Mexfield Housing Co-Operative are a fully mutual housing association and tenants have no security of tenure. In 1993 they bought Mrs Berrisford’s house from her as a mortgage rescue and re-let it to her for £89/week on a lease that was expressed to run “from month to month” and which allowed her to terminate it by a month’s notice, but only allowed Mexfield to do so if she failed to pay the rent or breached other terms. She got behind with the rent but instead of exercising the forfeiture clause (which would have failed as she soon paid up the arrears) they decided to argue that the whole lease was invalid because it was a lease without a term, that this sort of lease had been invalid since the 15th Century, and that they could therefore give the statutory 28 days notice and recover possession. They served the notice in 2008 and issued proceedings in the County Court shortly afterwards.
The County Court Judge, in a commendably practical way, rejected the claim, but Mexfield appealed and won in the High Court and the Court of Appeal. In all fairness to them by this stage they had agreed to grant her another lease in valid terms if they won, and the battle was being fought as a test case. But this did not alter the prospect to the wider world.
The case had caused considerable alarm in housing circles. And not only because it seemed unfair, but because there are many thousands of properties let in this way throughout the country, often to older residents, and the thought that all their leases were, or even might be invalid didn’t really bear thinking about.
The legal basis for the argument was eminently respectable. Cases going back to Say v Smith (1563) and beyond have held that a lease has to have a fixed or determinable length. During WW2 the CA held, rather inconveniently, that leases expressed to last “for the duration of the war” were invalid – Lace v Chantler (1944) – and this needed to be reversed by temporary legislation. And in Prudential v London Residuary(1992) the HL approved this and held that a lease by a shop owner from the LCC of some forecourt “until it is needed for road widening” was not a lease because it was not for a fixed or determinable term. There are also cases holding that although you can restrict a landlord’s right to terminate a periodic tenancy (eg a monthly one) for a fixed period you cannot restrict it indefinitely.
However, there is no real reason why this has to be the case. It is just a historic quirk of English law. And it is perfectly possible to grant a lease of say 2,000 years, terminable on 3 months’ notice if the landlord needs the land for road widening. Or you can let the land on monthly periodic tenancies which can run on for as long as you like, provided nobody terminates them by notice, which could be for ever. And before 1925 you could even have perpetually renewable tenancies and freeholds which could be terminated for various reasons.
Furthermore, there is the deep-seated concept of pacta sunt servanda – agreements are to be kept. Mexfield had agreed not to end her occupation except in certain circumstances, and here they were tearing up the agreement and saying that they had never been bound by it, despite having taken her rent for some 15 years. This can’t be right.
Well, the Supreme Court has spoken ( UKSC 52) and said that not only is the lease valid as a lease, but that Mexfield would in any event be bound by their agreement, even if for some reason the lease wasn’t valid. So Mrs Berrisford wins twice over, and there is a lot of relief all round.
It would be tempting to say that, like the giant computer Deep Thought in The Hitchhiker’s Guide to the Galaxy, the answer (to life, the universe, and everything) came out as 42 because nobody had thought of the question very much. Or that it is just an instance of what my Professor called Lord Denning’s Little Old Ladies rule (viz Little Old Ladies win). It would have been disappointing if the decision had gone the other way, given the intrinsic merits. However, this was no push-over, and the SC had to pull out some unusual arguments to get the right result.
Lord Neuberger, with whom the others basically agreed, held that this was not the time nor the case to abolish the common law need for tenancies to have terms. It was old and basic to the 1925 status of land law – leaseholds are for terms, freeholds are for ever. If it was to be abolished it was up to parliament to do this.
However, the 1925 legislation had specifically provided for one fairly common species of indefinite tenancies- leases for lives. s149(6) of the Law of Property Act 1925 said that:
Any lease… at a rent…for life… or any contract therefor made before or after the commencement of the Act… shall take effect as a lease…for a term of 90 years determinable after the death … of the original lessee … by at least one month’s notice….
A lease to an individual for an uncertain term was regularly recognised before 1925 as a lease for life. Mrs Berrisford is an individual. Accordingly as Mrs Berrisford is still alive the tenancy continues.
Alternatively, the agreement was personally binding on the parties even if it was not a lease and could not really be a licence and it would not have been binding on say Mexfield’s successors in title. Pacta sunt servanda indeed.
Lord Hope commented that they do things better in Scotland, and that perhaps it was time to allow fully mutual housing associations to grant assured tenancies, while Lady Hale referred to Carrollean concepts and said the position became “curiouser and curiouser”. It is hard to disagree.
But what are the lessons to learn? Perhaps:
- Avoid granting this form of lease in the future – it is easy to do so by granting a longer lease terminable by notice on death if this is what you want, and much easier to understand.
- Remember that if the tenant is not a person – a company of some kind – they can’t have a lease for lives and the safety net provided here won’t work – eg the tenant in Prudential.
- And if the landlord sells their interest on then the binding agreement argument doesn’t work either.
- It is always dangerous trying to do something which looks like sharp practice, and judges will always strain their utmost to avoid allowing this sort of thing to succeed.
- And do not underestimate the skill and ingenuity of the Supreme Court. The judges, and the barristers appearing before them, pull the most unexpected rabbits out of hats when it really matters. And in this case only a month after hearing the argument, which is impressive in itself.