LC-2023-000815 - [2024] UKUT 263 (LC)

If the Judge was wrong on the Term Issue, the 1997 Agreement could not, in itself, have taken effect as a lease, regardless of whether the Judge was right in the remainder of his analysis of the 1997 Agreement. Nor, as it seems to me, could the position have been cured by the 2000 Supplemental Agreement, given that the 2000 Supplemental Agreement made no change to the expressed term of the 1997 Agreement.

As the case law in this area tends to refer to tenancies rather than leases, I will do the same in this section of this decision, when referring generally to fixed term and periodic tenancies. As I have explained, the expressions are used interchangeably in this decision. Similarly, there is no distinction between these two expressions in the case law.

By way of reminder, the term of the 1997 Agreement was expressed to be the Minimum Term, which was defined to mean 10 years from the date of the 1997 Agreement (11^th March 1997). Clause 2 of the terms and conditions dealt the rights of termination. Clauses 2.2 and 2.3 dealt with specific rights of termination if certain conditions arose, and are not directly relevant for present purposes. The relevant part of clause 2 is clause 2.1, which I repeat for ease of reference:

“2.1

This Agreement shall come into effect on the date shown above and shall continue for no less than the Minimum Term. It 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.”

For APW, Mr Holland contended that the 1997 Agreement satisfied the requirements for a term certain. As Mr Holland developed his case in oral submissions, there were three reasons for this. Mr Holland’s primary argument was that the 1997 Agreement created a lease for a minimum term of 10 years, which could thereafter be terminated by either party giving the required period of 12 months’ notice. On the authorities, so Mr Holland contended, a lease granted for a term of this kind satisfied the requirements for a term certain. The fact that the notice did not have to expire on any particular date did not render the term uncertain. Mr Holland’s second, and alternative argument, if his primary argument was not accepted, was that the 1997 Agreement created a lease for an initial fixed term of 10 years followed by a periodic tenancy.

In oral submissions Mr Holland put forward a third argument on the Term Issue, in the further alternative, which was that if the term of the 1997 Agreement was uncertain, the consequences were as follows. Assuming that the 1997 Agreement otherwise satisfied the requirements for a lease, in the sense that it constituted an agreement for the grant of exclusive possession of the Sandbach Site to Orange, at an annual rent, the 1997 Agreement would have been void as a lease, by reason of its term being uncertain. Nevertheless, in these circumstances the possession of the Sandbach Site by Orange, coupled with payment of an annual rent, would have given rise to an implied annual periodic tenancy, on the terms of the 1997 Agreement so far as compatible with an annual periodic tenancy.

For OT, Mr Radley-Gardner contended that there was no term certain because there was no fixed periodic tenancy, following the expiration of the term of 10 years. Following the expiration of this fixed term the 1997 Agreement did not run from year to year or on any other fixed periodic basis. Instead, the 1997 Agreement simply ran on, with each party having the ability to give not less than 12 months’ notice of termination of the 1997 Agreement, “at any time”, subject to the requirement that such notice could not expire before the last day of the 10 year term. As such, the 1997 Agreement could not have taken effect as a lease, independent of OT’s other arguments, because these provisions did not satisfy the requirements for a term certain, either on Mr Holland’s primary argument or on his secondary argument. The 1997 Agreement could only have satisfied these requirements if it had been entered into for a fixed term followed by a fixed periodic tenancy. So far as an implied annual periodic tenancy was concerned, Mr Radley-Gardner submitted that no such tenancy could be implied for essentially the same reason. The implication of such a tenancy was equally inconsistent with the terms of clause 2.1 of the 1997 Agreement, which gave the parties the right to terminate the 1997 Agreement “at any time” on or after the expiration of the Minimum Term, on not less than 12 months prior notice in writing.

It will be seen that Mr Holland (on his primary argument) and Mr Radley-Gardner analysed the term created by the 1997 Agreement in the same way; namely as a term of 10 years which thereafter continued until terminated by not less than 12 months’ notice given by either party. Where counsel disagreed, on this analysis of the 1997 Agreement, was whether such a term constituted a term certain.

The leading case on the requirements for a term certain in relation to tenancies is the decision of the Supreme Court in Mexfield Housing Co-operative Ltd v Berrisford. One of the various issues which the Supreme Court had to consider in this case was whether the relevant occupancy agreement had been entered into for a term certain. Pursuant to this occupancy agreement the claimant had agreed to let and the defendant had agreed to take the relevant property from month to month at a weekly rent. By clause 5 of the agreement the defendant could bring the agreement to an end by giving one month’s notice. By clause 6 the claimant could bring the agreement to an end only if certain conditions were satisfied. The claimant sought to bring the agreement to an end by serving a notice to quit on the defendant. The claimant argued that what the agreement had created was a monthly periodic tenancy. This argument failed, on the basis that the agreement could only be brought to an end pursuant to the rights of termination in clause 5 or clause 6. This then raised the question of whether an agreement of this kind was capable, as a matter of law, of constituting a tenancy. The defendant accepted that it was not so capable, because the term was uncertain. This paved the way for the defendant’s argument, which was successful, that the overall result was that the defendant had what would, prior to 1926, have been a tenancy for life but was, by virtue of Section 149(6) of the Law of Property Act 1925, a tenancy for a term of 90 years.

For present purposes the relevance of Mexfield lies in the consideration by the Supreme Court of the law on certainty of term in tenancies. Although it was conceded that the agreement in Mexfield had not been entered into for a term certain, the law was subjected to a considerable degree of scrutiny, principally by Lord Neuberger MR (as he then was). Lord Neuberger summarised the state of the law in his judgment, at [33], in the following terms:

“33

Following the decision of the House of Lords in the Prudential case [1992] 2 AC 386, the law appeared clear in its effect, intellectually coherent in its analysis, and, in part, unsatisfactory in its practical consequences. The position appears to have been as follows: (i) an agreement for a term, whose maximum duration can be identified from the inception can give rise to a valid tenancy; (ii) an agreement which gives rise to a periodic arrangement determinable by either party can also give rise to a valid tenancy; (iii) an agreement could not give rise to a tenancy as a matter of law if it was for a term whose maximum duration was uncertain at the inception; (iv) (a) 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, but (b) a fetter for a specified period could be valid.”

Lord Neuberger went on to express dissatisfaction with the state of the law but, for reasons which he explained, did not feel able to change the law and dispense with the requirement for certainty of term, both in the case of tenancies granted for a fixed term and in the case of periodic tenancies. As Lord Neuberger explained, at [35] and in the first part of [36]:

“35

However, I would not support jettisoning the certainty requirement, at any rate in this case. First, as the discussion earlier in this judgment shows, it does appear that for many centuries it has been regarded as fundamental to the concept of a term of years that it had a certain duration when it was created. It seems logical that the subsequent development of a term from year to year (i e a periodic tenancy) should carry with it a similar requirement, and the case law also seems to support this.

36

Secondly, the 1925 Act appears to support this conclusion. Having stated in section 1(1) that only two estates can exist in land, a fee simple and a term of years, it then defines a term of years in section 205(1)(xxvii) as meaning “a term of years ... either certain or liable to determination by notice [or] re-entry”; as Lord Templeman said in the Prudential case [1992] 2 AC 386, 391B, this seems to underwrite the established common law position.”

Also of particular relevance to the present case is the analysis by Baroness Hale JSC (as she then was), in her judgment at [87], of the requirement for certainty as it applies to periodic tenancies:

“87

Periodic tenancies obviously pose something of a puzzle if the law insists that the maximum term of any leasehold estate be certain. The rule was invented long before periodic tenancies were invented and it has always been a problem how the rule is to apply to them. In one sense the term is certain, as it comes to an end when the week, the month, the quarter or the year for which it has been granted comes to an end. But that is not the practical reality, as the law assumes a re-letting (or the extension of the term) at the end of each period, unless one or other of the parties gives notice to quit. So the actual maximum term is completely uncertain. But the theory is that, as long as each party is free to give that notice whenever they want, the legal maximum remains certain. Uncertainty is introduced if either party is forbidden to give that notice except in circumstances which may never arise. Then no one knows how long the term may last and indeed it may last for ever.”

Baroness Hale went on to confirm, at [88], the possibility of a tenancy comprising a fixed term, followed by a periodic tenancy:

“88

These rules have an Alice in Wonderland quality which makes it unsurprising that distinguished judges have sometimes had difficulty with them. It is intriguing to read, in Doe d Warner v Browne (1807) 8 East 165, 167, that Lord Mansfield had once “thrown out” (obviously meaning “suggested”) the “notion of a tenancy from year to year, the lessor binding himself not to give notice to quit”. By that date the notion cannot have been “exploded” for very long. More recently, in Breams Property Investment Co Ltd v Stroulger [1948] 2 KB 1, the Court of Appeal held that it was not repugnant to the notion of a quarterly tenancy when the landlords promised that they would not terminate it within the first three years unless they required the premises for their own occupation, so the purchasers of the reversion could not give notice to quit until the three years were up. The Breams Property case can, however, be explained on the basis that although phrased as a quarterly tenancy with a restriction on the landlord’s right to serve notice to quit, in effect it simply 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.”

Confirmation to the same effect can be found in the decision of the Court of Appeal in Leeds City Council v Broadley [2016] EWCA Civ 1213 [2017] 1 WLR 738. In that case it was argued that a tenancy for a fixed term and a periodic tenancy could not be amalgamated into a single tenancy with a term certain. Each would be valid on its own, but the two could not be combined to create a single interest with a term certain. This argument was rejected by McCombe LJ, with whose judgment the other members of the Court of Appeal agreed. As McCombe LJ explained, at [17] and [18]:

“17

I would have concerns therefore that, at this late stage, the 1925 Act should be thought to render invalid leases such as those construed and considered in the earlier cases, of which I have cited three examples. Quite to the contrary, it seems to me that a term such as that granted (for a fixed period of months and then from month to month) falls clearly within the genus of the statutory descriptions in section 205(1)(xxvii), either as expressly covered by the words of the paragraph itself or because the paragraph envisages the possibility of creating terms of years, including a term for less than a year and a term from year to year (i e a periodic tenancy). I see no good reason why the statute should be taken to have rendered impossible the creation of an amalgam of the two, as had been familiar to the common law for centuries.

18

Again, in the Mexfield case [2012] 1 AC 955, para 55, Lord Neuberger MR said that in Breams Property Investment Co Ltd v Stroulger [1948] 2 KB 1 the grant of a periodic tenancy with a fetter on the landlord’s right to determine for three years had been found by this court to have been valid and was the equivalent of a fixed term of three years followed by a periodic tenancy: see also Megarry & Wade, The Law of Real Property, 8th ed (2012), p 775.”

I should also make reference to the decision of the Court of Appeal in Ashburn Anstalt v Arnold [1989] Ch 1. Both counsel referred me to the following extract from the judgment of Fox LJ, at 11E-F:

“In the present case there was an initial term from the date of the agreement of 28 February 1973 until 29 September 1973, the Michaelmas Quarter Day. Thereafter, the term would continue until (a certificate of readiness to proceed having been given) Matlodge should give not less than one quarter's notice to give up possession. It may be that the notice has to take effect on a quarter day calculated from the date of the commencement of the term rather than on one of the usual quarter days: see Kemp v. Derrett (1814) 3 Camp. 510 and King v. Eversfield [1897] 2 Q.B. 475; but, as Cotton L.J. said in In re Threlfall (1880) 16 Ch.D. 274, 281:

"I know of no law or principle to prevent two persons agreeing that a yearly tenancy may be determined on whatever notice they like."

We see no reason to limit that approach to yearly tenancies.”

Mr Holland relied upon this extract for the proposition that a term is not rendered uncertain simply because a notice to terminate the relevant tenancy did not have to expire on any particular date. Mr Radley-Gardner relied upon this extract in order to distinguish Ashburn Anstalt from the present case. Mr Radley-Gardner’s point was that in Ashburn Anstalt it was established that a quarterly periodic tenancy had arisen. Fox LJ was therefore only concerned, in the extract cited above, with the question of what notice was required to terminate the periodic tenancy. Mr Radley-Gardner drew my attention, in particular, to the quotation from Cotton LJ in Re Threlfall, where, again, it was established that a yearly tenancy existed. In the present case, so Mr Radley-Gardner submitted, the question of whether the term of the 1997 Agreement continued as a periodic tenancy was in issue and the answer to that question was governed by the terms of clause 2.1 of the 1997 Agreement. In the absence of a specified period for a periodic tenancy in the present case, so Mr Radley-Gardner submitted, there was no such periodic tenancy created by clause 2.1 of the 1997 Agreement. The term of the 1997 Agreement was therefore uncertain.

I should mention that the House of Lords decided, in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386, that Ashburn Anstalt had been wrongly decided. Lord Templeman explained why this was so in his speech at 395C-G:

“The decision of the Court of Appeal in In re Midland Railway Co.'s Agreement [1971] Ch. 725 was taken a little further in Ashburn Anstalt v. Arnold [1989] Ch. 1. That case, if it was correct, would make it unnecessary for a lease to be of a certain duration. In an agreement for the sale of land the vendor reserved the right to remain at the property after completion as licensee and to trade therefrom without payment of rent

"save that it can be required by Matlodge [the purchaser] to give possession on not less than one quarter's notice in writing upon Matlodge certifying that it is ready at the expiration of such notice forthwith to proceed with the development of the property and the neighbouring property involving, inter alia, the demolition of the property."

The Court of Appeal held that this reservation created a tenancy. The tenancy was not from year to year but for a term which would continue until Matlodge certified that it was ready to proceed with the development of the property. The Court of Appeal held that the term was not uncertain because the vendor could either give a quarter's notice or vacate the property without giving notice. But of course the same could be said of the situation in Lace v. Chantler [1944] K.B. 368. The cumulative result of the two Court of Appeal authorities In re Midland Railway Co.'s Agreement [1971] Ch. 725 and Ashburn's case [1989] Ch. 1 would therefore destroy the need for any term to be certain.

In the present case the Court of Appeal were bound by the decisions in In re Midland Railway Co.'s Agreement and Ashburn's case. In my opinion both these cases were wrongly decided. A grant for an uncertain term does not create a lease. A grant for an uncertain term which takes the form of a yearly tenancy which cannot be determined by the landlord does not create a lease. I would allow the appeal.”

It seems to me that what was said by Lord Templeman in Prudential does not necessarily affect what was said by Fox LJ in the extract from his judgment in Ashburn Anstalt which I have quoted above. It seems to me, on the reasoning of Lord Templeman, that the Court of Appeal went wrong in Ashburn Anstalt in holding that the term in that case was certain, in circumstances where Matlodge could only give notice to determine if the development condition was satisfied. Whether and, if so, when the development condition might be satisfied were uncertain. This constituted a fetter on Matlodge’s right to terminate which rendered the term of the tenancy uncertain. It does not seem to me necessarily to follow that Fox LJ was wrong in what he said about the timing of a notice to determine a tenancy, assuming no fetter upon the service of such a notice of the kind which in fact existed in Ashburn Anstalt.

Returning to the arguments of the parties on the Term Issue, I am bound to say that I found the primary argument of Mr Holland somewhat odd. I say this for the following reason. Mr Holland’s primary argument assumed that there is nothing objectionable in a tenancy which is granted for a minimum fixed period, and then continues until determined by a notice of termination given by either party. Provided that there is no fetter on the ability of the parties to give such notice, the term of the tenancy satisfies the requirements of certainty. Leaving aside special cases however, such as a tenancy for life caught by Section 149(6) of the Law of Property Act 1925, the case law which I have cited above seems to me to confirm that the requirements for a term certain are satisfied where the relevant tenancy falls into one of three categories. The first category comprises tenancies granted for a single fixed term. The second category comprises tenancies granted as periodic tenancies. The third category comprises tenancies which are an amalgamation of the first two categories; that is say tenancies granted for an initial fixed term which are then continued as periodic tenancies.

I am doubtful that there exists a fourth category of tenancies where the term is expressed as a minimum term and the tenancy thereafter continues until either party serves a notice, pursuant an unfettered contractual right in the tenancy agreement, to terminate the tenancy. I am equally doubtful that Fox LJ was recognising any such category of tenancies in Ashburn Anstalt.

Mr Holland argued that a term of this kind, that is to say a minimum fixed term which then continued until terminated by notice, did not infringe either of the “invalidating features” (to use Mr Holland’s expression) identified by Baroness Hale in Mexfield. For this purpose Mr Holland relied upon what was said by Baroness Hale at [93] in her judgment:

“93

So we have now reached a position which is curiouser and curiouser. There is a rule against uncertainty which applies both to single terms of uncertain duration and to periodic tenancies with a curb on the power of either party to serve a notice to quit unless and until uncertain events occur. But this rule does not matter if the tenant is an individual, because the common law would have automatically turned the uncertain term into a tenancy for life, provided that the necessary formalities were complied with, before the Law of Property Act 1925. A tenancy for life was permissible at common law, although of course it was quite uncertain when the event would happen, but it was certain that it would. I suppose at the time of the Hundred Years’ War there was uncertainty both as to the “when” and the “whether” it would ever end. Be that as it may, a tenancy for life is converted into a 90-year lease by the 1925 Act.”

I do not accept this argument. It does not seem to me that Baroness Hale, or any of the other members of the Supreme Court in Mexfield for that matter, had in mind a term of the kind contemplated by Mr Holland. It seems to me that Baroness Hale was, both at [93] and elsewhere in her judgment, identifying the requirement for certainty in relation to a tenancy granted for a single term and a periodic tenancy. In the former case the term could not be of uncertain length. In the latter case there could not be a fetter on the right to terminate the periodic tenancy.

Pausing the analysis at this point it seems to me that Mr Radley-Gardner was right to submit that if the 1997 Agreement is treated as having been entered into for a term which had a minimum length of 10 years and then continued until either party served the requisite notice of termination of not less than 12 months, this would not have constituted a term certain. On this basis, if the 1997 Agreement would otherwise have qualified as a lease, it could not have been a lease because it did not satisfy the requirements for a term certain.

I therefore conclude that the primary argument advanced by Mr Holland on the Term Issue fails. This renders it necessary to consider Mr Holland’s secondary argument, which was that the 1997 Agreement took effect as a lease for an initial term of 10 years, following by a fixed periodic tenancy. Is this the correct analysis of the 1997 Agreement and, specifically, clause 2.1 of the 1997 Agreement?

In Mexfield, Lord Neuberger approved, at [55] in his judgment, the decision of the Court of Appeal in Breams Property Investment Co Ltd v Stroulger [1948] 2 KB 1. He considered that the correct analysis of the decision was that a term had been created equivalent to a fixed term of three years, followed by a periodic tenancy:

“55

I indicated earlier in this judgment that this conclusion would apply irrespective of whether the purported tenancy created by the agreement was simply for an indeterminate term or was a periodic tenancy with a fetter on the landlord’s right to determine. There is no difficulty if the former is the right analysis. If the latter is correct, then there is a monthly tenancy which the landlord is unable to determine unless he can rely on one or more of the grounds in clause 6. In the Breams case [1948] 2 KB 1, the court concluded that a periodic tenancy with a fetter on the landlord’s right to determine for three years was valid. It seems to me that the term thereby created was equivalent to a fixed term of three years (subject to a restricted right of determination in the landlord and an unrestricted right of determination by the tenant) followed by a periodic tenancy.”

Baroness Hale also referred to the Breams case in her judgment, at [88]. Lord Neuberger did not find it necessary to enter into an analysis of the case, but he did not suggest that the case was wrongly decided. Baroness Hale also approved the decision in the Breams case. Her analysis of the case was the same as that of Lord Neuberger. I have quoted [88] above, but I repeat the relevant part of [88] for ease of reference:

“The Breams Property case can, however, be explained on the basis that although phrased as a quarterly tenancy with a restriction on the landlord’s right to serve notice to quit, in effect it simply 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.”

The decision in Broadley is further evidence of the willingness of courts to construe agreements of the kind which were under consideration in the Breams case and Broadley as tenancies granted for an initial fixed term, followed by a periodic tenancy.

The question is whether the same analysis can be applied to the 1997 Agreement. It seems to me that this is problematic. Both Mexfield and Broadley serve to confirm that there is nothing objectionable in a tenancy granted for a fixed term followed by a periodic tenancy. Such a tenancy qualifies as a tenancy granted for a term certain because the two, as it were, elements of the term (fixed term and periodic term) can be combined in one tenancy. This assumes however that, in any particular such case, what follows the fixed term is an arrangement capable of qualifying as a periodic tenancy.

In the Breams case this was not a problem. In that case the Court of Appeal were concerned with a series of agreements, all of which had been entered into as agreements for quarterly tenancies. The problem was that there was a fetter on the landlords’ ability to serve a notice to quit during the first three years of each agreement, except in the event of the landlords requiring the premises for their own occupation and use. The Court of Appeal did not consider this fetter to be repugnant to a quarterly tenancy. Whether they were right to take that view seems doubtful, in the light of subsequent authority. The decision can however be justified, as was explained in Mexfield, on the basis that the relevant agreements were correctly analysed as having been granted for fixed terms of three years followed by quarterly periodic tenancies. There was no doubt that there were quarterly periodic tenancies, once the initial period of three years had expired, because the agreements had been entered into expressly on the basis that they were quarterly tenancies.

Nor was this a problem in Broadley, where the relevant tenancies were granted for initial terms of six (and in one case) twelve months, and thereafter on a monthly basis. There was therefore no difficulty in the Court of Appeal deciding that the tenancies functioned as tenancies granted for an initial fixed term followed by, in each case, a monthly periodic tenancy.

In the present case however the position is different. Clause 2.1 of the 1997 Agreement can be said to have defined the initial term of the 1997 Agreement, if it otherwise qualified as a lease, as the Minimum Term; that is to say 10 years from 11^th March 1997. Clause 2.1 did not however provide that the 1997 Agreement would thereafter continue on a periodic basis. Instead, it was open to either party to terminate the 1997 Agreement on not less than 12 months in writing. The notice could expire at any time on or after the date of expiration of the Minimum Term. By my calculations this meant that a notice of termination, provided that it gave the required period of notice, could expire on 10^th March 2007 (assuming that 11^th March 1997 was included in the Minimum Term) or on any date thereafter.

If however the Minimum Term was to be followed by a periodic tenancy, such a periodic tenancy could only have been terminated by a notice expiring at the end of a period of the tenancy (strictly the anniversary of the commencement of a period of the tenancy or the day before this anniversary). This would be so whether one sought to construe such a periodic tenancy, following the Minimum Term as an annual tenancy or (by reference to the quarterly dates for payments due under the 1997 Agreement) as a quarterly tenancy. Clause 2.1 is however incompatible with this analysis. By clause 2.1 the relevant notice could expire at any time on or after the expiration of the Minimum Term. This contractual provision seems to me to be incompatible with the argument that clause 2.1 can be construed as having created a periodic tenancy, arising on the expiration of the Minimum Term.

The position would be different if it was possible to construe clause 2.1 as meaning, on the hypothesis of an annual periodic tenancy, that any notice to terminate had to expire on an anniversary of the date of expiration of the Minimum Term (or the day after), or as meaning, on the hypothesis of a quarterly tenancy, that any notice to terminate had to expire on a Payment Day, as defined in the 1997 Agreement, or on the day falling prior to a Payment Day. Any such construction seems to me to be ruled out by the wording of clause 2.1, which makes it quite clear that a notice to terminate can expire at any time on or after the expiration of the Minimum Term.

As I have noted, this particular problem did not arise in Breams or in Broadley. Nor did it arise in Ashburn Anstalt, where the relevant agreement provided for one quarter’s notice to be given. There was a fetter on the ability of the landlord to give this notice. The Court of Appeal, wrongly as it turned out, did not consider that this fetter prevented the term of the agreement from being certain. For present purposes however, the relevant point is that the Court of Appeal were not considering, in Ashburn Anstalt, a termination provision of the kind to be found in clause 2.1. The same point can be made in relation to Mexfield, where the relevant agreement provided for the defendant to occupy the relevant property on a monthly basis. There would therefore have been no difficulty in treating the agreement in Mexfield as a monthly periodic tenancy, but for the fetter on the claimant’s right of termination which, so the Supreme Court decided, had the consequence that the agreement had not been entered into for a term certain.

I therefore conclude that the terms of clause 2.1 of the 1997 Agreement are incompatible with the argument that the 1997 Agreement took effect as a lease granted for a fixed term of ten years, following by a periodic tenancy. In my judgment it is not possible, by virtue of clause 2.1, to treat the 1997 Agreement as having been entered into for a term of this kind. I therefore conclude that Mr Holland’s secondary argument fails.

It follows from the above analysis that I consider that the Judge was wrong to decide, at Paragraphs 24 and 25, that the 1997 Agreement, if it otherwise satisfied the requirements for a lease, was granted for a term certain. The Judge concluded that the 1997 Agreement was granted for an initial term of 10 years, followed by a periodic tenancy and, as such, was entered into for a term certain. For the reasons which I have given I do not agree with this analysis. The 1997 Agreement was entered into for an initial term of 10 years, which was certain. Thereafter however, it seems to me that the effect of clause 2.1 of the 1997 Agreement was that the term of the 1997 Agreement continued on a basis which was not a periodic tenancy and did not qualify as a term certain.

This leaves Mr Holland’s third argument, raised in his oral submissions, that if the 1997 Agreement did not take effect as a lease, because its term was uncertain, a yearly implied tenancy would still have arisen by virtue of Orange’s exclusive possession of the Sandbach Site, coupled with the payment of the equivalent of an annual rent.

Assuming, for present purposes, such exclusive possession, support for this argument can be found in Prudential Assurance Co Ltd v London Residuary Body. The problem in that case was that the relevant agreement, which was identified as a tenancy, had been entered for a term which was to continue until the relevant land was required for road widening works by the landlord, the London County Council, which was the highway authority. The agreement was entered into on 19^th December 1930. By the time the London Residuary Body, as successor in title to the London County Council, sought to serve a notice to quit on the occupier, there was no prospect of the road being widened. The House of Lords decided that the agreement could not have taken effect as a tenancy because the term, which was expressed to continue until the land was required for road widening purposes was uncertain. The consequences of the failure of the agreement to take effect as a tenancy were identified in the following terms by Lord Templeman in his speech in Prudential, at 392B-C:

“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.”

I have decided the 1997 Agreement did have the effect of granting Orange exclusive possession of the Sandbach Site, at the equivalent of an annual rent. It therefore follows, from my analysis above, that the 1997 Agreement only failed to take effect as a lease because its term was uncertain. As I understand the position it is not in dispute that Orange did occupy the Sandbach Site and paid the annual fee due under the 1997 Agreement. On the analysis of what Lord Templeman said in Prudential I can see the argument, in the present case, that Orange’s occupation of the Sandbach Site, paying the annual fee, would have given rise to an implied periodic tenancy, specifically an annual tenancy, on the same terms as the 1997 Agreement so far as those terms were consistent with an annual tenancy.

Mr Radley-Gardner argued that this was the wrong analysis. He argued that if the 1997 Agreement would otherwise have qualified as a lease, but was rendered void by the absence of a term certain, there was still a contract in place, in the form of the 1997 Agreement, which took effect as a licence. He also argued that, on this hypothesis, the 1997 Agreement would have failed as a Code agreement, both under the Old Code and the Code, because it was not in writing.

I am not convinced by the second of these arguments. The question of what effect the 1997 Agreement had, so far as the Old Code was concerned, seems to me to be beside the point. On the hypothesis of the 1997 Agreement having taken effect as a void lease, the question of what interest arose by reason of Orange’s occupation of the Sandbach Site pursuant to a void lease is one which, it seems to me, falls to be answered by reference to principles of landlord and tenant law. The question of whether, on that hypothesis, the 1997 Agreement could still function as an agreement in writing, such that it was subject to the Old Code, seems to me to be a separate question, which was not properly addressed in the arguments and which I do not need to answer.

The first of these arguments is however more formidable. Orange’s occupation of the Sandbach Site could only have given rise to an annual periodic tenancy, or indeed any other kind of periodic tenancy, if it is possible to imply such a tenancy from Orange’s occupation of the Sandbach Site paying the equivalent of an annual rent. At first sight it is difficult to see how such a periodic tenancy could be implied in circumstances where the termination provisions in clause 2.1 of the 1997 Agreement are, for the reasons which I have explained, incompatible with a periodic tenancy.

The answer to this might be thought to lie in Lord Templeman’s reference, in the extract from his speech in Prudential which I have quoted above, to the effect that the tenant entering under a void lease becomes a yearly tenant “holding on the terms of the agreement so far as those terms were consistent with the yearly tenancy”. So, in the present case, the argument would be that the implied yearly periodic tenancy would not have included clause 2.1 of the 1997 Agreement or, for that matter, any other provision of the 1997 Agreement incompatible with a periodic tenancy.

The difficulty with this answer is that this issue of consistency was considered in Mexfield. In the last part of his judgment Lord Neuberger did consider what he described as the defendant’s alternative case in contract, which was to the effect that the defendant was still, as a matter of contract, entitled to rely on the fetter on the claimant’s right of termination, on the hypothesis that the agreement did not take effect as a tenancy by reason of the fetter. The alternative case did not strictly arise for decision, because the defendant had been found to have a tenancy of 90 years. Lord Neuberger did however analyse the alternative case in some detail. In particular, Lord Neuberger considered whether an implied periodic tenancy could have arisen, on the hypothesis that the agreement itself could not have given rise to a tenancy. Lord Neuberger did not consider that an implied periodic tenancy could have arisen, for the reasons which he expressed at [66]-[68]:

“66

If the agreement cannot give rise to a tenancy, then, if it is not a contractual licence, the only right that Ms Berrisford could claim would be that of a periodic tenant on the terms of the written agreement in so far as they are consistent with a periodic tenancy, because she has been in possession purportedly under the agreement, paying a weekly rent to Mexfield. It is worth briefly considering why she would be a periodic tenant on this basis, not least because it is Mexfield’s contention that this is the right analysis.

67

It would be because the law will infer a contract on these terms from the actions of the parties, namely the terms they purported to agree in the agreement, and Ms Berrisford’s enjoyment of possession and payment of rent. But the ultimate basis for inferring a tenancy (and its terms) is the same as the basis for inferring any contract (and its terms) between two parties, namely what a reasonable observer, knowing what they have communicated to each other, considers that they are likely to have intended. Given that no question of statutory protection could arise, it seems to me far less likely that the parties would have intended a weekly tenancy determinable at any time on one month’s notice than a licence which could only be determined pursuant to clauses 5 and 6.

68

Since writing this, I have read what Lord Mance and Lord Clarke of Stone-cum-Ebony JJSC have written in connection with this point, and I respectfully agree with them. It is also interesting to read Lord Hope of Craighead DPSC’s judgment, which demonstrates that the Scottish courts have also encountered difficulty when grappling with interests of uncertain duration, and seem to have come up with a similar answer.”

Lord Mance JSC (as he then was) expressed the same views in his judgment, at [102]-[103]:

“102

On the hypothesis I am presently considering, those three characteristics were not all present. The basis for asserting that there was a contractual tenancy therefore falls away. But the contract was valid as such. There is no reason not to give it effect according to its terms. As a matter of legal categorisation, because it was not a tenancy, it can only involve a licence. Its terms precluded the giving by Mexfield of notice to terminate, except in circumstances falling within clause 6 of the agreement.

103

To force the contract into the category of tenancy, by rewriting its essential terms to provide for a periodic monthly tenancy terminable on a month’s notice, would be to substitute for the agreement that the parties have made a wholly different contract. It would be to treat the first two of the three characteristics of a tenancy mentioned above as sufficient by themselves and as displacing any need to satisfy the third. It would be to insist on terminology (such as the agreement’s references to letting and taking possession ”from month to month” and “this tenancy”) over substance (the parties’ express limitation of the right to terminate and the consequent absence of an essential characteristic of a tenancy).”

Lord Clarke JSC also expressed the same views in his judgment, at [109]:

“109

In this regard I agree with the views of Lord Neuberger MR expressed at paras 57—64 above. Ms Berrisford has been living in the property for a considerable time and, except for a short period referred to by Lord Neuberger MR at para 7, has been paying rent at the rate provided for in the contract. It would to my mind be bizarre for the law to imply or infer a contract between the parties to the effect that there was a periodic tenancy between them at the contractual rate. That would mean that Mexfield can bring the contract to an end by giving one month’s notice to quit. I see no basis for such an inference or implication. It would be contrary to the express terms of the agreement, namely that the only way that Mexfield can determine it is under clause 6. There is no need for any process of implication or inference because the parties have expressly agreed the position. In particular, Ms Berrisford at no time agreed that Mexfield could give her a month’s notice to quit. If, as a matter of law, the parties have created a licence and not a tenancy, so be it.”

The views expressed by Lord Neuberger, Lord Mance and Lord Clarke in Mexfield, on the implication of a periodic tenancy, may be said to have been obiter to the actual decision of the Supreme Court in that case. It seems to me however that I should follow the reasoning of their Lordships, in the present case. In particular, I am not convinced that this reasoning was necessarily in conflict with what was said by Lord Templeman in Prudential, in the extract from his speech which I have quoted above. The note of the arguments of counsel in the Appeal Cases report of Prudential discloses that the argument between the parties was as to whether the restriction on the right to terminate the agreement in that case was repugnant to a tenancy. It is not clear, from the record of the arguments on behalf of the owners of the relevant land, that the result of an implied periodic tenancy, if the agreement itself was void as a tenancy, was in issue. Even if it was in issue, the relevant provision in the agreement before the House of Lords in Prudential was not in the same terms as the fetter on termination which was being considered in Mexfield.

Applying the reasoning of their Lordships in Mexfield, which I have quoted above, I cannot see that it is possible to imply a periodic tenancy in the present case, brought about by Orange’s possession of the Sandbach Site and payment of the equivalent of an annual rent. Orange’s possession of the Sandbach Site was clearly intended by the parties to be on the terms of the 1997 Agreement, including the termination provisions in clause 2.1. If, as I have decided, those termination provisions were incompatible with a periodic tenancy it seems to me, on the basis of the relevant reasoning in Mexfield, that it is not possible to imply a periodic tenancy, in place of the void lease constituted by the 1997 Agreement. To adopt the language of Lord Clarke, such a result would be contrary to the express terms of the relevant contract; namely the 1997 Agreement. Instead, it seems to me that Mr Radley-Gardner is correct in his argument that, on the hypothesis that the 1997 Agreement was incapable of taking effect as a lease because its term was uncertain, the position defaults to one where the 1997 Agreement took effect as a licence, notwithstanding that, on this hypothesis, the 1997 Agreement did grant exclusive possession of the Sandbach Site to Orange at the equivalent of an annual rent.

I therefore conclude that Mr Holland’s third and final argument on the Term Issue must also fail. On the hypothesis that the 1997 Agreement took effect as a void lease only by reason of the absence of a term certain, it does not seem to me that an implied periodic tenancy would have come into existence in relation to the Sandbach Site, on the same terms as the 1997 Agreement so far as consistent with the 1997 Agreement. Instead it seems to me that the position defaults to the result contended for by Mr Radley-Gardner; namely that the 1997 Agreement took effect as a licence, with no implied periodic tenancy coming into existence by reason of Orange’s possession of the Sandbach Site and payment of the equivalent of an annual rent.

On the basis of my analysis of the Term Issue I conclude that the Judge was wrong to decide that the 1997 Agreement was entered into for a term certain. I have also decided that the position cannot be retrieved, from APW’s point of view, by the implication of an annual periodic tenancy. In my judgment, and for the reasons which I have set out, the absence of a term certain meant that the 1997 Agreement took effect as a licence. It therefore follows that the Judge was not wrong in his actual decision that the 1997 Agreement took effect as a licence, notwithstanding the differences between my reasoning and that of the Judge. It also follows that the Appeal fails, so far as the 1997 Agreement is concerned, on the basis of the Term Issue.