Landlord and tenant – Joint tenancy – Notice to quit – Appellant and respondent joint tenants of agricultural and commercial land – Appellant wishing to serve notice to quit to obtain new lease in name of company – Respondent obtaining interim injunction restraining service of notice to quit – Appellant appealing – Whether service of notice to quit by one of two or more joint tenants of periodic tenancy for personal benefit constituting breach of trust – Appeal allowed in part
The appellant and the respondent were joint tenants of land at Fir Tree Farm of which J was the landlord. They held: (i) an agricultural tenancy of farm land, commencing in March 1988 and continuing from year to year as a periodic tenancy, protected under the Agricultural Holdings Act 1986; and (ii) a commercial tenancy granted in December 2005 for a term of 12 years, but continuing thereafter as a periodic tenancy, protected under the Landlord and Tenant Act 1954.
On 23 March 2021 the appellant, J and a company (of which the appellant and his wife were the sole directors and shareholders), entered into a new tenancy agreement under which notices to quit would be served under both tenancies and J would grant the company tenancies of the agricultural and commercial land on expiry of the notices under the respective tenancies.
The respondent argued that that would constitute a breach of trust by the appellant and obtained an interim injunction restraining him from serving notices to quit in respect of both leases.
The appellant sought to appeal on the grounds that: the decision in Hammersmith and Fulham London Borough Council v Monk [1992] 1 EGLR 65 provided binding authority to the effect that one of two or more joint tenants of a periodic tenancy that served a notice to quit would not be acting in breach of trust if they did so in return for a personal benefit; and there was no authority on that issue, and the position was uncertain so that it was appropriate to grant permission to appeal.
Held: The appeal was allowed in part.
(1) Whereas in general all co-owners (at law) of a tenancy had to act unanimously in order to carry out an effective positive act in relation to the tenancy, in the case of a periodic tenancy the estate only continued so long as it was the will of both parties that it should continue. Accordingly, it was the continuation of the tenancy that was the positive act in relation to the tenancy, so that a notice given by one of the co-owners was effective to terminate the tenancy.
The fact that the joint tenants of a periodic tenancy were, by reason of their co-ownership of the tenancy at law, trustees for sale under the Law of Property Act 1925, or trustees based on their co-ownership under the Trusts of Land and Appointment of Trustees Act 1996, did not alter the position.
(2) While there were circumstances in which a joint tenant of a periodic tenancy might owe trust duties which would preclude them from serving a notice to quit, that depended on the existence of factors (such as an agreement between the tenants that the property would be used for a particular purpose, or that the property was held on trust for a partnership) that gave rise to trust duties that went beyond those of a bare trust under the 1925 or 1996 Acts.
Where a party was a trustee only by reason of their co-ownership with another joint tenant under a periodic tenancy (ie, there was merely a bare trust for sale or trust of land), the trustee was neither precluded from serving a notice to quit on the landlord nor from doing so for the purpose of acquiring a new lease of the property for themselves: Crawley Borough Council v Ure [1996] QB 13, Notting Hill Housing Trust v Brackley [2001] 3 EGLR 11 and Procter v Procter [2022] EGLR 26 considered.
The decision in Monk was not inconsistent with the possibility of the court granting an injunction to compel one or more joint tenants at law to serve a counternotice, if the equitable considerations under the trust for sale so dictated. An example was where the trust on which the joint tenants held the property, by reason of the agreement that one of the joint tenants would continue to remain in occupation of the property, contained fiduciary obligations beyond those of a bare trust for sale or trust of land: see Cork v Cork [1997] 1 EGLR 5.
(3) The starting point in considering whether additional duties were owed was the pleading. The only pleaded basis for a trust was the fact of co-ownership of the periodic tenancies. No other legal basis for any other fiduciary duties had been pleaded; nor any pleading of facts which might have given rise to fiduciary duties over and above those inherent in a bare trust for sale.
The only factual foundation for the imposition of any duties as trustee was the fact of co-ownership of the periodic tenancies. That was insufficient to give rise to the duties on which the respondent sought to rely.
On the basis of the pleading and evidence before the court, there was no serious issue to be tried that the appellant owed trust duties to the respondent which precluded him from serving a notice to quit, whether for the purpose of acquiring a new lease of the commercial land and/or the agricultural land. It followed that the judge erred in concluding that there was a triable issue.
Monk, which was concerned only with the validity of a notice between the joint tenants and the landlord, was not itself binding authority for the proposition that one of two or more joint tenants would not be acting in breach of trust in serving a notice to quit, even if the purpose in serving the notice was to obtain a personal benefit.
(4) Although there was no authority directly in point, there was in fact authority which compelled the conclusion that in the case of a bare trust for sale/trust of land one of two or more joint tenants would not be acting in breach of trust in serving a notice to quit, even if done to obtain a personal benefit: Procter considered.
Since there was no pleaded or evidential basis before the court to suggest any reason other than the mere fact of co-ownership as the foundation for trust duties being owed by the appellant, the interim injunction would be dismissed.
Kerry Bretherton QC and Katie Gray (instructed by Loxley Solicitors Ltd) appeared for the appellant; George Woodhead (instructed by Nelsons Solicitors) appeared for the respondent.
Eileen O’Grady, barrister
