Four-month business tenancy excluded from Landlord and Tenant Act 1954 – Tenant purporting by oral agreement to sublet to defendant for term of not less than 16 months – Freeholder claiming possession – Defendant claiming benefit of sublease protected by 1954 Act – Whether defendant took no more than residue of tenant’s interest by way of assignment – Whether alleged assignment subject to formality provisions of Law of Property Act 1925 – Judgment for freeholder
On 4 December 1997 the plaintiff granted to M Ltd a lease of land in Battersea for a fixed term expiring on 31 March 1998, having taken the necessary steps to exclude so much of Part II of the Landlord and Tenant Act 1954 (the Act) as would otherwise have brought about a continuance of the tenancy after the expiry date. On or about 18 December 1997 M Ltd reached an oral agreement with the defendant (H) permitting him to occupy the land for the purpose of his business at a monthly rent of £300. It was a term of the agreement that M Ltd would not serve a notice to quit expiring before 31 March 1999. H remained in occupation after the expiry of the lease to M Ltd, and resisted the plaintiff’s claim to possession on the ground that his tenancy was one to which the Act applied.
It was common ground that the Act would apply if the relationship between the parties was one of landlord and subtenant. However, the plaintiff, relying mainly on Milmo v Carreras [1946] KB 306, contended that the disposition effected by M Ltd, being for a period equal to or (in the instant case) exceeding the residue of the headlease could only take effect as an assignment. H contended that, although writing was not necessary for the creation of a short tenancy of the kind that he had taken (see section 54(2) of the Law of Property Act 1925), there could be no assignment as such without complying with the formalities prescribed by sections 52 and 53 of the 1925 Act. The plaintiff’s response was that those sections had no application, because an assignment that took effect under the rule applied in Milmo (supra) was not an express assignment, but, rather, an assignment by operation of law.
Held: H had taken an assignment.
It was plain from the reasoning in Milmo that where an assignment of the kind there considered took place, it did so by operation of law: see also Preece v Corrie (1828) 5 Bing NC 24. If the question had turned solely on the operation of section 52 of the 1925 Act, the plaintiff could not have relied on the exemption of “conveyances taking effect by operation of law”, as there was no “conveyance” as defined by section 205 of the Act: see Rye v Rye [1962] AC 496. However, the plaintiff could rely on section 53(1)(a) of the Act, as it clearly contemplated that an interest in land might be created or disposed of by operation of law. Moreover, it was immaterial that H did not have the benefit of a specifically enforceable contract to assign the lease. The Milmo rule was brought into operation by the very fact that the tenancy agreement, but for the length of the headlease, would have been effective under section 54(2) to create a legal estate. For that reason, H derived no assistance from the contractual formalities prescribed by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.
Timothy Dutton (instructed by Cameron McKenna) appeared for the plaintiff; Thomas Jefferies (instructed by Payne Hicks Beach) appeared for the defendant.
Alan Cooklin, barrister
