LEVEL 6 UNIT 10 LANDLORD AND TENANT SUGGESTED ANSWERS JUNE Note to Candidates and Tutors:

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1 LEVEL 6 UNIT 10 LANDLORD AND TENANT SUGGESTED ANSWERS JUNE 2011 Note to Candidates and Tutors: The purpose of the suggested answers is to provide students and tutors with guidance as to the key points students should have included in their answers to the June 2011 examinations. The suggested answers set out a response that a good (merit/distinction) candidate would have provided. The suggested answers do not for all questions set out all the points which students may have included in their responses to the questions. Students will have received credit, where applicable, for other points not addressed by the suggested answers. Students and tutors should review the suggested answers in conjunction with the question papers and the Chief Examiners reports which provide feedback on student performance in the examination. SECTION A Question 1 The scope and effect of the implied covenants of quiet enjoyment and nonderogation from grant will be examined in turn and an attempt made to determine their effectiveness in protecting tenants enjoyment and use of a property. The implied covenant of quiet enjoyment is universal in its scope. Unless provided for by way of an express covenant, it will be implied into all contracts for lettings, a term taken to include not only legal but also equitable leases as demonstrated by Markham v Paget (1908). The covenant of quiet enjoyment has three main aspects. The first two of these aspects amount to a qualified undertaking on the part of the landlord as to title and an undertaking to put the tenant in possession. These undertakings protect a tenant s enjoyment and use of the property in the sense that they ensure a course of redress if possession is not granted. They are of limited significance, however, once the tenant has gained possession. The undertaking as to title only guarantees a landlord has sufficient title to put the tenant into possession and it does not necessarily follow that such an interest will be maintained throughout the term. The undertaking to grant possession is satisfied once it is completed and will no longer be actionable. The third aspect of the covenant of quiet enjoyment is that the landlord undertakes to ensure that the tenant will enjoy the property free from physical interruption. To be actionable any disturbance suffered by a tenant must be substantial. In Browne v Flower (1911) substantial disturbance was regarded as disturbance so substantial or intolerable as to justify the tenant in leaving the demised premises and many of the older authorities limit the principle to disturbances that have a physical origin. Nevertheless, more recent authorities, Page 1 of 12

2 appear to adopt a broader common sense approach and tend to be in keeping with the view expressed by Lord Denning in McCall v Abelesz [1976] that the issue is whether there has been some interference with the tenant s freedom of action in exercising his rights as a tenant. This aspect of the covenant of quiet enjoyment protects a tenant s enjoyment and use of a property but it does have certain limitations. Disturbances of a temporary nature have not been regarded as actionable and the covenant does not extend to matters of privacy. For example, in Browne v Flower (1911) there was no breach despite the erection of a public staircase overlooking the dwelling. Further the covenant only extends to the landlord and those that derive title from him. The implied covenant of non-derogation from grant protects a tenant s use of property in that the landlord undertakes not to do anything inconsistent with the purpose of the letting. For example in Aldin v Latimer Clark, Muirhead & Co. (1894) a landlord was found to be in breach when he obstructed the airflow over land he had let as a timber yard. By its nature this covenant is far from universal in scope. It will only apply where a purpose for a letting can be found and only in circumstances where the landlord maintains control of the adjoining land. Further in Kelly v Battershell (1949) it was held that the covenant does not extend to comfort. In summary the implied covenants of quiet enjoyment and non derogation from grant go some way to protect a tenant s enjoyment and use of property. Nevertheless, as has been demonstrated, both limited to some degree in their extent and application and a case can be made that sometimes such limitations stand at odds with modern sensibilities. Question 2 (a) The common law definition of repair will be examined before the significance of the definition is discussed. A definition of repair is given by Buckley L.J in Lurcott v Wakeley & Wheeler (1911). Repair is the process of making good damage by replacement of subsisting parts. The common law draws a distinction between repairs, on the one hand, and renewals on the other, although the language adopted by the authorities is not always consistent. Renewals are seen as more extensive than repairs and outside the scope of an obligation to repair. McDougall v Easington District Council (1989) sets out three practical tests that may be used to draw the distinction between repairs and renewals. The first test examines whether the alteration affects the whole or part of the structure. If the work to be undertaken affects the whole, it is likely to constitute a renewal rather than a repair. In Lurcott v Wakeley & Wheeler (1911), for example, the rebuilding of a wall, which would have required the digging of footings, concrete foundations and the installation of a damp course, was seen to be beyond a normal obligation to repair. The second test examines whether the work will result in a change in character of the property. If the character of the property changes, the work will be a renewal. The third test compares the cost of works Page 2 of 12

3 with the value of the premises. The courts are free to adopt one or all of the tests as the circumstances of the case demand. The principal significance of the common law definition of repair is that it underlies the interpretation of express covenants to repair and the statutory obligations under the Landlord and Tenant Act Significantly, on account of the common law definition, a party under an obligation to repair is not required to undertake work that amounts to a renewal, irrespective of the state and condition of the premises. The practical application of the change in character test as set out in McDougall v Easington District Council (1989) means that if disrepair stems from an inherent defect there will be no obligation to repair even through the property may be barely habitable or fit for purpose, as illustrated by the decisions in Quick v Taff Ely Borough Council (1986) and Post Office v Aquarius Properties Ltd. (1987). In summary, while the law seeks to do justice between the parties in a contractual sense, such a focus means that the actual condition or fitness of a property is really only ever of second importance. This would indeed appear to be a serious shortcoming in relation to the law which governs the repair and maintenance of leasehold property. (b) The are two main statutory obligations to repair, both of which are to be found in the Landlord and Tenant Act The scope and effect of each of these obligations will be outlined and an attempt made to assess their effectiveness. S.8 of the Act requires a landlord to maintain a dwelling as fit for human habitation for the duration of the tenancy. It is a modern enactment of a provision that dates back to the 19 th Century and, according to the Law Commission, the provision has much to recommend it. Indeed, it is true that the provision is modelled on well understood common law principles and the physical state of the premises is central to its considerations. Unfortunately, the provision is limited in its application since the rental limits have not kept pace with inflation. As it currently stands, it only applies to houses let at very low rents. The narrowness of its application does indeed demonstrate a serious shortcoming in the law. S.11 of the Landlord and Tenant Act 1985 requires a landlord to keep in repair the exterior structure of a premises and the installations which supply services such as water, gas and space heating. It is much wider in scope than s.8 as it applies to dwelling houses let for a term of less than seven years. Further, contracting out of the section is only possible with the leave of a court and is rare in practice. The fact that the landlord must keep the premises in repair ensure the obligations apply for the duration of the tenancy. As originally enacted there was a major flaw in relation to purpose built blocks of flats, as highlighted by Campden Hill Towers Ltd v. Gardner (1977) but this was addressed by s.11(1a) which was introduced by s.116 Housing Act The provisions of s.11 go some way to address the shortcomings of the common law. The application of the section is wide and it covers the vast majority of short term residential lettings. The requirements of the section are tightly defined and the focus of a court s investigation will be the state of repair of the premises rather than the nature of any agreement between the parties. Nevertheless, there remains a serious shortcoming in that s.11 imports the common law Page 3 of 12

4 definition of repair. As a result there will be no obligation to carry out work that goes beyond repair even if the property is unfit for habitation. In summary it appears that there are indeed serious shortcomings in relation to statutory obligations to repair. While s.11 of the Landlord and Tenant Act 1985 does much to improve the position in relation to short term residential lettings, s. 8 of the Act is too limited in scope to be of much use. Further there are many types of tenancy that fall outside the ambit of statutory protection. Question 3 The enfranchisement provisions of the Leasehold Reform Act 1967 and the Leasehold Reform Housing and Urban Development Act 1993 will be examined before an attempt is made to determine the extent to which long leaseholders of flats are in a less advantageous position than long leaseholders of houses. The Leasehold Reform Act 1967 applies to houses. A house is defined by s.2 of the Act and requires the house to be structurally detached. So long as a tenant meets the qualifying requirements set out in the Act, he will acquire the right to be granted the house and the premises for an estate in fee simple absolute by virtue of s.8(1). A tenant is required to serve a standard from notice on the landlord, commonly referred to as a desire notice. The notice must set out the intention to acquire the freehold. Once the notice has been served, a tenant will be entitled to enforce the grant by contractual methods as s.5(1) specifies that on service of the notice, the parties will be regarded as having entered a contract for sale. A landlord must reply within two months and the reply must be in a standard form, as per paragraph 3. A landlord can set out grounds for any opposition to the claim but there is only one ground for refusal in relation to enfranchisement, that is that the premises are reasonably required for occupation as the only or main residence of the landlord or a member of his family. The Act sets out a procedure in s.9 to assist in the calculation of price. The Leasehold Reform Housing and Urban Development Act 1993 applies to blocks of flats. The definition of premises is set out in ss.3 & 101. It will apply to any self contained building which includes two or more flats. The right to enfranchise is a collective rather than an individual right. Tenants who wish to enfranchise must appoint a nominee purchaser to acquire the freehold as set out in s.15. Typically this will be a registered company limited by guarantee, although under the Act the purchaser may be any individual. S.15 of the Act contains provisions which allow the tenants to terminate the appointment if necessary. Once appointed, the nominee purchaser must serve a desire notice on the reversioner and the notice must set out the details required by S.13 of the Act. The Act acknowledges that the reversioner may not always be readily identifiable and provides provisions to acquire intermediate leasehold interests. This includes, inter ali, the names of the parties, a plan of the premises and the proposed purchase price. The price will typically be obtained by the use of a qualified surveyor. Once the initial notice is served, the nominee purchaser will become liable for the reversioner s costs. The reversioner is required to serve a counter notice either admitting or denying the claim or setting out an intention to apply for an order that collective shall not be enforceable. Such an order will only be granted if the reversioner can demonstrate that he intends to demolish or reconstruct and the application of this ground is severely curtailed by the requirements of S.23(1). When comparing the operation of the enfranchisement provision of the Leasehold Page 4 of 12

5 Reform Act 1967 and the Leasehold Reform Housing and Urban Development Act 1993 it is clear the latter is far more complicated. This is not necessarily entirely the fault of the legislation, as collective enfranchisement is by its nature more complex. There are more parties involved, there will be a financial commitment on all tenants and there is a far greater likelihood of their being intermediate leasehold interests. Further the future maintenance of common parts needs to be ensured. For these reasons long leaseholders of flats are in a less advantageous position than long leaseholders of houses when they exercise their right to collectively enfranchise. Question 4 The rules governing rent review and succession in relation to the Rent Act 1977 and the Housing Act 1988 will be set out before an attempt is made to draw a comparison between the two Acts. S.67 of the Rent Act provides a landlord or a tenant with the right to register a fair rent in relation to a given property. The provisions apply to regulated tenancies, a term used by the Act to encompass protected and statutory tenancies. Once a fair rent is registered, ss.44 and 45 of the Act provides that the registered rent is the maximum rent that a landlord can recover against the property. By virtue of s.66 a public register must be maintained and kept up to date. As originally enacted, a fair rent could be back dated to the date of the application but following the Housing Act 1980, it is now effective from the date of registration. The Act itself does not define a fair rent but provides some guidance in the form of the statutory regards and disregards to be found in s.70 of the Act. Nevertheless, in the words of Lord Reid in Mason v Skilling [1974], it is open to the adjudicator to adopt any method or methods of ascertaining a fair rent provided those methods are not unlawful or unreasonable. A number of methods have been adopted over the years, but in all cases scarcity value is left out of account. As a result, Rent Act properties are typically let below open market rent. The Housing Act 1988 abandoned the principle and machinery of a fair rent. Anti avoidance provisions aside, the Act makes no provision for altering rent in relation to fixed term tenancies. The agreed rent will stand for the duration of the term unless there is express provision in the lease in the form of a normal rent review clause. In such cases rent determination will be made by reference to common law principles. In relation to periodic tenancies, if there is express provision in the lease, this must be followed. In the absence of any such provision, a landlord can increase rent by following the notice procedure set out in S.13 of the Housing Act A tenant served with a notice has the option of entering negotiation with the landlord or he may refer the matter to a Rent Assessment Committee under s.13(4). As with the Rent Act 1977 guidelines are given in the Act as to the statutory regards and disregards but the final determination of rent will tend to higher as scarcity value is taken into account when determining rent. Assured tenancies are to be set at market value. The Rent Act 1977 provides that a tenancy may pass by way of succession. The requirements a successor must meet are set out in Schedule 1 of the Act and differ depending upon whether the successor is a surviving spouse or another member of the deceased s family. In all cases, any successor will have to have demonstrate that they lived with the original tenant. As originally enacted, two transmissions were possible in all cases but, following amendments made by Page 5 of 12

6 Schedule 4 of the Housing Act 1988, a second transmission of a Rent Act tenancy is only possible if the first successor was a surviving spouse. The Act does not define the term family member and this has been a matter of interpretation for the courts. Typically they adopt a family nexus test and the word family is given its everyday meaning. There has been much litigation in relation to the position of cohabitees and same sex couples but these problems have largely been resolved by other developments. Following the Housing Act 1988, cohabitees no longer had to apply as family members and could succeed on the same basis as a surviving spouse while the case of Ghaidan v Godin- Mendoza (2004) extended the right to same sex couples. The succession rules in relation to assured tenancies under the Housing Act 1988 depend on whether the tenancy is of a fixed term or is periodic. In relation to the former, the normal rules of intestacy apply but Ground 9 gives a landlord a mandatory right to seek possession in view of the change in ownership. In relation to periodic tenancies, only a spouse may inherit. The requirements are set out in S.17, the central requirement being that the spouse occupied as their only or principle home at the time of the death. Thus, as can be seen, there are major differences in principle between the Rent Act 1977 and the Housing Act In relation to rent, while the Rent Act 1977 placed a cap on rents, the Housing Act 1988 abandoned the principle and machinery of a fair rent and adopted the principle of a market rent. Indeed, the principal focus of the Housing Act s provisions in relation to rent is concerned with raising not capping the rent. In relation to succession, the Housing Act 1988 is far more restrictive in relation to the class of persons able to claim and in many circumstances a landlord will be able to recover the property by virtue of a mandatory ground for possession. In view of these differences, it seems fair to claim that the Housing Act 1988 strengthens the hand of landlords and the Rent Act 1977 is a reflection from a paternalistic era. Page 6 of 12

7 SECTION B Question 1 The type of tenancy each of John s tenants possess will be determined before advice is given as to the steps he should take to gain possession. John should be informed that as the lettings are short term residential and the tenancies were granted after 1989 they will be regulated by the Housing Act 1988 unless the tenancies fail to meet the requirements of s.1 or the tenancies are excluded by virtue of s.43. On the facts, it appears that both tenancies meet the requirements of s.1, that is both premises amount to dwelling houses within the meaning of the Act, both are let as separate dwellings and each is occupied by the tenant as their only or principal home. Neither of the tenancies fall within the exceptions set out in s.43 of the Act. It has been noted that there is a possibility that Ken may occupy more than one residence, as he is absent from the flat at weekends. In cases where a tenant occupies more than one residence, it will be a question of fact for the court to decide which is the principal home as was decided in Crawley Borough Council v. Sawyer (1988). On this basis, John could argue Ken s tenancy fails to meet the requirements of s.1 but such a line of argument has little to recommend it on the current facts and would be unlikely to succeed. Thus both tenancies will be regulated by the Housing Act Although both leases were created in the same way, Ken and Sasha will hold different tenancies on account of the different commencement dates. Ken s tenancy was granted in 1995 and will be subject to the provisions of the Act as they were originally enacted. Before 28 February 1996, Assured Shorthold Tenancies could only be created by serving a S.20 notice on the tenant at the start of the tenancy. As notice was not served on Ken, the tenancy will take effect as an Assured Tenancy. As the rent is paid monthly and there is no express agreement to the contrary it is reasonable to conclude that Ken has a monthly periodic tenancy. Sasha s tenancy was granted in 2005 so it will be subject to the provisions of s.19a of the Housing Act, inserted by s.96 of the Housing Act The absence of any notice means that the agreement will take effect as an Assured Shorthold Tenancy. As with Ken s tenancy, the facts suggest that it is a monthly periodic tenancy. With regard to gaining possession of the two properties, John should be advised that he must take the proper steps or risk incurring civil and criminal liability. In relation to criminal liability, both tenants occupy as residential occupiers within the meaning of the Protection from Eviction 1977 so John could potentially be liable for the criminal offences of unlawful deprivation of occupation under s.1(2) and harassment under s.1(3a). The penalties for these offences are a fine or imprisonment or both. In relation to possession, as the tenancies are protected under the Housing Act 1988, any purported termination will have no effect and John will only be able to terminate and gain possession of the properties if he follows the procedures set out in the Act. He must serve notice under s.8 of the Act and he will be required to establish one of the available grounds for possession recognised by the Act. In relation to Ken, John will have to rely on the fact that Ken is in arrears with his rent. There are two relevant grounds. The first of these is ground 8. This is a mandatory ground which means that the court must grant an order for Page 7 of 12

8 possession by virtue of S.7(3). To establish this ground, at least two months rent must be in arrears, both at the time of the service of the S.8 notice and the date of the hearing. If Ken were to pay the outstanding arrears before the hearing John would not be able to rely on this ground. The other possible ground is ground 10. To establish ground 10, John only has to demonstrate that there was some rent outstanding when the s.8 notice was served. Unfortunately, ground 10 is a discretionary ground so the court will only make an order for possession if it considers it reasonable to do so (s.7(4) HA). On the current facts, John would be unlikely to succeed on this ground. Ground 11 can be dismissed as it does not apply in these circumstances. In relation to Sasha, John should serve notice under s.21. As Sasha is an assured shorthold tenant John can terminate the tenancy by serving two months notice in writing. Once the two month notice period has expired John will be able to apply to the court for an order for possession. This is a mandatory ground so the courts must order possession. In summary, Ken occupies as an Assured Tenant and John only has a realistic chance of gaining possession if Ken continues to refuse to pay the rent. Sasha occupies as an Assured Shorthold Tenant under the Housing Act 1988 and John will be able to regain possession of the flat by serving two months notice in accordance with section 21 of the Act. Question 2 (a) Susan should be advised that the courts strictly construe conditions attached to options to renew. For example in West County Cleaners (Falmouth) Ltd v Saly (1966) an option to renew on condition that all the covenants in the tenancy have been observed and performed could not be exercised on account of the tenant s failure to comply with a covenant that required him to paint the premises in the last year of the term. It should be noted, however, that in Bass Holdings Ltd v Morton Music Ltd (1987), it was held that if a breach has been rectified an option may still be enforceable. In Bass Holdings, the tenant was able to exercise an option to renew expressed to be conditional on him performing and observing the covenants even though forfeiture on terms had been granted during the tenancy. It is not entirely clear from the facts of the current case whether Susan rectified the breach. Certainly, she could argue that the principle in Bass should apply, but the Bass case could well be distinguished on its facts. For these reasons Susan is unlikely to be able to exercise the option to renew. (b) As the tenancy is governed by the 1954 Act the tenancy will continue by virtue of s.24 of the Act and National Property Holdings plc will only be able to terminate in accordance with the provisions of the Act. Further, Susan has a statutory right to request a renewal of the holding, that is the part of the property that is occupied for business use. National Property Holdings plc may only oppose her request if they can make out one of seven grounds of opposition listed in s.30(1) of the Act. Susan should be advised to make a request for a new tenancy under s.26 of the Act. It should be noted that in relation to the terms of a renewed tenancy, National Property Holdings plc will have the right to apply for an interim Page 8 of 12

9 rent. Further where agreement can not be reached the court may make a final determination of terms. From the facts, it appears that National Property Holdings plc is likely to seek to oppose the tenancy on the basis of ground (f), that is on the basis that they intend to demolish and reconstruct the premises. To rely on this ground National Property Holdings plc will have to demonstrate not only that they have firm plans (Gatwick Parking Service v Sargent (2000)) but also that the work involves substantial interference with the structure of the building and that this can not be done without the need for possession. Further, the work must be undertaken by the landlord and the ground will not apply if the land is sold to a developer. For these reasons National Property Holdings plc will not be able to avoid the provisions of the Act by selling the land. (c) The covenant against improvements in the lease with Oak Properties Ltd is a qualified covenant against improvements and so will be subject to s.19(2) of the Landlord and Tenant Act This has the effect that Oak Properties Ltd may not unreasonably withhold their consent to improvements. Although it does not appear an issue in the current case, it should be stated that the addition of a new floor would amount to an improvement on the basis of the reasoning in Lambert v FW Woolworth & Co. Ltd (1936) that is to say when looked at from the point of view of the tenant it amounts to an improvement. The central issue in relation to Oak Properties Ltd is whether the conditions amount to an unreasonable refusal. In relation to the 5000 for Oak Properties Ltd s expenses, a landlord is entitled to charge a reasonable sum for legal expenses and the payment of a reasonable sum in respect of any damage to the property or diminution in value by virtue of s. 19(2). On the facts, however, 5000 appears rather costly and may well be an unreasonable condition. A breakdown of the expenses might help to clarify the position. In relation to the request to reinstate the premises at the end of the term, this will be regarded as a reasonable request if the alteration does not add to the letting value of the premises. On the facts, however, it would appear that the addition of a new floor would increase rather than decrease the letting value. As such it appears this request is unreasonable. The increase in rent is not justifiable. For these reasons Susan should be advised that Oak Properties Ltd s conditions do not appear to be reasonable. Question 3 (a) To advise Commercial Property Holdings plc, the legal framework which regulates the granting of consent will be set out before an attempt is made to determine whether Commercial Property Holdings plc has acted appropriately. The covenant preventing assignment of the lease is a qualified covenant against assignment and as such is regulated by s.19(1) of the Landlord and Tenant Act This implies the proviso into leases that a landlord will not unreasonably withhold consent. There is a significant body of case law on how reasonableness is assessed for the purposes of s.19(1), but the case of International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] sets out six clear guidelines. In addition s.144 of the Law of Property Act 1925 (LPA 1925) Page 9 of 12

10 provides that no fine or similar sum may be made payable to a landlord for the granting of consent. The Landlord and Tenant Act 1988 introduced a number of provisions relevant to the operation of s.19(1) LTA S.1(6) of the LTA has the effect of reversing the common law burden of proof in relation to s.19(1) applications, so it will be for Commercial Property Holdings plc to show that consent was reasonably withheld. S.1 of the 1988 Act also places a statutory duty on landlords to reply to any written requests within a reasonable time. If a landlord fails to respond, or fails to respond in a reasonable time, he may be liable in damages for breach of statutory duty. When dealing with a request under s.1, a landlord must respond in writing and set out any grounds for refusal. If consent is conditional, the conditions to consent must also be given. In relation to the facts it does not appear that Commercial Property Holdings plc has acted unreasonably. In relation to reasonableness, Commercial Property Holdings plc is entitled to consider its own interests above those of Shoebiz Ltd and, as it is perfectly reasonable for a landlord to refuse consent on the basis of a proposed tenant s references, as occurred in Shanley v Ward (1913), it cannot be unreasonable to take up such references in the first place. Further, from the available facts, Commercial Property Holdings plc does not appear to have made any refusal at all. It should also be noted that s.144 does not preclude the payment of reasonable expenses so Commercial Property Holdings plc is entitled to request payment of their legal fees. In relation to the procedure under the 1988 Act, it appears that Shoebiz Ltd alleges that Commercial Property Holdings plc has failed to respond within a reasonable time. While this will ultimately be a question of fact for the court, it would seem unlikely that a delay of two weeks to take up references could be regarded as unreasonable. Thus Shoebiz Ltd is not within its legal rights to assign and by assigning the lease to a third party and is itself in breach of covenant. (b) To recover possession of the two properties Commercial Property Holdings plc should begin forfeiture proceedings. There are different procedures in relation to non payment of rent and other breaches so each lease must be considered in turn. In relation to Auto-Parts Traders Ltd, they are in arrears with the rent so Commercial Property Holdings plc must first serve a formal demand for the rent due. This should be served on the day that the rent is usually paid. A formal demand will not be required if the right was waived by Auto Parts in the lease but this is unclear from the current facts. Once the formal demand has been made Commercial Property Holdings plc may commence proceedings. Commercial Property Holdings plc should be advised that if the court grants a forfeiture order, Auto Parts Traders Ltd may be entitled to relief from forfeiture. Auto Parts will be entitled to relief if they pay the outstanding rent and costs of the action into court at any time before the five days preceding the hearing (s.138(2) County Courts Act 1985). Auto Parts Traders Ltd will also be able to claim relief at the time of the hearing or any time within six months of Commercial Property Holdings plc recovering possession by virtue of s.138(9a) Page 10 of 12

11 County Courts Act Commercial Property Holdings plc is likely to gain possession of the property if the rent remains unpaid. In relation to Shoebiz Ltd, Commercial Property Holdings plc will need to adopt the procedure for breach of other obligation. They must first serve a notice under s.146 of the Law of Property Act The exact form of the notice depends on whether a breach can be remedied. In this case the breach involves unlawful assignment. Since the decision in Scala House and District Property Company v Forbes (1974) such breaches are not capable of remedy. For this reason the s.146 notice should set out the breach, explain the breach is not capable of remedy and set out any compensation Commercial Property Holdings plc require. Question 4 The requirements of a lease will first be set out before an attempt is made to determine whether each of the parties occupy by virtue of a lease or a licence. It will then be possible to advise David as to how he may terminate the agreements. For an agreement to amount to a lease it must meet the three common law requirements, that is the term must be of a fixed and ascertainable duration, the tenant must be entitled to exclusive possession and the term must be at least one day shorter than the grantor s estate. The first of these requirements is illustrated by the case of Lace v Chantler (1947) where a lease granted for the duration of the war was held to be invalid. Exclusive possession is regarded as the touchstone of a tenancy, to use the words of Lord Templeman in Street v Mountford (1985), and is concerned with the degree of control the tenant exercises over the premises. If exclusive possession has been granted, the courts will usually regard the agreement as a lease although there are three exceptions. These exceptions were first outlined in Facchini v Bryson (1952) and are agreements where there is no intention to create legal relations, situations where the tenant has no power to grant a tenancy and cases where the agreement to occupy arises from some other legal relationship. On the face of it, it appears that Eddie could argue that he was granted a tenancy of the cottage. The monthly payments in respect of gas and electricity could amount to rent and he appears to have been granted exclusive use of the property. Nevertheless there are several grounds on which David could resist such a claim. The fact that the cottage was granted to Eddie for as long as he wanted could be regarded as a failure to meet the common law requirement that the lease be of a fixed and ascertainable duration, although a court may take the view that the monthly payments are evidence of a monthly periodic tenancy. Failing this approach, Eddie might be able to bring the claim into one of the exceptions outlined in Facchini v Bryson (1952). As David and Eddie are related, David could argue that there was no intention to create legal relations. In Cobb v Lane (1952), for example. the grant of a property did not bestow exclusive possession on the parties as they were brother and sister. While the presumption may well be rebutted on these facts, in view of the payment of money and the provision of services, such a rebuttal may assist David in demonstrating that Eddie was occupying as a service licensee, as in Norris v Checksfield (1992). In relation to Eddie the decision as to whether he holds a lease or a licence may be mainly academic. Even if Eddie were to have a lease, it is clearly not a residential lease within the meaning of the Housing Act 1988 as it is not occupied as Eddie s only or principal home. Page 11 of 12

12 From the facts it does not appear that Paul has a lease of the greenhouses. The fact that they were let until such time as he needed them back suggests the agreement was not of a fixed and ascertainable duration. For example, in Prudential Assurance v London Residuary Body (1992), an agreement granting possession until land was needed failed to create a lease. Further, there does not appear to have been any rent paid on which Paul could base a claim of a periodic tenancy. While Paul promised as much produce as David and his family could eat this can not be regarded as rent for, although rent may be payment in kind, the promise of produce in this case is not quantifiable. In Barnes v Barratt (1970) payment based on as many hours service as the landlord requires was not regarded as rent. As it appears there is no tenancy, David will incur no liability in relation to improvements. In relation to the workshop, it appears that David did grant a six month tenancy to Q-print. Q-print do not, however, have a statutory right to renew. The basis of their claim will be under the Landlord and Tenant Act 1954 but their tenancy will be excluded from the Act on the basis of it being a short tenancy under S.43(3). To terminate the agreement with Eddie, David should give one month s written notice just in case the courts are prepared to accept that Eddie has a tenancy. In relation to Paul who has a licence, David can terminate the agreement with immediate effect. In relation to Q-print, David should serve notice in accordance with their agreement. Page 12 of 12