Barrett and Others v. Morgan

The House of Lords considered whether notices to quit served by a head landlord on a head tenant, pursuant to a prior arrangement or common understanding with that head tenant that the tenant would not serve a counter-notice, were nevertheless effective at common law to determine a sub-tenancy. The court held that such pre-arranged service is not equivalent to a surrender and does not prevent the notice operating to determine the sub-tenancy. The decision distinguished the consensual, consent-dependent nature of a surrender from the consent-independent termination of a periodic tenancy by notice to quit. The court applied Section 26 of the Agricultural Holdings Act 1986 as context for the statutory right to serve counter-notice and noted the statutory power in Section 29 and the Fourth Schedule had not been exercised.

Background and parties:

• The freeholders (the appellants) held farmland and wished to sell with vacant possession. The head tenants held the land as yearly tenants and Mr Morgan (the respondent) occupied under a sub-tenancy from the head tenants.
• To obtain vacant possession the freeholders served notices to quit on the head tenants. The head tenants, by prior informal arrangement and with no intention of serving counter-notices, allowed those notices to run their course. Mr Morgan refused to vacate and the freeholders sought possession.

Procedural history: The facts were considered first by the Vice-Chancellor (reported at [1999] 1 WLR 1109). The Court of Appeal held that notices to quit served by prior arrangement were tantamount to a surrender and therefore ineffective to determine the sub-tenancy. The appeal came to the House of Lords.

Nature of the claim / relief sought: Possession of the land; the freeholders sought a declaration and possession based on the effectiveness of the notices to quit served on the head tenants.

Issues framed:

• Whether a notice to quit served by a head landlord (or by a head tenant upwards) pursuant to a prior arrangement with the recipient is ineffective to determine a sub-tenancy because it is "tantamount to a surrender".
• Whether the legal distinction between surrender and termination by notice to quit affects the rights of sub-tenants and the allocation of remedies.

Court’s reasoning and decision:

• The court distinguished surrender (which requires the recipient landlord's consent and is consensual in the fullest sense) from termination by notice to quit (which brings the tenancy to an end in accordance with its original terms and does not require the recipient's consent to be effective).
• Because a periodic tenancy is terminable in the manner agreed at the outset, a party entitled to give notice may do so with or without the other party’s consent; prior agreement not to resist a notice does not change its nature nor render it ineffective.
• The House of Lords rejected the Court of Appeal’s view that pre-arranged notices are "tantamount to a surrender", overruled Sparkes v. Smart, and allowed the appeal. The court emphasised that sub-tenancies are protected from prejudicial voluntary acts outside the tenancy terms but can be determined by the natural expiry or by valid notice to quit given in accordance with the tenancy.

Appeal allowed. The House of Lords held that a notice to quit served pursuant to a prior arrangement with the recipient is not equivalent to a surrender and does not lose its effectiveness at common law to determine a sub-tenancy. The court distinguished surrender (consent-dependent) from termination by notice to quit (effective without recipient's consent) and accordingly overruled Sparkes v. Smart.

First instance: judgment of the Vice-Chancellor (reported at [1999] 1 WLR 1109). Court of Appeal: held that notices to quit served by prior arrangement were tantamount to a surrender and could not determine the sub-tenancy (no neutral citation given in the judgment for the Court of Appeal decision). Appeal to the House of Lords allowed ([2000] UKHL 1).