Time ran against a landlord who had allowed an oral periodic tenancy to continue after the tenant stopped paying rent
A tenant cannot usually acquire a title against his landlord during the currency of the lease. However, tenants who remain in possession for long enough after their leases have ended, without paying rent, may establish a possessory title to the land.
Mitchell v Watkinson [2013] EWHC 2266 (Ch); [2013] PLSCS 190 is an important decision on the meaning and effect of provisions in Schedule 1 of the Limitation Act 1980. Paragraph 5 provides that time begins to run against a landlord from the end of the first year or other period of an oral periodic tenancy. Consequently, a tenant under an oral periodic tenancy will bar his landlord’s title if he ceases to pay rent for 12 years.
It has long been established that this is so even though the tenant is protected by the Rent Acts: Moses v Lovegrove [1952] 2 QB 533. The statutory provisions contained in the Rent Acts constitute a “barrier” to the landlord’s right to recover possession, but do not alter the character of the tenant’s possession to convert what is adverse possession into permissive possession.
Logically, this ought to be the case in respect of business tenants too. The judge certainly thought so in Long v Tower Hamlets London Borough Council [1997] 05 EG 157, but did not need to decide the point to dispose of the proceedings before him. The judge in Onyx (UK) Ltd v Beard [1996] NPC 47 wondered whether this was right, but there was no firm decision to which we could refer until Perry v New Islington & Hackney Housing Association (14 January 2004). In that case, the county court dismissed the tenant’s claim that he had been in adverse possession of the land.
The decision in Perry has been doubted in one of the leading text books on the law of adverse possession and appears to have fallen by the wayside as a result of the High Court decision in Mitchell. The litigation concerned land that was let to a cricket club under an oral yearly tenancy. The tenancy was created by the payment and acceptance of rent, but the terms of the lease were evidenced in writing. However, the document in question did not itself create the tenancy and, because there was no “lease in writing”, the provisions of paragraph 5 of Schedule 1 of the 1980 Act were in play: Moses.
The last payment of rent was made in October 1974, but the landlord had never served a notice to quit. However, paragraph 5 treats an oral periodic tenancy as being determined at the end of the first period of the tenancy. Consequently, the landlord’s right of action for possession for the purposes of the 1980 Act is also treated as having accrued at that date – or, if later, the date of the last receipt of rent.
The judge considered the law carefully and concluded that the operation of the Landlord and Tenant Act 1954 was beside the point. Time had begun to run against the landlord in 1974, even though it had never taken any steps to determine the lease, irrespective of how the tenancy could, or should, have been determined.
The decision is a stark reminder of a rule that it is all too easy to overlook. At the end of an oral periodic tenancy, possession by the tenant moves, for Limitation Act purposes, from being possession with the landlord’s consent to adverse possession.
Allyson Colby, property law consultant
