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Blurred Lines? Preserving the Distinction between Leases and Licences

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About The Author

Ming Lu Ang (Regular Writer)

Ming is a second-year law student at the University of Birmingham. Through writing for Keep Calm Talk Law, she hopes to further her understanding in various areas of law and be kept up to date with the latest legal and commercial developments. Outside the law, she enjoys foreign language dramas and sketching.

Property is surely a right of mankind as real as liberty.

John Adams

The House of Lords, in the landmark case of Street v Mountford [1985], held that if ‘residential accommodation is granted for a term at a rent with exclusive possession… the grant is a tenancy’. This has come to form the classic and widely-used definition of a lease. Thus, a lease will be created when these requirements are met, unless one of the exceptions articulated by Lord Templeman in Street v Mountford [1985] apply. These exceptions include cases where the parties had no intention to create legal relations or where the party physically occupying the property and having exclusive possession is not a tenant.

However, subsequent cases like Bruton v London & Quadrant Housing Trust [1999] and Dutton v Manchester Airport Plc [1999] seem to have expanded the scope of Street v Mountford [1985] and its exceptions, such that contractual licences are now treated as leases. This has been done via the recognition of the existence of a lease, despite the landlord not actually having a legal estate in the land. As such, some have argued that the line between leases and contractual licences seems to have been blurred.

This article disagrees, and contends that the law of leases and licences has remained unchanged. It accepts that the application of a conventional and orthodox understanding of what constitutes a proprietary interest to the decision in Bruton causes problems. However, it contends that, by adopting a non-conventional understanding of what constitutes a proprietary interest which has the idea of relativity of title as its roots, it is possible to view the decisions in Bruton and Dutton as a maintenance of the status quo.

The Bruton Tenancy: Lease or Licence?

The Facts

The case of Bruton v London & Quadrant Housing Trust [1999] concerned a licence granted by a local authority to London and Quadrant Housing Trust (the Trust), the purpose of which was to allow the Trust to use the local authority’s properties to temporarily house the homeless. The terms in the licence provided that the occupiers would not gain security of tenure, which affords tenants of certain leases protection upon a leases’ expiry. The Trust then granted a licence to occupy one of the local authority’s properties to a homeless man – a Mr Bruton (B) – which required B to move out of the premises ‘on receiving reasonable notice’.

Subsequently, the local authority claimed that the Trust had breached its obligations to repair that had been implied into the terms of the licence under Section 11 of the Landlord and Tenant Act 1985 (LTA 1985). However, given that Section 11 of the LTA 1985 only applies to leases, the extent to which the Trust was liable turned upon whether B was a tenant or a licensee. Lord Hoffman – with whom the four other judges agreed – concluded that B was a tenant with proprietary interest in the property.

The Debate

The decision of the House of Lords in Bruton was highly controversial. It has been criticised for contradicting the principle of nemo dat quod non habet – the idea that ‘no one can give what he does not have’. Indeed, this was the basis upon which the Court of Appeal in Bruton [1998] QB 834 had reached the opposite conclusion. Here, Millet LJ had argued that:

If the grantor has no power to exclude the true owner from possession, he has no power to grant a legal right to exclusive possession and his grant cannot take effect as a tenancy.

Mark Pawlowski has argued strongly in favour of the Court of Appeal’s decision. In his view, the House of Lords’ decision in Bruton must be viewed as muddling the law and blurring the line between tenancy and contractual licences because:

If the Bruton tenancy is to be characterized as proprietary (in the non-conventional sense) conferring limited powers of excludability against the immediate landlord, how is this type of ‘property’ to be distinguished from the occupational rights of a contractual licensee?

However, it should be observed that the view of Mark Pawlowski and the Court of Appeal may create its own dilemma which is hard to resolve. It relies upon a conventional view of property that leaves the courts unable to cope with the nuances manifested in Bruton-like cases. For example, in disputes concerning numerous occupants possessing contractual licences, the courts would only be able to achieve just results by abandoning the ‘first-in-time’ principle that is typically applied. Instead, they would have to exercise their equitable discretion when considering remedies; this would be the only way they could consider all the relevant facts.

Conventional View of Property

The conventional view of property finds its roots in National Provincial Bank Ltd v Ainsworth [1965] where Lord Wilberforce held that a proprietary interest is always:

[D]efinable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability.

John-Paul Hinojosa expands upon this, identifying twin indicia of ‘assignability of benefit’ and ‘enforceability of burden’ that underpin this. However, the circularity of this definition has been the subject of heavy criticism from Kevin Gray, who has pointed out that:

If naively we ask which rights are proprietary, we are told that they are those rights which are assignable to and enforceable against third parties. When we then ask which rights these may be, we are told that they compromise, of course, the rights which are traditionally identified as ‘proprietary’. ‘Property’ is ‘property’ because it is ‘property’.

The usefulness of this conventional view of property can therefore be questioned, particularly when it is applied in complex cases like Bruton and Dutton. It leaves the inquiry impressionistic and devoid of any real substance.

Non-Conventional View of Property: Relativity of Title

Though some – including Mark Pawlowski – have argued that the decision in Bruton destroys the long-standing idea that leases may, and usually do, create a proprietary interest, this article contends that the Bruton decision may provide the impetus for the courts to increasingly give weight a non-conventional view of property that actually maintains the idea’s existence.

‘Control Over Access’

The Bruton tenancy may still be deemed a proprietary tenancy if “property” is taken to mean sufficient ‘control over access’ to allow the tenant to carry out the purpose for which they took on the lease. This approach has been advocated by Kevin Gray, who defines control over access as ‘a power-relation constituted by legally sanctioned, control over access to the benefits of excludable resources’. Therefore, in his view, “propertiness” is a concept reflected in a ‘continuum along which varying kinds of “property” status may shade finely into each other’.

This interpretation of property appears to have been adopted by the House of Lords in Bruton. It also seemed to gain an endorsement in the Australian High Court in Wilson v Anderson [2002] where Callinan J, with whom McHugh J agreed, said:

[I]n modern times, exclusive possession in absolute terms has long since ceased to exist.

Michael Harwood contends that, when this non-conventional conception of what constitutes property is adopted, the Bruton decision can be rationalised as upholding the long-standing notion that leases may, and usually do create a proprietary interest. Indeed, he observes two important facts that suggested B had sufficient ‘control over access’:

  • B could enforce his rights against the Trust and all third parties, except the original grantor: the local authority
  • Even though the local authority held a superior title, this did not necessarily mean Mr Bruton had no exclusive possession of the property.

Michael Lower worries that this notion of property existing as a continuum is too imprecise a tool to produce a rational ordering of the law. However, this seems to overlook that, in reality, it is also relatively difficult to be certain that the proprietary interest in a conventional leasehold is good against the entire world. As Nicholas Roberts argues:

Even a title which could be deduced back to a grant from the Crown might have been lost in the meantime to an adverse possessor.

Indeed, this idea that uncertainty can persist about whether some leasehold titles can still be superseded by more superior titles is exemplified by four different standards of leasehold title set out in Section 10 of the Land Registration Act 2002. The fact that leases can still be granted where the landlord does not have ‘Absolute Title’ and instead possesses only ‘Good Leasehold Title’ shows that the concerns raised by Michael Lower appear to be overstated. Indeed, as the Land Registry explains in its Practice Guide, ‘Good Leasehold Title’ applies where it is:

[N]ot in a position to know if the landlord had the full and unrestricted power to make the grant or if any restrictive covenants or other incumbrances affect the property. So, provided that the title to the leasehold estate itself is satisfactory, [the Land Registry] will grant good leasehold title.

Parallels with Adverse Possession

If the concept of ‘Control over Access’ is rejected, it is still possible to rationalize the Bruton tenancy as proprietary – and therefore view it as a superior title to those of all third parties except the local authority – by drawing parallels with adverse possession.

An adverse possessor acquires a ‘fee simple’ title to land which is superior to all except another with a more superior title. This is based on the idea of relatively of title. The possibility of drawing a parallel between Bruton and adverse possession cases such as Asher v Whitlock (1865) and Perry v Clissold [1906] was successfully argued by B’s counsel: the House of Lords therefore accepted the argument that, given a trespasser in adverse possession can grant a lease, there is no clear reason why a licensee cannot do the same.

The application of this argument allows the legal maxim of qui prior est tempore, potior est jure – ‘he who is earlier in time is stronger in law’ – can be applied to settle disputes. As well as keeping the law intact, this can also circumvent the problem of having to determine the priority of numerous occupants possessing contractual licences. 

Bruton Down, One More Obstacle?

In Dutton v Manchester Airport Plc [1999], Manchester Airport needed to carry out some felling works on land owned by the National Trust. This would involve removal of trees located in Arthur’s Wood, an important ecological site. Before the National Trust granted Manchester Airport the licence to enter and occupy its land, Lee Dutton (D) and a number of other individuals camped on the land in protest. They had therefore entered and remained on the land without a licence or consent.

Manchester Airport sought a possession order to secure D’s removal. However, this required a legal obstacle to be overcome: because, Manchester Airport had not yet entered into occupation, the only available remedy was an ejectment, which is available only to parties with estate in the land and not to parties – like Manchester Airport – that was claiming to be a licensee.

Despite this, the Court of Appeal in Dutton granted the possession order to Manchester Airport. This decision seems to suggest that contractual licences, just like leases, may be regarded as proprietary. It therefore appears to represents another example of the distinction between the two being blurred.

However, this view is misguided. A close analysis of the facts reveals that the question in Dutton is not like that in Bruton. Rather than being about whether an agreement was a licence or a lease, the question in Dutton was, as Chadwick LJ observed, simply:

[W]hether a person who has a right to occupy under a licence but who does not have any right to exclusive possession can maintain an action to recover possession.

In fact, Dutton appears to show why the non-conventional conception of property that this article has advocated should be preferred. Laws LJ, with whom Kennedy LJ agreed, relied on the idea of relatively of title when he concluded that the possession order should be granted on the basis that Manchester Airport had a more superior claim to possession than the trespassers.

As a result, the non-conventional view of property can explain how Dutton upholds the distinction between contractual licences and leases: given that there was an absence of ‘exclusive possession’ that would ensure D could maintain ‘control over access’, the right granted to Manchester Airport in Dutton would be on a lower rung in the property continuum than the right upheld in Bruton.


It seems clear that, despite what some have argued, the law concerning leases and contractual licences remains unchanged: the two remain distinct. It has been shown that – when a non-conventional understanding of property is adopted – the Bruton decision has not changed the law that a lease may, and usually does, create a proprietary interest. This is important, because this new understanding of property overcomes the problems of the conventional conception’s circularity.

To that extent, the Bruton decision should be welcomed as a much-needed acceptance of a non-conventional view of ‘property’ that accommodates decisions like Dutton, which would otherwise have to be treated as creating contractual licences that have a proprietary character.

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Tagged: Land Law, Property Law

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