Summary

As a matter of contractual interpretation, an occupancy agreement between a mutual housing association and one of its members, which was expressed to be "from month to month until determined" could not be determined simply by a month's notice to quit. The agreement, although incapable of being a tenancy by virtue of its uncertain duration, was treated as a tenancy for life at common law and therefore took effect as a 90-year lease determinable either on the tenant's death or in accordance with its express termination provisions.

Facts

The appellant tenant (B) appealed against a decision ((2010) EWCA Civ 811) that an order for possession obtained by the respondent landlord (M) was valid. The parties had entered into an "occupancy agreement" whereby B would live in a property owned by M "from month to month until determined". Clause 5 of the agreement specified that it was determinable by B on one month's written notice. Clause 6 stated that M was only entitled to end the agreement in four defined circumstances. M served a month's notice to quit. It was not in dispute that none of the four termination provisions applied. M's case was that the agreement was a monthly tenancy at common law and that the only statutory protection to which B was entitled was the right not to be evicted without a court order and the right to at least four weeks' notice to quit. The court at first instance accepted M's argument and granted a possession order. The Court of Appeal upheld the possession order. The issues for determination were whether (i) the agreement was terminable by one month's notice; (ii) it was a valid tenancy in law; (iii) it would have been treated as a tenancy before the Law of Property Act 1925 came into effect; (iv) it was converted into a 90-year term by virtue of s.149(6) of the Act; (v) B was entitled to remain in possession.

Held

(1) In the absence of any indication to the contrary, a tenancy granted "from month to month" was a monthly tenancy and might be determined by one month's notice. However, the precise rights and obligations of the parties depended on the circumstances in which they had been agreed. The circumstances surrounding the agreement were that M was a co-operative housing association and the purpose of entering into an agreement with B had been to provide her with a home. B's right of occupation was evidently not intended to be precarious. It was clear for various reasons that the arrangement created by the agreement could only be determinable by M pursuant to cl.6 (see paras 13-22 of judgment). (2) It was a long established principle of law that an agreement for an uncertain term could not be a tenancy, Lace v Chantler (1944) KB 368 CA applied and Prudential Assurance Co Ltd v London Residuary Body (1992) 2 AC 386 HL followed. Prudential continued to represent the current state of the law even though aspects of its practical effect were unsatisfactory and without justification. However, the rule had been regarded as fundamental for several centuries and was not to be jettisoned, at least not in the instant case (paras 26-27, 32-37). (3) If the agreement had been entered into before January 1, 1926, when the Act came into force, it would have been treated by the court as being the grant of a tenancy to B for her life subject to her right to determine it under cl.5 and M's right to determine it under cl.6, Doe on the demise of Crake v Brown 172 ER 992 Assizes and Zimbler v Abrahams (1903) 1 KB 577 CA considered (paras 41-44). (4) Under s.149(6) of the Act, the agreement was a tenancy for life at common law and was to be treated as a term of 90 years determinable on B's death subject to the express determination provisions in cl.5 and cl.6,Bass Holdings Ltd v Lewis (1986) 2 EGLR 40 CA (Civ Div) and Skipton Building Society v Clayton (1993) 25 HLR 596 CA (Civ Div) considered (paras 45-53, 82-86). (5) (Obiter) B had established that she had a subsisting tenancy of the premises, but if she had failed to do so, she would still have defeated M's claim for possession on the ground that she was entitled to enforce her contractual rights under the agreement. Just because the agreement was incapable of giving rise to a tenancy for some old and technical property law rule did not render it invalid as a matter of contract (paras 59-63). (6) (Per Lord Hope) There were significant differences between the way that English and Scottish law treated occupancy agreements (paras 71-81).

Appeal allowed