Home Page > Property Law Library > Landlord and tenant (general) > Uncertain term

Home Page
Contact
Editorial Team

Assignment
Break clauses
Chattels and fixtures
Business rates
Consents
Construction of lease terms
Dilapidations
Discrimination
Disclaimer
Distress
Estoppel
Forfeiture
Goods left on the premises
Indemnity
Insolvency
L & T (Covenants) Act 1995
Licences
Management regulations
Merger
Nuisance
Notices - service
Pre-emption clause
Rent
Rent review
Rent suspension
Restraint of trade
Service charges and insurance (general)
Set-off
Subletting, sharing possession or occupation
Surrender by operation of law
Surrender and re-grant
Tenancy at will
Uncertain term
Unlawful eviction

Current page






Uncertain term

Treated as tenancy for 90 years

Housing co-operative with uncertain term

Berrisford v Mexfield Housing Co-operative
[2011] UKSC 52

Summary

T was a tenant of a housing co-operative. Her tenancy agreement ran "from month to month until determined as provided in this agreement". The only term in relation to termination by L was a forfeiture clause. As there was no ability for L to determine the tenancy by a notice to quit, it was for an uncertain term. The Supreme Court therefore held that it took effect as a 90 year lease determinable on death, which could otherwise only be determined in accordance with the right of re-entry clause in the agreement. It could not be determined by a one-month notice to quit.

Facts

L let T the premises from 13 December 1993. Clause 1 of the agreement provided as follows:
    "[L] shall let and [T] shall take the [premises] from 13 December 1993 and thereafter from month to month until determined as provided in this Agreement".
The termination provisions were as follows:
    "5. This Agreement shall be determinable by [T] giving [L] one month's notice in writing.

    6. This Agreement may be brought to an end by [L] by the exercise of the right of re-entry specified in this clause but ONLY in the following circumstances:
      a) If the rent reserved hereby or any part thereof shall at any time be in arrear and unpaid for 21 days …

      b) If [T] shall at any time fail or neglect to perform or observe any of the [terms of] this Agreement which are to be performed and observed by [her]

      c) If [T] shall cease to be a member of [L]

      d) If a resolution is passed under … [L's] Rules regarding a proposal to dissolve [L]
    THEN in each case it shall be lawful for [L] to re-enter upon the premises and peaceably to hold and enjoy the premises thenceforth and so that the rights to occupy the premises shall absolutely end and determine as if this Agreement had not been made …"
L did not seek to terminate in accordance with the above provisions but instead served a standard common law notice to quit and then commenced possession proceedings.

L's argument

L argued that the notice to quit was effective and that as the landlord was a fully mutual housing co-operative and she was a member of it she had no statutory right to remain in possession. Their position was summarised by Lord Neuberger MR at para 9:
    "The essence of Mexfield's case was that the effect of a number of cases, culminating in the decision of the House of Lords in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386, is that an arrangement such as that embodied in the Agreement could not be a valid tenancy as a matter of law. Accordingly, Mexfield contended, Ms Berrisford had become a periodic (either weekly, because she paid a weekly rent, or monthly, because that was the parties' apparent intention) tenant of the premises by virtue of the payment and acceptance of rent since 1993, and, pursuant to well-established and unchallenged principles, Mexfield was entitled to determine such a tenancy with at least one week's (or one month's) notice in common law, but required to be at least four weeks' notice by the 1977 Act."
Initial decisions

At first instance L was refused possession. On appeal the Court of Appeal made an order for possession, agreeing with L that as there was no term certain, the agreement could not amount to a valid tenancy and therefore T had occupied pursuant to a monthly periodic tenancy, which could be determined by a notice to quit.

T's argument

T argued that prior to 1926, the arrangement would have given rise to a tenancy for life and that by virtue of s149(6) of the Law of Property Act 1925 it gives rise to a tenancy for 90 years subject to the landlord’s right to determine on death or under the clauses in the agreement. It followed that the notice to quit was of no effect as T had a fixed term for 90 years. (See para 11 of the decision).

Supreme Court

T's appeal was allowed and the order for possession discharged.

The Supreme Court accepted that prior to 1926 the agreement would have been treated as a tenancy for life as it was for an uncertain term. Lord Neuberger MR:
    “42. On this basis, then it seems clear that, at least if the Agreement had been entered into before 1 January 1926 (when the 1925 Act came into force), it would have been treated by the court as being the grant of a tenancy to Ms Berrisford for her life, subject to her right to determine pursuant to clause 5 and Mexfield's right to determine pursuant to clause 6.”
It was then accepted that s149 of the Law of Property Act 1925 converted that into a lease of 90 years. The circumstances in which such a lease would arise were then clarified. Lord Neuberger MR:
    “56. Accordingly a periodic tenancy with an invalid fetter on the landlord's right to determine should be treated in the same way as a tenancy for a fixed, if indeterminate, term. That seems to me to be justified in principle, logical in theory, and it ensures the law in this area is the same for all types of tenancy, whether or not periodic in nature (which was, I think, part of the reasoning in Prudential [1992] 2 AC 386). On that basis, even if the tenancy created by the Agreement was a monthly tenancy with an objectionable fetter, it seems to me that it would have been treated as a life estate under the old law (subject to the right to determine in accordance with the terms of the fetter), and so would now be a tenancy for 90 years.

    57. Ms Berrisford is still alive, and it is common ground that she has not served notice under clause 5 and that Mexfield is not relying on clause 6. In those circumstances, it follows that Ms Berrisford retains her tenancy of the premises and that Mexfield is not entitled to possession."
An alternative defence by T was subject of favourable judicial comment. This was that even if there was no tenancy, there were contractual rights which could be enforced. Lord Neuberger MR:
    “60. If the Agreement does not create a tenancy for technical reasons, namely because it purports to create an uncertain term, it is hard to see why, as a matter of principle, it should not be capable of taking effect as a contract, enforceable as between the parties personally, albeit not capable of binding their respective successors, as no interest in land or other proprietary interest would subsist.”
And Lord Mance at paras 101 and 102:
    "The three characteristic hallmarks of a contractual tenancy, as distinct from a contractual licence, are (a) exclusive occupation, (b) rent and (c) a term which the law regards as certain: Street v Mountford.. Only in "special circumstances" (not here relevant) will an agreement having these characteristics not involve a tenancy ..

    On the hypothesis I am presently considering, those three characteristics were not all present. The basis for asserting that there was a contractual tenancy therefore falls away. But the contract was valid as such. There is no reason not to give it effect according to its terms. As a matter of legal categorisation, because it was not a tenancy, it can only involve a licence. Its terms precluded the giving by Mexfield of notice to terminate, except in circumstances falling within clause 6 of the Agreement."


Mexfield distinguished - a licence instead

Southward Housing Co-operative Ltd v Walker
[2015] EWHC 1615 (Ch)

Summary

A tenancy granted by a fully mutual housing association had been caught by the rule against uncertain terms. The Court held that this did not have the effect of creating a 90-year tenancy because this was directly contrary to the parties' intentions and fundamental aspects of the agreement – Mexfield was distinguished. Therefore, it was to be treated as a contractual licence.

Facts

Ds were members of the C’s housing co-operative and were granted residential tenancies by C. The written terms of the tenancy agreement set out why it was not assured and required a weekly rent payable in advance. It also provided that Ds had a right to occupy the property so long as they occupied as their only or principal home and abided by the terms of the agreement. It went on to provide that C could only bring the tenancy to an end on grounds set out at clause 7 and by a notice to quit. The grounds included non-payment of rent and provided that possession could only be given by an order of the County Court.

Ds accrued rent arrears and C served a notice to quit and then issued proceedings for possession.

C contended that the tenancy was terminated in accordance with its express terms and that there was no other security of tenure due to the fact that as a co-operative housing association, its tenancies fell outside either the Housing Act 1985 (secure tenancies) or the Housing Act 1988 (assured tenancies).

Issues
  • Whether, following Mexfield (see above), the tenancy, not being one of a term certain, was a 90 year lease by virtue of s149(6) of the Law of Property Act 1925, and had not been determined;
  • Whether the exclusion of co-operative tenancies from either the 1985 or 1988 Act is incompatible with Articles 8 and 14 of the ECHR;
  • Whether the service of the notice to quit was unlawful on public law grounds; and,
  • Whether the making of a possession order was disproportionate.
Decision

On the first issue, in order to determine whether or not the tenancy was for a term certain the principles of contractual construction needed to be applied. As a preliminary point the Court held that agreement should be construed so that the right to serve notice to quit was dependent upon the existence of one or more of the grounds specified in the agreement. It followed that the agreement “must be treated, as was the occupancy agreement in the Mexfield case, as one for an uncertain duration”.

However, this did not determine whether or not s149(6) applied. The Judge considered that two sub-questions arose: Was it the intention of the parties to create a lease for life; and was intention relevant? The Court distinguished Mexfield. Hildyard J said:
    “In the Mexfield case, all the justices of the Supreme Court were agreed that in the particular circumstances of that case it was intended that the defendant should enjoy the premises for life; that, to put that into more legal language, the parties did in fact intend a lease for life determinable earlier by the tenant on one month’s notice and by the landlord on the happening of certain specified events.

    That meant that they did not have to consider the conundrum that arises if that is not the intention of the parties, and where, accordingly, the inexorable application of a rule that transmogrifies into a 90 year term an agreement that is incapable of constituting a tenancy (which is what Lord Neuberger acknowledged was the “Carrolian” consequence (see paragraph 34)), defeats the intention of the parties.

    In the present case, in my view, just that conundrum arises. For in my judgment it is plain that even if the parties envisaged that the Defendants in this case would stay at the property for a long time, it was not the intention of the parties that they should be legally entitled to enjoy the premises for life.”
With that in mind, drawing support from some of the obiter comments in Mexfield, the Judge went onto to determine that the solution was to award a contractual licence.

In relation to the second issue, the Judge determined that none of the grounds for asserting incompatibility were made out and that C was not a public authority for the purposes of Article 6. On that basis the final two grounds were dismissed as public law / human rights considerations did not apply to a private landlord such as C. (But consider now the application of McDonald v McDonald on the Human Rights Act defences page).


Back to top
If you have found this page useful, you may be interested in the following:

Options
Free Summaries £nil
Full Membership From £207 + VAT (1 year)