New Judgment: Berrisford v Mexfield Housing Co-operative Ltd [2011] UKSC 52
Mexfield Housing Co-Operative Ltd is a fully mutual housing co-operative association founded by a bank as part of a mortgage rescue scheme with a view to buying mortgaged properties from borrowers in difficulty and letting the properties back to them. In the Court of Appeal, Mexfield had successfully argued that its "Occupancy Agreement" could not be a valid express tenancy because it was of uncertain duration. However, it was an implied periodic tenancy, by virtue of the payment and acceptance of rent since 1993, and, pursuant to well established principles, Mexfield was therefore entitled to determine such a tenancy by notice to quit. Berrisford appealed. Held, unanimously allowing the appeal.
The purpose of the Occupancy Agreement was to provide Berrisford with a home; Mexfield's 'mortgage rescue' background tended to support the notion that Berrisford's right of occupation was not intended to be precarious. Despite the fact that the Agreement was expressed to be a tenancy "from month to month", it seemed clear from the language that the parties intended that the arrangement should only be determinable pursuant to clauses 5 or 6.
On a review of the authorities, such an agreement cannot take effect as a tenancy according to its terms as it is for an uncertain duration. While there is no apparent justification for the rule that an agreement for a term of uncertain duration cannot give rise to a tenancy and the law was not in a satisfactory state, this rule had been established for many centuries and should not be jettisoned. However, before the Law of Property Act 1925, the common law treated an agreement for an uncertain terms as a tenancy for the life of the tenant, determinable before the tenant's death according to its terms. The effect of s 149(6) of the 1925 Act was that the Occupancy Agreement, as a tenancy for life at common law, was to be treated as a term of 90 years determinable on the death of Ms Berrisford, subject to the rights of determination in clauses 5 and 6.
If the tenant, therefore, happened to be a company or corporation rather than an individual (Mrs Berrisford), then is it true that the safety net of s149(6) would not apply? Does that mean that the impact of such uncertain terms depends upon the nature of the tenant?
p said:
The rule of uncertainty of term came about as a result of Prudential v London Residuiary Body over a piece of pavement in which the lease stated it would be rented for £30 per year until it was required for road widening purposes. That was a commercial lease. Therefore the uncertainty of term applies to commercial property one would assume that the unanimous verdict of the Supreme Court applies to commercial leases too.
Damien said:
In an article in the Estates Gazette (02 EG 67, 19 Jan 2012) "An supremely unsatisfactory solution" it is suggested that this ruling would not apply to a corporate entity as it cannot, of course, hold a lease for life. Thus, in that case the original rule of Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386, [1992] 3 All ER 504 (HL) would apply creating a periodic tenancy.
A bit of an anomaly. Amy be time for a bit of statutory clarification.
Keiran said:
A tenancy for life can only be granted to individuals, therefore, terms of uncertain duration made to a company will still be invalid as a tenancy.
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