Tenancy: Definition, Avoiding Tenancy

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Table of Contents

Introduction
Discussion
The Mannai Investments Co Ltd v. Eagle Star Life Assurance Co Ltd.
Conclusion
Research Strategy
Reference

Introduction

When it comes to tenancy, obscure means are used by many landlords to save on costs as well time and procedures.

A license to occupy has been suggested as used by property owners for the easier exercise of control over tenants and to further avoid swirling mists and high costs of solicitors (Net Lawman, 2007).

Discussion

As a trainee in the firm of solicitors consulted by Alfred Micawber, a client of the firm who entered into a written agreement headed “License” in November 2002 with Botolphs Investments. Micawber was given the right to use and occupy a ground floor unit, which had formerly been used as a printshop, as a workshop and store. The agreement provided for the payment of a license fee of £350 per calendar month and that the agreement should be determinable by three months’ notice in writing on either side. The agreement further provided, inter alia, that:

“this licence is personal to the licensee.”

“this licence confers no exclusive right for the licensee to use and occupy the premises.”

“the licensee shall permit the licensor to enter the premises with necessary workpersons and equipment in order to carry out any work deemed necessary.”

In July 2007, Botolphs served notice on Micawber to determine the agreement in October 2007.

As a trainee, I would present the following to my principal.

Avoidance techniques as has been mentioned earlier involve two ways: re-routing the legal relationship so as to take it outside the remit of the protective legislation, and involving some provision within the tenancy agreement that seeks to avoid statutory control (Bright, 2002). Use of license instead of a lease has been included as an example of re-routing resulting in unregulated occupancy.

As has been clearly indicated in the 2004 case David George King et al v. Brandywine Reinsurance Co (UK) Ltd.:

“In determining the meaning of the language of a commercial contract, and unilateral contractual notices, the law therefore generally favours a commercially sensible construction. The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.” (Crown Copyright, 2004).

Likewise, as provided for in the Law of Property Act 1989 (C.34), under Contracts for sale etc. of land to be made by signed writing, it was indicated that:

2.—(1) A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each.

Micawber and the landlord made arrangements about the tenancy, yet the landlord have chosen to use a License to occupy instead. These are, in consideration, part of the tenancy agreement as long as they do not conflict with law. Micawber and Botolphs have rights and responsibilities given by law. The agreement, disguised as a License to occupy give both Micawber and Botlphs more than statutory rights, but cannot give them less than their statutory rights. If a term in the tenancy agreement, disguised as License gives either Micawber or Botolphs less than their statutory rights, that term cannot be enforced (Citizens Advice, 2007). This reinforces what has been indicated above.

Likewise, although License to Occupy and the Tenancy Agreement are entirely different in nature, the latter is understood as a “legally binding contract between a landlord and tenant that sets out both the legal and contractual responsibilities and obligations of the two parties. It should be written in plain and intelligible language and its terms and clauses should be fair and balanced, taking account of the respective positions of the parties and should not mislead about legal rights and responsibilities” (Arla, 2007).

It can be understood, under the Assured Shorthold Agreement (AS) under the 1988 Housing Act (amended 1996) offering flexibility to both Micawber and Botolphs that the License to Occupy has been used instead of the AS. It followed a standard straightforward notice procedures and Botolphs clearly exercised this by sending the determination notice about three months prior to vacancy request.

As indicated in the Bankway Properties v. Pensfold-Dunsford case, Arden L.J. struck down a provision which was indicated as “in substance an unlawful contracting out or evasion of an Act of Parliament,” specifying initial rent of £4,690 with a rent increase per annum of £25,000 which is way above the market rent. This agreement, obviously has an intention to put pressure on the tenant to vacate in case rent payment has not been met.

In Jones v. Wrotham Park (1980), a scheme used to discourage enfranchisement claims being made effected a ten times price the tenant had to pay in order to enfranchise which has been commented on by Lord Russell as “irrelevantly pejorative: a man is entitled to avoid a claim against his prima facie legal rights by adoption of a genuine disposition of those rights.”

The Mannai Investments Co Ltd v. Eagle Star Life Assurance Co Ltd.

The abovementioned case involves a landlord and tenant who earlier sought to resolve the conclusive dates of a given notice, of which amongst others indicated clause 7(13), which provided as follows:

“The Tenant may by serving not less than six months notice in writing on the Landlord or its Solicitors such notice to expire on the third anniversary of the term commencement date determine this Lease and upon expiry of such notice this Lease shall cease and determine and have no further effect….”

As summarised in the case by the decision, it had been indicated that:

The reasoning in this brief judgment is clear and compelling. You start with the position that, under the lease, the tenant has covenanted to pay rent for the full term; but under a proviso in the lease the tenant may, by notice, rid himself of the obligation under that covenant. However, to be effective for that purpose, the notice must conform to the terms of the proviso. If on its true construction the notice does not do so, it will not be effective for its purpose, because the parties have agreed that only a notice conforming to the terms of the proviso will be effective. The fact that the landlord realises that the tenant intended to take advantage of his rights under the proviso, but has only failed through some mistake to give the required notice, is irrelevant. The simple fact is that the tenant has failed to use the right key which alone is capable of turning the lock.”

Technicality in the use of words, indication and inclusion of dates of release and receipt of agreements, payments, and notices between and amongst parties that enter into binding contracts and agreements, for the end purpose of a mutual well-being had been into contention for many cases, of which under Mannai Investments Co Ltd v. Eagle Star Life Assurance Co Ltd., had recalled cases such as Hankey v. Clavering [1942] 2 K.B. 326 of which case had misleading or ineffective dates of issuing the notice for determination, and as such, was declared:

“Notices of this kind are documents of a technical nature, technical because they are not consensual documents, but, if they are in proper form, they have of their own force without any assent by the recipient the effect of bringing the demise to an end. They must on their face and on a fair and reasonable construction do what the lease provides that they are to do…”

Conclusion

As a matter of consideration with regards to statutory rights of every entity, Botolphs exercised a legal procedure by issuing Micawber a License to Occupy a ground floor unit of the Botolphs property in November 2002. The purpose of which has been clear: the occupation was temporary, and that Botolphs could eject or end the occupancy at any given period allowable.

Micawber could have acted immediately on that matter if he had an intention to have his rights, as a lawful tenant, be protected. He has not done so and accepted the License per se until given a determination notice in July 2007.

In considering the length of stay of Micawber in Botolphs’ property, which was far from temporary as it has exceeded four years, a lease contract or Tenancy Agreement could have been issued. The oversight, or intentional lapse committed by Botolphs does not indicate a lesser right provided by law for Micawber. As clearly indicated in the Mannai Investments Co Ltd v. Eagle Star Life Assurance Co Ltd., variations of terms or words do not in any way lessen the rights of every person or entity.

Research Strategy

This research paper shall use all available materials including but not limited to cases with relevance to property and tenancy laws, journal articles, online resources among others that could provide an insight as well as clear path on how to handle and treat the case of Alfred Micawber.

Necessary court decision quotes shall be indicated verbatim to point out clear meanings of laws as enacted by parliament and enforced by the courts. Likewise, legal point of views and opinions, if available shall also be considered to give light to the direction this research will go.

Since it is of convenience to gather information online, online resources shall also be used.

Reference

Arla (2007). “What is a Tenancy Agreement?” Web.

Bankway Properties Ltd. V. Pensfold-Dunsford (2001) EWCA Civ. 528 [2001] W.L.R. 1369.

Bright, Susan. (2002). “Avoiding Tenancy Legislation: Sham and Contracting Out Revisited.” Cambridge Law Journal 61 (1) 146-168.

Citizen’s Advice (2007). “What is a tenancy agreement?” Web.

Crown Copyright. (2004). “David George King et al v. Brandywine Reinsurance Co (UK) Ltd.” Her Majesty’s Court Services. Web.

House of Lords. “Judgments – Mannai Investment Co. Ltd v. Eagle Star Assurance.” Web.

Jones v. Wrothman Park Settled Estates (1980). A.C. 74, 113.

Mannai Investments Co Ltd v. Eagle Star Life Assurance Co Ltd [1997] AC 749.

Net Lawman (2007). “License to occupy suit of offices. “Web.

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