Summary

Where a tenancy agreement was void for uncertainty of term due to a clause which stated that the tenancy could only be determined if the tenant was in arrears or otherwise in breach of the agreement, it could not be enforced as a contract by the equitable remedy of specific performance.

Facts

The appellant tenant (B) appealed against a decision ((2009) EWHC 2392, (2009) 41 EG 115 (CS)) that the respondent landlord was entitled to bring her tenancy to an end by service of a month's notice to quit. M was a fully mutual housing association under the Housing Associations Act 1985 s.1(2) and the Housing Act 1988 s.45(1). M's status meant that it could not create an assured tenancy, or a secure tenancy, and its tenants or members had no statutory protection against eviction, except under the Protection from Eviction Act 1977 s.3. M had entered into month to month "occupancy agreement" with B under which, by clause 6, it agreed that it could not bring the agreement to an end unless B fell into arrears or committed a breach of the agreement. M served B with a month's notice to quit, even though B was not in arrears at that time and had not breached the agreement. The court was required to determine whether M was entitled to bring the tenancy to an end in those circumstances, given the contents of clause 6. M relied on Prudential Assurance Co Ltd v London Residuary Body (1992) 2 AC 386 HL and argued that the occupancy agreement was void for uncertainty, because of the effect of clause 6 on the term, and B therefore had an implied tenancy by conduct which could be validly determined by a notice to quit. B submitted that although the effect of Prudential was that, at common law, the tenancy was void, equity prevented M as the original contracting party from seeking possession in breach of clause 6 of the contract.

Held

(Wilson LJ dissenting) (1) A lease or tenancy agreement served a dual purpose: it recorded a contract between the original parties who were landlord and tenant, and it created an interest in land for the tenant which was transferable. It was well established that the commencement of a lease and the maximum duration of its term had to be certain, or capable of being rendered certain, before the lease took effect. B accepted that the terms of clause 6 made the maximum term of the proposed lease uncertain. The question therefore arose as to whether the contract purporting to grant a lease survived independently of the failed lease so that the contract could be enforced as between the original parties using an equitable remedy. (2) If the object of the original contract between the parties was to create an interest in land, and that object was not achievable at law because the interest would be of an uncertain term, then neither law nor equity should be able to enforce the contract between the original parties. As a matter of principle it was illogical and unsound to suggest that a contract which aimed to grant an interest in land, and which grant failed, could nevertheless survive as a separate and free-standing contract which could be enforced as if it were the failed lease, Prudential applied. The cases cited in support of B's argument did not support the bare proposition that equity would enforce the contract where the tenancy was void as a lease for uncertainty, Walsh v Lonsdale (1882) LR 21 Ch D 9 CA, Parker v Taswell 44 ER 1106 Ct of Chancery, Browne v Warner 33 ER 480 Ct of Chancery, Browne v Warner 33 ER 578 Ct of Chancery, King's Leasehold Estates, Re (1873) LR 16 Eq 521 Ct of Chancery and Siew Soon Wah (alias Siew Pooi Yong) v Yong Tong Hong (1973) AC 836 PC (Mal) considered. It was not possible to argue that the occupancy agreement should take effect as a contractual licence as neither party had intended it as a licence, Lace v Chantler (1944) KB 368 CA followed. (3) The court did not reach its conclusion with enthusiasm as it was clear what the parties had intended to contract. However, it was equally clear that the rule about certainty of term could not be fulfilled in the instant case. It was time that that rule was re-examined by Parliament. (4) (Per Wilson LJ) The proper analysis of the instant case was as follows: clause 6 rendered the maximum term of the tenancy uncertain and the tenancy was therefore void; the only tenancy between the parties was a tenancy of the property from month to month, thus determinable by the notice to quit served by M; in the event of service of a notice to quit, B had a right to specific performance of the occupancy agreement. B did not need to establish detrimental reliance, because, having provided consideration for the agreement, equity would have ordered specific performance of clause 6, Browne, Parker, King's Leasehold Estates, Zimbler v Abrahams (1903) 1 KB 577 CA and Siew Soon Wah considered.

Appeal dismissed