Name: Shauna Banjoka

Course: Landlord and Tenant

Lecturer/Tutor: Mr. Carson Nesbeth

Assignment : Question #4

RE: Legal Opinion to the Managing Director

The question is whether Bill holds a lease or a licence. If he holds a lease, he has a proprietary right in
the land. A licence in general does not create a proprietary right. In Street v Mountford [1985] 2 All ER
289, HL Lord Templeman said: 'A licence does not create an estate in the land to which it relates but
only makes an act lawful which would otherwise be unlawful.' This statement by Lord Templeman is
relevant as in determining whether it is a lease or licence, it is crucial to examine the intention of the
parties and any agreement made between the two parties.

It should be noted that the name given to the agreement by the parties is not conclusive of its nature.
Thus, it is not conclusive that Bill and Trend agreed that it should be called a licence. The arrangement
between Bill and Trend has been described as a licence, but the use of the word 'licence' is not decisive.
In Street v Mountford (1985), it was held that the intentions of the parties whether the agreement is a
licence or a lease is irrelevant. However, this does not mean that the description given by the parties to
the agreement should be ignored. In Antoniades v Villiers (1990) 1AC 417, CA Bingham LJ said:

A cat does not become a dog because the parties have agreed to call it a dog. But in deciding if it is a cat
or a dog the parties' agreement that it is a dog may not be entirely irrelevant.

So if other evidence points to a licence, the word 'licence' in the agreement could be taken into
consideration.

The three indications of a lease were stated by Lord Templeman in Street v Mountford (1985) as an
intention to grant exclusive possession , for a fixed term, in consideration of periodical payments (rent).
In Street v Mountford: The House of Lords held that if an agreement satisfied all the requirements of a
lease, the parties cannot alter the effect of it merely by calling it a licence. He stated: ‘Manufacture of a
five-pronged implement for digging results in a fork even if the manufacturer wishes to call it a spade. In
Bruton v London Quadrant Housing Trust Limited (2000) 1AC 406, HL Lord Hoffman indicated that the
first two are essential but referred to 'usually' the payment of rent.

Certainty of Duration
- The test of certainty will be satisfied if the period is capable of being rendered certain before the
lease takes effect – Lace v Chantler
- If the maximum is 3 years with an option to determine exercisable by Trend is held to be certain
it is a lease; if held to be uncertain it is a licence
- Also, duration is not uncertain for lack of commencement date – as the day the person takes
possession is normally seen as the commencement date. This leaves the question of exclusive
possession.
Exclusive Possession
The rationale of requiring exclusive possession for a lease is that without it the tenant would not be able
to use the premises for the purpose of letting (Odey v Barber (2008) Ch 175, HC). Ramnarace v
Lutchman confirmed the principle in Street by stating that you start with exclusive possession but look
to intention of the parties. The question is, in the words of Oliver LJ in AG Securities v Vaughan (1990) 1
AC 417, CA is this 'a sham....designed to conceal the true nature of the transaction? On the evidence, it
is impossible to say.

- Exclusive Possession connotes the right to physical occupation coupled with the power
to exclude all persons from the premises – including the owner.
- It is not clear whether Bill would have the right to exclude Trend as it would appear that
Trend could regain control of the premises at any point in time he so desired – “Trend
had every intention of returning home”.
- One would have to look at the precise wording in the written agreement to see how
much control Bill exercised over the premises.
- The facts are silent as to whether there would be exclusive possession.
Rent
- Is the $6,000 paid into Trend’s bank account each month to cover life insurance
payments or rent?
- Yes – consideration was given for the agreement.

If all of the above-mentioned are found in the agreement, then it is a fixed term lease.
This is so especially since Bill had so many maintenance obligations under the contract, the
court will view it as a lease. The Court will more than likely regard it as a lease since the court
does not like licence - they see them as sham agreements.

On the issue of Bill withdrawing from the agreement, it must be noted that if it is a licence, it
would be a contractual one and is flexible, therefore any one party can determine it. Trend
could easily withdraw with no hassle. On the contrary, if it is a lease, he would need to write to
Trend telling him that he wishes to withdraw and be released from it. Consequently, if Trend
says no, then Bill may:
(i) Sublet or
(ii) Assign