Fixed term followed by periodic tenancy: a single term?

In Leeds City Council v Broadley ([2016] EWCA Civ 1212, CA (Eng)) a landlord granted a lease for an initial fixed term of six months  and thereafter continuing on a monthly basis until either party brought it to an end by one month’s notice to quit. For Council tax purposes, it made a difference whether the agreement gave rise to a single term or gave rise to two separate leases (a fixed term tenancy followed by a periodic tenancy).

The local authority argued that a single hybrid fixed / periodic tenancy was a legal impossibility since it would lack certainty of term.

This argument failed. Authorities going back to the seventeenth century showed that this kind of arrangement has long been regarded by the common law as a valid lease. The Law of Property Act 1925 (ss. 1(1) and 205(1)(xxvii)) took over the common law position (Lord Templeman in Prudential Assurance v London Residuary Body and Lord Neuberger in Mexfield Housing Co-operative v Berrisford).

According to their terms, these arrangements created a single tenancy and authority showed that this was to be regarded as a valid arrangement.

Michael Lower

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Periodic tenancy: Government’s right to resume possession for a public purpose

In Attorney-General v Sun Lee Godown Co Ltd ([1968] HKLR 116) the Crown had granted a monthly tenancy. The agreement allowed the Crown to resume possession if it needed the land, or any part of it, for a public purpose. The question was whether the Crown retained the normal implied right to give a month’s notice to quit or whether this was displaced by the limited express right to recover possession. It was held, as a matter of construction of the agreement, that the express right was additional to, and did not displace the usual right to terminate by giving notice to quit.

Mills-Owen J. said:

‘I see no reason to infer a bargain whereby the Crown relinquished the right to give notice to quit in exchange for clause 3(f). Further, if I had been of the opinion that clause 3(f) operated, whether by way of inferred bargain or otherwise, to deprive the Crown of the right to give the usual month’s notice to determine the monthly tenancy, I would have held it to be void as repugnant to the nature of the tenancy expressly created. It would be clearly so repugnant, in my view, as amounting to complete in consistency with the incidents of a monthly tenancy. It would be not a mere added condition, or a mere regulation of the conditions on which notice to quit might be given by the landlord. On the contrary, in my view it would have been a provision depriving the landlord of the right to determine the tenancy by a means inherently incident to the nature of the tenancy expressly created, namely by notice to quit. It would have amounted to an attempt to change the nature of the monthly tenancy, by destroying an essential incident of such a tenancy, not merely to regulate the length of notice or the terms on which it might be given. It would not be a question of regulation to a degree but of complete abrogation of the right to give notice. That in my view would necessarily be repugnant to the nature of the tenancy.’

Michael Lower

A lease for an uncertain term granted to an individual is a lease for life

A lease for an uncertain term (or a periodic tenancy where the right to serve notice to quit is subject to an indeterminate, invalid fetter) created a lease for life at common law. This was so whether or not the parties intended a lease for life. In England, a lease for life takes effect as a lease for 90 years (Law of Property Act 1925, s. 149(6)). Contractual effect (binding only on the parties) is to be given to a licence agreement that cannot take effect as a lease (because of uncertainty of term). This is so even if the parties thought that they were creating a lease. Similarly, contractual effect (binding only on the parties) can be given to an invalid, indeterminate fetter on the right to serve a notice to determine a periodic tenancy.

In Mexfield Housing Co-operative Ltd v Berrisford ([2011] UKSC 52) M entered into an occupancy agreement with B. B could determine it by serving a month’s notice. M could only terminate it in the event of B’s default or in the event of her ceasing to be a member of M. M purported to terminate it by serving one month’s notice. It argued that the agreement was an ineffective attempt to create a lease. It was ineffective, it was argued, because of the lack of certainty attached to the landlord’s right to determine the agreement. M argued that the result was that B occupied under a periodic tenancy that could be brought to an end by notice to quit.

The Supreme Court reluctantly accepted (and B conceded) that this was a lease for an uncertain term. When granted to an individual, however, common law deemed this to be a lease for life. This seems to have accorded with the parties’ intentions in this case but the result would be the same even if this were not the case. The Law of Property Act 1925, s.149(6) converted a lease for life into a lease for a term of ninety years subject to the parties’ rights to bring it to an end in certain events by notice to quit.

Even if this had not been the case, the agreement could have taken effect as a contractual licence even if the parties had intended to create a lease. Lord Neuberger left open the question as to whether it could have taken effect as a periodic tenancy (had this accorded with the parties’ intentions) with contractual effect being given (as between the contracting parties) to the restrictions on the right to serve a notice to quit found in the agreement between M and B ([69]).

The Supreme Court was highly critical of the certainty of term principle but did not overrule earlier authorities that laid it down as an essential element of a lease.

Michael Lower