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Local market

From the beginning it would appear that there was a lease created between the owner of the freehold premises on the high street in a local market town who also happens to be our client and the restaurateur, but looking at the essentials of a valid lease, one would be able to conclude whether there was lease agreement or not. To start with, for a right to be capable of being a lease, two conditions must be fulfilled: (a) The duration of the lea se must be certain and read more

(b) Tenants must have exclusive possession1. It would then be clear that the second bit was fulfilled. In most cases leases would run for a fixed and determinable period of time say twenty years but the lease can be determinable at the option of either party provided it is provided for in the lease agreement. So that the lease between the owners of the premises in high street would also pass as a valid lease because it was for a fixed period of time 25 years and was to be determined after the 10th anniversary.

Having said that, it would then be in order to conclude that there was a lease at least according to the intention of the parties under the second limb, of determining whether there was exclusive possession, it would be prudent to note that a lease gives the tenant an interest in land and excludes all other persons including from the premises. In the case of Clore V Theatrical Properties Ltd. 2 that a person holding the right to use the refreshment room for a theatre for the purpose of selling refreshments so holding the premises not as a lease but licensee.

So in order for the client to maximize his position as against the restaurateur, he should let out his premises as a license and not a lease. Again by ensuring that non-exclusive possession is obtained by providing that premises are occupied by the grantee and the landlord and another person if this happens then the client will only take the agreement at the face value and a license would normally found to exist. That was the position in the case Aldrington Garages Ltd. v. Fielder. Our client by allowing his child to occupy the upper stores has prevented the exclusive possession requirement for a lease to subsist.

Thus rendering the whole arrangement to be treated as a license, which enjoys no protection under the Rents Acts? To know whether there was real lease agreement we take the case of Street v Mountford3 . In this case, the plaintiff had granted the defendant the right to occupy two rooms for 37 pounds a week. The agreement was labeled “license agreement” and contained a declaration by the defendant that the agreement did not give her a tenancy protected by the Rents Act. The courts in holding for Mountford said that the test is one of substance not of form.

Regarding the arrangement that subsists between the restaurateur and the child of the client, only a license can arise given the fact that the sub-lease did not have a fixed term. For a sub-lease to subsist there must be a fixed term and exclusive possession but in this case, the term of the sublease depended on the completion of the building under construction and which construction is not a generally prohibited practice and so long as it is agreed to sublease in the lease agreement, then one can go on to the sublet premises.