LAND LAW 2 IN A SHELL

1. Co-Ownership

Socio-economic context of Co-ownership

Read the article on Katherina Pistol

Ownership and Fragmentation in Land La

We can talk of a person owning things, land preferably for clearer communication of basic concepts.
As a general principle, Common Law there are no positive duties [do] on the owner of land under land
laws. However, other areas of law may impose negative duties [don’ts]. Owners of land have a right to
be free from interference. At the same time, owners bear risks of loss, destruction or damage to the
land.

Fragmentation of Ownership
Starting from the position of property as a bundle of rights, these rights can be parceled out to
different persons or they may belong in their entirety to different persons. In common law, there are
two kinds of co-ownership: Joint Ownership or Ownership in Common. These two for historical
reasons are called most of the time, Joint Tenancy or Tenancy in common respectively; Tenancy in
this context has nothing to do with leases, it refers to “concurrent ownership.”

The other two forms of co-ownership were coparcenary and tenancy by entireties which have been
said to be “virtually extinct” in England.

Tenancy by Entireties and Coparcenary

Tenancy by entireties comprised an inseverable joint tenancy between husband and wife said
to symbolize the medieval theory of individual unity between marital partners. In other
words, tenancy by entireties refers to a type of property ownership where multiple people
inherit the same property, and each person owns an undivided, transferable interest in the
property. The creation of new tenancies by entireties was prohibited in 1882 under the
Married Women Property Act 1882.

In a coparcenary, if a person dies intestate leaving two or more persons as his “heir”, and the
others and/or are female, inherited together with coparceners. Coparcenary refers to
property ownership where multiple people inherit the same property, and each person owns
an undivided, transferable interest in the property . Coparceners held undivided shares without
any right of survivorship.

Joint Tenancy
Joint tenancy is a legal form of co-ownership of land, where two or more people hold the ownership
jointly and equally. This means that each joint tenant has the entire interest in the property, rather
than a specific share. It is also distinguished from tenancy in common, where each owner has a
specific, identifiable share.
Another major difference with tenancy in common is the rule on Right of Survivorship or Jus
Accrescendi’ that says ‘survivor takes all.” On the death of one joint tenant, the interest in the
property automatically passes to the surviving joint tenant(s)and no interest in the land held jointly
descends under the deceased’s will or intestacy.
 It has been said that in many instances joint tenancy (with its automatic rule of survivorship)
operates as a crude testamentary substitute for a properly constructed will and is also coined the
poor man’s will. At common law, if there could be no right of survivorship, there could be no joint
tenancy:- Hennett v Holbech [1671] 85 E.R. 1108; Fisher v Wigg [1705] 92 E.R. 974
A conveyance to a corporation or another individual made the grantees tenants in common. The four
unities required for the existence of a join tenancy are unities of possession, interest, title and time.

1. Unity of possession
This means that each co-owner is as much entitled to possession of any part of the land as
the others, including receiving rent so that an action for trespass or rent or money had and
received or account will normally not lie. See Kennedy v De Trafford [1897] SC 180.

There is equitable jurisdiction to compel co-owners to pay a due proportion of an occupation

rent if it necessary to equity between the parties: See Dennis v McDonald [1982] 2 WLR 275.
In marital context, courts have ordered payments in cases where a marriage breaks down,
one of the parties leaves the matrimonial home. See Re Pavlou (A bankrupt) [1993] 1 WLR
1046

2. Interest
In joint tenancy, the interest of each tenant is the same in extent, nature and duration
because they hold just one estate. There can be no join tenancy between those interest of
different nature eg freeholder and a tenant for years: Kenworthy v Ward [1853] 68 E.R 1245.

Personal disability is a minor or a mental patient: Re Gardner [1924] 2 Ch. 243 at 251. Any legal
act such as conveyance, lease or surrender a lease of land etc requires the participation of all
joint tenats: Hounslow LBC v Pilling [1993] 1 WLR 1242 but see Hammersmith and Fulham
LBC v Monk [1992] 1 AC 478.

3. Title
Each joint tenant must claim his title to the land under the same Act or document. The
requirement is satisfied where all the tenants acquired their rights by the same conveyance
or if they simultaneously took possession of the land and acquired title to it by adverse
possession. For a co-owned legal estate, this type of unity also means that when a purchaser
is looking to purchase the title to a portion of co-owned land, the purchaser need only
purchase one title.

4. Time
Put simply, this unity requires that the interests of all joint tenants must have been vested in
them at the same time.

Ownership in Common or Tenancy in common

The difference between joint owners and ownership is that for common tenant each owns an
individual asset, a separate but not separated share in the land held in common. The land law texts
talk of an ‘undivided share,’ meaning that while the share itself is separate from others, the share
does not entitle its owner to a particular physical part of the asset. The undivided share can be
alienated without needing the consent of the other co-owners and will pass by will or intestacy. The
only unity which is essential is the unity of possession such that one tenant in common may be
entitled to a one fifth share and the other to fourth fifths or one for life and the other absolutely:
Sturton v Richardson [1844] 153 ER 7

Creation of Tenancies: At Law

It is helpful to look at the creation of tenancies separately at law and in equity. There’s an old
presumption at law which says that where the legal title to property was vested in two or more
persons they were joint tenants and not tenants in common. See Campbell and Others v Campbell
and Others [1792] 29 E.R. 755. According to Holt CJ in Fisher v Wigg, “The law loves not fractions of
estates, not to divide and multiply tenures.” The presumption can be rebutted where
- One of the unities is absent or words of severance were employed.

Williams v Hensman [1861] 1 J&H 546; (70 ER 862)

Creation of Tenancies In Equity

Unlike common law, equity did not favour joint tenancy, it was more concerned to achieve fairness
than to simplify tasks of conveyancers e.g., in investigation of title. The maxim of equity in this area is
that “Equity leans against joint tenants and favors tenancy in common.”
This means that a tenancy

Purchase money Provided in unequal Shares

If two or more people together purchase property and provide the money in equal shares, they are
presumed in equity to be joint tenants. If their contributions are unequal, the purchasers are
presumed to take beneficially as tenants in common in shares proportionate to the sums advanced.
The foregoing presumptions can be rebutted by evidence of contrary intention whether from
surrounding circumstances, by proof of express agreement between the parties, or the wording of
the conveyance or transfer of the property to the co-owners. See Edwards v Fashion [1712] 24 E.R 156.

Instances where the Presumption is rebutted

Where ‘t devised a mortgage by will to A & B as tenants in common,
As a general rule, where the conveyance expressly declares not only in whom the legal title is to vest
but also the beneficial interests are to be held, a court will give effect to that trust: Goodman v
Gallant [1986] 2 WLR 236. The general rule is subject to two exceptions. First where the trust is set
aside on the grounds of fraud or mistake or rectified. See Pettitt v Pettitt [1970] AC 777. Second,
where purchasers did not assent to the terms of the declaration. See Re Gorman.

Determination of Joint tenancies and Tenancies in Common: Partition.

Joint tenancies and tenancies in common may be determined by partition or by union in a sole
tenant, remember that joint tenancies may be determined by severance. Partition involves the
transfer to each co-owner of an appropriate portion of the land thereby reducing the former co-
ownership to separate ownership of individual parcels.
Partition can also occur where an undivided share of a tenant in common is subject execution under
the Sheriffs Act ss 25-43, note the different procedures for private land not registered under the RLA
and land under the RLA. Find cases in law reports where this occurred.

Union
Joint tenancies or tenancies in common may be determined if the whole of the land becomes vested
in a single beneficial owner. Where one of the two surviving joint tenants dies, the other becomes
the sole tenant by right of survivorship. If one joint tenant or tenant in common acquires the
interests of all the other tenants e.g. by purchasing them, the co-ownership comes to an end.
2. Settlements and Trusts for Sale
a. Background
The key concepts of received English land law were created by the rich at a time when the bulk of
their wealth was invested in land. The conceptual framework revolved around the concepts of
the estate, the trust and the fund. The wealthy and their lawyers used these concepts in
structures called ‘settlements’ to ensure that succeeding generations of family could share
control and the enjoyment of the land. For instance, the trust which is unique to Anglo-American
law, has been used time and again to protect the assets of the wealthy.

According to JDA Brooke Taylor, settlements have been traditionally utilized to tie up property to
prevent an individual from alienating property that is desired to be preserved in the family.
Recall, that the general rule for personal property, however, is “nemo dat qoud non habet”, that
is nobody can pass title to what they do not have a title.

b. Funds in Settlements
The essential nature of a fund is that it preserves its identity as the object of property rights even
though its contents change. In most funds control and management are separated from
enjoyment and entitlement through the device of the trust. For example, in a pension fund,
employees and pensioners have certain rights which can be enforced over the fund, although the
objects in which it is invested may change from time to time.

c. Land in Settlements
Where land is to be treated as an investment, it may be the object of a much more elaborate
structure which divides its value in terms of its income and capital and distributes entitlements in
fragments over time. A fund of property is not a legal person, so the objects which comprise it
must be held by someone who is a human being or a legal entity such as a person. The nature of
rights in land facilitated the types of settlement that were devised.

d. Functions of settlements
This area of land law relates to the law which governs successive interests in land. Successive
interests in land occur where one person is entitled for life and someone else thereafter. The
traditional regime in [English] land law was known as settlement. It gave the life tenant the key
management powers and vested him or her the fee simple as a trustee. The crucial feature of the
system is that the freehold itself can always be sold, the money paid to the trustees, with the
investments thereof replacing the land.

e. Types of Settlements
If A by his will left property to B for life with the remainder to C in fee simple that was a simple
type of settlement. Whenever a donor created a limited interest (an interest less than a fee
simple absolute) there was usually a settlement, since someone would or might be entitled in
succession after the limited interest. The essence of a settlement was a series of interests
created by a single gift, whether by deed or will. In the course of history, the distinct methods of
settling land became common; the strict settlement and trust for sale.
i. The Strict Settlement
The strict settlement was devised to preserve a family estate intact through succeeding
generations. In its simplest form, a testator granted the land to A (his eldest son) for life,
with the remainder to A’s eldest son in tail. A’s eldest son could not alienate the land until
he came of age. The clients of draftsmen of the strict settlement were territorial,
landlords, whose social power and position were based on land. Later on, the courts
introduced the rule against perpetuities, holding that ultimate ownership of land for an
uncertain time, for longer than the period of a life in being and an extra 21 was illegal.

Technically, where the beneficiaries were not of age, the trustees were the owners of the
landed estate on behalf of the family. The trustees were responsible for ensuring that all
receipts and payments from the estate were paid to the various members of the family
who were entitled to them.

The strict settlement put obstacles in the way of selling the land. The landowner was
given only a life interest in the property, being called the ‘tenant for life’. The life tenant
could not sell the estate or its parts without the express agreement of other heirs and
trustees. A tenant could only alienate his interest in the land and not lease or sell the land.

- Settlement and Resettlement

The process of settlement and resettlement (breaking the entails) ensured that no person
of full age could ever have more than a life estate (rule against perpetuities).

In 1882, the Settled Land Act was passed. The general scheme was to give the tenant for
life under the settlement, wide powers of dealing with the land free from it without the
consent of the other cestui que trust as if he were owning in fee simple. The Act protected
the beneficiaries, in case of a sale, by shifting the settlement from the land to the
purchase money, which had to be paid to trustees or into court.

ii. Trusts for Sale

The second type was the trust for sale which directed the trustees to sell the property,
invest the proceeds and hold the resulting fund upon the trusts declared by the settlor.
Unlike the strict settlement whose aim was to preserve a family estate intact, this type
saw property as potential money, treating land as an investment just like any other. The
trust for sale provided convenience that a mixed fund of land and personality could be
disposed of under the same set of rules.

The direction for the trustees to sell the land or property is immediate and binding and the
trustee breaches the trust if they fail to carry out such obligations. Recall that equity
regards as done that which ought to be done, and what ought to be done in this case is
that any land in the trust ought to have been turned into proceeds of sale. the cestui que
trust is therefore seen as having an interest in proceeds of sale even before the sale has
 taken place. As proceeds of sale are personalty, the interest of a cestui que trust in a trust
for sale is invariably personalty whatever the nature of the trust property.

The trust for sale has several benefits:

- Combines different asset types into one fund. Although the primary focus is to sell,
the trust fund can also comprise some personalty like leaseholds, stocks, shares,
and cash.
- Provides for dependents who may not manage to take care of their own affairs,
i.e., women and children.
- Easier management for situations with multiple beneficiaries.

Of important notice is the doctrine of conversion. The effect of creating a trust for sale
was that even before the sale, the rights of beneficiaries were for certain purposes
deemed to be rights in personalty. See Ackroyd v Smithson and Others 1. As soon as
there was a binding obligation to sell, the interests of the beneficiaries were notionally
converted into the money to which the land was destined to be converted. This was the
equitable doctrine of conversion.

1
[1779] 28 1262
 LEASES!
Basic Definitions
A lease is a grant for a term of years (or less) and is also often called a lease or tenancy, its
distinguishing characteristic being the conferment by the lessor (or landlord or lady) on the
lessee (or tenant) of a right of exclusive possession of land for a period of pre-arranged
maximum duration. A lease is both a contract and an estate. It matters not whether this period is
fixed and therefore self-determining ot periodic and therefore capable of extension or
termination at the will of the parties. The locus of a tenancy, if granted for a determinate period
as the ‘exclusive domain of a particular individual,’ can comprise anything, be it a vast tract of
land or a single room.

In the registered land act, a lease is:

“The grant with or without consideration, by the proprietor of land of the right to the exclusive
possession of his land, and includes the right so granted and the instrument granting it, and also
includes a sublease, but does not include an agreement for lease
Leaseholders hold land for a period which is certain or capable, by notice to quite of being made
certain, and is a form of land holding which entails several consequences.

Terminology
The grantor of a lease is known as the lessor and the person to whom the lease is granted, as the
lessee. On the grant of a lease, the lessor retains a reversion, which he may assign. The lessee may
assign the lease. Instead of assigning the lease [transferring the property for the whole period for
which it is held], the owner of a lease may grant a sublease (or an underlease) for a period at least
one day shorter than the lease, the parties to this sublease being known as the sublessor and
sublessee.

It is common to refer to owners for the time being of the reversion and the lease, whether the
original or by assignment, as the landlord and the tenant. Demise is the technical term for ‘let’ or
‘lease’, thus a lease may be referred to as a ‘demise’ or the premises in question as ‘demised
premises’.

Basic definitions and concepts

First of all, the exercise of a lease denotes the existence of freehold land or property. If you are
entitled to hold land for only a limited period, someone must have a present right to resume
possession at the end of that period. Second of all, the lessee’s right to possession is always
dwindling while the lessor’s is always approaching. Thirdly, the lessee will be paying the lessor who
has traded occupation for rent. Remember that there can be more co-existing entitlements in the
same piece of land, e.g., sublease, head lease, and freehold. Finally, lessees can only transfer what
they have, that is to say, the right to possession for the unexpired of the lease.

The contractualization of the lessee

The term of years is, therefore clearly, a proprietary estate in land, but this should obscure the fact
that at its root lies the contractual relationship of lessor and lessee. The tension between the
proprietary and the contractual in the leasehold context is rendered all the more palpable by the
emergence of the residential lease as a specialized form of consumer contract. Under this influence,
the courts have begun to expose tenancies to a much more comprehensive application of ordinary
contract principles.

It is worth noting that nowadays, no leases no longer lie beyond the reach of general contractual
doctrines such as those of frustration, repudiatory breach and mitigation of loss. The underlying
tension remains: the leasehold is no less a form of proprietary control than the freehold and the
tenant is fully entitled to “exercise the rights of an owner of the land, which is in the restrictions.”
See Street v Mountford2.
In that case, the landlord granted the appellant a license to occupy two rooms at a weekly
rate of 37 pounds per week. The written agreement stated that the license was not
assignable (could not sublease); it could be terminated by a 14-day written notice and that
the appellant understood and accepted that the license did not give rise to any tenancy. The
appellant had exclusive possession of the room and months later he wanted to register his
rent in respect to the room. The Landlord applied to the county court for a declaration that
he was a tenant per the agreement which found for him but on appeal, the Court of Appeal
held that it was a mere license. The Landlord then appealed to the House of Lords.
Allowing the appeal, it was held that a lease must grant exclusive possession of the
property for a fixed or periodic term at rent. It is the nature of the rights create that
is important and superficial labels are irrelevant. The only intention that was relevant
was the intention to confer exclusive possession. An occupier of residential
accommodation at a rent for a term is either a tenant or a lodger. They are a lodger if
the landlord provides services or attendance which require him to have unrestricted
access to the premises. Here, the landlord did not provide any services or
attendance. Therefore, the agreement created a lease even though it was called a
‘license.’

Essentials of a lease
A lease is a bilateral contract. The tenant is not only given an estate in land but he also gives
covenants e.g., pays rent and executes repairs. Although legislation may sometimes set out basic
definitions but it has been left to the courts to fashion the parameters of the lease, especially what is
meant by exclusive possession. At common law, traditionally the essence of a lease is that the tenant
should be given exclusive possession, that is the right to exclude all other persons from the
premises. In Street v Mountford 3, Lord Templeman observed that this means the tenant is entitled to
“keep out strangers and keep the landlord out unless the landlord is exercising limited rights
reserved to him by the tenancy agreement to enter and view and repair.” Therefore, if the lessor
seeks to retain an unlimited right of access to the property over the lessee, as opposed to the right
of access in limited and prescribed circumstances, then such an assertion by the lessor would be
unlawful. See Aslan v Murphy (No.1).4
In that case, Aslan occupied a basement room under an agreement expressly stating he did
not hold exclusive possession of the premises. Under the agreement, the landlord

2
[1985] AC 809; [1985] 2 All ER 289
3
Ibid
4
[1989] EWCA Civ 2
 maintained a key to the premises, and Aslan was allegedly excluded from the property for 90
minutes each day. Aslan challenged an order for possession arguing that the agreement
amounted to a lease and not a license and was entitled to security of tenure i.e., exclusive
possession. It was held that the agreement was a tenancy. However, the retention of keys by
a landlord does not in and of itself preclude the occupier from enjoying exclusive possession.
This must be decided on a case-to-case basis and the reasons for the retention must also be
examined. If the retention was for emergencies, meter readings and to conduct repairs, then
the lease would subsist.

The Distinction between Leases and Licenses.

It must be noted that the line between a lease and a license is thin, but distinguishing the two is quite
significant. Much of this dispute involves one party claiming a right of exclusive possession and the
other (the lessor) claiming they only granted a license. First of all, a lease of years constitutes a
transferable and enforceable proprietary estate, whereas even a contractual license, generally, does
not create any interest in land at all. See Ashburn Anstalt v Arnold.5
In this case, the defendants were sublessees of shops which were part of a block the landlord
wished to develop. The defendants persuaded the landlords to sell the sublease of the shops
in exchange for the landlords letting the defendants continue occupying the property as
“licensees” and trade from the shops without paying rent. The Landlords would get back
possession with a three-month written notice if they were ready to conduct the
development. In 1985, the plaintiffs purchased the leased premises from the landlord and
sought possession. The defendants refused to leave, arguing that they had a lease and thus
an overriding factor for sale.
It was held that rent reservation was not necessary for the creation of a tenancy.
Accordingly, the fact that the defendants were not required to pay rent did not prevent their
occupation from being a tenancy.

The second major distinguishing factor is that exclusive possession. In most scenarios, leases grant
the lessee powers to exclude others, including the lessor, from the premises. By contrast, a person
holding a license to occupy has no such right to exclude others. This is per Lord Oliver in AG
Securities v Vaughan.

Obligations of the Landlord/Lessor

In Land Law, especially under leases, there are several obligations that the lessor or landlord must
fulfil and these can either be express or implied obligations.

i. Express Obligations of the Lessor

Most of the formal leases contain a wide range of express covenants (obligations) by the
lessor with respect to such issues of repairs, insurance, maintenance of common parts of the
premises, rights of access and options for renewal.

In most cases, the precise content of each obligation is left to be determined largely by the
parties themselves. However, the normal balance of bargaining power between the lessor

5
[1988] 2 All ER 147
 and lessee ensures that the burdens of the leasehold relationship are usually allocated more
to the tenant than the landlord.

ii. Implied Obligations of the Lessor

Largely dependent on an express contrary agreement between the parties, the lease
imposes certain implied obligations on the landlord. These obligations may vary in
accordance with the legal or equitable nature of the lease but generally include:
- a covenant (obligation) for quiet enjoyment;
upon granting a lease to the lessor, the landlord thereby also agrees, both on his part and on
the part of the others, to refrain from doing anything which ‘substantially interferes with the
tenant’s title to or possession of the demised premises or with his ordinary and lawful
enjoyment of demised premises. See Southwark LBC v Mills.6
Mills was a tenant in a council flat which was built in 1919 and owned by Southwark
LBC. Mills complained under a provision within the tenancy agreement that the noise
insulation between the flats was wholly inadequate as against normal use of the
premises. Mills sought an order that the ineffective insulation amounted to a breach
of covenant for quiet enjoyment, and therefore, specific works should be conducted
to remedy this.
It was held that the Council had let a series of flats, of which the sound insulation was
poor and thus there was daily unwanted transmission of noise. Despite this, the
House of Lords held there was no breach of the covenant for quiet enjoyment. The
inadequate soundproofing was a product of the structure itself, ‘for which the
landlord assumed no responsibility.’ The noise was generated by neighbors as they
lawfully and reasonably exercised their own rights of enjoyment over their respective
properties, and the building had been adapted for multiple occupations. Given these
factors, the court held it ‘must have been within the contemplation of the
prospective tenants that the adjoining flats would be let to residential tenants and
that the occupiers would live normally in them’ (per Lord Hoffmann).

- the covenant (obligation) against derogation from grant.

The landlord/lessor is prevented from leasing out the property to another on terms
which effectively negative the usefulness of the grant or lease. Put differently, the
lessor cannot engage in conduct which is inconsistent with the purpose for which the
lease was granted, or undermines the exercise of that purpose. The principle
sometimes ensures that the leased property can be used as intended which
sometimes may not readily fit within covenants for quiet enjoyment.

In the case of Harmer v Jumbil (Nigeria) Tin Areas Ltd7, the tenant (Harmer) took a
lease of land for the purposes of storing explosives, both parties being aware that
explosives licenses would require there to be no buildings within a certain radius. The
landlord’s successor to neighboring land granted a lease to a tenant who sought to

6
[2001] 1 AC 1
7
[1921] 1 Ch D 200
 erect buildings so close to Harmer’s premises that he would have been in breach of
his license. Harmer sought an injunction to prevent the erection of the buildings.
Harmer argued granting a lease to a tenant who sought to erect buildings which
would result in his license being revoked amounted to a derogation of grant on the
part of the landlord. Both parties to the lease knew what the demised premises were
for leased for and of the licensing requirements. The lease to the tenant would result
in Harmer being unable to use the land for the very purpose for which it had been let.
The landlord argued there had been no interference with the premises demised to
Harmer, and he still had the use of the land which was subject to the lease. Further,
building on adjacent land not forming part of the demise, could not amount to a
derogation from grant.
Harmer successfully obtained an injunction to prevent the erection of buildings. Both
parties were aware of the use for which the demised premises had been let and of
the licensing requirements and conditions. The act complained of need not be a
direct interference with the demised land itself, but the act prevented the very use
for which the demised premises had been let and, therefore, amounted to a
derogation from grant. Warrington LJ quoted Parker J in Browne v Fowler:
The plaintiffs next relied on the maxim that no one can be allowed to derogate
from his own grant. This maxim is generally quoted as explaining certain
implications which may arise from the fact that, or the circumstances under
which, an owner of land grants or demises part of it, retaining the remainder in
his own hands. The real difficulty is in each case to ascertain how far such
implications extend . . . But the implications usually explained by the maxim
that no one can derogate from his grant do not stop short with easements.
Under certain circumstances, there will be implied on the part of the grantor or
lessor obligations which restrict the user of the land retained by him further
than can be explained by the implication of any easement known to the law.
Thus, if the grant or demise be made for a particular purpose, the grantor or
lessor comes under an obligation not to use the land retained by him in such a
way as to render the land granted or demised unfit or materially less fit for the
particular purpose for which the grant or demise was made.’

The obligation is not without its limits. In Port v Griffith 8, the defendant landlord
retained shops close to the leased premises of the claimant which had also been
leased for shops. The question herein now is could the defendant permit their use in
a manner which would compete with the tenant’s business? Luxmoore J said that:
“The presence of a trade rival in premises next door to those occupied by the
trader may, or may not, be a detriment to any particular business. I do not think
that I should be justified in saying that the presence of a trade rival next door
must of necessity be a detriment, but whichever the view may be, the presence
of a trade rival next door does not render the premises on which the trader is
carrying on his business unfit for that purpose, although it may incidentally
reduce the profit ration to be earned in that business.”

8
[1938] 1 All ER 295
 The relevant questions that must be asked to consider whether this obligation has
been defeated or not are:
- when will the non-derogation principle apply?
- Does it add much to the covenants for quiet enjoy or could the two be seen
as manifestations of the same underlying principle?

- The Importance of Exclusive Possession

A tenant who has exclusive possession can exercise the rights of the landowner to exclude
both strangers and the landlord except where the landlord is entitled subject to terms of the
lease to inspect the premises and carry out repairs. Exclusive possession must be
differentiated from exclusive occupation a grantee may be exclusively entitled to occupy the
premises but not have the exclusive possession because the grantor has retained control of
the premises. See Luganda v Service Hotels.9 [Look for the case summary in the library.]

On the other hand, a grantee may have exclusive possession where she does not occupy the
premises as he or she sublets it, thus receiving rent and profits. In Street v Mountford,10 Lord
Templeman said:
“The traditional view that the grant of exclusive possession for a term at a rent creates
a tenancy is consistent with the elevation of a tenancy into an estate in land. The tenant
possessing exclusive possession can exercise the rights of an owner of the land, which is
in the real sense his land albeit temporarily and subject to certain restrictions. A tenant
armed with exclusive possession can keep out strangers and keep out the landlord
unless the landlord is exercising limited rights reserved to him by the tenancy
agreement to enter, view and repair. A licensee lacking exclusive possession can in no
sense call the land his own and cannot be said to own any estate in the land [Exclusive
Occupation]. The license does not create an estate in the land to which it relates but
only makes an act lawful which would otherwise be unlawful.”

Common Law Rule on Certainty of Term and Duration of Leases

Although leasehold terms may relate to any definable time whether long or short, the
common law has imposed a centuries-old rule that the maximum duration of the term must
be ascertainable from the very outset of the lease. The “Certainty of Term” rule embodies a
property-oriented perspective that insists that it is simply not competent and allowed at law
for the landlord to bargain for an open-ended or indefinite term of years as an act of
contractual volition.

Such duration or certain term must be determinable in numerical terms. Therefore, particular
phrases which fail to give a period of years as defined by a numerical value will fail for
uncertainty of term in court. In Prudential Assurance Co Ltd v London Residuary Body 11, A
strip of land adjacent to a highway was sold to the council. The council leased the land back

9
[1969] 2 Ch 209 at 219
10
[1985] AC 809
11
[1992] 2 AC 386
 to the seller and the agreement stated the grant was to last until the council required the
land for road widening purposes. Lord Templeman quoting Lance v Chantler said:
“A tenancy from year to year is saved from being uncertain because each party has
power by notice to determine at the end of any year. The term continues until
determined as if both parties made a new agreement at the end of each year for a new
term for the ensuing year… A lease might purport to be made for the duration of the
war subject to the tenant’s right to determine before the end of the war. A lease might
be made from year to year subject to a fetter on the right of the landlord to determine
the lease before the war ends. Both leases would be invalid because each purported to
create an uncertain term.”

In a more recent decision, Lord Neuberger in Mexfield Housing Co-Operative v Berrisford12,

quoted the Prudential case and narrowed down the certain of term rule to three things:
- An agreement for a term, whose maximum duration can be identified from inception
can give rise to a valid tenancy;
- An agreement that gives rise to a periodic arrangement determinable by either party
can also give rise to a valid tenancy;
- An agreement could not give rise to a tenancy as a matter of law if it was for a term
whose maximum duration was uncertain at the inception
- A fetter on a right to serve notice to determine a periodic tenancy was ineffective if
the fetter is to endure for an uncertain period, but a fetter for a specific period could
be valid.

Statutory Formalities for the Creation (or a Grant) of a Lease

For registered [private] land, the formalities are found in Section 40 of the Registered Land
Act. In that section, three things are required for a lease exceeding three years or one that
contains an option to extend the term, together with the original term to exceed three years,
to be registered in law;
- Open a register in respect of the lease in the name of the lessee
- File the lease; and
- Noting the lease in the burdens section of the register of the lessor’s land.

For unregistered private land, failure to use a deed where one is required usually results in
the creation of a broadly equivalent equitable lease or, although less likely, a legal periodic
tenancy.

Equitable leases
Under equitable leases, in situations where there is no agreement for a rent or rent-
free tenancy, the landlord may recover from the lessee a reasonable sum assessed at
the ordinary market value for the use and occupation of the land. As it was noted in
Shaw v Groom13, failure by the landlord to provide his tenant with a rent book as

12
[2012] 1 AC 955
13
[1970] 2 QB 504
 required by statute did not disentitle the landlord from recovering the rent from the
tenant in a court of law.

Instances of Equitable Leases

A formally defective grant or transfer which also prevents the subsequent legal
assignment of any term irrespective of its duration creates an equitable lease. It
should be noted, however, that this only applies to unregistered land. Secondly, an
equitable lease may be created where the parties merely entered into a contract to
create or transfer a leasehold term but the contract never got completed. Lastly, an
equitable lease can also arise where the lessor holds only an equitable entitlement,
for example, the fee simple estate, and is therefore incompetent to create a legal
term of years of any kind.

Reference to Underlying Contractual Intent

It is significant to note that the mere fact that a transaction is ineffective in vesting legal
rights does not prevent the court from having recourse to the contractual rock layer of the
parties’ previous dealings. The principle is that since many of the transactions are preceded
by some sort of agreement, equitable doctrines give independent effect to the contractual
rights. This conforms with two maxims of equity:

- Equity regards the intent rather than the form

- Equity regards as done that which ought to be done
Therefore, provided that the previous contractual relationship was one in which courts using
equity would grant specific performance, equity will recognize the lessee of termed lease as
holding both the legal lease and an equitable lease for the same fixed term, on the same
covenants and conditions as if the transaction was effective at law. This was expressed in
Parker v Taswell14 by Lord Chelmsford who said that “[T]he intention of the parties having
been that there should be a lease… the aid of equity will be invoked to carry that intention
into effect.”

14
[1858] 27 Ch 812
MORTGAGES/CHARGES AS SECURITY INTERESTS

The Nature of Security

A security interest is a proprietary interest in an asset owned by someone else, which is held only as
security for the payment of a debt or performance of an obligation. There are four main types of
security interests in common law:
- The Mortgage;
- The Charges;
- The pledge or pawn; and
- The lien.
The terminology, however, is not always strictly applied. Particularly, the terms ‘mortgage’ and
‘charge’ are sometimes used interchangeably, and both are sometimes used as generic terms
referring to any type of security interests. To compound the confusion, the only type of legal security
interest that can now be created over an interest in land – the ‘charge’ – is a statutorily created
hybrid of the first and second categories while borrowing characteristics from both.

Types of Security: Real Security

Real security may be created by contract or even by will and may arise by operation of law and falls
into three classes.
- First, those by which the creditor obtains proprietary rights over the subject matter of
the security, but which do not depend on the creditor obtaining possession of such
property (for instance, mortgages securities).
- Second, those by which the creditor does not obtain proprietary rights over the property,
and which depend on him obtaining possession of the property (Such as pledges and
possessory liens)
- Third, those which do not depend on the creditor obtaining either proprietary rights over
or the possession of the property ( such as charges and non-possessory liens).
Note: A Possessory Lien is a right that grants a creditor the right to remain in possession of a
property under the lien until the debtor has satisfied his or her debt. A lien is the legal claim
that one person has over the property of another as security for the payment of a debt.
This threefold classification derives from what Willes J said…

Terminology problems
In layman terms, aspiring property owner’s ‘get’ a mortgage (a valuable commodity) from a bank
which is in the business of ‘offering’ mortgages to borrowers. If there’s a default in repayment, the
bank may then decide to ‘repossess’ the property – as…

Creation, Attachment, and Perfection of Security

The security interest is created at the point when a present right, enforceable against the grantor, is
conferred on the grantee. It attaches to an asset as soon as a specific asset becomes subject to the
interest, so that from that point the grantee has a proprietary interest in the secured asset. It is then
perfected once any necessary steps have been taken to make it enforceable against third parties.

All three events may well take place simultaneously, but they need not. If, for example, you are
proposing to buy an interest in land financed by a mortgage loan and you execute the mortgage
deed before you have completed the purchase, the mortgage is created when you execute the
mortgage deed or charge instrument, it attaches to the interest when you subsequently acquire it,
and it is perfected when the mortgagee registers the mortgage at the deed’s registry.

Signaling, Monitoring, and Control

A debtor who offers a valued asset as security can be said to be signaling confidence that he will be
able to repay. This lessens the need for the lender to engage in expensive checks on his
creditworthiness. If the asset has a predictable market value which is greater than the proposed
loan, the creditor has even less need to check creditworthiness.

In other words…

Granting of Security

Terms
The borrower/person with interest in property that is presented as security is known as a mortgagor
for unregistered land and a chargor for registered land.

Mortgages