Berrisford v Mexfield Housing Co- Operative Ltd

A purported tenancy is void as a lease where a restriction on determination leaves its maximum term uncertain. Entry into possession and payment of rent may nevertheless generate a periodic common-law tenancy, but the contract cannot be enforced in equity as though it were the invalid lease. Equity may intervene on a separate basis such as trust, estoppel or unconscionability. Where the parties intended a tenancy, the arrangement cannot be recast as a contractual licence. A monthly periodic tenancy is terminable by ordinary notice to quit. The majority applied these rules to an occupancy agreement; the dissent would have enforced the agreed restriction on possession between the original parties.

Mexfield Housing Co-operative Ltd granted Ruza Berrisford an Occupancy Agreement in 1993. The agreement provided for occupation from month to month, but restricted Mexfield's right to end the arrangement to specified events, including rent arrears or breach.

After Mexfield served a notice to quit, the Central London County Court refused summary judgment. Peter Smith J allowed Mexfield's appeal and made a possession order in [2009] EWHC 2392 (Ch). A fresh agreement meant that possession was no longer a live issue, but the Court of Appeal heard the appeal as a test case. The issues were whether equity could enforce the agreement as an interest in land and, alternatively, whether it created a contractual licence.

The appeal was dismissed by a majority. Aikens LJ gave the principal judgment and Mummery LJ agreed. Wilson LJ dissented and would have allowed the appeal.

1. The majority held that clause 6 made the maximum duration of the purported tenancy uncertain because the specified events might never occur. The arrangement therefore could not create a valid lease. The certainty requirement was a fundamental rule of land law, reflected in sections 1(1) and 205(1)(xxvii) of the Law of Property Act 1925, and applied in Prudential Assurance Co Ltd v London Residuary Body [1992] AC 386 and Lace v Chantler [1944] KB 368.
2. Equity could not validate the failed lease or enforce the agreement by specific performance, injunction or declaration as though the lease had been created. Equity follows the law. The cases relied on by the appellant were distinguished or confined: Parker v Taswell (1858) 27 LJ (Ch) 812 concerned a formal defect, while In re King's Leasehold Estates LR 16 Eq 521 was sustainable on a conventional contract ground. Separate equitable doctrines such as trust or estoppel might protect occupation, but none was relied on.
3. The agreement could not be construed as a contractual licence because the parties intended to create a tenancy. Entry into possession and payment of rent produced a monthly periodic tenancy, terminable by notice to quit.
4. Wilson LJ considered that [1992] AC 386 concerned property rights between successors in title and did not determine equitable enforcement between original contracting parties. He would have ordered enforcement of clause 6 without requiring detrimental reliance.

The formal result was dismissal of the appeal.

• Court of Appeal (Civil Division): By majority, Aikens and Mummery LJJ dismissed the appeal; Wilson LJ dissented.
• High Court, Chancery Division: Peter Smith J allowed Mexfield's appeal from the county court and made a possession order in [2009] EWHC 2392 (Ch).
• Central London County Court: HHJ Mitchell refused Mexfield's application for summary judgment on 20 November 2008.