Berrisford (FC) v Mexfield Housing Co-operative Limited

A residential occupancy agreement expressed to continue until determined in specified circumstances must be construed according to ordinary contractual principles. A landlord cannot acquire an additional right to terminate merely because the agreement describes occupation as continuing from month to month.

Although a tenancy for an uncertain term cannot take effect according to its express duration, an agreement granted to an individual which would formerly have created a determinable tenancy for life now takes effect under section 149(6) of the Law of Property Act 1925 as a 90-year tenancy. It remains subject to its agreed rights of earlier determination. A periodic tenancy containing an invalid restriction of uncertain duration on termination may be treated in the same way.

A fully mutual housing co-operative bought a member’s home under a mortgage rescue scheme and let it back to her under an occupancy agreement. The agreement continued from month to month until determined under its terms. The tenant could terminate on one month’s notice, while the co-operative could terminate only for specified causes.

After rent arrears arose and were cleared, the co-operative served an ordinary notice to quit instead of invoking the contractual forfeiture provision. The county court refused summary judgment. Peter Smith J and the Court of Appeal ordered possession: [2009] EWHC 2392 Ch; [2010] EWCA Civ 811; [2011] 1 Ch 244.

The central issue was whether the agreement created a subsisting tenancy despite its uncertain duration and the restriction upon the landlord’s power to terminate.

1. Appeal allowed unanimously. Lord Neuberger delivered the leading judgment. Lord Hope, Lord Walker, Lady Hale, Lord Mance, Lord Clarke and Lord Dyson agreed that the occupancy agreement created a subsisting tenancy and that the possession order must be discharged.

2. Applying ordinary contractual principles, the agreement could be determined only by the tenant under clause 5 or by the co-operative under clause 6, apart from consensual surrender. The words “from month to month” did not confer an additional right upon the co-operative to terminate on one month’s notice. Such a right was inconsistent with the express language, would make clause 5 redundant and would undermine the emphatic limitation in clause 6.

3. The court retained the established certainty requirement affirmed in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386. A term of years must have a maximum duration ascertainable at its inception. A restriction of uncertain duration upon the right to terminate a periodic tenancy is likewise incompatible with a tenancy taking effect strictly according to its terms. Although the rule lacked an evident modern justification, its antiquity, statutory context and possible effect upon established titles made this case unsuitable for its abandonment.

4. Before 1926, however, the common law treated a grant to an individual for an uncertain duration as a tenancy for that individual’s life, determinable earlier in accordance with the grant. That consequence arose by operation of law and did not depend upon proof that the parties intended the legal category of a life tenancy.

5. Section 149(6) of the Law of Property Act 1925 converts such a life tenancy into a 90-year term, determinable after the original tenant’s death and subject to the agreement’s existing rights of earlier determination. The provision applies to arrangements made after 1925 as well as to pre-existing interests. It also applies where the tenancy is capable of earlier termination for causes other than death.

6. The same analysis applies whether the agreement is characterised as a single term of uncertain duration or as a periodic tenancy containing an invalid restriction of uncertain duration upon the landlord’s power to terminate. The tenancy therefore continued because the tenant was alive, had not served notice under clause 5, and the co-operative did not rely upon clause 6.

7. It was unnecessary to decide the alternative contractual case. Lord Neuberger nevertheless considered that an agreement invalid as a tenancy for technical reasons could ordinarily remain enforceable personally between the original parties. Lord Hope, Lord Mance and Lord Clarke supported that approach, while Lord Dyson regarded it as strongly arguable. Such a contract would not have proprietary effect against successors.

1. United Kingdom Supreme Court: Allowed the tenant’s appeal unanimously and discharged the possession order: [2011] UKSC 52 .
2. Court of Appeal: By a majority, held itself bound by authority to order possession, Wilson LJ dissenting on the contractual issue: [2010] EWCA Civ 811 ; [2011] 1 Ch 244.
3. High Court: Peter Smith J allowed the co-operative’s appeal and ordered possession: [2009] EWHC 2392 Ch.
4. County Court: His Honour Judge Mitchell refused the co-operative’s application for summary judgment.