Lease or licence?

Citation

(1999), "Lease or licence?", Property Management, Vol. 17 No. 4. https://doi.org/10.1108/pm.1999.11317dab.001

Lease or licence?

Bruton v. London and Quadrant Housing Trust [1991] 30 EG 91

In this case the House of Lords had the interesting task of deciding whether the occupier of a flat in a block, which was managed by the respondent housing trust under the terms of a licence granted to the housing trust by the local authority, was himself merely a [sub] licensee, or whether he had a tenancy. The question arose because the appellant, Mr Bruton, was claiming the benefit of the statutory covenants implied under s.11 of the Landlord and Tenant Act 1985, and these of course apply only to leases and tenancies.

The basis of the argument turned on the application of the rules laid down by Lord Templeman in the leading cases of Street v. Mountford [1985] AC 809; [1985] 1 EGLR 128; [1985] 274 EG 821 to the effect that exclusive possession at a rent for a term will normally give rise to a lease or tenancy regardless of the terminology used in the agreement itself, apart from a few well-established exceptions to the general rule such as family arrangements, occupation prior to completion of a contract of purchase, etc.

In this case the local authority had granted a licence in respect of a block of flats to the housing trust and it was accepted by the court that the provisions of s.32 of the Housing Act 1985 would have made any purported grant of a lease or tenancy to the housing trust ultra vires; the housing trust in turn granted what purported to be a licence of one of the flats to the appellant. The agreement under which Mr Bruton occupied the flat called itself a licence and stated that it was for the purpose of providing temporary accommodation pending re-development of the site. Since the agreement had been made, however, the proposed redevelopment scheme had been abandoned. The flat apparently fell into a state of disrepair and the appellant sought to rely upon the implied statutory covenants to compel the housing trust to repair it. The housing trust responded by serving notice to quit.

The principal judgement, given by Lord Hoffman is rather involved and the reasoning somewhat tortuous. The judgement of Lord Hobhouse of Woodborough rather less so:

Counsel for the housing trust accepted ...that a contractual relationship of landlord and tenant suffices to make the provisions of the [1985 Landlord and Tenant] Act applicable. The question therefore is whether the agreement [in this case] creates such a relationship. The answer to this question is, in my judgement, determined by the decision in Street v. Mountford ... The agreement was an agreement to give Mr Bruton the exclusive possession of the flat for a period or periods of time in return for the periodic payment of money; the grant of exclusive possession was not referable to any other relationship between the parties. It follows that the relationship created was that of landlord and tenant and the provisions of the Act apply to the agreement. Mr Bruton is entitled to succeed ...

The fact that by granting exclusive possession to Mr Bruton the housing trust may well have been in breach of the terms of the licence granted it by the council did not affect the outcome; nor did the fact that the housing trust itself had no legal estate in the land.

Quite how the decision in this case may affect the willingness of other local authorities to grant short term licences to house the homeless and other persons in need of temporary accommodation in the future, of course, remains to be seen.