Trustees Of St John's Hospital v Keevil & Anor

A legal assignment of a tenancy requires a deed, even where the tenancy itself was not created by deed. An ineffective assignment may give rise to estoppel only where the requirements of estoppel by convention are established, including sufficient prejudice or detriment and circumstances making it unconscionable to depart from the shared assumption. The court will give effect to the parties’ evident intention in its commercial context, but cannot recast an intended assignment as a surrender and regrant where the transaction’s terms are inconsistent with that analysis.

The Hospital granted pastureland to the father under a tenancy containing restrictions on assignment but no part-resumption clause. In 1992 the Hospital, the father and the son signed an agreement intended to transfer the tenancy to the son, increase the rent and insert a part-resumption clause. No deed or separate assignment was executed.

The Lands Tribunal held that the father remained the tenant and that the part-resumption clause was ineffective. The Hospital appealed on estoppel and, alternatively, surrender and regrant. The central issues were whether the son was precluded from denying a legal assignment and whether the agreement could operate as a surrender and grant of a new tenancy.

1. Appeal dismissed. The father remained the legal tenant and the part-resumption clause did not form part of the tenancy.
2. A deed was required for the legal assignment of the tenancy under Law of Property Act 1925, section 52. The 1992 agreement was not a deed. The court was bound by Crago v Julian [1992] 1 WLR 372.
3. The case was properly analysed as a possible estoppel by convention. The parties had acted under a shared mistake about the legal effect of the agreement, but the Hospital had not established detrimental reliance. The estoppel case had also been raised inadequately and too late. The court applied the approach in John v George (1995) 71 P&CR 375, under which responsibility for the mistaken assumption and sufficient prejudice are important considerations in deciding whether departure would be unconscionable.
4. The circumstances did not make it unconscionable for the son to rely on the defect. The Hospital’s experienced surveyor had prepared the document, while the farmers had no legal advice and had merely signed it.
5. The intended transaction could not be treated as a surrender and regrant. Most of the operative clauses referred expressly to assignment, continuation and variation of the original tenancy. Although the court seeks to give effect to evident commercial intention, applying Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, it cannot make a new agreement or restructure the transaction into one the parties did not intend.

• Court of Appeal (Civil Division): The appeal from the Lands Tribunal was dismissed with costs.
• Lands Tribunal: On 27 November 2000, HH Judge Rich QC held that the father remained the tenant and that the part-resumption clause was not part of the tenancy.