From the beginning it would appear that there was a lease created between the owner of the freehold premises on the high street in a local market town who also happens to be our client and the restaurateur, but looking at the essentials of a valid lease, one would be able to conclude whether there was lease agreement or not.
To start with, for a right to be capable of being a lease, two conditions must be fulfilled:
(a) The duration of the lea se must be certain and
(b) Tenants must have exclusive possession
1. It would then be clear that the second bit was fulfilled. In most cases leases would run for a fixed and determinable period of time say twenty years but the lease can be determinable at the option of either party provided it is provided for in the lease agreement. So that the lease between the owners of the premises in high street would also pass as a valid lease because it was for a fixed period of time 25 years and was to be determined after the 10th anniversary.
Having said that, it would then be in order to conclude that there was a lease at least according to the intention of the parties under the second limb, of determining whether there was exclusive possession, it would be prudent to note that a lease gives the tenant an interest in land and excludes all other persons including from the premises.
In the case of Clore V Theatrical Properties Ltd. 2 that a person holding the right to use the refreshment room for a theatre for the purpose of selling refreshments so holding the premises not as a lease but licensee. So in order for the client to maximize his position as against the restaurateur, he should let out his premises as a license and not a lease.
Again by ensuring that non-exclusive possession is obtained by providing that premises are occupied by the grantee and the landlord and another person if this happens then the client will only take the agreement at the face value and a license would normally found to exist. That was the position in the case Aldrington Garages Ltd. v. Fielder. Our client by allowing his child to occupy the upper stores has prevented the exclusive possession requirement for a lease to subsist. Thus rendering the whole arrangement to be treated as a license, which enjoys no protection under the Rents Acts?
To know whether there was real lease agreement we take the case of Street v Mountford3 . In this case, the plaintiff had granted the defendant the right to occupy two rooms for 37 pounds a week. The agreement was labeled “license agreement” and contained a declaration by the defendant that the agreement did not give her a tenancy protected by the Rents Act.
The courts in holding for Mountford said that the test is one of substance not of form. Regarding the arrangement that subsists between the restaurateur and the child of the client, only a license can arise given the fact that the sub-lease did not have a fixed term. For a sub-lease to subsist there must be a fixed term and exclusive possession but in this case, the term of the sublease depended on the completion of the building under construction and which construction is not a generally prohibited practice and so long as it is agreed to sublease in the lease agreement, then one can go on to the sublet premises.
The moment the premises ‘leased’ to the restaurateur, and then all rights thereto became vested in the restaurateur so much so that rent had to be paid to him. The restaurateur has recently notified your client of an intention to expand business into the upper storey and to set up a brasserie style terrace on the cobbles. The question then comes are his actions justified one his one month quit notice cannot be entertained because it is way too short a sufficient three month notice ought to be given to the stall holder.
It also should be noted that both the stallholder and the legal practice are tenants at will and as such is at liberty to terminate the tenancy but sufficient notice ought to be given. The restaurateur on his part is a tenant for life and his powers include and are not limited to powers to lease the settled land, this power enabled him to enter into a sublease agreement between him and the legal practice.
Apparently the expansion (which are otherwise classified under improvements are not prohibited by local laws or by-laws so the expansions are to say the least legal). The quit notices should though not affect the legal practice in that the agreement between the restaurateurs was such that the sublease would last for two years during which the construction of the other premises would have been completed so the attempt by the restaurateur to issue quit notices to the legal practice would not be allowed to stand.
Much that it may appear that the legal practice was at a tenancy at wills, a lease or license as the case may be arose and any attempt by the restaurateur would amount to a breach of law. In this case, the intention of the parties (restaurateur and the legal practice) was that the legal practice to continue operating from the leased premises and leave the premises once the other premises had been completed.
PART TWO XYZ BARRISTERS To: Peter Deane (herein my client)
For a lease to be valid there must be some conditions, which must be fulfilled like:
(a) The right of exclusive possession, a fixed period of time for the subsistence of the lease and so on. If a lease misses only one of the above then a lease won’t arise what would arise instead would be licenses, which are not offered protection by the Rents Act so that the arrangement between Peterdeane (client) and the restaurateur only creates a license.
The fact that deanes child was allowed to stay on in the premises did prevent the exclusive possession requirement for a lease to subsist thus rendering the whole arrangement to be treated as a license which enjoys no protection under the Rents Act. Similarly, since the lease agreement was signed by both client and restaurateur, and that their intention was that of a lease having been created, the intent rather than the form should be tested.
The stallholder would pass as a tenant at the will of his landlord. In this case the restaurateur and as such he is able to end the tenancy at any time subject to a sufficient notice normally three months. But as regards the sublease, it cannot be terminated at the will of the landlord because the intention was that it was to run for two years.
As stated earlier, when a lease agreement is made then all burdens and covenants pass with the land to the second and a subsequent tenants6. So the restaurateur takes the land with all benefits including the benefit of determining the existing leases. Landlords and tenants act 1954
- Ridull J.G. Land Law (7th Edition) Butterworths p.g. 295-296 (1936) 3 ALL ER 483\(1985) 2 ALL ER 289
- Eastleigh Borough Council v Wash (1985) 2 ALL ER at 112 Landlords and tenants Act 1954