LEASES

LEASES

Def: S (1)(b) LPA 1925
3 Characteristics suggested by Lord Templeman in Street v Mountford (1985): 1. Exclusive Possession (Duration + Commencement) 2. a determinated period 3. Rent
1. Exclusive Possession: The tenant has control over anyone who enters the premises and can exclude everyone, including the landlord.
2. A determinate period: (Commencement of the lease)- Say v Smith(1563)-Time of commencement must be clear & certain /// (Duration of the Lease)- Lace v Chantler(1944)- An agreement for a lease for the duration of the war was uncertain.- Prudential Assurance v London Residuary Body(1992) applied in Mexfield Housing Co- Operative Ltd v Berrisford (2010): Service of 6-months notice was sufficient to determine yearly tenancy.
3. Rent: If rent is paid it can be seen as indicator of a lease, however in Ashburn v Arnold (1989) Fox LJ stated: "The reservation of a rent is not necessary for the creation of a tenancy." however Lord Templeman argues in the Street case that if rent does not constitute a tenancy then the distinction between a contractual tenancy and a contractual license becomes wholly unidentifiable.
Formalities:
1. Deed- S. 52(1) LPA 1925: The grant of a lease for a fixed term of more than three years must be by deed. i.e. S. 1 LP(MP) 1989- that it should be signed, witnessed and delivered. Note: if the lease is for 7 years or more it will not take effect unless it has been registered under the Land Registraction Act 2002.
2. Exception: S. 54 LPA 1925
3. Assignment requires a Deed.
4. Walsh v Lonsdale (1882) doctrine: Lease may be enforceable on equitable principle as equity looks on that as done which ought to be done i.e. it is quite clear that the parties had intended. Conditions: 1. The agreement must be subject to the payment of rent/consideration. 2. The agreement must be in writing to satisfy S. 2(1) of the 1989 Act. 3. The claimant must not have acted in a fraudulent/dishonest way (R v Tower Hamlets LBC, ex p Von Goetz (1999)). Note: Exception- Where Specific Performance Not Awarded.
The Landlord's Covenants
1. Express Covenants included in the lease
2. Implied Covenants at common law and under statute: 1. Quiet Enjoyment 2. Landlord will not derogate from his grant 3. Premises are fit for the purpose and are habitable
  1. Quiet Enjoyment (Remedies: Damages/Injunction): The tenant is guaranteed the right to enjoy the property without interference from anyone else interfering with enjoyment of the premises as in McCall v Abelesz (1976); for instance: Removal of windows and doors in Lavender v Betts (1942), or interfering with the supply of essential services in Perera v Vandiyar (1953). However,it does not extend to the condition of the property at the start of the lease as in Southwark LBC v Mills(1999) where the HL did not find the Council to be in breach because the soundproofing was in place at the start of the tenancy. S. 2 of the Protection from Eviction Act 1977- No right to deprive occupier from its premises. S. 1(2)- Restriction on re-entry without due process of law. S. 1(3)- Harassement as amended by S.29 (1) of the Housing Act 1988.
  2. Landlord will not derogate from his grant: Principle: 'you must not take away that which you have given' as in Harmer v Jumbil (1921)
  3. Premises are fit for the purpose and are habitable: 1. Caveat emtor.Caveat lessee: EJ in Robbins v Jones (1863) stated; "Fraud apart, there is no law against letting a tumble down house", for instance: defective walls in Jackson v Watson Property Investment Ltd (2008). 2. Implied condition of fitness for human habitation i.e. House should be fit for human habitation, which was not the case in Smith v Marrable (1843) because it was infested with bugs. Held: The lessee may now quit the premises without notice. 3. Implied contractual duty of care: Liverpool City Council v Irwin (1977) principle: Implied contractual duty of care to keep common parts in reasonable repair and usability, however in this case it was held that the obligation applies to private and public landlords only. 4. Liabitlity in negligence: Cavalier v Pope (1906) held not liable because was not part in contract. It should be noted that it applies only whilst occupation.
    1. 5. Section 8 LTA 1985: Fit for habitation at the beginning of the tenancy and implied undertaking that the landlord will maintain the premises in condition throughout tenancy. 6. Section 11 - 16 LTA as amended by HA 1988 S. 116: Landlord must keep structure/building in repair etc...Quick v Taff ely BC (1986) it was held that disrepair is related to the physical condition of whatever has to be repaired." 6. Liability under Defective Premises Act 1972 S.4
3. Remedies: 1. Damages for breach of covenant: Calabar Properties Ltd v Stitcher (1984) - Damages are intended to put the tenant in the position contracted for, not to punish the landlord. as in Earle v Charalambous (2006) 2. Specfic Performance: S. 17 LTA 1985. 3. Remedies for self-help: Lee Parker v Izzet (1971)- doest not allow the tenant to breach his own covenant. Metropolitan Properties co Ltd v Wilson (2002): Held: No self help because iit was not shown that the lessor had failed to take the necessary steps carrying out repairs. 4. Appointement of a receiver (only in extreme cases): For instance: Hart v Emelkirk ltd (1982). It applies when landlord is not making repairs leaving the property at risk of progressive degradation.
Remedies for breach of tenant's covenants:
1. Forfeiture: Clause reserving a right to landlord to re-enter and determine the lease in the event of breach of tenant's covenant(s). Most powerful remedy because it has the power to terminate lease. NEED COURT ORDER FOR PREMISES LET AS A DWELLING: s. 2 PROTECTION FROM EVICTION ACT 1977.
  1. (a) BREACH OF COVENANT NOT RELATING TO RENT: S. 146 LPA 1925 Notice must: - Specify the breach Adagio properties ltd v. Ansari WAYCOURT LTD v. Chelsea - Require compensation (if the landlord desires it) - Require the breach to be remedied if it is capable of remedy. Is breach capable of remedy? (I) breach of covenant not to use premises for immoral purposes RUGBY SCHOOL (GOVERNORS) v. Tannahill (1935)- use or premises for immoral purposes was incapable of remedy. Cf. GLASS v. Kencakes (1966)- tenant had remedied his breach when he forfeited the sub-lease of his sub-tenant who used the premises for immoral purposes. Patel v. K&J Restaurants- tenant had breached covenants not to use premises for illegal or immoral purposes. CA held that breach was irremediable but agreed with judge’s decision that relief from forfeiture should be granted.
    1. (Ii) BREACH OF COVENANT NOT TO ASSIGN OR SUBLET Scala house and district property co. Ltd v. Forbes (1974)- subletting without landlord’s consent was incapable of remedy. Confirmed obiter in expert clothing (1986) and savva v. Hussein (1996). BON APPETTITO LTD v. Poon (2005)- subtenancy in breach of covenant was not capable of remedy. Akici v. BUTLIN LTD (2006)- BREACH OF COVENANT AGAINST PARTING WITH POSSESSION OR SHARING POSSESSION, WHICH DID NOT CREATE OR TRANSFER A LEGAL INTEREST, WAS CAPABLE OF REMEDY UNDER s. 146. IN PATEL v. K&j restaurants ltd ca stated that: - If a tenant successfully excluded its sub-tenant without court proceedings, a breach might be remedied, but if sub-tenant was let back in, breach could not be remedied. - Relief from forfeiture could be granted because breach had not been wilful.
    2. (Iii) BREACH OF OTHER NEGATIVE COVENANTS Test = is breach of covenant one that is in fact capable of being remedied? Savva v. Hussein- breach of a negative covenant (not to make alterations) was capable of being remedied
    3. (Iv) BREACH OF POSITIVE COVENANTS Test = can compliance with the covenant plus monetary compensation remedy the harm which landlord has suffered? Expert clothing service and sales ltd v. Hillgate house ltd- breach of positive covenants (to reconstruct premises within a specified time) and court of appeal held that they were remediable.
  2. (B) BREACH OF COVENANT TO REPAIR S. 146 notice must inform tenant of right to serve counter-notice within 28 days. When it serves counter-notice, l must obtain leave of the court before starting possession proceedings . Act sets out circumstances in which court will grant leave: Circumstances necessitate the immediate remedying of the lack of repair: LAND SECURITIES PLC v. Receiver for the metropolitan police district. IF L EFFECTS THE REPAIRS, COURT CANNOT SUBSEQUENTLY GIVE T LEAVE TO PROCEED UNDER THE 1938 ACT-SEDAC INVESTMENTS LTD v. TANNER. INSTEAD L SHOULD SUE FOR A DEBT DUE- HAMILTON v. MARTELL SECURITIES LTD. WHERE L SUES FOR A DEBT DUE, 1938 ACT DOES NOT APPLY- JERVIS v. HARRIS.
  3. (C) BREACH OF COVENANT FOR NON-PAYMENT OF RENT Formal demand for rent due before sunset on the day the money is due. Not necessary if: - Expressly excluded by lease. - S. 210 common law procedure act 1852 applies: 6 months’ arrears and insufficient goods available for distress to cover arrears.
  4. Relief from forfeiture - Non-payment of rent (A) ABSOLUTE RIGHT TO RELIEF WHERE ARREARS AND COSTS ARE PAID BEFORE TRIAL. (B) tenant may apply for relief within 6 months of landlord regaining possession by action. Relief will be granted if it is equitable to do so in the circumstances. - Other breaches of covenant S. 146(2) lpa 1925: tenant may apply for relief from forfeiture. Court has discretion to grant or withhold relief as it thinks fit. S. 146(2) directs the court to have regard to the conduct and all the other circumstances. SHILOH SPINNERS LTD v. Harding Court should have regard to: - WILFULNESS OF DEFAULT e.G. Greenwood reversions - Gravity of breach - disparity between value of property and extent of damage caused S. 146(4)- sub-lessee or mortgagee has right to apply for relief against forfeiture
  5. OTHER RESTRICTIONS ON EXERCISE BY LANDLORD OF FORFEITURE 1. Equality Act 2010 s. 15(1) Equality Act 2010- tenant with disability may be able to defend possession proceedings if L treats T unfavourably because of disability. Onus on L. [Old law- Disability Discrimination Act 1995, courts gave limited effect to Act- Malcolm v. Lewisham LBC, Beedles v Guinness Northern Counties Ltd, Lalli v. Spirita Housing.]

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