice in writing upon Matlodge certifying
In relation to public sector housing, a licence to occupy a dwelling-house will be
protected in the same way as a tenancy, as long as the licence fulfils the conditions of a
“secure tenancy”: Housing Act 1985, s.79(3).
*
Since the decision
of
the House of Lords in
Street
v.
Mountford
[1985] A.C.
809
there have been a large number of cases in which the central question has been whether
exclusive possession has been granted.
In the commercial sector:
London
&
Associated Investment
&
Trmt
v.
Calow
(1987) 53 P.
&
C.R. 340;
Dellneed
v.
Chin
(1987) 53 P.
&
C.R. 112;
University
of
Reading
v.
Johnson-Houghton
[1985] 2
E.G.L.R. 113;
Dresden Estates
v.
Collinson
(1987) 281 E.G. 1321;
Smith
v.
Northside
Developments
(1987) 283 E.G. 1211.
In the residential sector:
Postcastle Properties
v.
Perridge
(1985) 276 E.G. 1063;
Bretherton
v.
Paton
(1986) 18
H.L.R. 257;
Royal Philanthropic Society
v.
County
119851 2 E.G.L.R. 109;
Crancour
v.
De Silvaesa
(1986) 52 P.
&
C.R. 204;
Brooker Settled Estates
v.
Ayers
(1987) 282 E.G.
325;
Hadjiloucas
v.
Crean
[1987] 3
All
E.R. 1008;
Sharp
v.
McArthur
(1986) 19 H.L.R.
364;
AG Securities
v.
Vaughan
(1987)
The Times,
December 28.
See
Wade, “Licences and Third Parties” (1952) 68 L.Q.R. 337; Briggs, “Licences:
Back to Basics?” [1981] Conv. 212; Thompson, “Licences: Questioning the Basics” [1983]
Conv,
50;
Briggs,” Contractual Licences: A Reply” 119831 Conv. 285; Everton, “Towards
a Concept of Quasi-Property’’ [1982] Conv. 118
&
177; Moriarty, “Licences and Land
Law: Legal Principles and Public Policies” (1984) 100 L.Q.R. 376.
(1987) 284
E.G.
1375. A transcript of the Court of Appeal decision was kindly made
available by the defendants’ solicitors, Pritchard, Englefield
&
Tobin.
226
MAR.
19881
NOTES OF
CASES
227
that
it
is ready
at
the expiration of such notice forthwith to
proceed with the development of the property and the
neighbouring property involving
inter alia
the demolition of
the property.”
The plaintiffs were successors in title to Matlodge, having acquired
the freehold in 1985. Less than a month after completion, the
plaintiffs wrote to the defendants informing them that they were
required to vacate the premises. The defendants refused, and the
plaintiffs brought an action for possession. The defendants resisted
the plaintiffs’ action, arguing that either clause
5
conferred on
them a tenancy, or, even if clause
5
created only a contractual
licence, it was nevertheless an overriding interest within the scope
of section 70(l)(g) of the Land Registration Act 1925.5
The lease/licence point can be dealt with briefly. Although Evans
Lombe
Q.C.,
sitting
as
a
deputy judge in the High Court, had held
that clause 5 conferred only a licence,6 the Court of Appeal
thought that the defendants were tenants. First, Fox L.J., giving
the judgment of the whole court, took the view that rent was not
an essential prerequisite of a tenan~y.~ Second, the Court of
Appeal rejected the plaintiffs’ argument that clause 5 fell foul of
the rules relating to certainty of duration.* On both points, Fox
L.J.’s judgment is uncontroversial and in line with authority.
Despite indications to the contrary in
Street
v.
Mo~nfford,~
rent is
not a
sine qua
non
of a tenancy.” As for certainty of duration, Fox
L.J. was unable to distin uish the present case from
Re Midland
Railway
Co.’s
Agreement?’
which appears not to have been cited
at first instance. The fact that the freehold owners could determine
the arrangement only after a condition precedent had been
satisfied-giving a certificate of readiness to proceed with
redevelo ment of the site-did not prevent a periodic tenancy
arising.
18
There was also a dispute relating to clause
6
of the 1973 agreement, which is not
February 16, 1987 (unreported). It was, however, held at first instance that a
’
(1987) 284, 1375 at pp.1377-8.
At at p.1388.
’
[1985] A.C. 809.
lo
The emphasis placed by Lord Templeman on rent as a characteristic of a tenancy is
heterodox; see Anderson, “Licences: Traditional Law Revisited?” (1985) 48 M.L.R. 712
at pp.716-7.
It should be noted that the Law of Property Act 1925, s.205(1) (xxvii) defines a term of
years absolute as “a term of years (taking effect in possession or in reversion whether or
not at rent)
.
. .”
In addition the judgment of Windeyer
J.
in the Australian case of
Radaich
v.
Smith
((1959) 101 C.L.R. 209 at p.222), which was expressly approved by
Lord Templeman in
Street
v.
Mounrford
(at p.827), makes no mention of rent as an
discussed in this note.
contractual licence is capable of binding third parties. See below.
essential element of a tenancy.
[1971] Ch. 725.
It was irrelevant that clause
5
was drafted in terms of a licence:
“If the agreement satisfied all the requirements of a tenancy, then the agreement
produced a tenancy and the parties cannot alter the effect of the agreement by insisting
that they only created a licence. The manufacture of a five-pronged implement for
manual digging results in a fork even if the manufacturer, unfamiliar with the English
language, insists that he intended to make a spade.” ([1985] A.C.
809
at p.819
per
Lord
Templeman)
To continue reading
Request your trial