Posts Tagged ‘illegality’

Monat Investment Limited v All person(s) in occupation of part of the remaining portion of Lot No 591 in Mui Wo DD 4 No 16 Ma Po Tsuen, Mui Wo

November 25, 2020

In Monat Investment Ltd v All Person(s) in Occupation of Part of Remaining Portion of Lot No 591 in Mui Wo DD 4, No 16 Ma Po Tsuen, Mui Wo Lantau Island ([2020] HKCFI 1970) the Court of First Instance had to consider the claim that a squatter’s unlawful actions meant that his adverse possession claim had to fail.

Facts

The disputed land comprised a building (‘the Brown area’) and an adjoining open area (‘the Green area’). D claimed to have acquired title to both by adverse possession.

D’s father built a wooden hut on the Brown area in 1954. Around 1977 or 1978 this was replaced by a two-storey brick house. D (one of eight children) moved out. In 1980, D’s father died and his mother remained in possession of the house with some of the children.

In 1996, part of the Green area was paved with concrete but not fenced in. D’s mother died in 1999. D did not live in the disputed land but kept the house under lock and key and paid the electricity bills. P (the owner of the paper title) brought possession proceedings.

Adverse possession

There was clear evidence, in the form of electricity bills, that D’s father took possession of the Brown area by January 1975 at the latest.

It was not until 1996 when the Green area was paved with concrete that D’s mother (after D’s father’s death) could be said to have taken possession of that area. Clearing vegetation from the Green area and then paving it was exactly what an owner might be expected to do ([33]).

D’s mother remained in possession with D’s brothers and sisters after the father’s death. She moved out before her death in 1999 but retained possession; the house was kept locked and she paid the electricity bills.

D took over possession after his mother’s death. He did not live there but, again, retained possession by keeping the house locked and paying the electricity bills.

Illegality

The plaintiff (‘P’) argued that D’s adverse possession claim failed because D had to plead his own illegality to establish his case. The illegal acts P relied on were: (i) trespass; (ii) erecting an unauthorised structure in breach of the Government lease and section 14 of the Buildings Ordinance.

Deputy Judge To pointed out that, of its nature, the doctrine of adverse possession has already balanced public policy and illegality ([59]). There is always some illegality in adverse possession cases; if the court were to frequently decide that illegality was a bar to success for an adverse possession claim, this would be to entirely defeat the doctrine ([62] – [63]).

Illegality is generally only relevant ‘when that the possession or the manner of possession is prohibited by some other statutory provisions’ ([63]).

Deputy Judge To said:

‘Even in circumstances where the possession or the manner of possession is prohibited by some other statutory provisions, given the legislative intent behind the Limitation Ordinance, it is difficult to see why the illegality associated with the squatter’s possession, use or occupation of land should have any impact on his entitlement to possessory title acquired by adverse possession. Usually, the prohibition could be enforced against the squatter after he has acquired title in just the same way as it could be or could have been enforced against him before he acquired legal title or could have been so enforced against the paper owner.’ ([64])

and:

‘Illegality whether in the act of possession or the manner of possession is generally irrelevant. It is only when the possession or the manner of possession is prohibited by some other statutory provisions that it becomes necessary for the court to resolve the conflict by statutory construction or by balancing the public interest and public policy behind the statutory provisions against those behind the Limitation Ordinance.’ ([79])

Conclusion

D’s adverse possession claim succeeded in respect of the Brown and Green areas. Even if there was a need to carry out a balancing exercise, D should succeed.

Michael Lower

Tinsley v Milligan still applies in Hong Kong

August 17, 2019

In Patel v Mirza, the UK Supreme Court abandoned the Tinsley v Milligan reliance test in deciding whether or not to enforce agreements tainted by illegality.

In Hong Kong, this question has frequently arisen with regard to schemes for the exploitation of ding rights under the Small House Policy. In a number of cases, property owners have transferred land to dings who apply to build a small house on the land after claiming the benefits conferred on dings by the small house policy.

The schemes considered by the courts were tainted by illegality since they envisaged that the ding would make a false declaration to the Director of Lands that they were the legal and beneficial owners of the land.

In a number of the cases considered by the courts, property owners have transferred land to dings for no consideration as part of an unlawful development scheme. If the scheme does not proceed, the property owners then seek to recover the land alleging that the ding holds the property on resulting trust since there was a voluntary transfer to them.

The relevant principles for dealing with claims like this are contained in paragraph 21 of Hon Au-Yeung J. in Tang Teng Tso v Cheung Tin Wah ([2014] HKCFI 680). The property owner can enforce their property rights against the ding as long as they do not need to plead their illegality.

This reflects the Tinsley v Milligan reliance test and some may have wondered whether Hong Kong’s courts would change their approach after Patel v Mirza.

This was considered in Kwan Hung Shing v Fong Kwok Shan ([2019] HKCFI 1687). Wilson Chan J. confirmed that the principles in Tang Teng Tso (and the reliance test on which they are based) remain the law in Hong Kong.

In Kwan Hung Shing, the plaintiff had assigned land to dings introduced by a developer under an unlawful development scheme. The plan was for the dings to claim their rghts under the Small House Policy. The developer would assign two of the completed houses to the plaintiff.

When the developer failed to carry out the agreement, the plaintiff claimed that the dings held the land assigned to them on presumed resulting trust since they had not paid for the land.

The claim succeeded and the court declared that the dings held the property on resulting trust for the plaintiff.

Michael Lower

Frustration of leases: Brexit and illegality

April 23, 2019

Introduction

This is the second post about Canary Wharf (BP4) T1 Ltd v European Medicines Agency ([2019] EWHC 335) in which Marcus Smith J considered the claim of the European Medicines Agency (‘the EMA’) that Brexit (should it occur) would be an event that would frustrate the EMA’s lease of its office premises in Canary Wharf.

The first post outlined the facts and Marcus Smith J’s account of the doctrine of frustration. This post looks at the EMA’s argument that performing its obligations under the lease would be illegal after Brexit and that the lease was frustrated on that account.

The EMA’s argument on illegality

Marcus Smith J explained that:

‘The EMA’s contention that the Lease was frustrated by supervening illegality, taken at its highest, involved the proposition that, after withdrawal of the United Kingdom from the European Union, it would no longer be lawful for the EMA to pay rent to CW pursuant to the Lease. The payment of rent would be unlawful because the EMA would – in paying rent – be acting ultra vires or without capacity’ ([96]).

Essential points about supervening illegality

The earlier post outlined Marcus Smith J’s account of the law on supervening illegality. Briefly:

  • illegality arising under foreign law does not frustrate a contract;
  • ‘for supervening illegality to frustrate, it must remove all or substantially all of the benefit that one party receives from the contract.’ ([195])
  • the frustration must not be self-induced.

Assumptions favourable to the EMA’s case

Marcus Smith J. assessed the EMA’s case on the following assumptions:

  • that illegality under foreign law was relevant to frustration under English law;
  • that, following Brexit, it was ultra vires the EMA, and therefore illegal, for it to continue to perform its obligations under the lease.

London and Northern Estates Company v. Schlesinger

Marcus Smith J referred to the Court of Appeal decision in London and Northern Estates Company v. Schlesinger ([1916] 1 KB 20) where an Austrian subject took a lease of a flat. When war broke out, restrictions were introduced prohibiting enemy aliens from living in the area in which the flat was located. The Court of Appeal held that this supervening illegality did not frustrate the lease.

Marcus Smith J commented:

‘the primary basis for the decisions of Avory and Lush JJ is illuminating: for supervening illegality to frustrate, it must remove all or substantially all of the benefit that one party receives from the contract. Thus, Avory and Lush JJ both stressed that not only did the lease continue, but also that the defendant was entitled to sub-let or indeed lend the flat to his friends. In short, the fact that the defendant was himself precluded from occupying the flat was not nearly enough to render the lease frustrated.’ ([195])

Application to this case

If it were accepted that the supervening illegality deprived the EMA of any ability to use the premises then the lease would be frustrated. For this to be true, it would need to be the case that it was ultra vires the EMA to occupy, assign, sub-let or share possession of the property ([198] – [199]). The lease would also be frustrated if it were assumed that EMA’s payment of the rent was ultra vires ([200]). Making these assumptions (and that illegality under foreign law is relevant) then Brexit did frustrate the lease.

Self-induced frustration

Even if the supervening illegality did frustrate the lease it is still relevant to ask whether the frustration is self-induced.

Marcus Smith J explained:

‘When considering whether there has been a frustrating event, it is quite clear that the courts consider the conduct of the party alleging frustration broadly and ask the broad question of whether the supervening event was something beyond that party’s control or within it. “Self-induced frustration” is something of a misnomer. It is simply a reference to post-contractual events and actions which indicate that certain options – that might have ameliorated the frustrating event – have been closed off by the acts or omissions of the party claiming frustration.’ ([206])

Here the frustration was self-induced:

‘(3) The fact is – as evidenced by the provisions of the Withdrawal Agreement – that the European Union could have done more than simply baldly ordering the relocation of the EMA (by way of the 2018 Regulation) and focussing only on the progress of the establishment of the EMA’s new headquarters in Amsterdam (which is what the 2018 Regulation does). The 2018 Regulation could have gone further, regarding the winding down of the EMA’s position in the United Kingdom. It could, for example, have included provisions along the lines of Article 119 of the Withdrawal Agreement.’ ([206])

The EU’s failure to confer capacity on the EMA to make use of the right to assign or sub-let the lease was a choice that it had made. It was this choice that gave rise to such illegality as existed. The lease is not frustrated by this illegality ([207]).

Michael Lower

 

 

 

 

Recovering property transferred pursuant to an agreement tainted with illegality: Patel v Mirza in Hong Kong

December 2, 2017

In Chung Tin Pui v Li Pak Sau ([2017] HKEC 2103) P was the manager of a tso that owned two lots of land in the New Territories. The Tso entered into two contracts with D1. D1 was to build several houses on each of the two lots.

The tso would have the right to select three of these for itself and D1 would assign these to the tso. D1 would also rebuild the tso‘s ancestral hall. The tso and D1 entered into two deeds of development in pursuance of the two agreements.

The tso assigned its land to D1 and D2 for no consideration pursuant to the two contracts and deeds; the land was held on trust for the tso. D1 and D2 divided the land into smaller lots which were assigned to D3 – D13 who all had knowledge of the trust.

D1 and D2, in breach of contract and their duty as trustees, sold four of the sub-lots, failed to complete the development on time and failed to rebuild the ancestral hall.

P sought to re-amend its statement of claim to plead that:

  1. D3 – D13 were all subject to the trust since they knew of it;
  2. P should be allowed to set the contacts and deeds of development aside on the grounds that they were contrary to law and public policy (given that part of the scheme relied on D3 – D13 making false declarations to the government that they would be beneficial owners of the property) (‘the illegality point’);
  3. so that upon P’s withdrawal from the development the Ds would hold the land on resulting trust for P.

In considering the illegality point, the court (Louis Chan J) placed the UK Supreme Court decision in Patel v Mirza at the centre of his analysis; this was said to be ‘of very high persuasive authority’ ([51]).

Louis Chan J summarised the effect of Patel v Mirza thus:

’53. It is not necessary to discuss the question of locus poenitentiae (§116). A person who satisfies the ordinary requirements for a claim in unjust enrichment should be entitled to the return of his property; he should not be debarred from enforcing his claim
only because the property which he seeks to recover was transferred to the defendant for an unlawful purpose (§§116 and 121). There may be a particular reason for the court to refuse to assist an owner to enforce his title to property, but such cases are likely to be rare (§116).

54. In considering such a claim, the Court should consider whether the public interest like the integrity of the legal system (or certain aspects of public morality) would be harmed by the enforcement of the claim by taking into account:

  • the underlying purpose of the prohibition which has been transgressed, and whether the purpose would be enhanced by the denial of the claim;
  • any other relevant public policy on which the denial of the claim may have an impact; and
  • whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts (§120).’

It no longer mattered whether or not the illegal development had been wholly or substantially performed ([58]). Nor did it matter whether or not P’s manager had known of the illegality ([60]).

Rather, ‘[t]he question now is whether by allowing the 2nd defendant and her nominees to keep the rest of the lots is a proportionate response to the illegality that the plaintiff has hitherto subscribed’ ([59]).

P was given leave to re-amend the statement of claim and to consider whether he wanted to make any further re-amendments in the light of Patel v Mirza.

Michael Lower

 

 

 

Settlement induced by misrepresentation that one of the parties had title to land as bona fide purchaser for value

July 25, 2017

In Howin Industrial Ltd v China Group Global Ltd ([2017] HKEC 1485) P transferred land to D2 to D13 for no consideration. D2 to D13 were male indigenous villagers entitled to ding rights. D2 to D13 executed declarations of trust confirming that each of them held his land on trust for P. These declarations were not registered at the Land Registry.

P was wound up. The Government subsequently issued notices of resumption in respect of the land. D2 to D13 assigned the land to D1 which had been incorporated to handle the compensation claims.

P’s liquidators discovered the declarations of trust. They made inquiries and were led to believe that neither D1 nor its lawyers knew of the declarations and that D1 was a bona fide purchaser for value of the land (‘the representation’). This was shown to be false in subsequent criminal proceedings.

Influenced by the representation, P’s liquidators entered into a deed of settlement (‘the deed’) dividing the compensation monies between P and D1.

When P’s liquidators discovered the truth, they sought to have deed set aside. They were successful. It was enough that they were influenced to enter into the deed by the representation (Zurich Insurance Co plc v Hayward [2016] 3 WLR 637, SC).

Time did not start to run until they had discovered the fraud or concealment (Limitation Ordinance, s. 26(1)).

P was entitled to a declaration that it was the sole beneficial owner of the land. This appears to be founded on a resulting trust arising from the fact that D2 to D13 did not give consideration. P did not need to plead the illegality.

In the criminal proceedings, the Court of Appeal had taken the view that the assignments to D2 to D13 were sham documents having no legal effect. D2 to D13 thought that the point of the documents was to transfer the ability to exploit their ding rights.

P was entitled to all of the compensation paid by the Government.

Michael Lower

Recovery of land transferred pursuant to an unlawful contract

December 31, 2016

In Li (or Lei) Ting Kit Tso v Cheung Tin Wah ([2016] HKEC 2720) the managers of a Tso entered into an oral agreement with D1. Under the terms of the agreement, the Tso would transfer land to D1 or a party nominated by him. Thirteen houses would be built on the land and the Tso would receive three of these and a cash payment.

D1 had one year from the date of the agreement (in October 1996) to obtain the necessary approval for the development from the Lands Department in accordance with the Small House Policy; otherwise, P could call for the re-assignment of the land to it. D1 agreed that he would not transfer the land to third parties nor allow any nominee of his to do so.

D1 nominated a company, D2, as the party that would enter into the written agreement in line with the oral agreement with D1. The Tso entered into the written agreement with D2 and transferred the land to it. No consideration was paid by D2 to the Tso (although the assignment to D2 stated that D2 had provided consideration).

No development had taken place by 2011 and the Tso wrote to D2 purporting to accept its repudiatory breach in delaying the carrying out of the development and calling on D2 to transfer the land back to it.

D2 had already divided the legal title to the land into thirteen sections and assigned some of them to third parties. After receiving D2’s letter it assigned the remaining sections to third parties.

It was accepted by the Tso that its agreement with D2 was unlawful since it would inevitably involve indigenous villagers making false declarations to the Lands Department. As a result, the Tso could not sue for breach of the agreement.

The Tso was able to rely on the presumption of resulting trust as against D2. The unlawful agreement was not consideration for the assignment to D2. Nor was the Tso estopped by the deed from showing that no consideration had been paid to it.

The problem was that D2 no longer had the land, title to which was in the hands of the various assignees. Since there was nothing to show that the assignees were anything other than good faith purchasers, the Tso had no claim against them.

Instead, D2 was ordered to pay equitable compensation to the Tso (the market value of the land as at the date of the writ).

Michael Lower

Contracts and illegality: Patel v Mirza

August 25, 2016

In Patel v Mirza ([2016] UKSC 42) the UK Supreme Court considered the law concerning the recovery of money paid under a contract to carry out an illegal activity where the illegal act is not performed. If the activity were not illegal, the party who has paid the money would be entitled to recover the sum paid as a claim in unjust enrichment. The question is whether the illegality should prevent the claimant from recovering the money or other property transferred to the other party to the failed contract. In the context of Hong Kong’s property law, these principles are relevant, for example, where ding rights are sold to developers and false declarations are made to the Government as part of the overall performance of the contract. Can property transferred to developers in pursuance of the illegality-tainted contract be recovered?

Until now, English law in this area has been based on the House of Lords decision in Tinsley v Milligan and Hong Kong’s courts have applied this framework. Under the Tinsley approach, the question is dealt with as a procedural matter. The plaintiff is treated as having substantive legal rights and the question of illegality is dealt with as a procedural issue. The plaintiff can succeed if he has no need to plead his own illegality. If the plaintiff has to plead his own illegality (to rebut a presumption of advancement for example) then the claim will fail. This is subject to the possibility of a locus poenitentiae; the plaintiff who has to plead his own illegality might still be able to succeed if he can show that he withdrew from the transaction before implementation. This approach to the treatment of sums paid under illegal contracts that are not performed has come in for severe criticism. The  judgments of the nine members of the UK Supreme Court in this case are a collective attempt to create a new framework for dealing with cases of this sort. While there was unanimity as to the outcome on the facts of the case, there was disagreement within the Supreme Court on some of the fundamentals of the approach to be taken in this area.

In Patel, P paid GBP620,000 to M. M was to use the money to bet on shares in RBS relying on M’s insider information concerning an anticipated UK Government announcement. The announcement was never made. P sought to recover the GBP 620,000 on the basis that M would be unjustly enriched if he were permitted to keep it once the contract had failed. The question was whether the courts would help P given the illegality of the contract which amounted to a conspiracy to commit the offence of insider dealing. The UK Supreme Court were unanimous in deciding that P was entitled to recover the money despite the illegality of the contract and despite the fact that he would need to explain the nature of the agreement in order to establish his claim.

 

Lord Toulson and the majority: enforce the contract where to do so would be appropriate as a matter of policy (the ‘range of factors’ test)

The majority of the Supreme Court expressed agreement with the ‘range of factors’ approach articulated by Lord Toulson. Under this approach, the court would carry out a balancing act when deciding on whether or not to enforce a contract where there was unlawful conduct in its formation, purpose or performance. In broad terms, the court would:

a) consider the underlying purpose of the prohibition which has been transgressed, b) consider conversely any other relevant public policies which may be rendered ineffective or less effective by denial of the claim, and c) keep in mind the possibility of overkill unless the law is applied with a due sense of proportionality.’ ([101] Lord Toulson).

Lord Toulson did not think any greater detail than that would help but suggested that relevant factors to be borne in mind when reaching a judgment would include: ‘the seriousness of the conduct, its centrality to the contract, whether it was intentional and whether there was marked disparity in the parties’ respective culpability.’ (107) The reliance approach in Tinsley should no longer be followed ([110] Lord Toulson).

 

Lord Neuberger’s Rule

Lord Neuberger takes a much simpler approach. He begins by saying that the appeal concerns, ‘a claim for the return of money paid by the claimant to the defendant pursuant to a contract to carry out an illegal activity, and the illegal activity is not in the event proceeded with owing to matters beyond the control of either party.’ ([145]). He contends for a very simple rule to the effect that the plaintiff is entitled to the money paid under such a contract (‘the Rule’) ([146]). This would apply ‘in appropriate cases’ even if the contract has been wholly or partly performed ([167]) though credit might have to be given for any benefit that the plaintiff has received ([168]). Lord Toulson’s balancing approach could be useful in deciding whether or not the case was an appropriate case for the application of the Rule ([174).

 

Do not enforce illegal contracts but order restitution of benefits conferred under contracts that fail on the grounds of illegality

The approach of the remaining judges is that the illegal contract is not enforced but is unravelled. Lord Mance disagreed with the majority’s suggestion that there needed to be a significant revision of the law in this area. His approach is that the unlawful contract could be rescinded and the parties put into the position that they would have been in had the contract never been entered into ([197]). Rescission would be available even if the contract had been partially performed, but the court would make adjustments to reflect any benefits that the plaintiff had received ([198]).

Lord Sumption spoke in favour of the illegality defence and the reliance principle as the appropriate guide as to when the defence was available (while accepting that its formulation in Tinsley was open to criticism). Where a contract fails then benefits conferred by one party on the other are recoverable ([247]). Equally, where the contract fails on the grounds of its illegality then the parties should be put into the position that they would have been had it never been entered into ([250]). The contract in this case was affected by the illegality principle ([267]) but restitution of the money that P paid to M in accordance with it should be ordered ([268]).

Michael Lower

 

Illegal sale of ding rights: Tinsley v Milligan re-affirmed

March 9, 2016

In Kan Wai Chung v Hau Wan Fai ([2016] HKLRD 632, CFI) developers entered into cooperation agreements with the plaintiffs (villagers with ding rights). The developers transferred title to parcels of land in a village to the plaintiffs. The agreement provided that the villagers held the lots as nominees and on trust for the developers. The developers and villagers worked together to exploit the ding rights. It was accepted by all of the parties that this aspect of the agreement and the actions done in pursuance of it were illegal.The houses were built and the developers entered into sale contracts (‘the first contracts’) with third parties; the villagers were nominally the vendors in those agreements. The villagers then entered into their own contracts with another purchaser for the sale of the same lots (‘the second contracts’). The developers brought proceedings seeking an injunction to prevent the second contracts from being completed so as to interfere with performance of the first contracts. These proceedings were ultimately settled in such a way as to allow the developers to complete the first contracts and retain the proceeds of sale. The villagers now brought proceedings against the developers and the solicitors who had prepared the first contracts alleging that they amounted to an unlawful conspiracy. This had caused them loss in the form of their own legal costs in defending the injunction proceedings and the costs order made against them.

This was a trial of two preliminary issues. The first of these was whether the villagers had any equitable interest in the property. If they did not then they could not be said to have suffered any loss as a result of the outcome of the earlier proceedings ([33] per Anthony To J). The villagers had not given any consideration for the transfer of the land to them (though the  assignments to them stated otherwise). On the face of it, therefore, the developers could rely on the presumption of resulting trust. The villagers argued that the developers could not rely on the presumption because of the illegality of the agreement concerning the ding rights. This failed since the case fell squarely within the approach laid down by the House of Lords in Tinsley v Milligan ([39] to [48]). The developers could rely on the presumption to establish their proprietary interest and had no need to plead the illegality.

There was some discussion as to whether the High Court of Australia’s approach to illegality in Nelson v Nelson was to be preferred to Tinsley. Anthony To J. considered that he was bound by several Court of Appeal decisions to accept that Tinsley was the approach taken in Hong Kong. It would be for the Court of Final Appeal to reconsider this if asked to do so in some later proceedings ([45]).

Michael Lower

 

Presumption of advancement and participation in an unlawful scheme

April 22, 2015

In Yip Wai Hong v Yip Kai Tong ([2015] HKEC 501, CFI) a father transferred a village house to each of his two sons.  The consideration referred to in the assignments was never paid. The father now contended that the sons each held their village house on resulting trust for him. The sons sought to rely on the presumption of advancement and Deputy Judge Burrell decided that they were entitled to do so. It did not matter that the defence made no specific reference to the presumption. It was enough to show that there had been a transfer from father to son for the presumption to arise ([34] – [38]). The father also argued that the presumption is now a ‘weak  concept’. This was rejected: Tribe v Tribe from the UK and Calverly v Green from Australia show that the presumption is still alive and well ([41] – [42]).

The father could not rebut the presumption. One reason for this was that in order to do so he would need to rely on evidence of an illegal scheme. The houses were among several built on land owned by the plaintiff under a scheme which involved indigenous villagers selling their ‘Ting’ rights to allow the houses to be built under the Small House Policy. The father alleged that the sons, like the other villagers, had simply sold their ‘Ting’ rights. The overall scheme was undoubtedly unlawful. The sons had to make statutory declarations that they ‘had no intention at present to make any private arrangement for any rights under the Small House Policy to be sold to other individual / developer’ and that they were each the sole owner of the relevant house ([44]). These would be untrue if the sons were not the sole legal and beneficial owners. Although the father was not the maker of the false declarations, his knowledge  that the scheme was unlawful was enough to prevent him from relying on the scheme to rebut the presumption. Further, his actions in making the allegedly false declarations possible by transferring ownership to the sons would be illegal ([54]).

Michael Lower

Tenancy void for illegality

May 31, 2013

In Li Wing-Sun v Wu Man ([1978] HKLR 575, CA) L was a licensee of the Government. The licence prohibited any ‘transfer’. In breach of the licence terms, L granted a lease to T. The question was whether the lease was valid (the proceedings were L’s claim for rent arrears and mesne profits). The Court of Appeal pointed out it had been admitted that there was a tenancy so, on the face of it, the decision could not rest on the contention that there was not.

At the time that the tenancy agreement was entered into, however, it was an offence to occupy Government land without a permit. The lease clearly envisaged that T would occupy the land (even though it had no permit) and so was illegal. The tenancy was void and L could not recover rent or mesne profits.

Michael Lower