Mexfield Housing Co-Operative Ltd v Berrisford

JurisdictionEngland & Wales
CourtSupreme Court
JudgeLORD NEUBERGER,LADY HALE,LORD WALKER,LORD HOPE,LORD MANCE,LORD CLARKE,LORD DYSON
Judgment Date09 Nov 2011
Neutral Citation[2011] UKSC 52

[2011] UKSC 52

THE SUPREME COURT

Michaelmas Term

On appeal from: [2010] EWCA Civ 811

before

Lord Hope, Deputy President

Lord Walker

Lady Hale

Lord Mance

Lord Neuberger

Lord Clarke

Lord Dyson

Berrisford (FC)
(Appellant)
and
Mexfield Housing Cooperative Limited
(Respondent)

Appellant

Mark Wonnacott

Kerry Bretherton Laura Tweedy

(Instructed by Mary Ward Legal Centre)

Respondent

Jonathan Gaunt QC

Kerry Bretherton

Laura Tweedy

(Instructed by Rickerbys LLP)

Heard on 5 and 6 October 2011

LORD NEUBERGER
The factual background
1

Mexfield Housing Co-Operative Ltd ("Mexfield") is a fully mutual housing co-operative association, which was founded by a bank as part of a mortgage rescue scheme, ie with a view to buying mortgaged properties from individual borrowers who are in difficulty, and then letting the properties back to them. In that capacity, it acquired a number of residential properties, which it then let out to the former owner-mortgagors, who, in the normal way for tenants of a fully mutual housing co-operative, were required by its rules to be members of Mexfield.

2

One of those properties is 17 Elton Avenue, Barnet ("the premises"), which, during 1993, Mexfield purchased from Ms Ruza Berrisford, and, by a written agreement made on 13 December 1993, agreed to let it back to her. The agreement was described as an "Occupancy Agreement" ("the Agreement"), and it started by reciting that, in anticipation of her occupation of the premises, Ms Berrisford had become a member of Mexfield. Clause 1 then provided as follows:

"[Mexfield] shall let and [Ms Berrisford] shall take the [premises] from 13 December 1993 and thereafter from month to month until determined as provided in this Agreement."

3

Clause 2 stipulated that the rent was to be payable weekly in advance, and the fourth schedule stated that it was to be £89 per week, subject to annual increase in accordance with the Retail Price Index plus 2%. Clause 2(4) stated that any increase in rent was only to take effect after "[a]t least one month's notice in writing".

4

Clauses 3 and 4 contained a number of covenants of a familiar nature to those who are conversant with professionally drafted residential tenancy agreements. Clause 3 was concerned with Ms Berrisford's obligations, and it included, in subclause (1), an obligation to take possession of the premises and to pay the rent, in subclause (9), an obligation to use the premises as her "only or main residence", and, in subclause (11), an absolute obligation not to assign, sublet or part with possession or occupation of the whole or any part of the premises.

5

The only provisions of the Agreement which expressly provided for its determination were clauses 5 and 6, which were in these terms:

"5. This Agreement shall be determinable by [Ms Berrisford] giving [Mexfield] one month's notice in writing.

6. This Agreement may be brought to an end by [Mexfield] by the exercise of the right of re-entry specified in this clause but ONLY in the following circumstances:

a) If the rent reserved hereby or any part thereof shall at any time be in arrear and unpaid for 21 days …

b) If [Ms Berrisford] shall at any time fail or neglect to perform or observe any of the [terms of] this Agreement which are to be performed and observed by [her]

c) If [Ms Berrisford] shall cease to be a member of [Mexfield]

d) If a resolution is passed under … [Mexfield's] Rules regarding a proposal to dissolve [Mexfield]

THEN in each case it shall be lawful for [Mexfield] to re-enter upon the premises and peaceably to hold and enjoy the premises thenceforth and so that the rights to occupy the premises shall absolutely end and determine as if this Agreement had not been made …."

6

Because Mexfield was a mutual housing association, any residential tenancy granted to one of its members attracted no statutory protection, save the very limited protection accorded by the Protection from Eviction Act 1977 ("the 1977 Act"). For present purposes, the 1977 Act relevantly contains provisions which (i) preclude a residential property owner from physically excluding or evicting an existing or former licensee or tenant from the property without an order of the court, and (ii) entitle a residential occupier under a periodic tenancy to at least four weeks' notice to quit.

7

Ms Berrisford remained in occupation of the premises, complying with her obligations under the Agreement, until (apparently through no fault of hers) she fell behind with her rent. Mexfield could have invoked clause 6(a), but it did notdo so, presumably because it is a forfeiture provision, and Ms Berrisford soon paid off the rent arrears, so it would have been a foregone conclusion that she would have obtained relief from forfeiture. Rather than relying on clause 6(a), what Mexfield did was to serve a notice to quit on Mrs Berrisford on 11 February 2008, expiring on 17 March 2008. Mexfield then brought proceedings for possession in the County Court, arguing that, despite the apparent limited circumstances in which, and the limited method by which, it could terminate the Agreement (sc. under clause 6), it nonetheless was entitled to put an end to Ms Berrisford's tenancy by serving a notice to quit.

8

The evidence advanced on behalf of Ms Berrisford suggests that, in the past five years or so, Mexfield, or its mortgagee, came under some financial pressure, and that, as a result of purchasing its mortgage debt, Mexfield is now effectively owned and controlled by "a businessman", who is seeking to pursue the claim for possession for "commercial reasons". Mexfield's evidence is that it is run by a committee of management, and nobody else. For present purposes, it is unnecessary to address this dispute, but it is only fair to Mexfield to record that (i) even if Ms Berrisford's version of events is correct, Mexfield has done nothing wrong, (ii) this is a test case, as the Agreement is a standard form used by Mexfield, and (iii) Mexfield has agreed that it will enter into a fresh agreement with Ms Berrisford if her current appeal fails.

9

The essence of Mexfield's case was that the effect of a number of cases, culminating in the decision of the House of Lords in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386, is that an arrangement such as that embodied in the Agreement could not be a valid tenancy as a matter of law. Accordingly, Mexfield contended, Ms Berrisford had become a periodic (either weekly, because she paid a weekly rent, or monthly, because that was the parties' apparent intention) tenant of the premises by virtue of the payment and acceptance of rent since 1993, and, pursuant to well-established and unchallenged principles, Mexfield was entitled to determine such a tenancy with at least one week's (or one month's) notice in common law, but required to be at least four weeks' notice by the 1977 Act.

10

At first instance, His Honour Judge Mitchell refused Mexfield's application for summary judgment. However, on appeal, Peter Smith J, and, on appeal from him, the Court of Appeal, accepted, albeit reluctantly, Mexfield's argument, and made an order for possession – see [2009] EWHC 2392 Ch and [2010] EWCA Civ 811; [2011] 1 Ch 244. In the Court of Appeal, in three clear and illuminating judgments, Mummery and Aikens LJJ considered that they were bound by authority to make such an order, but Wilson LJ held that the contractual limitation on Mexfield's right to determine the Agreement was enforceable by Ms Berrisford.

Ms Berrisford's primary claim that she has a subsisting tenancy

The argument in summary
11

The argument for Ms Berrisford, as developed by Mr Wonnacott in his conspicuously clear and learned submissions, is to this effect:

  • (i) The Agreement purports to be the grant to Ms Berrisford of a tenancy for a term determinable by her on one month's notice under clause 5, or by Mexfield through exercising its rights under clause 6, and in no other way;

  • (ii) Subject to the points in sub-paragraphs (iii) and (iv), such an arrangement cannot constitute a valid tenancy in law;

  • (iii) Before 1926, the arrangement would have been a term for the life of the tenant, subject to the determination rights under clauses 5 and 6 before her death;

  • (iv) By virtue of section 149(6) of the Law of Property Act 1925 ("the 1925 Act"), such a term is now a tenancy for 90 years, subject to the landlord's right to determine on the tenant's death, and to the rights under clauses 5 and 6;

  • (v) As Ms Berrisford has not served notice under clause 5, and Mexfield is not relying on clause 6, Mexfield is not entitled to possession, as the 90-year tenancy created by the Agreement still subsists.

12

I shall consider those five points in turn.

Can the landlord determine the Agreement by giving one month's notice?
13

The first point turns on the interpretation of the Agreement. At any rate at first sight, it seems hard to quarrel with Mr Wonnacott's contention that it continues until either the tenant serves notice under clause 5 or the landlord can and does exercise its rights under clause 6. After all, clause 1 provides that the Agreement is to subsist "until determined as provided in this agreement", and the only provisions which deal with determination are clauses 5 and 6.

14

However, on behalf of Mexfield, Mr Gaunt QC relies on the fact that clause 1 describes the tenancy as being "from month to month", and says that this carries with it a right in the landlord to determine the Agreement on one month's notice. This was not a point raised by Mexfield in the courts below, but it is a pure point of law, and no prejudice could be caused to Ms Berrisford by the fact that it wastaken for the first time in this court. We therefore permitted Mexfield to argue that it has the right to determine the Agreement on one month's notice.

15

Having now heard the argument, which was advanced in...

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1 books & journal articles
  • The Dynamics of Enduring Property Relationships in Land
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    • The Modern Law Review Nbr. 81-1, January 2018
    • 1 January 2018
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