Prudential Assurance Company Ltd v London Residuary Body
| Jurisdiction | UK Non-devolved |
| Judge | Lord Templeman,Lord Griffiths,Lord Goff of Chieveley,Lord Browne-Wilkinson,Lord Mustill |
| Judgment Date | 16 July 1992 |
| Judgment citation (vLex) | [1992] UKHL J0716-1 |
| Date | 16 July 1992 |
| Court | House of Lords |
[1992] UKHL J0716-1
Lord Templeman
Lord Griffiths
Lord Goff of Chieveley
Lord Browne-Wilkinson
Lord Mustill
House of Lords
My Lords,
This appeal arises out of a memorandum of agreement dated 19 December 1930 and said to have created a lease for a term which was not limited to expire by effluxion of time and cannot now be determined by the landlord.
By the agreement, the London County Council let to one Nathan a strip of land with a frontage of 36 feet to Walworth Road, a thoroughfare in Southwark, and a depth of 25 feet at a rent of £30 per annum from 19 December 1930 "until the tenancy shall be determined as hereinafter provided." The only relevant proviso for determination is contained in clause 6 which reads as follows:
"The tenancy shall continue until the said land is required by the Council for the purposes of the widening of Walworth Road and the street paving works rendered necessary thereby and the Council shall give two months' notice to the tenant at least prior to the day of determination when the said land is so required and thereupon the tenant shall give vacant possession to the Council of the said land …"
By the agreement, the tenant was authorised to erect "temporary one storey shops or buildings of one storey and for the retention of such shops or buildings as temporary structures" until the land was required for road widening and he was then bound to remove the temporary structures and clear the land. The Council agreed to pay all the costs of road making and paving works. The agreement was clearly intended to be of short duration and could have been secured by a lease for a fixed term, say five or ten years with power for the landlord to determine before the expiry of that period for the purposes of the road widening. Unfortunately the agreement was not so drafted. Over 60 years later Walworth Road has not been widened, the freehold is now vested in the appellant second and fourth defendants, who purchased the property from the first defendant London Residuary Body after it had issued a notice to quit, the defendants have no road making powers and it does not appear that the road will ever be widened. The benefit of the agreement is now vested in the respondent plaintiffs, the Prudential Assurance Co. Ltd. The agreement purported to grant a term of uncertain duration which, if valid, now entitles the tenant to stay there for ever and a day at the 1930 rent of £30; valuers acting for both parties have agreed that the annual current commercial rent exceeds £10,000.
A demise for years is a contract for the exclusive possession and profit of land for some determinate period. Such an estate is called a "term". Thus Coke on Littleton 19th ed. (1832), para. 45b said that:
"'Terminus' in the understanding of the law does not only signify the limits and limitation of time, but also the estate and interest that passes for that time."
Blackstone in his Commentaries, 1st ed. (1766), Book II, said, at p. 143:
"Every estate which must expire at a period certain and prefixed, by whatever words created, is an estate for years. And therefore this estate is frequently called a term, ' terminus', because its duration or continuance is bounded, limited and determined: for every such estate must have a certain beginning, and certain end."
In Say v. Smith (1530) 1 Plowden 269 a lease for a certain term purported to add a term which was uncertain; the lease was held valid only as to the certain term. Anthony Brown J. is reported at p. 272 to have said that:
"Every contract sufficient to make a lease for years ought to have certainty in three limitations, viz. in the commencement of the term, in the continuance of it, and in the end of it; so that all these ought to be known at the commencement of the lease, and words in a lease, which don't make this appear, are but babble … And these three are in effect but one matter, showing the certainty of the time for which the lessee shall have the land, and if any of these fail, it is not a good lease, for then there wants certainty."
The Law of Property Act 1925, taking up the same theme provided that:
"1(1) The only estates in land which are capable of subsisting or of being conveyed or created at law are —
( a) An estate in fee simple absolute in possession;
( b) A term of years absolute."
Section 205(1)(xxvii) was in these terms:
"'Term of years absolute'" means a term of years … either certain or liable to determination by notice, re-entry, operation of law, or by a provision for cesser on redemption, or in any other event (other than the dropping of a life, or the determination of a determinable life interest); … and in this definition the expression 'term of years' includes a term for less than a year, or for a year or years and a fraction of a year or from year to year;"
The term expressed to be granted by the agreement in the present case does not fall within this definition.
Ancient authority, recognised by the Act of 1925, was applied in Lace v. Chantler [1944] K.B. 368. A dwelling house was let at the rent of 16s.5d. per week. Lord Greene M.R. (no less) said at pp. 370-371:
"Normally there could be no question that this was an ordinary weekly tenancy, duly determinable by a week's notice, but the parties in the rent-book agreed to a term which appears there expressed by the words 'furnished for duration,' which must mean the duration of the war. The question immediately arises whether a tenancy for the duration of the war creates a good leasehold interest. In my opinion, it does not. A term created by a leasehold tenancy agreement must be expressed either with certainty and specifically or by reference to something which can, at the time when the lease takes effect, be looked to as a certain ascertainment of what the term is meant to be. In the present case, when this tenancy agreement took effect, the term was completely uncertain. It was impossible to say how long the tenancy would last. Mr Sturge in his argument has maintained that such a lease would be valid, and that, even if the term is uncertain at its beginning when the lease takes effect, the fact that at some future time it will be rendered certain is sufficient to make it a good lease. In my opinion that argument is not to be sustained. I do not propose to go into the authorities on the matter, but in Foa's 'Landlord and Tenant' 6th ed., p. 115, the law is stated in this way, and, in my view, correctly: 'The habendum in a lease must point out the period during which the enjoyment of the premises is to be had; so that the duration, as well as the commencement of the term, must be stated. The certainty of a lease as to its continuance must be ascertainable either by the express limitation of the parties at the time the lease is made, or by reference to some collateral act which may, with equal certainty, measure the continuance of it, otherwise it is void …'"
The Legislature concluded that it was inconvenient for leases for the duration of the war to be void and therefore by the Validation of War-time Leases Act 1944 Parliament provided that any agreement entered into before or after the passing of the Act which purported to grant a tenancy for the duration of the war:
"1(1) … shall have effect as if it granted or provided for the grant of a tenancy for a term of ten years, subject to a right exercisable either by the landlord or the tenant to determine the tenancy, if the war ends before the expiration of that term, by at least one month's notice in writing given after the end of the war; …"
Parliament granted the fixed and certain term which the agreements between the parties lacked in the case of tenancies for the duration of the war and which the present agreement lacks.
When the agreement in the present case was made, it failed to grant an estate in the land. The tenant however entered into possession and paid the yearly rent of £30 reserved by the agreement. The tenant entering under a void lease became by virtue of possession and the payment of a yearly rent, a yearly tenant holding on the terms of the agreement so far as those terms were consistent with the yearly tenancy. A yearly tenancy is determinable by the landlord or the tenant at the end of the first or any subsequent year of the tenancy by six months' notice unless the agreement between the parties provides otherwise. Thus in Doe d. Rigge v. Bell (1793) 5 Durn. & East 471 a parole agreement for a seven year lease did not comply with the Statute of Frauds but the tenant entered and paid a yearly rent and it was held that he was tenant from year to year on the terms of the agreement. Lord Kenyon C.J. said, at p. 472:
"Though the agreement be void by the Statute of Frauds as to the duration of the lease, it must regulate the terms on which the tenancy subsists in other respects, as to the rent, the time of year when the tenant is to quit, etc. … Now, in this case, it was agreed, that the defendant should quit at Candlemas; and though the agreement is void as to the number of years for which the defendant was to hold, if the lessor choose to determine the tenancy before the expiration of the seven years, he can only put an end to it at Candlemas."
Now it is said that when in the present case the tenant entered pursuant to the agreement and paid a yearly rent he became a tenant from year to year on the terms of the agreement including clause 6 which prevents the landlord from giving notice to quit until the land is required for road widening. This submission would make a nonsense of the rule that a grant for an uncertain term does not create a lease and would make nonsense of the concept of a...
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