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

The owner argued under this heading that, on the correct interpretation, the Agreement was either (i) a yearly tenancy determinable on any date after 12 months’ notice with a minimum duration of 10 years, (ii) a 10-year fixed term followed by a yearly tenancy which was terminable on any date after 12 months’ notice, or (iii) a 10-year fixed term followed by a daily periodic tenancy terminable on 12 months’ notice.

Each of these three possibilities is, in my judgment negated by the express wording of the Agreement. Mr David Holland KC, leading counsel for the owner, seemed in argument to accept at one stage that clause 2.1 was unambiguous. As it seems to me, that conclusion is inescapable. Clause 2.1 provides for three things: first that the Agreement “shall come into effect on” 11 March 1997; secondly that the Agreement “shall continue for no less than” 10 years from 11 March 1997; and thirdly that the Agreement “may be terminated by either party giving to the other not less than 12 months’ notice in writing to expire at any time on or after” the expiry of the Minimum Term (i.e. on or after 11 March 2007).

It is not disputed that the judge found that the occupier had been given exclusive possession of the Site. Nor was it disputed that the occupier paid rent (called a Tariff) in accordance with the Agreement, namely by quarterly instalments on the nominated Payment Days, 31 March, 30 June, 30 September and 31 December in each year of their occupation. The only question for us is, therefore, whether what was created by the terms of the Agreement and these events was a tenancy and, if so, what kind of tenancy. If it was not a tenancy, what was it?

In my judgment, the language of the Agreement shows that the parties intended to create a tenancy for a Minimum Term of 10 years from 11 March 1997, terminable by either party giving not less than 12 months’ notice in writing to expire at any time on or after 11 March 2007.

The owner’s first interpretation, namely that these words created a yearly tenancy determinable on any date after 12 months’ notice with a minimum duration of 10 years is negated by the language of Minimum Term, as opposed to minimum duration. There is nothing in any of the words of the Agreement that talk about the creation of a tenancy from year-to-year, and certainly nothing that suggests there was an annual periodic tenancy at inception starting on 11 March 1997. The Tariff is not even calculated from the inception day, namely 11 March 1997, but from 14 August 1996. The owner suggested that Breams was a comparable case. I do not agree. In Breams, the tenancy was expressed to be a periodic tenancy with a term restricting the service of a notice to quit for three years. Here, we have a tenancy for a 10-year term with a clause restricting termination before the expiry of that term. Baroness Hale’s interpretation of Breams at [88] in Mexfield is of no help to the owner, because she only said that the restriction on termination for three years turned 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”. Even if this interpretation is correct, here there were no words to create the periodic tenancy as there were in Breams.

The owner’s second interpretation to the effect that the Agreement created a 10-year fixed term followed by a yearly tenancy which was terminable on any date after 12 months’ notice does not work for the same reasons. There are no words indicating that what was intended was a 10-year term followed by a tenancy from year-to-year incepting on 11 March 2007. The Tariff Payment Days are not referable to the period of a year following 11 March 2007, and the Tariff was not calculated by reference to that period. The termination provision is not what one would expect from a yearly tenancy. In submissions, Mr Holland repeatedly described clause 2.1 as creating a 10-year term and then a periodic tenancy, but that is simply not what the words say. There is no “and” about it. The words create a minimum 10-year term and provide for that tenancy to be terminable by either party giving not less than 12 months’ notice in writing to expire at any time on or after 11 March 2007. There is, indeed, a question as to whether a periodic tenancy ought to be inferred, but that question falls, to my mind, to be considered at a later stage of the analysis. As a matter of interpretation of the Agreement, no periodic tenancy was created after 11 March 2007.

The owner’s third interpretation is a 10-year fixed term followed by a daily periodic tenancy terminable on 12 months’ notice. Again, I cannot see how this can be extracted from the words the parties used for the same reasons as are given above.

For these reasons, I reject the argument that the Agreement created a valid term certain. The term of the tenancy purportedly created by the Agreement was uncertain at its inception on 11 March 1997, because it was, on its terms, capable of lasting for an indeterminate period ending (possibly) on any day from 11 March 2007 for ever afterwards. On the clear authority, binding on this court, of both Prudential and Mexfield, the tenancy purportedly created by the Agreement was void at its inception. The owner’s third argument raises the question of the legal consequences of that invalidity.