Adverse possession — Landlord and tenant — Tenant not paying rent — Whether time ran from expiration of notice to quit or date when rent stopped — Whether ‘lease in writing’ under para 5, Schedule 1 to Limitation Act 1980 — Whether tenant can be in adverse possession under Landlord and Tenant Act 1954 continuation tenancy
By a letter
dated September 4 1975 the then owners of shop premises offered the plaintiff a
quarterly tenancy to commence on September 29 upon certain terms; the plaintiff
endorsed a copy of the letter on September 8 to the effect that he agreed to
abide by those terms, and entered into possession on September 29 1975. On
October 13 1976 the Greater London Council were registered as proprietors of
the freehold title, and in September 1983 gave the plaintiff notice to quit on
March 25 1984. In August 1988 the freehold was transferred to the defendant
council as the successor authority. The plaintiff claimed
maisonette on the upper floors in 1977. Accordingly, he had been in adverse
possession of the premises and the council’s claim for possession was
statute-barred by section 15 of the Limitation Act 1980. The council’s application
to strike out the plaintiff’s claim was allowed by Deputy Master Wall. On
appeal it was contended for the defendant council that: (1) the plaintiff’s
tenancy was a ‘lease in writing’ within the meaning of para 5(1) of Schedule 1
to the Limitation Act 1980 and that therefore time did not begin to run until
the tenancy expired by notice to quit on March 25 1984, less than 12 years
before the commencement of proceedings; (2) it was impossible for the plaintiff
to be in adverse possession because, by reason of Part II of the Landlord and
Tenant Act 1954, the plaintiff’s tenancy was continued after the expiration of
the notice to quit; and (3) the plaintiff acknowledged the council’s title by
correspondence.
reversionary lease not made by deed, and not conferring on the plaintiff an
immediate right to take possession, was incapable of taking effect as a parol
lease under section 54(2) of the Law of Property Act 1925. The tenancy, which did
come into existence, was not one created by the tenancy document, but rather
arose by operation of law; it was therefore not a ‘lease in writing’ within the
meaning of para 5(1) of Schedule 1 to the 1980 Act. (2) Whether or not a tenant
can be in adverse possession where a tenancy is continuing under the 1954 Act,
there was no evidence that the Act applied at the time. (3) There was no
acknowledgement of the council’s title in the correspondence.
The following
cases are referred to in this report.
Bolton (Lord) v Tomlin (1836) 5 Ad & El 856
Buckinghamshire
County Council v Moran [1990] Ch 623; [1989]
3 WLR 152; [1989] 2 All ER 225, CA
Doe d
Landsell v Gower (1851) 17 QB 589
Edge v Strafford (1831) 1 Cr&J 391
Foster v Reeves [1892] 2 QB 255
Hand v Hall (1877) 2 ExD 355
Inman v Stamp (1815) 1 Stark 12
Kingsmill v Millard (1855) 11 Exch 313
Kushner v Law Society [1952] 1 KB 264; [1952] 1 All ER 404; (1952)
159 EG 139
Martin v Smith (1874) LR 9 Exch 50
Moses v Lovegrove [1952] 2 QB 533; [1952] 1 All ER 1279; [1952] 1
TLR 1324, CA
Parker v Briggs (1893) 37 Sol Jo 452
Parker v Taswell (1858) 2 De G&J 559
Rawlins v Turner (1699) 1 Ld Raym 736
Rollason v Leon (1861) 7 H&N 73
Ryley v Hicks (1725) 1 Stranage 651
Smirk v Lyndale Developments Ltd [1975] Ch 317; [1975] 2 WLR 495;
[1975] 1 All ER 690; (1974) 29 P&CR 407; [1975] 2 EGLR 43; 235 EG 751, CA
Tress v Savage (1854) 4 E&B 36
Walsh v Lonsdale (1882) 21 ChD 9
Wright v Macadam [1949] 2 KB 744; [1949] 2 All ER 565, CA
This was an
appeal by the plaintiff, Ronald James Long, against the decision of Deputy
Master Wall, who had allowed an application by the defendants, Tower Hamlets
London Borough Council, to strike out the plaintiff’s claim on the ground that
it disclosed no cause of action.
Philip Walter
(instructed by Wallace Bogan) appeared for the plaintiff; Sarah Hargreaves
(instructed by the solicitor to the Tower Hamlets London Borough Council)
represented the defendants.
Giving
judgment, Mr James Munby
QC said: This case raises the question what is meant by the words ‘tenancy
from year to year or other period, without a lease in writing’ in para 5(1) of
Schedule 1 to the Limitation Act 1980. It also, at least on one view of the
matter, raises the question what is meant by the words ‘creation by parol of
leases taking effect in possession for a term not exceeding three years’ in
section 54(2) of the Law of Property Act 1925 — a question which, in turn,
involves consideration of the law relating to reversionary leases. Both
questions are of some interest and importance.
The matter
comes before me on an appeal by the plaintiff, Ronald James Long (‘Mr Long’),
from an order made by Deputy Master Wall on September 26 1995. The master had
before him an application by the defendants, Tower Hamlets London Borough
Council (the ‘council’), by summons dated March 21 1995 to strike out the
originating summons which the plaintiff had issued on January 13 1995. The
master struck out the originating summons on the ground that Mr Long’s claim
was doomed to fail.
Facts
The facts
which are relevant to the main question that I have to decide lie within a very
narrow compass. The dispute relates to the ground-floor shop (‘the shop’) and a
maisonette on the upper floors (‘the maisonette’) at 21 Turners Road, Tower
Hamlets, London E3 (‘the premises’). The premises are part of the property
registered at Her Majesty’s Land Registry under title number 255264. On
September 4 1975 agents acting for the then owner of the premises, a Mr Jacobs,
wrote a letter to Mr Long in the following terms:
Dear Sir,
21 Turners
Road E3
Ground
Floor
We confirm on
behalf of our client, Mr H Jacobs, that we are prepared to grant you a
quarterly tenancy of the above upon the following terms:
1 The rent to
be £55 per quarter, payable on the usual quarter days in advance, exclusive of
general and water rates payable in respect of this part of the property.
2 The
premises are to be held by R J Long, Esq, trading as Long Bros, Upholstery, in
connection with his business as an upholsterer.
3 The tenant
is not to sublet the whole or any part of the premises.
4 The tenant
is to maintain the interior and shop front in good decorative repair and
condition.
5 The tenant
is to give four weeks notice in writing before vacating the premises.
6 The tenancy
is to commence on Monday, the 29th September 1975
on a quarterly
basis.
Yours
faithfully,
On September 8
1975 Mr Long made the following endorsement on a copy of the letter:
I, Ronald
James Long, agree to abide by the terms and conditions of the tenancy set out
herein
Signed R J
Long
Date 8-9-75
The copy
letter endorsed by Mr Long (‘the tenancy document’) was returned to the
landlord. It was retained by the landlord and his successors in title, being
eventually produced from their files by the council after the present
litigation had been commenced.
On or about
September 29 1975 Mr Long took possession of the shop. On September 24 1976 Mr
Jacobs’ successor in title completed the sale of the freehold of the premises
to the Greater London Council (‘GLC’). On October 13 1976 GLC were registered
as proprietors of the premises. In or about September 1983 GLC gave Mr Long
notice to quit the shop; the notice expired on March 25 1984. On August 25 1988
the freehold of the premises was transferred under statutory powers to the
council as the successor authority to GLC. The council have since been
registered as proprietor of the premises.
Issues
It is common
ground that Mr Long has paid no rent for the shop for many years. According to
Mr Long he stopped paying rent in 1977. The council accept that rent has been
neither demanded nor paid since March 1984. When precisely rent was last paid
is a matter which can only be resolved at trial. Mr Long claims to have taken
possession of the maisonette in 1977 at a time when, he says, it was
unoccupied. The council, on the other hand, have produced documents which prima
facie establish that the maisonette was lawfully occupied by a Mr Taylor as
tenant of GLC until February 20 1978, when he was rehoused by GLC elsewhere.
Precisely when and to what extent Mr Long ever made use of the maisonette is in
dispute between the parties, as is the extent to which he has, in recent years,
been in occupation of the shop. These also, however, are matters which can only
be resolved at trial.
At trial the
case will turn on the application to the facts, whatever they may be found to
be, of section 15(1) and (6) of, and paras 5 and 8 of Schedule 1 to, the
Limitation Act 1980. Section 15(1) and (6) is in the following terms:
(1) No action
shall be brought by any person to recover any land after the expiration of
twelve years from the date on which the right of action accrued to him or, if
it first accrued to some person through whom he claims, to that person… .
(6) Part I of
Schedule 1 to this Act contains provisions for determining the date of accrual
of rights of action to recover land in the cases there mentioned.
Para 5 of
Schedule 1 provides as follows:
(1) Subject to
sub-paragraph (2) below, a tenancy from year to year or other period, without a
lease in writing, shall for the purposes of this Act be treated as being
determined at the expiration of the first year or other period; and accordingly
the right of action of the person entitled to the land subject to the tenancy
shall be treated as having accrued at the date on which in accordance with this
subparagraph the tenancy is determined.
(2) Where any
rent has subsequently been received in respect of the tenancy, the right of
action shall be treated as having accrued on the date of the last receipt of
rent.
Para 8(1) of
Schedule 1 provides that:
No right of
action to recover land shall be treated as accruing unless the land is in the
possession of some person in whose favour the period of limitation can run
(referred to below in this paragraph as ‘adverse possession’); and where under
the preceding provisions of this Schedule any such right of action is treated
as accruing on a certain date and no person is in adverse possession on that
date, the right of action shall not be treated as accruing unless and until
adverse possession is taken of the land.
Mr Long’s case
is simple. He says that he is and has been ever since 1977 continuously in
possession of the whole of the premises (that is, of both the shop and the
maisonette); that he has paid no rent since 1977 for any part of the premises
and has, ever since then, been in adverse possession of the premises within the
meaning of para 8(1); that in accordance with para 5(2) the GLC’s right of
action to recover the premises is to be treated as having accrued at the latest
by January 1 1978; and that, in consequence, any claim by the council to
recover the premises became statute-barred, in accordance with section 15(1), at
the latest by January 1 1990, some five years before the present proceedings
were commenced. On this footing Mr Long seeks: (i) a declaration that he is
entitled beneficially to the premises; and (ii) rectification of the
proprietorship register of title no 255264 to remove the premises from that
title and to open a new title for the premises under which he is the registered
proprietor.
The council
deny that Mr Long can prove either the factual possession or the animus
possidendi which are necessary to found adverse possession: Buckinghamshire
County Council v Moran [1990] Ch 623. Moreover, the council say that
Mr Long last paid rent in March 1984, less than 12 years before the proceedings
were commenced on January 13 1995. Accordingly, say the council, their claim to
recover the premises is not yet statute-barred.
As I have
already said, the factual disputes between the parties can only be resolved at
trial. On what basis, therefore, do the council seek to strike out Mr Long’s
claim? Three arguments are put forward by Miss Sara Hargreaves of counsel on
behalf of the council. Each, in substance, proceeds on the footing that,
whatever may be the eventual resolution of the factual disputes to which I have
referred, there are other grounds on which the council can establish that time
cannot on any view have begun to run in Mr Long’s favour until 1984 at the
earliest.
Before
considering Miss Hargreaves’ arguments there is one preliminary matter which I
must address. It will be appreciated that the tenancy document related only to
the shop. There is no suggestion that Mr Long was ever granted a tenancy of the
maisonette or that he has ever paid any additional rent for the maisonette. On
what basis, then, does Miss Hargreaves seek to resist Mr Long’s claim in so far
as it relates to the maisonette? She relies upon the principle that if a tenant
occupies land belonging to the landlord but not included in the demise, that
land is presumed to be an addition to the land demised to the tenant, so that
it becomes subject to the terms of the tenancy and must therefore be given up
to the landlord when the tenancy ends: Smirk v Lyndale Developments
Ltd [1975] Ch 317*. Mr Philip Walter of counsel, on behalf of Mr Long,
seeks to confine the principle, which otherwise he accepts, in two ways: first,
he says it is limited to cases where the encroachment is on land which is
waste; second, he says that it is limited to cases where the tenant is estopped
by words or conduct from denying that the additional land is within the demise.
Neither condition, he says is satisfied in the present case.
*Editor’s
note: Also reports at [1975] 2 EGLR 43
I cannot
accept either of Mr Walter’s submissions. In Smirk v Lyndale
Developments Ltd [1975] Ch 317, Pennycuick V-C considered all the relevant
authorities, which as he said at p323G had got into something of a tangle, and
concluded at pp324G, 329C, 332G that the law had been correctly stated by
Alderson and Parke BB in Kingsmill v Millard (1855) 11 Exch 313.
His decision on the point was not challenged on appeal and was accepted as
correct by the Court of Appeal: [1975] Ch 317, at pp337G, 340E, 341H. The law
as laid down in those two cases I take to be clear and binding on me. They show
that the principle applies whether or not the land encroached upon is waste.
They show, moreover, that the principle is based on a presumption, albeit a
rebuttable presumption, which, although it may be considered to operate in a
manner akin to an estoppel, is not dependent upon proof, as Mr Walter I think
would have it, of any active representation to the landlords by the tenant. On
the contrary, the presumption is treated as applying unless the tenant, during
the term, communicates with the landlords in such a way as to show that he is
asserting his own title as against the landlords or, as Alderson B put it, that
he is setting the landlords at defiance. There is nothing in the evidence
before me in the present case which even begins to suggest that Mr Long, in his
dealings with the GLC and the council, ever sought to distinguish between the
shop and the maisonette or ever sought to assert that, while he occupied the
shop as tenant, his occupation of the maisonette was in some different
character. Accordingly, in my judgment, Miss Hargreaves is entitled to say
that, on the evidence as it stands, the presumption is wholly unrebutted and
that the principle as laid down in Smirk v Lyndale Developments Ltd
applies. It follows that, for present purposes, no distinction is to be drawn
between Mr Long’s claim as it relates to the shop and his claim as it relates
to the maisonette.
I turn
therefore to consider the three issues identified by Miss Hargreaves as
justifying the striking out of Mr Long’s claim.
Issue 1 —
‘lease in writing’
In the first
place, and this is her principal argument, Miss Hargreaves submits that the
tenancy document is a ‘lease in writing’ within the meaning of para 5(1) of
Schedule 1 to the Limitation Act 1980; that time accordingly did not begin to
run in favour of Mr Long when he stopped paying rent (whenever that was) but
only when his tenancy was brought to an end by notice to quit; and that the
only relevant notice to quit was that which expired on March 25 1984, less than
12 years before the commencement of the present proceedings.
Mr Walter
denies that the tenancy document is, or as a matter of law is capable of being,
a ‘lease in writing’ within the meaning of para 5(1). Put shortly, his argument
can be summarised as follows:
(a) A document
cannot be a ‘lease in writing’ within the meaning of para 5(1) unless it is
dispositive, that is, as Mr Walter put it in argument, the document must be one
which at law creates, of and by itself, a leasehold estate in land.
(b) As the
tenancy document was not executed as a deed, it could take effect as a lease
only if fell within the exception in section 54(2) of the Law of Property Act
1925, that is, if it ‘[took] effect in possession’ for a term not exceeding
three years. It did not, says Mr Walter, because it took effect, if at all, as
a reversionary lease.
At first blush
the use in para 5(1) of the words ‘tenancy from year to year or other period,
without a lease in writing’ is rather puzzling to
distinction between those leases which are required by section 52 to be made by
deed and those leases which section 54(2) permits to be created by parol, in
other words without the need even for writing. The provisions of the Law of
Property Act 1925 itself are also, at first, rather puzzling. Notwithstanding
the reference in section 52(2)(d) to ‘leases or tenancies … not required
by law to be made in writing’, the Act does not itself, so far as I am aware,
require any class of lease to be made in writing, though certain leases made
under the Settled Land Act 1925 which would otherwise be required by section
42(1)(i) of that Act to be made by deed are permitted by section 42(5)(ii) to
be made by writing under hand.
(1) Historical background
The
explanation for the seeming oddities is historical. As Mr Walter pointed out,
para 5 of Schedule 1 to the Limitation Act 1980 reproduces provisions first
enacted as section 8 of the Real Property Limitation Act 1833 and later
re-enacted as section 9(2) of the Limitation Act 1939. Section 8 of the Real
Property Limitation Act 1833 provided as follows:
And be it
further enacted, That when any Person shall be in Possession or in Receipt of
the Profits of any Land, or in Receipt of any Rent, as Tenant from Year to Year
or other Period, without any Lease in Writing, the Right of the Person entitled
subject thereto, or of the Person through whom he claims, to make an Entry or
Distress or to bring an Action to recover such Land or Rent shall be deemed to
have first accrued at the Determination of the first of such Years or other
Periods, or at the last Time when any Rent payable in respect of such Tenancy
shall have been received (which shall last happen).
As Mr Walter
also pointed out, the context in which the Real Property Limitation Act 1833
was enacted was that of the Statute of Frauds 1677. However, in order to
understand the exceedingly interesting and instructive arguments that have been
so skilfully deployed by Mr Walter and Miss Hargreaves it is necessary to go
even further back than that and to consider, albeit briefly, the relevant
principles of the common law.
At common law
a lease could be granted in any way, even orally: Megarry and Wade, The Law
of Real Property, 5th ed 1984, at p636. Moreover, there was at common law
no restraint upon the grant of a reversionary lease, that is, a lease to take
effect in reversion on some future day, however distant, and conferring no
right to take possession in the meantime. Such a lease (to be contrasted with a
concurrent lease, that is, a lease of the reversion: Megarry and Wade at
pp664–665) gave the lessee an immediate vested legal interest in the
land, that interest being known as an interesse termini, though until
the date when the lease was due to take effect this interest was vested in
interest and not in possession. On the other hand, the lessee under a
reversionary lease acquired no estate in the land until he had actually
entered, that is, taken possession in accordance with the lease; until then all
he had was an interesse termini: Megarry and Wade at pp231, 637,
647–648.
In 1677 the
Statute of Frauds was enacted ‘For Prevention of many fraudulent Practices,
which are commonly endeavoured to be upheld by Perjury and Subornation of
Perjury’. Section 1 of the Statute of Frauds provided that:
all Leases,
Estates … or Terms of Years … made or created by Livery and Seisin only, or by
Parol, and not put in Writing, and signed by the Parties so making or creating
the same, or their Agents thereunto lawfully authorised by Writing, shall have
the Force and Effect of Leases or Estates at Will only, and shall not either in
Law or Equity be deemed or taken to have any other or greater Force or Effect;
any Consideration for making any such Parol Leases or Estates, or any former
Law or Usage, to the contrary notwithstanding.
Section 2 of
the Statute of Frauds excepted from the operation of section 1:
all Leases
not exceeding the Term of Three Years from the making thereof, whereupon the
Rent reserved to the Landlord, during such Term, shall amount unto Two third
Parts at the least of the full improved Value of the Thing demised.
Section 4 of
the Statute of Frauds provided, so far as is material, that:
no Action
shall be brought … to charge any Person … upon any Contract or Sale of Lands, …
or any Interest in or concerning them … unless the Agreement upon which such
Action shall be brought, or some Memorandum or Note thereof, shall be in
Writing, and signed by the Party to be charged therewith, or some other Person
thereunto by him lawfully authorized.
Accordingly,
when the Real Property Limitation Act 1833 was enacted the distinction was not,
as it now is, between those leases required to be made by deed and those which
may be created by parol, but rather between those leases required by section 1
of the Statute of Frauds to be ‘put in Writing’ and those which, by virtue of
section 2 of the Statute of Frauds, could still be created at common law by
parol.
The modern
requirement of a deed was first imposed by section 4 of the Transfer of
Property Act 1844, which provided:
That no Lease
in Writing of any … Land … shall be valid as a Lease … unless the same shall be
made by Deed; but any Agreement in Writing to let … any such Land shall be
valid and take effect as an Agreement to execute a Lease …; and the Person who
shall be in the Possession of the Land in pursuance of any Agreement to let
may, from Payment of Rent or other Circumstances, be construed to be a Tenant
from Year to Year.
The drafting
of section 4 of the Transfer of Property Act 1844 was soon perceived to have
been defective: see Tress v Savage (1854) 4 E&B 36, at p43, per
Coleridge J. Section 4 was therefore repealed by section 1 of the Real Property
Act 1845. Section 3 of the latter Act provided:
That … a
Lease, required by Law to be in Writing, … shall … be void at Law, unless made
by Deed:
Sections 1, 2
and 4 of the Statute of Frauds remained in force.
Thus from 1845
the combined effect of the Statute of Frauds and the Real Property Act 1845 was
that those leases which, prior to the Transfer of Property Act 1844, had been
required by section 1 of the Statute of Frauds to be in writing were now
required by section 3 of the Real Property Act 1845 to be made by deed; but
that those leases which had been excepted by section 2 of the Statute of Frauds
from the operation of section 1 of the Statute of Frauds remained excepted from
the operation of section 3 of the Real Property Act 1845.
Although the
effect of section 3 of the Real Property Act 1845 was to make a written lease
which did not fall within section 2 of the Statute of Frauds ‘void’, that did
not deprive the written document of all legal effect. At law, as soon as
the tenant took possession, and rent was paid and accepted, a yearly or other
periodic tenancy arose. That periodic tenancy was a legal estate which was
treated as being held on such of the terms set out in the written document as
were applicable to and not inconsistent with a periodic tenancy: Tress v
Savage (1854) 4 E&B 36; Martin v Smith (1874) LR 9 Exch
50. In equity the imperfect lease was treated as a contract to grant a
lease and, moreover, provided there was valuable consideration and a sufficient
act of part performance, a contract of which specific performance would, in
principle, be granted under the rule in Parker v Taswell (1858) 2
De G&J 559 and Walsh v Lonsdale (1882) 21 ChD 9.
Sections 1 and
2 of the Statute of Frauds and section 3 of the Real Property Act 1845 were
replaced by sections 52 and 54 of the Law of Property Act 1925. Section 4 of
the Statute of Frauds, so far as is material, was replaced by section 40 of the
Law of Property Act, itself since repealed by section 2(8) of the Law of
Property (Miscellaneous Provisions) Act 1989. Section 52 of the Law of Property
Act 1925, replacing section 3 of the Real Property Act 1845, provides so far as
is material, as follows:
(1) All
conveyances of land or of any interest therein are void for the purpose of
conveying or creating a legal estate unless made by deed.
(2) This
section does not apply to NL …
(d)
leases or tenancies or other assurances not required by law to be made in
writing;
‘Conveyance’
is defined by section 205(1)(ii) of the Law of Property Act 1925 as including a
lease. Section 54 of the Law of Property Act 1925, replacing sections 1 and 2
of the Statute of Frauds, is in the following terms:
(1) All
interests in land created by parol and not put in writing and signed by the
persons so creating the same, or by their agents thereunto lawfully authorised
in writing, have, notwithstanding any consideration having been given for the
same, the force and effect of interests at will only.
(2) Nothing
in the foregoing provisions of this Part of this Act shall affect the creation
by parol of leases taking effect in possession for a term not exceeding three
years (whether or not the lessee is given power to extend the term) at the best
rent which can be reasonably obtained without taking a fine.
The words
‘taking effect in possession’ are not defined as such, though ‘Term of years
absolute’ is defined by section 205(1)(xxvii) of the Law of Property Act 1925
in such a way as to distinguish a ‘term of years taking effect in possession’
from a ‘term of years taking effect in reversion’:
‘Term of
years absolute’ means a term of years (taking effect either in possession or in
reversion whether or not at a rent) …
‘Possession’
is defined by section 205(1)(xix) of the Law of Property Act 1925 as including
receipt of rents or profits or the right to receive the same.
It will be
observed that sections 52 and 54 of the Law of Property Act 1925 follow very
closely, and in large part perpetuate the language of, their statutory
precursors. As is pointed out in Megarry and Wade at p637:
The
provisions of the two previous Acts were repeated by the Law of Property Act
1925 but with certain alterations. No attempt has been made to state the
combined effect of the earlier Acts: section 54 follows the Statute of Frauds
1677 and section 52 follows the Real Property Act 1845 so that their differing
provisions still stand side by side. This is presumably because they had become
so familiar that it was thought best to preserve them.
Thus sections
52(2)(d) and 54(1) preserve fossilised references to leases in writing
which, though they may reflect the formal requirements imposed in 1677 by the
Statute of Frauds (and still representing the law when the Real Property
Limitation Act 1833 was enacted), had been overtaken by the formal requirement
of a deed imposed by the Transfer of Property Act 1844.
However, as is
also pointed out in Megarry and Wade at p637, and as appears from a comparison
of section 54(2) of the Law of Property Act 1925 with section 2 of the Statute
of Frauds, section 54(2) did make two changes. The first, on which nothing turns
for present purposes, was to substitute for the reference in the Statute of
Frauds to a rent not less than two-thirds of the full improved value reference
to the best rent reasonably obtainable without taking a fine. The second, which
is crucial to Mr Walter’s argument, was to substitute for the reference in the
Statute of Frauds to a lease not exceeding three years ‘from the making
thereof’ reference in section 54(2) to a lease ‘taking effect in possession’
for a term not exceeding three years.
The Law of
Property Act 1925 made two other changes to the law which are material for
present purposes: first, section 149(1) and (2) abolished the doctrine of interesse
termini and the rule that a lessee took no estate until he had actually
entered; second, section 149(3) limits to 21 years the time that may elapse
before the term under a reversionary lease begins; a reversionary lease
postponed for more than 21 years is void. The effect of section 149, therefore,
is to give the lessee under a reversionary lease, so long as it is not
postponed for more than 21 years, an immediate estate, rather than a mere
interest, in the land — though until the date when the lease is due to take
effect that estate will be vested in interest only and not in possession.
(2) Para 5(1) — ‘lease in
writing’
Before the
master Mr Walter argued that, notwithstanding the use of the words ‘lease in
writing’, the exception under para 5(1) of Schedule 1 to the Limitation Act
1980 applies only if the lease has been made by deed. That submission, which,
in my judgment, is clearly wrong, was not pursued before me. Mr Walter and Miss
Hargreaves were at one in agreeing that the word ‘writing’ in para 5(1) has the
meaning given to it by section 5 of and Schedule 1 to the Interpretation Act
1978:
‘Writing’
includes typing, printing, lithography, photography and other modes of
representing or reproducing words in a visible form, and expressions referring
to writing are construed accordingly.
I agree. A
written document does not have to be a deed in order to be a ‘writing’ for the
purposes of para 5(1), though on the other hand, a document which is a deed
will also be a ‘writing’ for the purposes of para 5(1).
As I have
said, Mr Walter’s argument is that a document is not a ‘lease in writing’
unless it is dispositive, that is, a document which at law creates, of and by
itself, a leasehold estate in land. A document which is merely an agreement for
a lease, or merely evidential of the terms of a lease is not, he submits, a
‘lease in writing’. Miss Hargreaves’ submission is that this is much too subtle
and technical an approach. She contends for a simple and practical approach,
suggesting that the reason why para 5(1) distinguishes between those leases
which are, and those leases which are not, ‘in writing’ is evidential. She
asserts, I have no doubt correctly, that Mr Long acquired, at the latest when
he took possession and started paying rent on or about September 29 1975, a
periodic tenancy at law and that that tenancy is to be treated at law as having
been held on the terms of the tenancy document. She says, again no doubt
correctly, that equity would in principle treat the tenancy document as a
specifically enforceable agreement for a lease, so that Mr Long had what is
often called an equitable lease. Thus far, I did not understand Mr Walter to
challenge Miss Hargreaves’ analysis of the effect of the tenancy document in
the events which had happened. So, says Miss Hargreaves, there plainly was a
lease, all the terms of the lease are to be found set out in a written
document, and there is, therefore, a ‘lease in writing’. It is, says Miss
Hargreaves, as simple and straight forward as that. No, says Mr Walter, Miss
Hargreaves’ argument does not go far enough. She has to show that the tenancy
agreement itself was dispositive and created a legal estate in land. An
equitable lease is not, he says, a lease and does not of itself create an
estate in land.
In my
judgment, Mr Walter’s submission on this point is correct.
In the light
of the historical background, and bearing in mind the familiar distinction,
drawn for example in sections 9 and 7 of the Statute of Frauds (now sections
53(1)(c) and 53(1)(b) of the Law of Property Act 1925), between
those transactions required to be ‘in’ writing, that is, where the writing
required by the statute is dispositive, and those requiring only to be
‘manifested and proved by some writing’, that is, where the writing required by
the statute need be no more than evidential, one’s initial impression is that
the ‘writing’ referred to in para 5(1) of Schedule 1 to the Limitation Act 1980
must be dispositive and not merely evidential. Para 5(1), after all, refers to
a ‘lease in writing’ (emphasis supplied). Indeed, as a matter of simple
English language, that is what one would expect the words to mean.
But the matter
does not rest there, because I have been referred to two authorities which, in
my judgment, indicate that this is indeed the correct meaning of the words. In Doe
d Landsell v Gower (1851) 17 QB 589 the question was whether an
entry in a vestry-book, signed by the tenant and by one, but not by all, of the
parish officers, was a ‘lease in writing’ within the meaning of section 8 of
the Real Property Limitation Act 1833. It was held by the Court of Queen’s
Bench (Patteson, Coleridge and Wightman JJ) that it was not, because only one
of the parish officers had signed the vestry-book and he had not professed to
sign on behalf of all. The facts of the case were very far removed indeed from
the facts of the present case, but the reasons given by the judges for arriving
at their decision are apposite. They are all to the same effect. Patteson J at
p598 made it clear that, in his opinion, what section 8 required was an …
‘actual lease’, that is
… not … a
document, generally, but … a lease; … something which is to pass an interest.
Coleridge J at
p599 said that what section 8 required was
… a lease in
writing: that is, not merely an instrument which would be
Wightman J at
p600 said that section 8
… requires an
instrument in writing that may operate as a lease.
In my
judgment, this is clear authority for the proposition that there was no ‘lease
in writing’ for the purposes of section 8 of the Real Property Limitation Act
1833, and thus there is no ‘lease in writing’ for the purposes of para 5(1) of
Schedule 1 to the Limitation Act 1980, if the ‘writing’ is merely evidential.
If there is to be a ‘lease in writing’ the writing must itself at law ‘pass an
interest’ (to use the words of Patteson and Coleridge JJ) and ‘operate as a
lease’ (to use Wightman J’s words).
Moses v Lovegrove [1952] 2 QB 533, the only other authority on the
point to which I was referred, is to the like effect. One of the questions in
that case was whether a rent book was a ‘lease in writing’ within the meaning
of section 9(2) of the Limitation Act 1939. The Court of Appeal held that it
was not. Sir Raymond Evershed MR said at p536:
The alleged
lease in writing consisted of the rent book, which was put in evidence. The
judge rejected the view that the rent book was such a lease in writing within
the meaning of the Act, and I think he was entirely right in that conclusion.
The rent book
is, I think, what it purports to be, and what it is called, a rent book, that
is, a book containing acknowledgements for payment of weekly sums of rent, and
containing also, in pursuance of the terms of the legislation, a reference to
the conditions on which the tenant was holding his tenancy. I think that on the
face of it, it was not intended to be, and is not a contract for granting a
tenancy, still less a lease creating an estate. It is, I think, at most what it
was intended to be, and what it is on the face of it called, a book evidencing
the terms on which the tenant held.
Romer LJ at
p543 said that he entirely agreed with the Master of the Rolls.
These
authorities make it clear, in my judgment, that a written document, whatever
its terms, however clearly referable to the existence of a lease, and however
comprehensive it may be in setting out the terms of the lease, is not a ‘lease
in writing’ for the purposes of para 5(1) of Schedule 1 to the Limitation Act
1980 unless at law the document itself operates to ‘pass an interest’ (the
words used by Patteson and Coleridge JJ), itself ‘operates as a lease’ (the
words used by Wightman J) or itself ‘creates an estate’ (the words used by Sir
Raymond Evershed MR).
(3) Section 54 (2) — ‘taking
effect in possession’
That being so,
the next question which arises is whether the tenancy document operated to
create a leasehold estate. It plainly did not take effect as a deed. The
question therefore is whether or not it operated in accordance with section
54(2) of the Law of Property Act 1925 as a ‘lease taking effect in possession
for a term not exceeding three years’.
Mr Walter
accepts that, notwithstanding the reference in section 54(2) to the creation of
leases ‘by parol’, a lease which otherwise satisfies the requirements of
section 54(2) can be created either by parol or in writing. This is plainly
correct: see, for example, Wright v Macadam [1949] 2 KB 744, at
p747 per Jenkins LJ; Kushner v Law Society [1952] 1 KB
264, at p272 per Lord Goddard CJ. Mr Walter concedes that the tenancy document,
properly construed, purported to take effect as a tenancy and not as a mere
agreement to grant a tenancy: Rollason v Leon (1861) 7 H&N
73; Hand v Hall (1877) 2 ExD 355. He also accepts that the
tenancy document, since it stipulated for a quarterly tenancy, was for a ‘term
not exceeding three years’ as that phrase is used in section 54(2).
However,
submits Mr Walter, the tenancy did not ‘tak[e] effect in possession’ and the
tenancy document was therefore not, as required by section 54(2), a lease taking
‘effect in possession’. Although the tenancy document was executed on September
8 1975, the tenancy was not to commence immediately but rather on a future
date, September 29 1975, and Mr Long had no right to take possession until the
latter date. Therefore, says Mr Walter, it took effect, if at all, as a
reversionary lease. Whatever may have been the position at common law or prior
to 1925, he says, the inclusion in section 54(2) of the words ‘taking effect in
possession’ has the effect of excluding altogether from the ambit of section
54(2) reversionary leases conferring no immediate right to take possession.
Thus, he submits, a reversionary lease can only take effect if made by deed. If
that is right then it follows, says Mr Walter, that a reversionary lease cannot
be a ‘lease in writing’ for the purposes of para 5(1) of Schedule 1 to the
Limitation Act 1925 unless it is made by deed. Mr Walter submits that the only
tenancy which ever came into existence in the present case was not one created
by the tenancy document. It arose, he says, by operation of law as a result of
Mr Long taking possession on or about September 29 1975 and paying rent. The
tenancy document, says Mr Walter, is not a lease. It is no more than a document
whose terms, so far as they are consistent with a periodic tenancy, will be
treated as the terms on which Mr Long held the periodic tenancy which arose by
operation of law on or about September 29 1975.
Miss
Hargreaves, on the other hand, disputes that reversionary leases were excluded
from the exception in section 2 of the Statute of Frauds or that they are
excluded from the ambit of section 54(2). She accepts that the three-year
period, referred to both in section 2 of the Statute of Frauds and in section
54(2), provides what she calls the basic measure of computation, and that the
computation of the three-year period is from the date of the parol grant. But
that, according to Miss Hargreaves, is the only limit imposed by section 54(2).
The fundamental principle, common both to section 2 of the Statute of Frauds
and to section 54(2), she says, is: the term whether it is to commence
immediately or at some date in the future, must take effect in possession
within three years from the date of the parol grant and must not extend beyond
three years from the date of the parol grant. So long as it satisfies this
condition it matters not, she submits, whether the term takes effect in
possession at the date of the parol grant. It is implicit in this argument that
the words ‘taking effect in possession’ in section 54(2) are descriptive only
of the quality of the lease at the date when the term commences and not of the
quality of the lease at the date of the parol grant. She suggests that the
restrictions on the grant of reversionary leases are to be found in section 149
of the Law of Property Act 1925, and not in section 54(2).
(a) Statute of Frauds
Before turning
to consider the question as it arises in relation to section 54(2) I must first
examine certain older authorities on section 2 of the Statute of Frauds. The
first case is Rawlins v Turner (1699) 1 Ld Raym 736. The report
is very short:
No lease by
parol is good which imports to convey an interest for more than three years
from the time of the making.
It was ruled
by Holt Chief Justice at Lent Assizes at Kingston 1699, that such lease for
three years of land, as will be good without deed within the [Statute of
Frauds] … s2, must be for three years, to be computed from the time of the
agreement; and not for three years to be computed from any day after.
The second
case is Ryley v Hicks (1725) 1 Stranage 651. Again the report is
very short:
In Middlesex,
coram Raymond, Chief Justice.
Leases by
parol for less than three years from the making, to commence at a future day,
are not within Statute of Frauds… .
The plaintiff
declares, that 24 February 1723, she demised to the defendant a chamber, a
cellar, and half a shop, habendum from LadyDay then next for a quarter of a
year, and so from quarter to quarter, so long as both parties shall please, at
51. per quarter.
It was
objected by Whitaker, that this being to commence at a future day, was but a
lease at will since the Statute of Frauds. The Chief Justice at first thought
it a good objection, but upon farther consideration he was of opinion, that the
exception was not confined to leases that were to commence from the time of
making, but was general as to all leases that were not to hold for above three
years from the making. So the plaintiff had a verdict …
The case is
also reported in Buller’s Nisi Prius 6th ed at p177:
A lease by
parol for a year and an half, to commence after the expiration of a lease which
wants a year of expiring, is a good lease within the statute of frauds, for it
does not exceed three years from the making.
It will be
seen that the two reports differ in their summary of the relevant facts. As
observed in Selwyn, An Abridgment of the Law of Nisi Prius, 13th ed
1869, vol 2 at p759, the report in Strange is ‘probably from a different note’.
But the statement of principle is the same in both reports.
Ryley v Hicks was criticised by Dampier J in Inman v Stamp
(1815) 1 Stark 12, reported on this point only in Selwyn at p759 (the earlier
proceedings at nisi prius are reported, but on a different and for
present purposes irrelevant point, as Inman v Stamp:
In Inman
v Stamp BR Trin 55 Geo III., Dampier, J, said the practice had been with
the foregoing case of Ryley v Hicks, although he rather inclined
to think that the 2nd section of the statute [of frauds], taken with section 4
[of the statute of frauds], was confined to leases executed by possession, on
which two-thirds of the improved rent was reserved.
In Edge
v Strafford (1831) 1 Cr&J 391 it was argued that Ryley v Hicks
had in effect been over-ruled by Inman v Stamp. The argument was
rejected at p396 by Bayley B, giving the judgment of the Court of Exchequer,
who appears to have treated Ryley v Hicks as good authority for
the proposition that:
a lease,
though it were to commence in futuro, would be within the exception in the statute
of frauds, if it did not exceed three years from the making.
A similar
argument in Lord Bolton v Tomlin (1836) 5 Ad & El 856 fared
little better, though the court in that case managed to avoid deciding, or even
expressing any opinion on, the point.
In Hand
v Hall (1877) 2 ExD 355 an agreement was made on January 26 1876 for a
tenancy until Midsummer 12 months from February 14 1876. It was held by the
Court of Appeal, reversing the Exchequer Division, that the agreement operated
as a devise within the exception in section 2 of the Statute of Frauds. As was
pointed out in Foa, The Relationship of Landlord and Tenant, 6th ed
1924, at p11, the decision of the Court of Appeal is consistent only with the
view that Ryley v Hicks was correctly decided, although that case
seems not to have been referred to and the contrary appears not to have been
argued.
The next case
to which I was referred is Foster v Reeves [1892] 2 QB 255. In
that case an agreement was made on May 12 1890 for a tenancy for three years to
commence on June 24 1890 and thereafter from year to year until determined. The
landlord sued to recover rent after the tenant had given up possession. It
seems to have been common ground that there was no lease at law, and the
argument in the Court of Appeal was as to the power of the county court, under
the legislation then in force, to grant specific performance of the agreement
under the rule in Walsh v Lonsdale (1882) 21 ChD 9. Each of the
judges, however, referred, albeit briefly, to the position at law. Lord Esher
MR said at p257:
When the
agreement is looked at, it is found that it assumes to create a tenancy for
three years to begin at a subsequent date. Such a tenancy can at common law
only be created by deed … If, therefore, we look to the common law alone, this
claim cannot be supported.
Fry LJ said at
pp258–259:
… it was a
sum which could be recovered in equity, provided the agreement under which it
was claimed was one that would be enforced by a court of equity. Independently
of this, there was no right to sue for it.
Lopes LJ said
at p259:
By the joint
operation of the Statute of Frauds and … [the Real Property Act 1845], a lease
for more than three years must be by deed. Here the agreement purports to
create a term of more than three years, and it is clear that rent could not, at
common law, have been recovered under that agreement.
At first, Mr
Walter was minded to argue that Lord Esher MR’s observations (though not, he
accepted, those of Lopes LJ) were authority for the proposition that a tenancy
to begin at a subsequent date could at law only be created by deed. On
reflection, and having considered Ryley v Hicks (1725) 1 Stranage
651, Mr Walter accepted that this was not what Lord Esher MR had meant. In my
judgment, Mr Walter was entirely correct to make that concession. When Lord
Esher MR said at p257 that ‘Such a tenancy can at common law only be created by
deed’, the tenancy he was referring to was, as the immediately preceding words
make clear, ‘a tenancy for three years, to begin at a subsequent date’
(emphasis supplied). Read thus, Lord Esher MR was making the same point as
Lopes LJ, and indeed the very same point that had been made by Lord Holt CJ as
long ago as 1699: a tenancy for three years to commence at a future date was
not within section 2 of the Statute of Frauds, and thus at law could only be
made in writing from 1677 or, from 1844, by deed. This was not because the
tenancy was to commence at a future date, for Ryley v Hicks shows
that, even after the enactment of the Statute of Frauds, there was nothing
objectionable in that. It was because the tenancy was to last for a period
expiring more than three years from the date of the agreement, and it had been
established by Rawlins v Turner (1699) 1 Ld Raym 736 that such a
lease fell outside the exception in section 2. There is, in my judgment,
nothing in Foster v Reeves to suggest that the Court of Appeal
was seeking to overturn established authority, although in that case, as
previously in Hand v Hall (1877) 2 ExD 355, Ryley v Hicks
seems not to have been referred to Foster v Reeves is, therefore,
in my judgment, no authority for the proposition that, after the enactment of
the Real Property Act 1845, a lease for less than three years to commence at a
future date could at law only be created by deed.
Be that as it
may, the matter appears to have been resolved the following year in Parker
v Briggs, a decision of the Court of Appeal reported only, and there
rather inadequately, in (1893) 37 Sol Jo 452:
the
appellants contend … that a parol lease to commence at a future date was in
point of law and in fact an agreement for a lease, and as such must be in
writing under section 4 of the Statute of Frauds, even though the lease agreed
to be granted were for a less period than three years (Edge v Strafford
1 Cr&J 391) … The court, however, decided against the appellants …, two of
the learned judges holding that it was possible to create a parol lease to commence
in the future (Ryley v Hicks Stra 651) …
Accordingly,
Mr Walter was, in my judgment, correct not to press the argument that, after
the enactment of the Real Property Act 1845, a lease to commence at a future
date, could at law only be created by deed, even if it would otherwise fall
within the exception in section 2 of the Statute of Frauds. The contrary is, in
my judgment, clear from the authorities to which I have referred. That Ryley
v Hicks (1725) 1 Stranage 651 remained good law until the coming into
force of the Law of Property Act 1925 appears, moreover, to have been the
general view of the commentators: see Halsbury’s Laws of England, 1st ed
1911, vol 18, at p384, para 830; Foa, The Relationship of Landlord and
Tenant, 6th ed 1924, at p11; Redman, The Law of Landlord and Tenant,
8th ed 1924, at pp121, 439–440.
It follows, in
my judgment, that prior to the coming into force of the Law of Property Act
1925 Mr Walter’s argument would have failed. So far as concerns the effect of
the exception in section 2 of the Statute of Frauds, Miss Hargreaves correctly
relies upon Rawlins v Turner (1699) 1 Ld Raym 736 and Ryley
v Hicks (1725) 1 Stranage 651 to make good her submissions. Unless,
therefore, the effect of section 54(2) of the Law of Property Act 1925 was, as
Mr Walter asserts, to change the law as previously laid down in Ryley v Hicks,
the tenancy document will, as it seems to me, constitute a ‘lease in writing’
for the purposes of para 5(1) of Schedule 1 to the Limitation Act 1980.
Before turning
to consider the meaning of section 54(2) there is another aspect of the Statute
of Frauds on which Mr Walter placed some reliance and to which I must briefly
advert. Cases such as Inman v Stamp (1815) 1 Stark 12, Edge
v Strafford (1831) 1 Cr&J 391 and Lord Bolton v Tomlin
(1836) 5 Ad & El 856 show that if there was an oral letting in futuro
for less than three years from the date of the agreement there was no remedy in
contract, though an action could be brought on the lease once possession had
been taken, so that what had previously been a mere interesse termini
had become an estate in the
such an oral transaction was caught, qua contract, by section 4 of the
Statute of Frauds but, falling as it did within the exception in section 2, was
not caught, qua lease, by section 1 of the Statute of Frauds. As Mr
Walter observes, the law as formulated in particular in Edge v Strafford
was unsatisfactory in treating very differently the enforceability of the same
transaction qua contract and qua demise. Given that the exception
in section 2 of the Statute of Frauds extended to oral demises, it could be a
fine point whether a particular oral transaction was a mere agreement, and thus
wholly unenforceable by virtue of section 4, or a demise, and thus effective qua
lease under the exception in section 2.
(b) Section 54(2)
As I have
already mentioned, the words ‘taking effect in possession’ which appear in
section 54(2) of the Law of Property Act 1925 were not to be found in section 2
of the Statute of Frauds. There appears to be no judicial authority as to the
effect (if any) of this change: certainly I was referred to none. The question
is canvassed by some of the commentators, though unhappily for Mr Long and the
council, who as a result have been driven to litigate the matter, the
commentators do not speak with one voice.
Foa, The
General Law of Landlord and Tenant, 7th ed 1947, at p10, puts the point
very clearly:
A parol lease
might be made under the exception in the Statute of Frauds to take effect in
futuro, provided that it came to an end within three years from the making
thereof (Ryley v Hicks (1725) 1 Stra 651). The present statute
seems to except only those taking effect immediately in possession.
The same view
is expressed in Megarry and Wade at p637, where it is said that:
A lease
taking effect in possession is to be contrasted with one taking effect in
reversion, eg a lease granted today to take effect in 19 days’ time …
Emmet on
Title, 19th ed 1986, vol 2, para 26.006 expresses
the same view as Megarry and Wade in very similar language. Hill and Redman’s Law
of Landlord and Tenant, 18th ed 1988, vol 1, at ppA264–265, paras
A[631][639], is to the same effect, drawing a distinction between
(a)
reversionary leases, that is leases to take effect in reversion at the time of
the grant, possession being postponed to a future date (which are outside the s
54(2) exception); and (b) leases which take effect in possession at once
but where the term is calculated from a future date (which are within the
exception).
These plainly
support Mr Walter’s argument. Miss Hargreaves referred me to the contrary view
expressed in Halsbury’s Laws of England, 4th ed 1994 reissue, vol 27(1),
at p87, para 78, where it says of section 54(2):
The three
years are computed from the day of the making of the lease; and, if the term
does not commence at once, it must expire, or be capable of expiring, within
three years from that day. [Rawlins v Turner (1699) 1 Ld Raym
736; Foster v Reeves [1892] 2 QB 255, per Lord Esher MR.]
The exception to the requirement of a deed is not confined to leases commencing
at the time they are made. [Ryley v Hicks (1725) 1 Stranage 651]
One’s
confidence in that view might be somewhat greater were it not for the fact that
the passage has remained unchanged since before 1925: compare Halsbury’s
Laws, 1st ed 1911, vol 18, at p384, para 830. Miss Hargreaves also referred
me to Woodfall’s Law of Landlord and Tenant, looseleaf ed 1994, vol 1,
at p5/2, para 5.003, where Ryley v Hicks (1725) 1 Stranage 651 is
still referred to as good authority, albeit not for the point at present in
issue. Again, the passage in question has remained virtually unchanged since
before 1925: compare Woodfall’s Law of Landlord and Tenant, 21st ed
1924, at p158. Moreover, elsewhere in the current edition the view appears to
be expressed that a lease takes effect in possession for the purposes of
section 54(2) only if it is to commence immediately and not at a future date:
Woodfall, vol 1, at p6/8, para 6.019.
The
preponderance of the commentaries therefore supports Mr Walter. That fact
though suggestive can hardly be decisive. There are, however, in my judgment,
three reasons why Mr Walter’s argument is indeed correct.
In the first
place, the words ‘in possession’, when used as part of the phrase ‘taking
effect in possession for a term not exceeding three years’, in my judgment, have
their normal legal meaning. They connote an estate or interest in the land
which is vested ‘in possession’ rather than merely vested ‘in interest’. This
reading is powerfully reinforced by the distinction drawn in section
205(1)(xxvii) of the Law of Property Act 1925 between a ‘term of years taking
effect in possession’ and a ‘term of years taking effect in reversion’. The
words ‘taking effect in possession’ in section 54(2) are, in my judgment, used
in the same sense in which those words are used in section 205(1)(xxvii) and
thus, and this is the critical point, in distinction to the words ‘taking
effect in reversion’. This, as it seems to me, demonstrates that, as Mr Walter
submits, reversionary leases were not intended to come within the ambit of section
54(2). Putting the same point rather differently, the words ‘taking effect in
possession’ are used in section 54(2) in such a way as to achieve the same
result as that contended for by Dampier J in Inman v Stamp when
he sought to argue that the exception in section 2 of the Statute of Frauds
applied only to leases ‘executed by possession’.
Second, it is
very difficult, if Miss Hargreaves’ argument is correct, to see what was the
purpose of including the words ‘in possession’ in section 54(2) at all. It is
implicit in her argument that the words ‘taking effect in possession’ in
section 54(2) are descriptive of the quality of the lease at the date when the
term commences and not of the quality of the lease at the date of the parol
grant. Given the definition of ‘possession’ in section 205(1)(xix) of the Law
of Property Act 1925, however, it would seem that any lease, even a concurrent
lease, must necessarily take effect ‘in possession’ at the date when the term
commences. So, if Miss Hargreaves is correct, the words ‘in possession’ add
nothing to what would otherwise be the effect of section 54(2).
The third
reason is, in my judgment, decisive. It will be remembered that those leases
which fell within the exception in section 2 of the Statute of Frauds were
defined, so far as is material for present purposes, as being
Leases not
exceeding the Term of Three Years from the making thereof.
In contrast,
those leases which fall within the exception in section 54(2) are defined, so
far as is material for present purposes, as being
leases taking
effect in possession for a term not exceeding three years.
It will be
seen that the three-year period referred to in section 2 of the Statute of
Frauds is not the same as the three-year period referred to in section 54(2).
Under the Statute of Frauds the three-year period was the period ‘from the
making’ of the lease, in other words the period of three-years from the date of
the parol grant. Thus, whether or not the language of section 2 implicitly
required the term of the lease to commence on ‘the making thereof’ (the point
on which Dampier J in Inman v Stamp thought that Ryley v Hicks
(1725) 1 Stranage 651 had been wrongly decided), the words ‘not exceeding the
Term of Three Years from the making thereof’ plainly meant that, as held by
Holt CJ in Rawlins v Turner (1699) 1 Ld Raym 736, no lease by
parol could be good which imported to convey an interest for more than
three-years from the time of the making. Under section 4(2), on the other hand,
the three-year period is the period of the term comprised in the lease.
Moreover, there has been omitted from section 4(2) any express reference to the
date of ‘the making’ of the lease. Thus, if Miss Hargreaves’ argument is
correct, there is no limit expressed in section 54(2) to the period which may
elapse before the lease ‘tak[es] effect in possession’, the only requirement
being that the lease, when eventually it does ‘tak[e] effect in possession’,
must be ‘for a term not exceeding three years’. On this footing the only limit
to the period which might elapse before the term ‘tak[es] effect in possession’
Property Act 1925.
Miss
Hargreaves, of course, recoils from going this far. Her argument acknowledges
that the term, whether it is to commence immediately or at some date in the
future, must not extend beyond three years from the date of the parol grant.
However it is impossible to find that limitation in the language of section
54(2) unless it is to be found, as I think it is to be found, in the crucial
words ‘taking effect in possession’, those words then being understood, as they
have to be understood, in the sense which I have already indicated. Indeed,
Miss Hargreaves comes very close to recognising how far the logic of her
argument drives her when she suggests that the restrictions on the grant of
reversionary leases are to be found in section 149 of the Law of Property Act
1925, and not in section 54(2). But this, in my judgment, is quite impossible.
There is simply no basis for suggesting that what parliament envisaged when it
repealed section 2 of the Statute of Frauds and enacted section 54(2) was the
grant of parol leases which might not come into effect for 21 years and might
not come to an end for 24 years. It makes sense to suggest, as is implicit in
Mr Walter’s argument, that parliament intended to clarify the law and, by
adopting Dampier J’s approach, to abolish the gloss to Rawlins v Turner
(1699) 1 Ld Raym 736 represented by the somewhat controversial decision in Ryley
v Hicks (1725) 1 Stranage 651. It is a very different thing indeed to
suggest that parliament intended to sweep away the basic principle articulated
in Rawlins v Turner and to widen so drastically the class of
leases excepted from the operation of what are now sections 52(1) and 54(1) of
the Law of Property Act 1925.
One final
comment on the matter is perhaps appropriate. As Mr Walter points out, the
effect of construing section 54(2) in the way for which he contends is to put
an end to the distinction, based on sections 2 and 4 of the Statute of Frauds
and illustrated by cases such as Edge v Strafford (1831) 1
Cr&J 391, of an oral letting in futuro being enforceable qua
lease, but not qua contract. If his construction of section 54(2) is
correct, the effect of the Law of Property Act 1925 was to make equally
unenforceable both an oral executory agreement to grant a lease (section 40)
and an oral attempt to grant a lease taking effect in possession in the future
(section 54(2)), and, accordingly, to put an end to the need to distinguish
between those oral transactions for a future tenancy which, as a matter of
construction, took effect as mere agreements, and were thus unenforceable by
virtue of section 4 of the Statute of Frauds, and those oral transactions
which, as a matter of construction, took effect as leases, and thus fell within
the exception in section 2 of the Statute of Frauds. It is tempting to think
that this was, indeed, parliament’s intention when it replaced section 2 of the
Statute of Frauds with section 54(2) of the Law of Property Act 1925, but the
temptation, which rests on mere speculation, must in my judgment be resisted.
Be that as it may, it is of some comfort to note that, accepting Mr Walter’s
submission, as I do, this is indeed the effect of the legislation.
Accordingly Mr
Walter is correct, in my judgment, when he submits that reversionary leases
conferring no immediate right to take possession are altogether excluded from
the ambit of section 54(2) of the Law of Property Act 1925 and that such
reversionary leases can take effect only if made by deed. It follows that the
tenancy document (which it is common ground was a reversionary lease not made
by deed and not conferring on Mr Long an immediate right to take possession)
was incapable of taking effect as a parol lease under section 54(2). Thus, as
Mr Walter submits, the tenancy which undoubtedly came into existence was not
one created by the tenancy document but rather one which arose by operation of
law. From this it follows, in my judgment, that the tenancy document is not a
‘lease in writing’ within the meaning of para 5(1) of Schedule 1 to the
Limitation Act 1980. Accordingly, and as a matter of law, Miss Hargreaves fails
in her first argument for striking out Mr Long’s claim.
Issue 2 —
the Landlord and Tenant Act 1954
Miss
Hargreaves’ second argument is based on the provisions of the Landlord and
Tenant Act 1954. She submits that Mr Long’s tenancy was a tenancy to which Part
II of the Landlord and Tenant Act 1954 applied. Section 24(1) of that Act
provides that:
A tenancy to
which this Part of this Act applies shall not come to an end unless terminated
in accordance with the provisions of this Part of this Act;
an event which,
she says, did not occur in the present case until the notice to quit given to
Mr Long in or about September 1983 expired on March 25 1984. She points out
that section 24(2) of the Landlord and Tenant Act 1954 does not include the
operation of the Limitation Act 1980 among the list of matters which,
notwithstanding section 24(1), are expressed not to prevent a tenancy to which
the Act applies coming to an end. In short, she submits, the effect of the
clear and mandatory language of section 24(1) is to make it impossible for the
tenant under a tenancy to which Part II of the Act applies to be in adverse
possession within the meaning of para 8(1) of Schedule 1 to the Limitation Act
1980 until such time as the tenancy has been terminated in accordance with the
provisions of Part II of the Act. The argument is entirely novel: neither Miss
Hargreaves nor Mr Walter was able to point me to any authority in which the
point has been canvassed let alone decided.
A similar
argument in the context of the Rent Acts was rejected in Moses v Lovegrove
[1952] 2 QB 533. I have to confess that my initial reaction to Miss Hargreaves’
argument reflected that of Sir Raymond Evershed MR when he said at p537:
Such a view,
if well founded is, I think, somewhat startling, for it would necessarily
follow therefrom that in a case of premises controlled or covered by the Rent
Restriction legislation, unless the statutory period under the Limitation Act, 1939,
had expired before they came under the control, no Limitation Act could ever
run in favour of the tenant, or could ever run at all, so long as the Rent
Restriction legislation remains on the statute book.
There is a
further reason for thinking such a conclusion surprising, and it was a reason
noticed by my brother Romer during the argument: the Rent Restriction
legislation is intended to protect tenants. If … [counsel] is right, it would,
in this instance, have the peculiar and oblique effect of preserving to the
landlord a right in respect of this property, which she would indubitably, on
the argument, otherwise have lost.
Miss
Hargreaves points out, however, that there is a fundamental difference between
the operation of the Rent Acts and the operation of Part II of the Landlord and
Tenant Act 1954. Whereas the Rent Acts do not prevent the termination of the
tenancy by a common law notice to quit, and thus confer on the protected tenant
no more than what has been described as a ‘personal status or statutory right
of irremovability’, Part II of the Landlord and Tenant Act 1954 continues the
common law tenancy, albeit with a statutory variation as to the mode of
determination. What Miss Hargreaves says as to the distinction between the two
statutory schemes of protection is, of course, entirely correct. For my part,
however, I doubt that the distinction which Miss Hargreaves draws really bears
upon the reasoning which underlay the decision of the Court of Appeal in Moses
v Lovegrove [1952] 2 QB 533 or that it is sufficient, for the purposes
of the proper application of the Limitation Act 1980, to justify distinguishing
the two types of case in the way she suggests.
Be that as it
may (and I wish to emphasise that I am expressing no final view on Miss Hargreaves’
submissions), there is, in my judgment, a fundamental flaw in her argument
which makes it impossible for her to succeed at this stage in the litigation.
This is that her argument assumes that Mr Long’s tenancy was a tenancy to which
Part II of the Landlord and Tenant Act 1954 applied at the material times.
However, Part II of the Act applies only to tenancies where the property
comprised in the tenancy is or includes premises occupied by the tenant for the
purposes of a business carried on by him or for those and other purposes:
section 23(1). Given the factual disputes between the parties to which I have
already referred, and the general paucity of the evidence at present before the
court, it would not, in my judgment, be appropriate to assume for the purposes
of this striking out application, as on Miss Hargreaves’ case to have to, that
Mr Long was at the material times occupying the whole or some part of the
premises for the purposes of a business being carried on by him.
Accordingly I
reject Miss Hargreaves’ second argument for striking out Mr Long’s claim.
Issue 3 —
acknowledgement
Miss
Hargreaves’ final argument is that Mr Long acknowledged the GLC’s title to the
premises in 1984, that is less than 12 years before the present proceedings
were commenced. In this connection she relies upon sections 29 to 31 of the
Limitation Act 1980. She accepts that the acknowledgement must be in writing.
She puts her case in two ways.
First, she
relies upon a letter dated January 12 1984 written to the GLC by Jones, Son
& Day, a firm of estate agents and valuers who Mr Walter accepts were
acting as Mr Long’s agents. The letter was in the following terms:
Long Brothers
Clemence
Street Site
11/19 &
21 Turners Road
We refer to
your letter of 14th September with enclosure. Since it would appear our clients
are entitled to compensation for disturbance we shall be obliged if appropriate
claim form be forwarded.
As our
clients would prefer alternative accommodation they ask if your Council have
any lock-up type store in the area to let of 500/600 square feet.
Neither the
letter of September 14 1983 nor its enclosure was in evidence before me. Both
seem to have been lost.
Deputy Master
Wall thought that the reference to compensation might have been to statutory
compensation following the service of a compulsory purchase order. Miss
Hargreaves was able to demonstrate to my satisfaction that this cannot have
been the case, and Mr Walter does not seek to argue the contrary. Miss
Hargreaves and Mr Walter are at one in accepting that the enclosure to the
missing letter of September 14 1983 was in all probability a notice to quit
served in accordance with Part II of the Landlord and Tenant Act 1954, and in
accepting that the reference to compensation in the letter of January 12 1984
was in all probability a reference to compensation payable under that Act. Mr
Walter, however, draws attention to the fact that, while the letter of January
12 1984 referred to two other properties in addition to the premises, namely 11
and 19 Turners Road, it referred to the letter of September 14 1983 as having
apparently contained only a single enclosure. Therefore, he says, it is not
shown with that degree of probability necessary to justify the striking out of
Mr Long’s claim, either that the letter of September 14 1983 contained a notice
to quit the premises, as opposed to a notice to quit one or other or both of
the other properties, or that the letter of January 12 1984 was written with
reference to the premises.
Furthermore,
says Mr Walter, the letter of January 12 1984 did not constitute an
acknowledgment of the GLC’s title to anything because it was not making any
definite assertion. The critical words ‘it would appear’ are, he says,
suggestive of no more than an inference derived from a document just received
rather than an assertion or admission of fact. The letter of January 12 1984
merely assumes for the sake of argument that something said in the missing
letter of September 14 1983 may be correct, but without acknowledging that it
necessarily is. It amounts, he says, to nothing more than a comment to the
effect that ‘on the basis of what you say in your letter, and assuming for the
sake of argument that it is correct, it would appear … ‘. The request for a
claim form cannot, he says, be read as an admission of anything. He points out
that it is difficult to construe the letter of January 12 1984 without knowing
what had been said in the letter of September 14 1983 and without knowing the
precise form of its enclosure. He relies upon the subjunctive use of the word
‘would’ which, he says, is not consistent with an unequivocal acknowledgment.
I can see the
force of Mr Walter’s arguments. The point, in a sense, is a short one, but at
the end of the day, and not having seen either the letter of September 14 1983
or its enclosure, I am not prepared to hold that the letter of January 12 1984
constituted an acknowledgment by Mr Long of GLC’s title to the premises.
In the
alternative, Miss Hargreaves relies upon the following letter written to the
GLC by Mr Long on March 1 1984:
As explained
to your dept on many times we are exempt from water rates, we have no toilets
no running water at all. One of your men came round and had a look at the
premises later part of last year to see for himself what I said was correct.
Miss
Hargreaves says, on the evidence I have seen no doubt correctly, that the GLC’s
practice was to collect water rates on behalf of Thames Water only in respect
of tenanted properties. Therefore, she says, the very fact that in 1984
the GLC were, as the evidence shows, trying to collect water rates from Mr Long
indicates that he must still have been paying rent to GLC for the shop. That
may or may not be so, but as I have already said the date when Mr Long last
paid rent is a matter which can only be resolved at trial. More to the point,
however, Miss Hargreaves submits that there would have been no purpose in Mr
Long approaching GLC with the complaint about the water supply set out in his
letter of March 1 1984 unless he had thought that GLC was responsible for the
water supply by reason of his tenancy. Therefore, she says, the letter of March
1 1984 constitutes an acknowledgment by Mr Long of the GLC’s title to the
premises.
Mr Walter says
that the letter of March 1 1984 cannot possibly be construed as an
acknowledgment of GLC’s title as freeholder. The only admission, he says, is
that the GLC were demanding payment of the water rate. I agree. It is, in my
judgment, nothing to the point that the GLC’s practice was to collect water
rates only from tenanted properties and that the GLC may therefore have thought
that Mr Long was their tenant. There is nothing in the evidence I have seen to
show that Mr Long either knew of the GLC’s practice or had any reason to
believe that the reason why the GLC were demanding payment of the water rates
was because they were treating him as their tenant. There is, in my judgment,
no warrant for Miss Hargreaves’ assertion that Mr Long must have thought that
the GLC were responsible for the water supply by reason of his tenancy.
Absent knowledge of the GLC’s practice, there is any number of reasons why
someone in Mr Long’s position may have thought that the GLC, a local authority
exercising many public functions, was responsible for collecting water rates.
Acknowledgment by Mr Long that the GLC had some form of responsibility for the
water supply to the premises cannot of itself and without more ado, in my
judgment, constitute an acknowledgment by him of the GLC’s title to the land.
Someone like Mr Long is as likely to have thought that the GLC were exercising
their functions as local authority as to have thought that their involvement
was as owner of the land.
Conclusion
Accordingly,
in my judgment, Miss Hargreaves has failed to make out any of the grounds she
relies upon to justify striking out Mr Long’s claim. It may be that, at trial,
she will succeed in making good one or other of the matters on which I have
held there to be triable issues. But she has failed to show, as she must if it
is to be struck out at this stage, that Mr Long’s claim is doomed to fail. Mr
Long is entitled to go to trial to have his claim determined.
It follows, in
my judgment, that Mr Long’s appeal must be allowed. I shall therefore set aside
the order made by Deputy Master Wall on September 26 1995 and dismiss the
summons issued by the council on March 21 1995.
Appeal
allowed.
