It is capable of subsisting; as a legal estate, but it must be created in the manner required by the law and satisfy the definition of a ‘term of years absolute’ otherwise it is an equitable interest.1 There are two types of lease; fixed which is self determining 6months, 1 year, 50 years. The vital feature is that it is a fixed maximum duration. Periodic, weekly, monthly, annually, it continues indefinitely until terminated giving notice. A lease is sometimes referred to as hybrid- proprietary interest in land but roots in contractual relationship between landlord and tenant.
There are also 3 essential requirements for a lease, according to Lord Tepleman the lessee or tenant must be granted: exclusive possession, for a fixed or periodic term; and in consideration of a premium (lump sum) or periodical payments.
A licence is different it’s a permission to do some act which would otherwise be unlawful in regard to the land of another person. It prevents what otherwise would be a tort i.e. trespass. There are five categories of licence: Bare licence, licence coupled with equity, licence coupled with the grant of an interest, licence ; estopppel and contractual licence. The category into which a licence falls has consequences in terms of both revocability and assignability.
The distinction between a lease and a licence – however elusive – is a vital determinant of several legal issues. Lease – licence distinction derives an immediate significance from the fact that a lease normally confers a proprietary estate in land but never a licence.2 Only a tenant has an estate or interest in land, whereas a licence is a right personal to the licensee and cannot be assigned. (Grey).
It’s seen that not normally a tenant but a licensee, is subject to the ‘short-cut’ summary procedure for the recovery of possession. However, there is also a countervailing tendency in modern statute law to treat the contractual licence as on a balance with the leasehold estate. The distinction between tenancy and licence no longer controls the operation of the protective codes regulating secure tenancies.3 A ‘secure tenancy’ covers, not merely a tenancy but also a licence to occupy a dwelling house as long as the licensee enjoys exclusive possession.4
In recent years it has become established that possession, is not necessarily denied to all kinds of licensee.5 Not just someone who owns an estate in land, but certain catergories of people who hold a licence can claim exclusive possession of land.6 Therefore a licensee can sue in trespass7 and nuisance8, provided in either case the claimant ‘is enjoying or asserting exclusive possession of the land’.9
When it comes to recovering land from a trespasser the position of a lease and a licence is, the tenant, as owner of a term of years has a clear right to recover possession from trespassers who invade his land. However the licensee has no legal title to exclude the other ‘persons’ as he lacks any estate in the land. 10 (Grey).
In recent times the courts have attached an importance to the degree of possessory control exercised over land by a licensee. Therefore a contractual licensee who is in ‘effective control’ of a site is entitled to obtain an order for possession as against trespassers who have entered that site without consent.11
This is backed by Manchester Airport plc v Dutton12; the court of appeal upheld the right of a contractual licensee to invoke the ‘fast possession’ procedure in order to recover possession from trespassing protestors on an environmentally sensitive development site. This form of eviction was made available even though the licensee had no right to exclusive possession of the area, had at best merely limited rights of entry for specified purposes, and most surprisingly was not yet in occupation of the sit at all.13 (Grey)
“This equip ration of contract-based and estate-based rights to justify possession has radically closed the juristic gap between many forms of licence and the proprietary estate of the lease.”14 (Grey)
The essential difference between a lease and a licence at one time was believed to be that a lease gave the tenant exclusive possession of the property, whereas a licence did not. That is no longer the sole criterion for distinguishing between them though.15
The particular areas of interest to do with licences in recent times have been the overlap with leases. Street v Mountford highlighted the complexity of the use of a licence as a method of circumventing the rent legislation regarding security of tenure.16
Protection was given to the tenants in two key ways, firstly by restricting landlords’ right to evict and secondly by restricting their ability to increase rent arbitrarily this was under the Rents Acts. 17
As a result many landlords were anxious to avoid creating a lease, and they attempted to avoid the effect of the Rent Acts by creating a licence instead, as licensees were not afforded Rent Act protection.
The distinction between leases and licences is therefore blurred and requires an examination of the principles applied by the courts to determine on which side of the line any particular agreement may fall.18