Legal Principles and Points
- A licensee, in this case a trust, can grant a lease over a premises, even if they only hold a licence over the premises. The nature of this lease is non-proprietary, and it is sometimes referred to as a ‘Bruton lease’.
Facts of the Case
- A local authority granted a trust, D, a licence to use a number of short life properties for temporary accommodation for homeless people, in the time before the properties were demolished and developed.
- C (Bruton) signed a contract to use one property on a weekly licence.
- C then brought proceedings that the trust was defaulting on a number of implied terms of the agreement, to keep the premises in good working order.
Issues in Bruton v London & Quadrant Housing Trust Ltd 
- This case went to the Court of Appeal and also the House of Lords. The issue in both instances was whether C was a tenant of a licensee in the circumstances.
- The trust, D, alleged that C was only a licensee, because he was alleged to have accepted a term that he was a licensee. As such, the trust argued that there was no implied term to keep the property in good working order.
Held at First Instance and in the Court of Appeal
- Both the trial judge and the Court of Appeal stated that C was only a licensee, because (Millet LJ) an agreement cannot be a lease unless it ‘binds the whole world’. Because the alleged lease in the present case did not bind the local authority (the trust only had a licence to the property) , the agreement could not create a lease.
- The only exception to the above rule, as stated by the CA is where there is estoppel: where the grantor is estoppel from denying that he could not create a legal estate.
Held by the House of Lords
- The House of Lords allowed the appeal from the Court of Appeal, and their reasoning was as follows:
- Because the claimant had exclusive possession of the property, under Street v Mountford  AC 809, it could not be a licence, and as such, was a lease. It is immaterial that there the agreement may suggest, in its wording, that it is a licence, as you cannot contract out of a statute.
- In this case, the council and the trust could only enter the property for limited purposes, therefore the C exclusively possessed the property.
- The House of Lords also explained that a lease need not be proprietary, thereby creating two forms of lease. A lease is an agreement between two parties, and thereby it is immaterial to that lease whether it creates an estate or other proprietary interest which binds other parties. Therefore in this case, the lease created was not a proprietary one, and thus did not bind the council; it did however bind the trust. This is often called a Bruton Lease; where one who has a mere licence in the property creates a non-proprietary lease with an individual over the property.
- “The only rights which it reserved were for itself and the council to enter at certain times and for limited purposes. As Lord Templeman said in Street v. Mountford  AC 809, 818, such an express reservation “only serves to emphasise the fact that the grantee is entitled to exclusive possession and is a tenant.” Nor was there any other relationship between the parties to which Mr. Bruton’s exclusive possession could be referable.”
- “In my opinion, the Trust plainly did purport to grant a tenancy. It entered into an agreement on terms which constituted a tenancy. It may have agreed with Mr. Bruton to say that it was not a tenancy. But the parties cannot contract out of the Rent Acts or other landlord and tenant statutes by such devices. Nor in my view can they be used by a landlord to avoid being estopped from denying that he entered into the agreement he actually made. For these reasons I would allow the appeal and declare that Mr. Bruton was a tenant. I should add that I express no view on whether he was a secure tenant or on the rights of the council to recover possession of the flat.”