Barrett v Morgan

A periodic head tenancy ends in accordance with its terms when a valid notice to quit expires. The notice also determines a derivative sub-tenancy, whether it was served unilaterally or by prior arrangement with the head tenant.

Such a notice is not equivalent to a surrender. A surrender requires the landlord’s consent and cannot prejudice an existing sub-tenant. A notice to quit depends for its effectiveness on the parties’ original tenancy agreement, rather than their consent when the notice is served. A sub-tenant’s interest therefore cannot survive the natural termination of the estate from which it derives.

The respondent occupied agricultural land as a sub-tenant. His landlords held the land as yearly tenants of the appellant freeholders. To obtain vacant possession, the freeholders served notices to quit on the head tenants after receiving an assurance that no statutory counter-notices would be served.

A deputy High Court judge found that the arrangement was intended to bring the sub-tenancy to an end. The Court of Appeal, in a decision reported at [1999] 1 WLR 1109, treated the consensual arrangement as tantamount to a surrender and held that it could not determine the sub-tenancy.

The issue before the House was whether prior agreement between the head landlord and head tenant deprived otherwise valid notices to quit of their common-law effect upon the sub-tenancy.

1. Appeal allowed unanimously. Lord Millett delivered the leading speech. Lord Slynn of Hadley, Lord Woolf, Lord Nicholls of Birkenhead and Lord Hope of Craighead agreed with his reasoning.

2. Per Lord Millett, a surrender and termination by notice to quit are legally distinct. A surrender brings a tenancy to a premature end in a manner outside its terms and requires the immediate landlord’s consent. Since a third party cannot be prejudiced by a later agreement to which that party was not privy, an existing sub-tenancy survives a surrender of the head tenancy.

3. By contrast, a periodic tenancy is terminable by notice to quit under the agreement made when the tenancy was created. The notice remains a unilateral legal act because its effectiveness does not depend upon the recipient’s present consent. Prior discussion, agreement or coincidence of commercial interests does not convert it into a surrender.

4. A sub-tenant’s derivative title cannot survive the natural determination of the head tenancy in accordance with its terms. Accordingly, the notices served by the freeholders brought the head tenancy and the respondent’s sub-tenancy to an end, despite the head tenants’ prior assurance that they would not serve counter-notices under section 26 of the Agricultural Holdings Act 1986.

5. A head tenant who gives an upwards notice to quit in breach of rights granted to a sub-tenant may be liable in damages and, if the sub-tenant has advance warning, may be restrained by injunction. That possible breach does not make the notice ineffective against the head landlord. The respondent had no right to prevent the head landlord from serving notice or to compel the head tenant to serve a counter-notice.

6. Sparkes v Smart [1990] 2 EGLR 245, which treated a collusively arranged notice as incapable of determining a sub-tenancy, was overruled. The Court of Appeal’s order was set aside and the appeal allowed.

1. House of Lords: Allowed the freeholders’ appeal unanimously and overruled the Court of Appeal’s conclusion that the notices were tantamount to a surrender.
2. Court of Appeal: Held, in the decision reported at [1999] 1 WLR 1109, that notices served by prior arrangement were consensual acts equivalent to a surrender and did not determine the sub-tenancy.
3. High Court: The deputy judge found that the freeholders and head tenants intended to obtain vacant possession by bringing the sub-tenancy to an end. The disposition at this stage is not stated in the judgment.