Definitional requirements of a lease- change in Street v Mountford , look to the substance, not the label Street v Mountford (1985), Lord Templeman : ‘ the parties cannot turn a tenancy into a licence merely by calling it one ’ : substance not form. Miss Mountford paid what was called a ‘licence fee’ under the agreement, for her premises; CA HELD: applying Summer v Hazelhurst: that the document stated the intention of the parties it was called a licence, so it was a licence. HL : overturned CA. Said the licence was a sham; the only object of using language of a ‘licence’ was to disguise the fact that Street had granted a tenancy. So whether lease or licence doesn’t depend on what it is called by the parties—it’s about the substance , the label used by the parties is not conclusive. The essential characteristics of a lease: o (1) CERTAIN DURATION + (2) EXCLUSIVE POSSESSION = LEASE o Templemen added: (3) you need RENT. However, Templeman was wrong about the requirement for rent: o Rent is not a necessary definitional requirement for a lease: o S205(1)(xxvii) LPA 1925 o Ashburn Astalt v Arnold (1989). So essential requirements are (1) CERTAIN DURATION + (2) EXCLUSIVE POSSESSION = LEASE (1) CERTAIN DURATION/CERATINTY OF TERM Two says to satisfy this: (1) Fixed Term: o Maximum duration known at outset: o The start and finish is set out in advance o A lease for 6 months is just as much a lease as one for 999 years. o Lace v Chantler (1944). Lease for the ‘period of the war’ failed as a fixed term , because the parties didn’t know how long the war would last. o Prudential Insurance v London Residuary Body (1992). Arrangement to let land ‘until it was required for road widening’ . HELD: the exact end date needn’t be known; only the maximum duration needs to be known; but in this case even that failed. o Break clauses : clauses which enable one party or the other to bring the lease to an end earlier . These don’t offend the rule that the term must be certain, because the parties still know the maximum term at the outset. o Same with forfeiture clauses , which allow landlord to end the lease early if the tenant breaches a covenant. Again, doesn’t offend ‘certain term’, but maximum term is known at outset. o Leases for life are converted into a fixed term of 90 years by s149(6) LPA 1925 3
(2) Periodic Term: o Hammond v Farrow (1904) : ‘short terms presumed not to be for more than 3 years’. o In practice, they tend to be weekly, monthly, quarterly, annual . o They can satisfy certain of term even though at start you don’t know how long the arrangement will last. o Agreed mode of payment (the period by which rent is calculated) = the period term : if you pay weekly, then it’s a weekly lease. o The lease renews with each payment : the certainty requirement is satisfied if agreed period of payment.
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- Fall '19
- Law, Leasehold estate, Lord Templeman, Miss Mountford