Creation of Leases

• Pages: 43-60

DOI: 10.4324/9781003186946-4

The law of landlord and tenant governs the relationship between lessor and lessee

(otherwise called ‘landlord’ and ‘tenant’ respectively), defines the rights and obli-

gations of the parties to leases and tenancies, and lays down the formalities for

the creation and the termination of the lessor/lessee relationship. Leaseholds, also

known as ‘demises’ or ‘terms of years’, have a long history. In early medieval times,

leaseholds were regarded merely as contractual rights to occupy land. Alessee could

be evicted at any time. He had no estate in the land, and his/her only remedy for

wrongful dispossession was an action for damages against the dispossessor. Later,

with the development of the action of ejectment, by the end of the 15th century,

it became possible for a dispossessed tenant to recover possession of the land, and

at that point the leasehold may be said to have acquired the status of a proprietary

interest and an estate in land. Leaseholds, in fact, always remained outside the feu-

dal system of landholding, to which the freehold estates belonged, but when lease-

holds ‘became a new type of estate, it was impossible to deny that they were also a

new type of tenure; for every tenant must hold by tenure of some sort if he is to hold

an estate at all’.1 Ironically, the leasehold, originally conceived outside the doctrine

of tenures, is today the only form of ‘tenure’ that has any practical significance. The

nature of this tenure, signified by the words ‘landlord’ and ‘tenant’, is that the tenant

pays ‘rent service’ (now known simply as ‘rent’) to the landlord in return for his/

her right to occupy the land, and the landlord retains a right to levy distress against

the tenant’s goods in the event of non-

payment of rent and, more importantly, in

some circumstances a right to forfeit the lease if the tenant is in breach of his/her

obligations.

ESSENTIAL CHARACTERISTICS OF LEASES

There are two requirements for a right to occupy land to be capable of taking eect

as a lease:

(a) the right to exclusive possession must be given; and

(b) the duration of the lease must be certain.

These requirements must now be considered in turn.

Exclusive possession

It is a necessary characteristic of a lease or tenancy that the tenant must have exclu-

sive possession of the premises. This means that the tenant must be given the right

to exclude all other persons from the land, including the landlord. However, the

mere fact that a person has exclusive possession of land does not necessarily make

him/her a tenant; he may be only a licensee, having merely a personal privilege to

1 Megarry and Wade, The Law of Real Property, 8th edn, para 3–015.

CHAPTER 4

CREATION OF LEASES

44 Creation of leases

occupy and no interest in the land. The most important distinctions between a lease

and a licence are:

(a) a lessee, holding a legal lease, has an interest in land that is binding on the

whole world; a licensee has a mere personal right that, at most, binds only

licensor and licensee;

(b) a lessee, but not a licensee, may maintain an action in trespass against any

person who interferes with his/her right to possession;

(c) a lessee may assign his/her lease, whereas a licensee has no proprietary

interest capable of assignment; and

(d) In Trinidad and Tobago, a lessee, but not a licensee, is entitled to claim a

statutory, 30-

year lease in respect of land on which a house is erected, under

the Land Tenants (Security of Tenure) Act 1981.2

Distinguishing between leases and licences

In determining whether a lease or a licence has been created, it was once the

rule that, where exclusive possession was granted, there was a lease.3 Later, a

more flexible test was used, viz, that the answer to the question depended on

the intention of the parties to be inferred from the surrounding circumstances,

and the fact that exclusive possession was granted was not decisive in favour of

a lease.4 Then, in 1985, the decision of the House of Lords in Street v Mountford5

appeared to abandon the flexible test in favour of the more rigid proposition

that:6

where the only circumstances are that residential accommodation is oered and

accepted with exclusive possession for a term at a rent, the result is a tenancy ...

In other words, if the three requirements, viz, exclusive possession, a fixed or peri-

odic term, and rent are present, there will be a tenancy, unless there are exceptional

circumstances that point to a licence. Under this test, it appears that the intentions

of the parties as to whether a lease or a licence was to be created are irrelevant, and

the only intention that is to be regarded as relevant is the intention to give exclusive

possession of the premises.7

Lord Millett, in the Privy Council, in Ramnarace v Lutchman,8 assumed, without

discussion, that Street was applicable in Trinidad and Tobago, though this has not

2 Ch 59: 54. See Mahadeo v Dass (1988) High Court, Trinidad and Tobago, No 1570 of

1980; Thomas v Barath (1986) High Court, Trinidad and Tobago, No 1686 of 1980; Cyrus

v Gopaul (1989) Court of Appeal, Trinidad and Tobago, Mag App No 69 of 1987. See

pp 56–60, below.

3 Lynes v Snaith [1989] 1 QB 486; Glenwood Lumber Co Ltd v Phillips [1904] AC 405.

4 See, eg, Cobb v Lane [1952] 1 All ER 1199; Isaac v Hotel de Paris [1960] 1 All ER 348, PC; Quan

v Gonzales (1966–69) 19 Trin LR (Pt V) 331.

5 [1985] 2 All ER 289. The decision in Street v Mountford was designed to prevent landlords from

avoiding the consequences of the Rent Restriction Acts by framing what were essentially tenancy

agreements as ‘licences’. The courts are now astute in detecting such ‘sham’ licences, described

by Lord Templeman in Antoniades v Villiers [1988] 3 All ER 1058, at 1064, as ‘a pretence intended

only to get round the Rent Acts’.

6 [1985] 2 All ER 289, at 300.

7 Ibid.

8 [2001] 1 WLR 1651.