Suggested Answer to Exercise 5.4 (Part 3)
A Detailed Answer Plan
A lease is a legal estate in land that is usually1 capable of binding third parties. Tenants of a lease may also benefit from additional statutory protection of their interests. A licence2 is a personal permission to occupy land. A licence will not normally bind third parties and licensees benefit from much less statutory protection.
According to Lord Templeman in Street v Mountford  AC 809, a grant of exclusive possession for a term at a rent will normally create a lease. There must also be a capable grantor and grantee. We are told that Pilbeam owns the land; we shall assume for the benefit of this answer that all of the parties are over 18 (LPA 1925, s 1(6)). Depending on the duration of the lease, it may also need to be in the form of a deed (LPA 1925, s 52(2)(d)).
The term of a lease must have a certain beginning, and its end must be ascertainable at the outset (although a lease may include terms under which it can be brought to an early end): Lace v Chantler  KB 368; Prudential Assurance Co Ltd v London Residuary Body  AC 386.
Exclusive possession means that the tenant can exclude everyone from the premises, including the lessor (subject to the lessor having reasonable access to carry out his obligations and inspect the premises). Whether or not exclusive possession has been granted is a question of fact, and does not depend on either the wording of the agreement nor the subjective intention of either or both parties (see Street v Mountford  AC 809 at 816-19, although there is some suggestion that the parties’ intention will be more significant in commercial cases; National Car Parks Ltd v The Trinity Development Company (Banbury) Ltd  2 P & CR 114). In cases concerning residential occupation, the courts are particularly alert to the possibility of sham terms imposed by the lessor in an attempt to exclude exclusive possession. The Court may ignore any term of the agreement that it considers a sham (Antoniades v Villiers  1 AC 417).
Pilbeam ‘granted Yasmin a lease’ - can assume, therefore, most requirements met.
‘… until she got married’: uncertain term - Lace v Chantler; Prudential Assurance Co Ltd v London Residuary Body.
However, section 149(6) of the LPA 1925 - lease terminable on tenant’s marriage is automatically converted into a lease for a term of 90 years.
Javed is described as ‘the tenant’ and was ‘told that he could have a lease’ - can assume therefore that most of the requirements have been met.
This is also a grant for an uncertain term - not, therefore, a lease for this period.
However, if Javed has exclusive possession and is paying a rent there may be an implied periodic tenancy, based on the period by which the rent is assessed. This was the outcome in both Lace v Chantler and Prudential Assurance Co Ltd v London Residuary Body. So if Javed was required to pay rent monthly it would be a lease from month to month. The lease will continue until Pilbeam or Javed determine it, subject to any statutory limitation on Pilbeam’s power to do so. However, it may be necessary to look more closely at the terms agreed between Pilbeam and Javed as these may preclude an implied tenancy (see Berrisford v Mexfield Housing Co-op Ltd  EWCA Civ 811).
Term is sufficiently certain. Problem here is does Brenda have exclusive possession?
Label, ‘licence agreement’ - not conclusive (Street v Mountford) - look to reality of situation.
‘Brenda agreed that Pilbeam could sleep there whenever he stayed in London’ - does this preclude exclusive possession? How far does it compromise Brenda’s control of the flat (see, for example, the discussion of exclusive possession in Westminster CC v Clarke  2 AC 228 and Bruton v London and Quadrant Housing Trust  1 AC 406. It has long been accepted that a lessor can have a right of access in limited circumstances that will not prevent the tenant’s possession being exclusive.
Even if the term is inconsistent with exclusive possession, is it genuine or a ‘sham’?
- Antoniades v Villiers  1 AC 417 (landlord’s purported right to occupy or place other persons into occupation). On the facts in that case the lessor never intended to exercise the rights - the flat was too small to share with strangers, and the lessor had not discussed with the tenants how his power to introduce more occupants would work in practice.
- Consider Brenda’s agreement on the facts - how big is the flat, has the condition and its operation been discussed; is it reflected in the rent being charged; did Pilbeam ever intend to exercise it, how frequently, etc.? If the term is a sham, the agreement is re-read without it.
1. See 'Bruton v London and Quadrant Housing Trust  1 AC 406.’
2. See ‘Licences are considered in Chapter 3 of Land Law.’