In essence, “leases” are created between landlords and tenants as contracts to grant exclusive possession of the land for a defined period of time, in exchange of rent from tenant. Leases give contractual interests to tenants, while at the same time creates proprietary interests in the land by granting exclusive possession, which elevates a tenancy into an “estate/interest in land”. It can therefore be understood and has been suggested by commentators that leases are of dual nature and should “be characterised as something of a hybrid”: a hybrid of contract and estate in land. In the landmark case of Bruton v London and Quadrant Housing Trust, court to a certain extent disregarded this dual nature and consequently revolutionized the long-established understanding and principles of lease/tenancy and created a new species of “lease”. This essay will explain the decision made in Bruton, explore its implications and elucidate the potential problems associated with it.
The defendant charitable organization London & Quadrant Housing Trust (“LQHT”),entered into an agreement with and was granted a licence by the local authority (“the Council”) to use a block of flats owned by the Council for temporary housing accommodation for homeless persons. Both parties confirmed the nature of agreement as a licence with no proprietary interest or estate granted to the LQHT.
LQHT executed a licence agreement with the plaintiff, Mr. Bruton, to allow him to reside in the flat. According to the licence agreement, LQHT preserved the right to enter the flat for reasons of inspection and repair works. Mr. Bruton later initiated proceedings against LQHT, alleging that he occupied the flat as a tenant and LQHT was in breach of the implied covenant to repair under Section 11 of a Landlord and Tenant Act. LQHT defended its case and claimed that Mr. Bruton was merely a licensee of the flat that LQHT did not owe him any implied obligation to repair under the Act.
Although the Court of Appeal held that the agreement was a licence, on appeal the House of Lords reversed that decision and concluded that the agreement was in fact a lease (albeit not in the “traditional” sense) and Mr. Bruton was an effective tenant of the flat.
Ratio: the Street v Mountford legacy
The judgment made in Brutonby the House of Lords was a highly controversial one, and it was generally based on the understanding and interpretation of the Street v Mountford case which served as a justification of its departure from longstanding principles.
In the judgment, court referred to a set of characteristics described by Lord Templeman in Street v Mountford to ascertain the nature of a “tenancy”: “to constitute a tenancy the occupier must be granted exclusive possession for a fixed or periodic term certain in consideration of a premium or periodical payments”. After analyzing the facts of Bruton, court reached the conclusion that the agreement between LQHT and Mr. Bruton did possess all the characteristics of a tenancy. The language used and the label placed upon the agreement was decided by court as irrelevant as the court would investigate and discover the true nature of the agreement, and decide “if upon its true construction it has the identifying characteristics of a lease”. As Lord Jauncey puts it, “it is the legal consequences of the agreement which is determinative rather than the label”.Therefore, even though the agreement was labelled as “license”, court has decided from facts and construction that “prima facie the agreement constituted a tenancy.”
The cornerstone of the decision made in Bruton was the interpretation made by Lord Hoffmann regarding the nature of a lease/tenancy. Lord Hoffman defined a lease/tenancy as follows: “lease or tenancy describes a relationship between two parties who are designated landlord and...