Landlord and tenant — Assignment — Whether a deed necessary for an effective assignment of an oral periodic tenancy — Held, a deed was necessary
appellant, Mrs Julian, and her husband lived in a flat which they rented on an
oral weekly tenancy from the plaintiff landlord — The tenancy was originally
held in the sole name of Mr Julian — In 1982 Mr and Mrs Julian were divorced
but Mr Julian, although he left the flat, took no steps to transfer the tenancy
— In their matrimonial proceedings Mr Julian gave an undertaking to do all acts
and things as may be necessary to transfer to Mrs Julian the tenancy of the
flat — No steps were taken as they assumed that the effect of that undertaking
was to transfer Mr Julian’s interest in the flat to his wife — Mrs Julian
remained in the flat and paid the rent — In October 1987, following a request
by Mrs Julian, the landlord’s agents refused to transfer the tenancy into her
name and refused to accept further payments of rent — In February 1988 the
landlord served notice to quit on Mr Julian terminating his tenancy and,
because he was no longer in possession, he did not become entitled to any
statutory protection — In May 1990, following proceedings issued by the
landlord, Judge MacNair (in Lambeth County Court) made an order for possession
— Mrs Julian appealed
an insuperable obstacle for a person in the position of Mrs Julian — The
tenancy had not been disposed of in writing — The statutory language leaves no
room for reaching a different conclusion — The exception in section 52(2)(d)
of the 1925 Act that no deed is required for the creation of leases or
tenancies not required by law to be made in writing does not apply to an assignment
of a lease — Accordingly, to be effectual as a legal assignment, a transfer of
Mr Julian’s tenancy should have been by way of deed
The following
cases are referred to in this report.
Botting v Martin (1808) 1 Camp 317
Pocklington
(Thomas) Gift Trustees v Hill [1989] 2 EGLR
97; [1989] 36 EG 87; (1989) 21 HLR 391
Rye v Rye [1962] AC 496; [1962] 2 WLR 361; [1962] 1 All ER 146,
HL
This was an
appeal by the defendant, Mrs Julian, who lived in a first-floor flat at 55
Hollingbourne Road, London SE24. The flat had been let on a weekly tenancy by
the plaintiff, Mrs Crago, to Mrs Julian’s former husband, Mr Julian.
David Phillips
(instructed by Philcox Gray & Co) appeared for the appellant; Guy
Fetherstonhaugh (instructed by Stafford Young Jones) represented the
respondent.
Giving
judgment, SIR DONALD NICHOLLS V-C said: Mrs Julian has lived in a rented
flat on the first floor, 55 Hollingbourne Road, London SE24, since early 1966.
She lived there with her husband, and subsequently with their children, from
the time of their marriage in March 1966. The flat was rented on a weekly
tenancy from the plaintiff, Mrs Crago. The flat was the Julians’ matrimonial
home and, although it was in the sole name of Mr Julian, they assumed that the
tenancy belonged to them jointly.
In 1982 Mr and
Mrs Julian were divorced. Mr Julian left the flat and had nothing further to do
with it. In the matrimonial proceedings he gave an undertaking:
. . . within
14 days of the granting of the Decree Absolute herein to do all acts and things
as may be necessary to transfer to the Petitioner the tenancy of the flat
situate at 55 Hollingbourne Road, London SE24 and which Tenancy is presently
vested in his sole name.
Nothing was
done to transfer the tenancy. Mr and Mrs Julian assumed that nothing further
needed to be done. They assumed that the effect of the document was to transfer
Mr Julian’s interest in the flat to his wife.
Mrs Julian
stayed in the flat. The two children grew up and eventually left. Mrs Julian
paid the rent. She alone dealt with the managing agents. She spent substantial
sums of money on the flat in the belief that she was a protected tenant. New
rent books were issued by the agents, one in February 1983 and another in
November 1986, both naming Mr Julian as the sole tenant. In 1987 Mrs Julian
experienced some difficulty with housing benefit. She wrote to the managing
agents and asked them to change the name of the tenant shown in the rent book
from her former husband to herself. She thought there would be no difficulty
about this. She wrote:
Could I now
have the tenancy (of 55 Hollingbourne Rd) changed over to my name please. If
you still need a letter from my ex-husband, it could be arranged. . . . P.S.
Here is a copy of the divorce paper stating transferring the tenancy to me. Thanking
you.
That was on
October 8 1987.
Unfortunately
for Mrs Julian, the agents were not willing to do this. They refused to accept
further payments of rent from her. Until they received this letter the agents
did not know that Mr Julian had moved away and given up all interest in the
tenancy. A few months later they served on Mr Julian a notice to quit dated
February 18 1988, terminating his tenancy from March 14 1988. Because he was no
longer in possession, he did not become entitled to any statutory protection.
Proceedings against Mrs Julian, seeking possession of the flat, were begun by
Mrs Crago in Lambeth County Court on March 28 1988. The trial took place before
Judge MacNair and he gave judgment in favour of the lessor, Mrs Crago, on May
17 1990.
There were
several issues before the judge. He held, first, that the contractual tenant
was Mr Julian alone; second, that the tenancy was never assigned to Mrs Julian;
third, that the tenancy was not determined until the expiry of the notice to
quit in March 1988; and, fourth, that the plaintiff was not estopped, by the
conduct of herself or her agents, from claiming possession from Mrs Julian. On
this appeal, brought by Mrs Julian, only the second of those four
determinations is being challenged. That is the only issue before us in this
court. Counsel for Mrs Julian accepted that for him to succeed on this appeal
he must establish that, before the notice to quit expired, Mr Julian had
assigned the tenancy to his former wife.
On the issue
of assignment the judge found that the tenancy did not include a term
prohibiting assignment. But he decided against Mrs Julian on two grounds:
first, that as a matter of law, the tenancy could be assigned only by deed and,
second, that even if an assignment could be made orally, there were here no
words or conduct which could give rise to an assignment. The judge reached his
overall conclusion with reluctance. He said that the consequences for Mrs
Julian, if she lost, were very serious. No reason had been given by Mrs Crago
for wishing to get Mrs Julian out of the flat which for so long had been her
home and Mrs Julian’s lack of statutory protection stemmed simply from these
parties, inexperienced in legal matters, not having executed a formal deed of
assignment of the tenancy. Had either Mrs Julian or her former husband realised
a deed was necessary, there would have been no difficulty in getting one drawn
up by a solicitor and executed by them.
I turn, first,
to the question of law: could this tenancy be assigned effectively only by
deed? I can start with the summary of the
law set out in Megarry and Wade on the Law of Real Property, 5th ed,
p665:
A legal
lease, once created, can be transferred inter vivos only by deed, in
accordance with the general rule. This applies to all legal leases, even those
created orally, eg a yearly tenancy. However, on principles similar to those
applicable to the creation of leases, an oral or written assignment will be
effective in equity as between the assignor and the assignee as a contract to
assign, if sufficiently evidenced by writing or part performance.
In the present
case nothing less than an assignment at law will assist Mrs Julian. The view
stated in Megarry and Wade is also expressed in all the other leading
textbooks on this subject. Undaunted, Mr Phillips contended that these views
are erroneous. The general rule mentioned by Megarry and Wade is a
reference to certain provisions in the Law of Property Act 1925. Mr Phillips
submitted that, properly interpreted, these provisions do not preclude a valid
assignment otherwise than by deed of a lease which has been created orally. The
statutory provisions are to be found in Part II of the Law of Property Act
1925. The material parts of the relevant sections, sections 52 to 54, provide:
52.–(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–
(a) assents by a personal representative;
(b) disclaimers made in accordance with section
54 of the Bankruptcy Act 1914 or not required to be evidenced in writing;
(c) surrenders by operation of law, including
surrenders which may, by law, be effected without writing;
(d) leases or tenancies or other assurances not
required by law to be made in writing;
(e) receipts not required by law to be under
seal;
(f) vesting orders of the court or other
competent authority;
(g) conveyances taking effect by operation of
law.
53.–(1) Subject to the
provisions hereinafter contained with respect to the creation of interests in
land by parol —
(a)
no interest in land can be created or disposed of except by writing signed by
the person creating or conveying the same, or by his agent thereunto lawfully
authorised in writing, or by will, or by operation of law;
54.–(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.
This is a
hotchpot of sections reproducing, with some amendments, provisions which before
1925 were to be found in the Statute of Frauds 1677 and the Real Property Act
1845. I consider section 53 first. The grant of a tenancy is the creation of an
interest in land. An assignment of a tenancy of land is the disposal of an
interest in land. Thus, both the grant of a tenancy and the assignment of a
tenancy fall four-square within section 53(1)(a). A tenancy of land
cannot be created or assigned save by writing, or by will, or by operation of
law. Para (a), however, is expressed to be ‘subject to the provisions
hereinafter contained with respect to the creation of interests in land
by parol’ (emphasis supplied). Section 54(2) is such a provision. Section 54(2)
provides that the statutory requirements of Part II of the Act do not affect
‘the creation’ by parol of leases taking effect in possession for a term not
exceeding three years at a full market rent. I pause to observe that, thus far,
there can be no doubt as to the meaning of the statutory provisions: interests
in land cannot be created or disposed of except in writing, but a lease in
possession at a market rent for up to three years can be validly created
orally. Hence, and this is to be noted, the effect of these statutory
provisions is indubitably to draw a distinction between the manner in which a
short lease may be created and the manner in which it may be assigned.
The point is
not wholly free from authority. Section 53(1)(a) derives from section 3
of the Statute of Frauds and section 54 derives from sections 1 and 2. In Botting
v Martin (1808) 1 Camp 317, Serjeant Best argued that by the leases
mentioned in section 3, as requiring to be assigned in writing, must be
intended such leases as are required by sections 1 and 2 to be created in
writing, viz, leases conveying a larger interest to the party than a term for
three years. He submitted:
As a lease
from year to year could be originally made by parol, there was no reason why it
might not be assigned by parol; and the words of the statute would bear this
interpretation, which was clearly consistent with its general import.
McDonald CB
rejected the submission.
In my view,
section 53 provides an insuperable obstacle for Mrs Julian in the present case.
Like McDonald CB, I consider the statutory language really leaves no room for
reaching a different conclusion, even though the result is the curious
distinction I have mentioned. Even if there were room for doubt I would be slow
to upset an interpretation of statutory provisions which has been accepted by
conveyancers for a very long time.
This
conclusion is sufficient to dispose of this appeal, because here there was no
assignment in writing. However, I do not think I should leave the arguments of
law there, given the existence also of section 52. One of the arguments
advanced by Mr Phillips, if correct, would have the effect that, although
section 53(1)(a) requires writing for the assignment of an orally
created tenancy, section 52 does not apply. Such an assignment does not require
to be made by deed.
This
submission raises a point on the interpretation of section 52, which seems not
to have been the subject of decision. I see force, as a matter of common sense
and practicality, in the arguments of Serjeant Best in Botting v Martin.
But, as I have already said, the language of sections 53 and 54 does not admit
of that interpretation. Quite apart from section 52, the law imposes a formal
requirement on the assignment of an orally created lease which does not apply
to its creation. With that in mind, I can see no justification for interpreting
the exception in section 52(2)(d) as applicable to the assignment of leases
not required to be in writing as well as to their creation. Section 52 (1) must
be read with the definition of ‘conveyance’ in section 205. It bites on
particular types of transactions effected by instruments in writing (see Rye
v Rye [1962] AC 496): conveyances, mortgages, leases and so forth. They
are void, for the purpose of conveying or creating a legal estate, unless made
by deed. Section 52(2) then excepts from the requirement of a deed certain
instruments: for example, assents by a personal representative, certain
disclaimers, surrenders by operation of law and (para (d)) leases or
tenancies not required by law to be made in writing. That is the ambit of the
exception. In the case of leases, the exception does not touch anything other
than the lease itself. Subsequent dispositions of the lease, whether by way of
mortgage, charge, assignment or otherwise, are not within para (d),
unless they themselves qualify as ‘other assurances not required by law to be
made in writing’. An assignment of a lease does not so qualify.
I am confirmed
in this construction of section 52 by the terms of its ancestor section,
section III of the Real Property Act 1845. So far as material, this provided as
follows (for ease of reading I have numbered the separate limbs):
. . . [1] a
lease, required by Law to be in Writing, of any Tenements or Hereditaments, and
[2] an Assignment of a Chattel Interest . . . in any Tenements or
Hereditaments, and [3] a Surrender in Writing of an Interest in any Tenements
or Hereditaments . . . not being an Interest which might by Law have been
created without Writing . . . shall also be void at Law, unless made by Deed .
. .
A ‘chattel
interest’ in land is a reference, in modern terminology, to a leasehold
interest. This harks back to the old classification whereunder an interest in
land for a term of years was classed as a chattel: a chattel real. Again, the
wording of this section leaves no room for doubt. A clear distinction is drawn
between leases and assignments of leases. In the former case, but not the
latter, there is an exception for leases not required by law to be in writing.
In my view,
therefore, the law concerning the need for a deed is correctly stated in Megarry
and Wade. To be effectual as a legal assignment, a transfer of Mr Julian’s
tenancy required to be by way of deed.
Mr Phillips
sought to place some reliance on the decision of this court in Thomas
Pocklington’s Gift Trustees v Hill (1989) 21 HLR 391.* There the court based its decision on a
finding of an oral assignment of a periodic tenancy. But, so far as one can
see, the attention of the court was not drawn to the provisions of the Law of
Property Act. No argument seems to have been addressed to the court on sections
52 to 54, nor is the need for a deed mentioned or alluded to in the judgments.
This case, therefore, is in no sense an authority on the interpretation of
those sections. All that can be said is that it seems to have been assumed on
all sides that a deed was not necessary. But that is not a decision by the court
on the point.
*Editor’s
note: Also reported at [1989] 2 EGLR 97.
This appeal,
therefore, must fail. The judge’s decision was correct. Accordingly, I shall
not prolong this judgment by considering whether there was a purported oral
assignment in the present case, beyond observing that I should not be taken as
necessarily agreeing with the judge’s conclusion on this issue. As it is,
however, I would dismiss this appeal. Mrs Julian never became the tenant. Of
course, a deed would not have been necessary if Mrs Crago or her agents had
expressly or impliedly agreed to Mrs Julian’s becoming the tenant and
had accepted her as the tenant in place of her former husband. There could then
have been a new tenancy, which could have been created orally. Unfortunately
for Mrs Julian, that never happened.
RUSSELL and LEGGATT LJJ agreed and did not add anything.
