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Published: Fri, 02 Feb 2018

Advise elizabeth as to the legality of her demand

1 Advise Elizabeth as to the legality of her demand.

Whether Elizabeth can demand William, Catherine, Phillip and Beatrice to leave Buckingham immediately, will depend on whether the four are tenants or licensees. Unlike a tenancy, a license does not give the licensee an estate or interest in the land. It merely makes the licensee’s presence on the land authorised, so that s/he is not a trespasser (MacKenzie and Phillips, 2010:425). William, Catherine, Phillip and Beatrice are not trespassers because they have permission from Judith to live at Buckingham. So, the issue is to establish whether they are tenants or licensees.

A lease must be for a certain period and give the tenant exclusive possession (Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386). Exclusive possession involves the right to use the property to the exclusion of others, including the landlord (MacKenzie and Phillips, 2010:425). Street v Mountford [1985] AC 809 provides a useful guide to the approach adopted by the courts in considering whether an agreement creates a lease or a license. Among the questions to be asked is whether the occupier has exclusive possession; if so, whether there was intention to create legation relation; the circumstances giving rise to the occupier’s exclusive possession; whether the grantor has the power to grant a tenancy and whether there are any other exceptional circumstances in the case which might negative the intention to create a tenancy.

(a) Catherine and William

On the papers, Catherine and Williams appears not to be tenants because they signed separate license agreement with no terms of years. However, Judith’s expressed intention to create a licence may not be conclusive, especially if she wanted to avoid the Rents Acts by granting licenses instead of leases (Faccini v Bryson [1952] 1 TLR 1386). In Street v Mountford [1985] AC 809, the House of Lords held that a written agreement which stated that it was a license and which referred to the payment of a license fee rather than a rent, was nevertheless a lease. It is not their apparent intentions but their real intentions, as shown by their conduct and the circumstances (Marcroft Wagons Ltd v Smith [1951] 2 KB 496). The provision that Judith could, at any time, enter the flat and share their bedroom could be said that it was designed to prevent Catherine and William to acquire exclusive possession. This could be evidenced by the fact they signed separate agreements despite being couple. The true nature of the agreement and the circumstances indicate that Judith had no real intention to share their bedroom but had inserted this provision as pretence to avoid statutory protection. They tenants and, accordingly, Elizabeth cannot legally demand them to leave the Buckingham immediately. She will need to follow the statutory requirements for vacant possession.

(b) Phillip

Phillip’s situation is well illustrated by Lord Donaldson MR’s comments in Aslan v Murphy [1990] 1 WLR 779. The fact that Judith retained the keys to Phillip’s flat does not by itself prevent him from having exclusive possession and holding a tenancy. However, Lord Donaldson said that the purpose for which the keys were retained must also be considered. If it is to allow the landlord to enter in an emergency, or to read meters, or to do repair, this would not by itself prevent the occupier from holding tenancy. However, since the purpose of Judith having the keys to Phillip’s flat was to provide genuine services of changing Phillip’s sheet and vacuum weekly, then this it can be inferred that he is a lodger rather than a tenant. Therefore, Elizabeth can legally demand him to leave the Buckingham immediately.

(c) Beatrice

Although Beatrice has exclusive possession of the top flat, this does not automatically mean that mean that she is a tenant. Whether she is a tenant would depend on if they intended to create legal relations (Faccini v Bryson [1952] 1 TLR 1386). In Marcroft Wagons Ltd v Smith [1951] 2 KB 496, the landlord, as an act of kindness, had allowed the former tenant’s daughter to remain in the property after her mother’s death. It was held that it was clearly not the owner’s intention to create legal relations. Therefore, it may be inferred that it was a family arrangement or an act of generosity to occupy the top flat, thereby, negating any Judith’s intention to create a tenancy. This can be evidenced by the circumstances which gave rise to her exclusive possession. She is not only Judith’s niece but also divorced and unemployed. Elizabeth can legally demand him to leave the Buckingham immediately.

2 Advise Rubina as to what action she may take for any breaches of covenant and against whom. What remedies are available to her?

A covenant is a promise made by one party for the benefit of another party which is contained in a deed (MacKenzie and Phillips, 2010:476). Any covenant is a contract, therefore the normal rules apply. The obligation is enforceable between the initial parties as a matter of general contract law. There are two sets of law applicable to the enforcement leasehold covenants. The choice of which law to apply depends on whether the lease of was created on or after 1 January 1996 (the date on which the Landlord and Tenant (Covenant) Act 1995 took effect), or before that date. Since the lease in question was granted in 1986, the old law applies.

Since Rubina is not the original landlord, the issue is whether as a purchaser of the reversion she can enforce the original covenants in the lease. Two requirements must be established before a leasehold covenant can be enforced by the revision. Firstly, there must be privity of estate between the relevant parties, and secondly, the covenant in question must touch and concern the property or must have reference to the subject matter of the property (Spencer’s case (1583) 5 Co Rep 16a; Law of Property Act 1925, s. 142. A privity of estate arises when there is a relationship of landlord and tenant between the parties. Therefore, there will be privity of estate between the purchaser of the revision and the assignee of the lease. They would, respectively, be the new landlord and tenant. Where privity of estate exists, some leasehold covenants will be enforceable between the current tenant and landlord.

Touching and concerning land includes most standard leasehold covenants such as rent, repair, assignment and mode of use. The purchaser of a revision will acquire the benefits and burden of all covenants in the lease which touch and concern the property. A covenant is said to touch and concern land if is of benefit to the covenantee whilst s/he as estate in the land; the covenant affects the nature, quality, mode of user of value of the covenant’s land; and the covenant is no stated to be personal (P&A Swift Investments v Combined English Stores plc [1989] AC 692).

As a result of the transaction, Rubina is now Asif’s landlord. There is a privy of estate between them. Asif is bound by any of the landlord’s covenants (Law of Property Act 1925, s.142) and benefit from any of the tenant’s covenants. This means that Asif is bound Lola’s covenants, and so is obliged to pay rent, carry out repair and not to use the property otherwise than as a dwelling. Rubina may have the legal right to enforce these covenants against him because the right to take action for any pre-existing breach of covenant passes to the new landlord with the assignment of the revision (Law of Property Act 1925; Re King [1963] Ch 459

Tara may also remain liable on her covenant, even though she has given up all connection with the property. This means that if Asif fails to carry out the necessary repairs Rubina could seek compensation from Tana. However, in reality, this is only likely to happen if Asif is unable to meet his obligations. With regard to Sophia, Rubina may not enforce the covenant against her because covenants in the head lease are not enforceable against a subtenant. There is no landlord and tenant relationship between Rubina and Sophia. As a result, there is neither a privity of contract nor privity of estate between Rubena and Sophia. However, there is an exception in respect of restrictive covenant. Rubina can enforce the covenant not to use the property otherwise than as a dwelling if it satisfies the rule relating to restrictive covenants derived from Tulk v Moxhay (1848) 2 Ph 774.

Among the remedies available to Rubia include bringing an action to recover a debt or ending the lease by forfeiture. There is also a self help remedy which allows her to enter the premises and seize goods belonging to the tenant. She could also seek injunction to restrain the breach of using the premises only as a dwelling. She can also claims damages for breach of contract as an alternative or additional remedy.

3 Explain the circumstances in which a mortgagee becomes entitled to possession and sale of the mortgaged property. How effective is the protection offered to the mortgagor?

A mortgage is granted as security for payment of a loan, the purpose being to allow the mortgagee to take the property in whole or partial satisfaction of the debt if the mortgagor does not repay the amount borrowed. Various remedies are available to the mortgagee id the mortgagor fails to repay the loan or does not keep up the instalments. These include foreclosure, appointment of a receiver and possession and sale. However, the most common remedy invoked by the mortgagee in the even of serious default by the mortgagor is the exercise mortgagee’s power of possession and sale (Gray and Gray, 2009:298). Possession may be sought in order to manage the property. This may happen if the mortgagor fails to take proper care of the property, which may endanger its value (Smith, 2007:276). A mortgagee may also seek possession of a property in order to let it (MacKenzie and Phillips, 2010:476). However, in great majority of cases, is taken as a prelude to selling the land Smith, 2007:276). It is virtually impossible to sell the land unless the buyer is given vacant possession.

A power of sale may be provided expressly by the terms of the mortgage deed, but a similar power is now supplied in any event by statute (Gray and Gray, 2009:298-99). The mortgagee’s statutory power of sale arises if the mortgage in question has been effected by deed, the mortgage money or some instalments of the mortgage money have become due and the mortgage contains no expression of contrary intention precluding a power of sale in the foregoing circumstances (Law of Property Act 1925, s. 101(1)(i), (4)). This power of sale is implied into every mortgage made by deed.

However, the fact that the power of sale have arisen is insufficient for the mortgagee to be able to sell. The power must have become exercisable. The power of sale becomes exercisable if one of the following conditions has been met: a notice requiring payment has been served and has not been complied with within three months, or some of the interest payable is at least two months in arrears or there has been a breach of an express covenant in the lease or some provisions of the Law of Property Act 1925 (Law of Property Act 1925, s. 103). If any one of these conditions is satisfied, the mortgagee has statutory authority to proceed with a sale of part or all of the mortgaged property (Law of Property Act 1925, s. 101(1)(i)). On sale, the mortgagee will convey to the buyer a good estate or interest free from the interests of the mortgagor and of any estates, interests or rights to which the mortgage has priority, but subject to any estates or interests having priority to the mortgage (Law of property Act 1925, s. 104(1))

The following means of protection is provided for the mortgagor. The mortgagee may not seek possession by means of any force as this would constitute a criminal offence (Criminal Law Act 1977, ss. 5 and 7). Therefore, the mortgagee has to make an application to the court for possession. This, in itself, would give the mortgagor a little time whilst the application is processed, to repay the arrears (MacKenzie and Phillips, 2010:483). If the mortgage is of a dwelling, section 36 of the Administration of Justice Act 1970 may be used to protect the mortgagor. This provides that, on application for possession, the court may adjourn the proceedings, stay or suspend judgment, or postpone the date for delivery of possession if it appears likely that the mortgagor will be able to pay off the arrears within a reasonable time. Also, apart from the duty not to act fraudulently, the mortgagee owes a duty to the mortgagor when exercising the power of sale to obtain a proper price (Raja v Lloyds TSB Bank plc [2001] ALL ER 160; Chappelle, 2008:348).

However, the protection is not effective because, although the result of possession and sale is always the eviction of a family and the destruction of a way of life, no protection can be claimed on the basis of the guarantees of the respect for private life and the home enshrined in Article 8 of the European Convention on Human Rights (ECHR). The House of Lords has stated that a mortgagor cannot invoke Article 8 to diminish the mortgagee’s contractual and property rights under a mortgage (Harrow LBC v Qazi [2004] 1 AC 983). The legal position has not been improved by the view taken recently by the House of Lords in Kay v Lambeth LBC [2006] 2 AC 465; Leeds CC v Price [2006] UKHL 10 and Doherty v Birmingham CC [2008] UKHL 57.

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