Summary

A notice to quit served by a landlord by pre-arrangement with the headtenant, and on the common understanding or agreement that the headtenant would not serve a counternotice, was effective at common law to determine both the headtenancy and any subtenancy held under it, and was not tantamount to a surrender.

Facts

Appeal by the plaintiff freeholders from the order of the Court of Appeal (summarised below) dismissing their appeal from the order of Mr Peter Smith QC, who dismissed their action for possession. The freeholders claimed to be entitled to possession of an agricultural holding as a consequence of the determination of the defendant's subtenancy of that holding. The defendant had occupied the holding pursuant to the subtenancy since 1980. The headtenants held the land as yearly tenants from the freeholders. The headtenants and the freeholders were all members of the same family. In 1992 the freeholders wished to sell the land with vacant possession, which necessarily required the determination of both the headtenancy and the subtenancy. This could not be achieved by a surrender of the headtenancy, since the subtenancy would survive such a surrender. However, the subtenancy was subject to automatic determination at common law on the determination of the headtenancy. The freeholders and the headtenants, who also wished to see the land sold with vacant possession, accordingly agreed that the freeholders would serve notices to quit on the head tenants, and that the headtenants would refrain from serving any counternotice under s.26 Agricultural Holdings Act 1986. The headtenancy was duly determined upon the expiry of the notices to quit. The defendant refused to give up possession, and both at first instance and in the Court of Appeal it was held that notices to quit given pursuant to an agreement or understanding with the headtenants that they would not be contested was tantamount to a surrender. In so holding, the Court of Appeal followed its earlier decision in Sparkes v Smart (1990) 2 EGLR 245.

Held

There were very clear differences between a surrender and the way in which the headtenancy was brought to an end by the arrangements in the present case. The proposition that a notice to quit served by pre-arrangement with the recipient was "a consensual transaction tantamount to a surrender", and was incapable of determining a subtenancy, was unsupportable since it did not need the recipient's consent to be effective. Nothing was gained by the substitution of the pejorative word "collusive" for the word "consensual". The decision below had the extraordinary result that the parties to a tenancy could not achieve by agreement that which either of them could achieve alone without agreement; it also meant that a headtenant could determine a subtenancy by the unilateral act of serving an "upwards" notice to quit on the head landlord, but could not achieve the same result by telling the head landlord that he would not object to a notice to quit served on him. Such a disparity had no place in the orderly development of the common law. Sparkes v Smart (1990) (supra) overruled: it could not stand with Harold Pennell v George Rodney Payne & Anor (1995) 2 WLR 261.

Appeal allowed.