LC-2023-000815 - [2025] EWCA Civ 971

Undoubtedly the two most relevant authorities to what we have to decide are Prudential and Mexfield. In deference to the fact that the parties and the judge referred to a range of other authorities, I shall mention some of them briefly in this section of my judgment.

In Re Threlfall (1880) 16 Ch D 274, a mortgage deed contained an attornment clause under which the mortgagor became a tenant to the mortgagee from year-to-year at a rent of £800 per annum payable quarterly. The mortgage could determine the tenancy without notice after the end of the first quarter. The Court of Appeal held that an annual periodic tenancy had indeed been created as the attornment clause provided, not a tenancy at will as contended for by the mortgagor.

In Lace v. Chantler, there was a sub-letting expressed by the following words in a rent book: “furnished for duration”. The tenant argued that the words meant that the property had been let to him for the duration of the war. The Court of Appeal upheld that claim, but held that such a tenancy was void as it was for an uncertain term. Lord Greene MR also refused at pages 371-2 to construe the agreement as either an agreement for a lease or a valid licence. He held that “[t]he intention was to create a tenancy and nothing else”.

In Amad v. Grant [1947] CLR 327, the High Court of Australia was construing a written tenancy agreement providing for “the weekly rent of £2 2s. 6d. payable in advance such tenancy to commence on [17 May 1937] and not cease … until one month’s notice in writing shall have been given … and such tenancy to continue for the term of three years at the least”. The majority interpreted this agreement as a letting for a fixed term of three years followed by a monthly periodic tenancy (see Latham CJ at page 336). The owner suggested that this case was most like this one, but I do not agree. On the words used, there was clearly in that case a fixed term plus a continuing periodic tenancy. Indeed, the difference between the minority and the majority was only as to whether what followed the three-year fixed term was an annual or a monthly tenancy. In our case, as will appear, there was just a fixed term and a notice period.

Breams Property Investment Co. Limited v. Stroulger [1948] 2 KB 1 (Breams) was another similar case. There was in that case an agreement for a periodic quarterly tenancy subject to a clause that provided that the landlord would not, during the period of three years from the start, serve notice to quit unless they required the property for their own occupation. It was argued that the clause was repugnant to a quarterly tenancy and should be regarded as deleted (see Scott LJ at page 6). It was held that the clause was not repugnant to (i.e. inconsistent with) a periodic tenancy. The question of the certainty of the term does not seem to have been considered. Baroness Hale interpreted Breams at [88] in Mexfield as turning “the quarterly tenancy into a three-year term terminable by the tenant on notice before that, to be followed by a normal quarterly tenancy after that”.

Reohorn v. Barry Corporation [1956] 1 WLR 845 was a redevelopment case under Part II of the Landlord and Tenant Act 1954. The Court of Appeal allowed renewal, and suggested a new tenancy from 1 May 1956 to 31 December 1956 and thereafter until determined by 6 months’ notice given by either party to expire at any time on or after 31 December 1956 (see Denning LJ at page 851). There was no argument about whether what the court suggested constituted a term certain or not. I cannot see how such a determination assists us in any way.

Reliance was placed by the owner on the case of Ashburn Anstalt v. Arnold [1989] Ch 1 (Ashburn) which Prudential expressly overruled. Lord Templeman said at page 395C-G in Prudential that Ashburn “if it was correct, would make it unnecessary for a lease to be of a certain duration”. I can gain no assistance from Ashburn.

Harler v. Calder (1989) 21 HLR 214 was a case where O’Connor LJ held at page 217 that the parties could contract out of the common law rule that a notice to quit should expire on a rent day. The facts are quite unlike those in this case.

I come then to Prudential, which, as I have said, is important to our determination. It concerned a lease of a strip of land by the highway which was expressed to “continue until the … land is required by the council [landlord] for the purposes of the widening of” the highway. The House of Lords decided that the lease was void as being for an uncertain term, but that a yearly tenancy was to be inferred from the tenant’s possession of the property and payment of rent. The provision allowing termination for road widening was inconsistent with a yearly tenancy and, therefore, inapplicable.

Lord Templeman explained at page 392B-C as follows:

Lord Templeman then referred to a number of the old cases before resoundingly endorsing Lace v. Chantler and reversing the Court of Appeal, which had inferred a yearly tenancy subject to the road widening clause. He said this at page 394F-G:

Lord Browne-Wilkinson concurred at pages 396-7 and described the outcome in Prudential as “bizarre”. He said it resulted from the “application of an ancient technical rule of law which requires the maximum duration of a term of years to be ascertainable from the outset”. He said that nobody had “produced any satisfactory rationale for the genesis of the rule”, but limited himself to expressing the hope that the Law Commission might see whether there was in fact any good reason for “maintaining a rule which operates to defeat contractually agreed arrangements between parties”. Lords Mustill and Griffiths agreed with that observation.

In Mexfield, the Supreme Court revisited and (according to the headnote) applied Prudential. The claimant housing association had granted the tenant a monthly tenancy at a weekly rent subject to clauses 5 and 6 limiting termination. Clause 5 allowed the tenant to terminate on one month’s written notice, and clause 6 provided that the landlord could bring the tenancy to an end by the exercise of the right of re-entry only if rent was in arrears by 21 days or there were other breaches by the tenant or in other specified circumstances, none of which applied in the circumstances of that case. The landlord served one month’s notice to quit without relying on clause 6, and argued that the tenancy was invalid and that a weekly or monthly periodic tenancy was to be inferred, which could be determined by the notice it had served. The Supreme Court overruled the lower courts, holding that clause 6 made the tenancy void as being for an uncertain term, but that, since the agreement would have given rise to a tenancy for life prior to 1926, the effect of section 149(6) of the Law of Property Act 1925 was that the agreement was to be treated as a tenancy for a term of 90 years. It should be noted that the section 149(6) route is not available in this case as the parties are not individuals.

Lord Neuberger applied both Lace v. Chantler and Prudential to hold at [33], in relation to periodic tenancies, that whilst a fetter on termination for a specified period could be valid (see Breams), “a fetter on a right to serve notice to determine a periodic tenancy was ineffective if the fetter is to endure for an uncertain period” (see Breams and Lord Neuberger’s interpretation of that case at [55]). At [34]-[35], Lord Neuberger associated himself with Lord Browne-Wilkinson’s disquiet over the state of the law, saying that there was no “practical justification” for the law as he had expressed it to be. Lord Neuberger did not, however, support “jettisoning the certainty requirement, at any rate in this case” for a number of reasons that need not now be recited.

Lord Neuberger also held at [59]-[60], obiter, that, if the agreement had not created the 90-year term (which it did), the tenant would nonetheless have been entitled to enforce her contractual rights to occupy subject to clause 6. He acknowledged that both Lace v. Chantler at pages 371-2 and Prudential had rejected the contractual solution. In Lace v. Chantler, it was said that the intention was to create a tenancy and nothing else, and in Prudential, the road widening provisionwas treated as a void fetter on termination for an indefinite period. Lord Neuberger held at [60]-[63] that Lord Greene MR’s view in Lace v. Chantler could not withstand principled analysis. The fact that the parties might have thought they were creating a tenancy was no reason for not holding that they had in fact agreed a contractual licence, as in Street v. Mountford [1985] AC 809.

At [66]-[67], Lord Neuberger discussed the question of whether the void tenancy in that case would be a contractual licence or a periodic tenancy on the terms of the agreement insofar as consistent with a periodic tenancy (as in Prudential). He concluded at [67] as follows:

Lord Neuberger agreed with what Lords Mance and Clarke also said to similar effect (see Lord Mance at [102]-[103], and Lord Clarke at [109]). Lords Hope, Walker, Mance, Clarke and Dyson agreed with Lord Neuberger but gave judgments of their own. Baroness Hale also concurred in the result. I mean no disrespect by not dealing with the intricacies of these concurring opinions. I will deal with the passage in Baroness Hale’s judgment relied upon in relation to the invalidating features argument, in due course.

Finally, by way of authority, I would mention Lewison LJ’s judgment in Avondale Park Ltd v. Delaney’s Nursery Schools Ltd [2023] EWCA Civ 641, [2023] L&TR 29, where he endorsed the passage from Lord Templeman’s speech in Prudential that I have cited at [25] above.