Validity of notice — Tenancy of uncertain duration — Land let until highway authority requiring it “for road-widening purposes” — Condition never effected — Present landlord not a highway authority — Whether grant bad for uncertainty — Whether periodic tenancy to be implied — Whether termination condition repugnant to periodic tenancy — Whether notice to quit valid — Tenant’s appeal allowed
In December 1930, the London County Council acquired from N a small strip of land fronting 263-265 Walworth Road, London SE17, when they contemplated widening the road. They then leased it back to N together with a right to put a temporary building on it until such time as the “land is required by the council for the purpose of the widening of Walworth Road…” (clause 6). By clause 1, the tenant was to pay £30 pa payable quarterly.
N’s interest became vested in the Prudential Assurance Co Ltd, which in 1975 sublet the premises to the London Electricity Board, still currently in occupation. The proposal to widen the road was never carried into effect. The LCC’s rights became vested in the GLC, as the successor to the LCC, and then in the London Residuary Body, which was not a highway authority. The LRB sold the land to the defendants in 1988, but prior to the sale the LRB purported to serve a notice under section 25 of the Landlord and Tenant Act 1954 determining the Prudential’s interest. It was common ground that the notice was not effective under section 25.
On the issue whether, treated as a common law notice to quit, it was effective to determine the tenancy created under the agreement of December 1930, Millett J in the High Court [1991] 1 EGLR 90; [1991] 25 EG 120 upheld the notice to quit that had been served by the LRB.
He held, inter alia, that the agreement granted the tenant a periodic yearly tenancy and not a tenancy for a fixed but uncertain term; that clause 6 imposed a restriction on the landlord’s right to serve a notice to quit terminating the periodic tenancy, but that the restriction was not repugnant to the nature of the yearly tenancy and was valid (see decisions of the Court of Appeal in Re Midland Railway Co’s Agreement [1971] Ch 725 and Ashburn Anstalt v Arnold [1987] 2 EGLR 71; (1987) 284 EG 1375); that the clause 6 restriction on the landlord’s right to serve a notice terminating the yearly tenancy fell away once the landlord and the highway authority were different bodies — when that state of affairs arose clause 6 ceased to have any effect. The Prudential appealed to the Court of Appeal.
Held The appeal was allowed.
1. Clause 1 of the 1930 agreement specified the date of commencement of the tenancy but not the date of termination. Clause 6 contained the termination provisions. The judge had construed clause 6 as modifying the landlord’s right to serve a notice to quit, but it had nothing to do with such notices, which were optional notices. Clause 6 obliged the landlord to give the notice and was dealing with the duration of the tenancy. Once the land was required by the council for their statutory road-widening purposes, the tenancy was to come to an end. Accordingly, clauses 1 and 6 proposed to grant a tenancy for a term of uncertain duration.
2. On the question of whether the law would recognise the grant of a tenancy until the land was required for road-widening purposes, the case of Lace v Chantler [1944] KB 368 led to the inescapable conclusion that a grant of such a tenancy could not take effect as a good grant. In that case the Court of Appeal held that the grant of a tenancy for the duration of the war was bad as the termination date was of uncertain duration. Re Midland Railway was authority for the proposition that the “uncertainty of term” principle, applied in Lace v Chantler, was not applicable to periodic tenancies; and that a fetter on a periodic tenancy of the right of one or other party to serve a notice determining the tenancy was not to be rejected if the fetter fell short of preventing the party from ever determining the tenancy. In Ashburn Anstalt the Court of Appeal held that where a tenancy could have been brought to an end by the tenant at any time and could have been brought to an end by the landlord upon the occurrence of an event in the power of the landlord to control, there was no reason why the court should not hold the parties to the agreement. The court distinguished Lace v Chantler on the basis that in that case the duration of the war could not be predicted and there was no provision for either party to bring the tenancy to an end before the war ended and that event might be very hard to pinpoint. However, the present case was governed by Lace v Chantler unless it was one where the uncertain duration of the term could be controlled by both parties, as in Ashburn. In the present case, as in Lace v Chantler, the maximum duration of the tenancy purported to be granted was uncertain and in neither was a periodic tenancy granted.
3. As the original tenant and his successors had paid the rent provided by the agreement and the rent was accepted by successive landlords, once the tenancy which the agreement purported to grant was bad, a tenancy from year to year was implied on those terms that were consistent with such a tenancy. Clause 6 of the agreement showed the intention that the tenant should not give up the tenancy until the land was required for road widening. The implied tenancy from year to year should incorporate a corresponding fetter on the right of the landlord to terminate that tenancy. Re Midland Railway was binding authority for the proposition that the fetter would not be repugnant to the inherent nature of a periodic tenancy and would be valid.
4. It was not open to the LRB to serve notice determining the tenancy under which the Prudential, as successors in title to N, held the land comprised in the 1930 agreement. The tenancy from year to year under which the land was held included an implied provision that notice to quit might not be served by the landlord until the land was required for road-widening purposes.
David Neuberger QC and Paul le Chevalier de la Piquerie (instructed by the solicitor to the Prudential Assurance Co Ltd) appeared for the tenant; and Robert Reid QC and Stephen Lloyd (instructed by Clifford Watts Compton) appeared for the landlord.
