Distinguishing Leases and Licenses: A Critical Analysis

This assignment delves into the complexities of distinguishing between leases and licenses in Northern Irish law. It examines the relevant facts of a particular case to determine whether a lease or license agreement is present, highlighting the importance of this distinction in determining statutory rights and applicability of section 3. The analysis covers various precedents, including Street v Mountford [1985], AG Securities v Vaughan [1990], and Antoniades v Villiers [1990].

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Housing Law
08-Mar-18
(Student Details: )

Housing Law
Introduction
The Deasy’s Act, fully known as the Landlord and Tenant Law Amendment Act (Ireland), 1860
is a key piece of legislation, which was designed for consolidating the majority of legislations
which has been passed in the earlier centuries in the nation (Sturgeon, 2016). This act brought
certain modifications to the earlier law. A key impact was placed by one of the sections and this
section is the reason why the landlord and tenant legislation of Ireland is different from that of
UK, even till this day (Hession and Casey, 2011). This is section 3, which puts forth the relation
of tenant and landlord, which was deemed to be based on implied or express contract of parties,
and not on the service or tenure, and that a reversion should not longer be required for
establishing this relation. This was also a departure from the earlier position under the common
law and regulated the terms and condition of contracts, along with the medications in law
regarding ejectments (Brennan, 2013).
This discussion is focused on analysing section 3 of the Deasy’s Act in order to explain the
manner whereby the Court in Northern Ireland would decide on any contract, to be classified as a
lease, in place of it being classified as a license.
Section 3
Deasy’s Act is a legislation which is of fundamental significance and could be defined as the
basic foundation of the present day landlord and tenant law (Dickson, 2003). However, this act
could only go on to safeguard the position of tenants. There were no provisions made for
renewing of leases or for compensation for improvements, or for the disturbance on termination
of tenancy. Under section 3, two key elements have to be examined. The first one is the
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relationship of tenant and the landlord being deemed to have been created on implied or express
contract of parties. Secondly, this relation is considered to subsist when there is an agreement by
the party to hold the land form, or under any other consideration of any rent (Brennan, 2013).
Under this section, the relationship between the landlord and the tenant is based on express and
implied contract, which is raised when one of the parties, agrees upon holding the land from
another party, particularly in consideration of any kind of rent. Where both license and lease are
derived from the contract, both have feature payment of money and involve occupation, the case
of lease deems it as rent, whilst the case of license deems it as license fee (Turner, Quinn and
Shields, 2014). It is crucial that one is able to differentiate between the agreement under
examination being a license or a lease, due to the statutory rights and protections which are
accompanied by lease. Such benefits are not available in a license; further, an interest in land is
not created through the license. It was held in Irish Shell & BP Ltd v John Costello Ltd (No. 2)
[1984] IR 511, Henchy J provided that the intentions of the parties had to be seen in such cases,
instead of applying an objective test, which would result in parties being imputed to the
intentions which they never had (Brennan, 2013).
License or Lease
There is a need to clearly make distinction between a license and a lease. The reason for this
stems from the difference in rights which the license holder and the lease holder get. Leases help
in creating the legal interest in land. Through them, a contractual relation is created between the
tenant and the landlord and is also required to fulfil the principles of contract law. This requires
the presence of intent of creating legal relation, the tenant having exclusive possession of land,
and it being for a periodic or fixed term at rent. On the other hand, the licenses do not give any
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legal interest in land and are instead deemed as privileges or personal rights (McMath, 2018).
This means that such permissions are given to the licensee for using the land of the licensor for
the stated reasons, which would be deemed as trespass where such permission was not taken. It
could cover the permission of occupying the land, but the same is different from exclusive
possession. Both licenses and the leases can be formed without any written document. Though,
when these documents are absent, making determination between the presence of lease, and the
presence of license, becomes difficult. In such cases, the court looks into the substance of
agreement and they disregard the labels which had been assigned to them (Cronin, 2015).
To bring clarity on this matter, there is a need to refer to the established case laws. To begin
with, the case of Street v Mountford [1985] UKHL 4 needs to be elucidated. In this case, Street
had given Mountford the right of occupying two of the rooms in his own home, where the
exclusive possession had been given for weekly rent and was determinable on a fourteen day
notice period. A declaration had been signed by Mountford on insistence of Street that the right
of occupying had to be deemed as a license, in place of it being deemed as a lease. A declaration
was sought by Mountford that the agreement could be deemed as a lease (Morgan, 2007). The
key issue in this matter was whether the agreement could be deemed as a lease, or whether it had
to be deemed as a license as had been signed in the declaration. The court held that this was a
lease, particularly due to the granting of exclusive possession of term at rent. The court had the
right of looking behind the label which had been given to an agreement, for the purpose of
deciding whether the lease had been granted, which had been disguised as a license (Wilkie, et
al. 2006). This agreement was a lease clearly and this gave Mountford the entitlement of
legislative protection based on the landlord and tenant legislation. This case resulted in an end
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Housing Law
being put on the sham licenses, which resulted in the cases like Somma v Hazlehurst [1978] 1
WLR 1014 being reversed (Ball, 2018a).
AG Securities v Vaughan and Antoniades v Villiers [1988] UKHL 8 is another important case in
this context. In this matter, AG Securities had a long lease on a building and had licensed each of
the four rooms to different individuals at a different set off time, and based on independent
agreements. The issue was whether the licensees claim regarding them having a collective lease
over the building entitled them to be protected under the landlord and tenant legislation. The
court held that this could not be done. Even though the parties could not contract out of this
legislation, a shifting population could not be deemed as the joint tenants under a lease. Thus,
they were just licensees and could not be given the protection (Ball, 2018b).
Antoniades v Villiers [1988] 3 WLR 139 was also decided with this case. In the latter case, an
experienced landlord permitted an individual and his girlfriend for occupying the four rooms
under his property, which included the top floor flat, through two different licence agreements.
Within the flat, there were separate beds; however, the landlord was aware that they were going
to live as husband and wife, particularly because he had provided them with the double bed on
the request of the two. The key issue in this matter was based on the presence of different licence
agreement for attempting to surpass the landlord and tenant legislation, through avoiding the
lease creation. The court held that in this case, there was a lease created due to the exclusive
possession which was to be given to the couple (Ball, 2018c). Other noteworthy cases in this
regard, particularly to bring clarity on differentiation between the licenses and leases are the
cases of Northern Ireland Housing Executive v McCann [1979] NI 39, Todd v Unwin (1994) and
Northern Ireland Housing Executive v Duffin [1985] NI 210.
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The cases referred till now are the ones of last decade. To bring clarity to the latest matters,
reference needs to be made to the case of Northern Ireland Renewables Limited v Harry Carey
(2016) NICA 30. This case revolved around the real nature of the tenant and landlord relation
and regarding which ingredients have to be present, before any arrangement can be deemed to be
a lease. As has already been highlighted, in Northern Ireland, there is applicability of the Deasy’s
Act. This case was related to a dispute which took place between the landowner who had been in
an arrangement for the erection of wind turbines and the related equipment, with a farm
developer, for a term of twenty five years on his land. The landowner denied the signing of lease
at the time where the contract in between the parties was taking place and where this contract
required him to do (Pierce, 2016a).
The landowner contented that the document which purported to be a lease could not take the
requisite effect as being a lease at law, based on section 3 of the Deasy’s Act. This was due to the
fact that there was an absence of the actual rent being payable during the time the lease had to be
granted. The key issue was that even though no rent would be due actually at a particular time
period during the life of this lease, it was very certain that the situations where the rent would
become payable and that the certainty was enough for meeting the requirements for the rent
placed in section 3. The judgment of the court also discussed on the other needs for the
relationship of tenant and the landlord for being raised, as had been covered under the Deasy’s
Act, which included the fact that there was no need of revision. This means that the lease was not
required to be for certain term of years, even when the usual criteria is this only, and can actually
be forever (Pierce, 2016a).
Based on this arrangement, the grantee holds land from grantor forever; and for this, they get the
rent payment, and based on certain conditions which match the ones which are covered in the
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traditional leases having a term. In this matter, Weatherup LD had acknowledged the judicial and
academic debate which revolved around section 3 of the Deasy’s Act, for so many generations.
Even with the age and the significance of the landlord and tenant law of Ireland, there has been a
constant debate in the legal circles regarding what are the exact legal requirements, which have
to be brought in effect. This situation is particularly made worse owing to the range of
conflicting judgments which had been given by the courts regarding the interpretation (Pierce,
2016b).
Conclusion
Thus, on the basis of the discussion undertaken in the previous sections, it can be concluded that
the relevant facts of the particular case have to be analysed by the courts, in order to hold the
presence of lease or license agreement. This was necessary to determine, as the statutory rights
are only provided under the leases and not under the license. This is also crucial to determine the
applicability of section 3. Even when the entire situation is given the cover of being a license
agreement, the court looks into the facts of the particular case, to decide on the present status.
The cases elucidated above are just few of the many where the courts analysed the circumstances
of the case to decide on the matter being present. It goes without saying that the decisions of the
Northern Court of Ireland are very crucial in holding this status, even with so many precedents
being already present.
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References
Ball, J. (2018a) Street v Mountford [1985]. [online] Available from:
https://webstroke.co.uk/law/cases/street-v-mountford-1985 [Accessed 08/03/18]
Ball, J. (2018b) AG Securities v Vaughan [1990]. [online] Available from:
https://webstroke.co.uk/law/cases/ag-securities-v-vaughan-1990 [Accessed 08/03/18]
Ball, J. (2018c) Antoniades v Villiers [1990]. [online] Available from:
https://webstroke.co.uk/law/cases/antoniades-v-villiers-1990 [Accessed 08/03/18]
Brennan, G. (2013) Landlord and Tenant Law. 6th ed. Oxford: Oxford University Press.
Cronin, P. (2015) Leases and Licences. [online] Available from:
http://www.cfrlaw.co.uk/site/wp-content/uploads/2015/08/article-on-differences-between-leases-
and-licences.pdf [Accessed 08/03/18]
Dickson, B. (2003) Civil Liberties in Northern Ireland: The CAJ Handbook. 4th ed. Belfast:
Committee on the Administration of Justice.
Hession, R., and Casey, N. (2011) Complex Conveyancing. 2nd ed. West Sussex: Bloomsbury
Professional.
McMath, L. (2018) Licence Or Lease? [online] Available from:
http://www.hhdsolicitors.com/media/uploads/Licence%20Or%20Lease.pdf [Accessed 08/03/18]
Morgan, J. (2007) Aspects of Housing Law. Oxon: Routledge.
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Pierce, G. (2016a) Getting to grips with the tricky nature of leasehold agreements. [online]
Available from: https://www.belfasttelegraph.co.uk/business/news/getting-to-grips-with-the-
tricky-nature-of-leasehold-agreements-34982976.html [Accessed 08/03/18]
Pierce, G. (2016b) Getting to grips with the tricky nature of leasehold agreements. [online]
Available from: https://www.worthingtonslaw.co.uk/articles-downloads/2016/august/getting-to-
grips-with-the-tricky-nature-of-leasehold-agreements [Accessed 08/03/18]
Sturgeon, L. (2016) An Introduction to Business Law in Northern Ireland. 2nd ed. Ireland:
Institute of Chartered Accountants in Ireland.
Turner, C., Quinn, L., and Shields, R. (2014) The Law of Property in Northern Ireland.
Newtownards: Colourpoint Creative Limited.
Wilkie, M., Cole, G., Luxton, P., and Morgan, J. (2006) Landlord and tenant law. 5th ed.
London: Palgrave Macmillan.
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