Legal Case Summary
Ashburn Anstalt v Arnold [1989] Ch. 1
LAND LAW – LEASE/LICENSE DISTINCTION
Facts
The defendant was the successor-in-title to a company which persuaded the claimant to sell his lease to the company in exchange for a promise that he would continue occupying the property rent-free until the defendant gave him one quarter’s notice to leave. No end-date was given. The defendant sought possession of the property without notice.
Issue
The case of Street v Mountford held that a lease requires an exclusive grant of possession for a certain period of time and the payment of rent.
The claimant argued that it had a valid lease over the property, binding the defendant by virtue of the ‘actual occupation’ overriding-interest provisions of Land Registration Act 1925. In the alternative, it argued that if the interest was a mere license, it should be a binding license or constructive trust.
Decision / Outcome
The Court of Appeal held that the claimant had a binding lease.
The court held that the ‘period of time certain’ requirement would be satisfied if the lease terminated on a sufficiently certain event (such as after the expiry of notice). However, this case has been overruled on this point by the House of Lords in Prudential Assurance v London Residuary Body, and is therefore likely wrongly decided.
The court’s second holding, that rent is not necessary for the creation of a tenancy, has yet to be overruled despite conflicting with the requirements of Street v Mountford.
The court also held that if a lease had not existed, the license would not have bound the defendant, as licenses do not bind third parties. A constructive trust required it to be unconscionable to deny the claimant occupation, and the mere fact that the defendant knew about the license was insufficient to give rise to unconscionability.
Updated 21 March 2026
This case summary remains broadly accurate as a description of Ashburn Anstalt v Arnold [1989] Ch 1 and its place in land law. The key points covered are still cited in this way in standard English land law texts.
One clarification worth noting: the article states that Street v Mountford [1985] AC 809 required payment of rent as an element of a lease. The House of Lords in Street v Mountford did describe rent as a hallmark of a tenancy, but the article correctly notes that Ashburn Anstalt‘s holding that rent is not essential has not been overruled. This position is now well-established and reflected in the Law of Property Act 1925, s 205(1)(xxvii), which defines a term of years as not requiring a money rent. The article’s treatment of this point, while slightly ambiguous, does not materially mislead.
The overruling of Ashburn Anstalt on the certainty of term point by the House of Lords in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 remains good law. The requirement for a certain maximum duration of a lease was affirmed there and has not subsequently been departed from by the Supreme Court.
The article’s treatment of licences and constructive trusts is consistent with the continuing general principle that a contractual licence does not bind third parties and that unconscionability sets a high threshold for constructive trust claims in this context. No subsequent Supreme Court or Court of Appeal decision has materially altered these principles in a way that would make this summary misleading.
Readers should note that the overriding interest provisions of the Land Registration Act 1925 referred to in the article have been replaced by the Land Registration Act 2002, which governs registered land in England and Wales today. The relevant overriding interests are now found in Schedule 3 to the 2002 Act. This does not affect the outcome of the case itself but is relevant context for students applying the principles to current law.
