Payne Hicks Beach

Payne Hicks Beach

01 December 2011

Draft_RAM_3_Uncertain Terms


 

For further information please contact Andrew Tugwell or Richard Manyon

 


 

The Supreme Court casts doubt on a long held truism of land law

 

The case of Berrisford v Mexfield Housing Cooperative Limited [2011] UKSC 52 has unsettled a well established principle that leases need to be for a certain term of years. Practitioners have long relied on the premise that leases of uncertain duration would be void, subject to the possibility of converting them into periodic tenancies by reference to their terms.

 

Mexfield has taken away this comforting certainty.

The facts were that Ms Berrisford held a lease of her property which was expressed to continue "from month to month until determined as provided by this agreement". These terms included a provision for re-entry if Ms Berrisford fell behind in her rental payments.

She did indeed fall behind, however her landlord, apparently conscious that she would be likely to obtain relief from forfeiture even if such action were successful in the first instance, did not rely on this ground. Instead, they sought to argue that the original lease was void for uncertainty and, if it was a tenancy at all, took a periodic form terminable on one month's notice.

The landlord served a notice to quit and was initially successful in a summary judgment application. The Supreme Court had other ideas however.

The Justices expressed dissatisfaction with the certainty rule and opined that there was no justification for holding that a lease of uncertain duration should not be valid. They did not go so far as to overturn the rule however, given the extent of historic authority behind it.

Instead they found ways around the rule in this case by holding (on the basis of statute) that:-

  1. Perpetually renewable leases are converted into leases of 2000 years duration.
  2. Leases of uncertain duration where the tenant is an individual can be converted to 90 year leases, determinable on the death of the individual.
  3. Even if this were not the case and the lease was void, the landlord could be prevented from terminating it otherwise than in accordance with its terms by reference to the usual principles of contract law.

Parties therefore need to be careful of the type of interests they create. In particular, there is a risk that short term arrangements which are not properly documented could be converted into long term leases which are difficult to terminate.

 

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