Q) Last year Abe and Bee, a young couple, moved into a large, one bedroom flat above a

shop in Bow. The registered freehold of the property was owned by Cleaneze plc, a cleaning
company that used the shop as a launderette. In 2010 Cleaneze plc had entered into a forty
year license of the flat with Dot, Bee’s mother who was the manager of the launderette.
Before moving into the flat Abe and Bee each signed separate copies of an identical
document, although Abe signed his copy two days after Bee because he was
unexpectedly delayed on his return from holiday. Each document included the following
terms: a) This agreement is a license and will last for five years or until Dot needs
the flat back for her own occupation. b) Abe and Bee shall pay an occupation charge of
£200 per week. c) Cleaneze plc will provide cleaning services every Sunday morning
between 9.00am and 11.00am. d) Dot will retain keys to the flat. e) Since Abe and Bee have
lived in the flat the cleaning services have been provided only once, even though Abe emailed
Cleaneze plc with a reminder. Abe and Bee seek your advice about the status of their
agreement. Advise them. (2015 Zone A)
The concerned question pertains to lease license distinction.We will determine the nature of the
agreement rather than relying on what the parties have stipulated. We also determine the effect
of this arrangement between the relevant parties on the third parties.

By way of background,Leases are proprietary rights capable of binding third parties and creates
landlord-tenant relationship while license is a personal right which is not capable of binding third
parties.Lord Templeman laid out three conditions namely exclusion possession,rent charge and
term certain in the case of Street v Mountford and stipulated that the existence of these three
conditions will normally amount to lease.We must be aware that the idea that the parties can
stipulate the legal nature of the agreement which was allowed in Somma vs Hazlehurst is
overruled in Street.Only genuine clauses will be given legal effect.Genuinity will be determined
by examination of the circumstances and by parties actual practice.We shall be discussing
these three conditions stipulated in Street separately.

Our first issue pertains to whether there was exclusive possession(hereinafter referred to as EP)
or not.Tenant is said to be in exclusive possession of the land if even the landlord cannot enter
without the permission of the tenant.Landlord can reserve limited rights but to exercise those
limited rights tenant’s consent should be obtained. In our scenario few clauses are inserted in
an attempt to avoid enjoyment of exclusive possession.In relation to retention of keys relying on
the case of Aslan vs Murphy it is likely to be regarded as sham as retention of keys will not
automatically negate EP.In our fact scenario,it is not explicitly mentioned that Dot by retaining
the keys entered the apartment any time he wanted too without Abe’s permission.If this is the
case then Dot could claim that he had retained exclusive possession.As the Dot’s actual
practice do not indicates he had intention of retaining control by virtue of keys hence it will be
sham (Nicolaou vs Pitt).Moreover,Dot can argue on basis of provision of services that he
retained EP.This will be refuted because to negate EP on basis of provision of services,services
should be genuinely provided that too on continuous basis(De Silveso)(Merchant vs
Chanter).In our case services were only provided once.On these facts it can be confidently said
that Abe was in exclusive possession of the flat although the agreement on its face states that it
is a license agreement.We are aware that the agreement has to be determined
objectively(considering parties actual practices and circumstances).However,the landlord can
raise an argument that in the absence of four unities which are required for a lease to exist
relying on the case of AG Securities vs Vaughn plus both of them were required to sign a
separate agreement Mikeover vs Brady this is to be regarded as license.But in relation to
absence of four unities in the case AG Securities it should be noted that in that specific case the
individuals were unconnected and came in the possession at different time,were granted
different rooms and every individual was responsible for his/her own rent however in our case
the individuals are young couple unlike in Mikeover where the aggrieved party were just friends
and in the case of Antoniades vs Villers this signing of separate agreement by a couple was
held as sham.With regards to four unities,from an objective standpoint the three unities namely
time,interest and possession are very much there as both moved into the flat at one day,both
have equal shares and both are equally using the flat and Dot can only raise an argument in
relation to unity of title which will be refuted as was in the case of Antoniades.

The second issue we must deal with is whether the duration for which the lease was granted
was certain or uncertain.In the case of Lace vs Chantler,for example, a lease expressed to last
for the duration of the Second World War was deemed to be too uncertain.Similarly,in the case
of Prudential Assurance vs London Residuary Body grant of lease for till the occurrence of
an event was construed as indeterminate period and was held void but the court held that in the
absence of term certain,parties exclusive possession at rent charge will be referred to as
periodic tenancy which can be revoked by issuing a notice to the tenant.Application of this rule
can be viewed in the case of Mexfield vs Berrisford and in this case it was established that
uncertain term is to be deemed as tenancy for life determinable on the occurrence of the
uncertain event.Turning over to the facts of the question at hand,the term is uncertain as we are
aware if an event marks the end of an agreement it is to be regarded as uncertain,moreover,the
word ‘or’ also suggests that the term is uncertain.Abe cannot rely on the Berrisford principle as
the Dot in question is not a capable grantor meaning he himself has been granted forty year
license so he cannot grant a lease greater than his legal estate.Hence the term is to be
regarded as uncertain.

The last consideration in determining whether it is a lease or license is with regards to rent
charge.Given facts explicitly mention that occupation charge 200 pounds has to be paid.On this
fact it is established that rent was charged.Though by virtue of s.205 of Law and
Property(hereinafter referred to as LPA) Act,1925 applied in Ashburn Anstalt vs Arnold rent is
not necessary for a lease to exist.In the start of the anwer it was mentioned as one of the
important characteristic because street stipulates the common law rules and LPA is a statutory
provision.

In the above light of legal analysis and relying on the case of Addiscombe Garden Estates
where it was established that courts will consider all the three factors namely exclusive
possession,rent charge and term certain conjunctively before establishing it as a lease or
license.In the absence of term certain this agreement shall be regarded as license.Accordingly,
Abe cannot rely Bruton vs London and Quadrant Housing Trust and argue that it doesn't
matter that Dot has no legal estate because Bruton also requires existence of all three
conditions of Street which are not present in our current fact scenario.Moreover,Dot can raise
an argument relying on Jones vs Padvatton that the arrangement was domestic and was not
intended to be legally binding.In relation to this as all the formalities were fulfilled evident from
signing an agreement this argument will be rebutted as intention to create legal relation is
inferred (Meritt vs Merritt).On these facts it is established that the arrangement between the
relevant parties is to be regarded as a license.The rent will be considered as consideration for
the contract and the license will be a contractual license subject to contract law rules.