Landlord and tenant – Notice to quit – Registration gap – Appellant purchaser of agricultural land purporting to serve notice to quit on respondent tenant after transfer of title but before registration at Land Registry – County court ruling notice invalid – Whether judge erring in law – Appeal dismissed
The respondent had an oral agricultural tenancy of about 18 acres of land at Ashton-on-Stodday, near Lancaster. The first appellant became the registered proprietor of the holding. Sometime later the first appellant sold off just under an acre (in respect of which the respondent’s tenancy came to an end), reducing the holding to about 17.46 acres. By a contract completed on 19 June 2013, the first appellant sold another small part of the holding, being about 0.114 acres, to the second appellant which became the registered proprietor of on 16 July 2013.
An issue arose concerning “the registration gap”, ie the period between when the legal process of transferring the title to the plot was completed as between vendor and purchaser and when the transaction was entered on the register of title at HM Land Registry, thereby effecting the transfer under section 27(1) of the Land Registration Act 2002. The second appellant’s purchase had not been processed by the Land Registry when, on 1 July, the second appellant served the respondent tenant who farmed some of its land with notices to quit, even though the land had not yet been registered to it.
The respondent challenged the notice on the basis that it was not good in law because, among other things, at the time of serving the notices the second appellant was not the registered owner of the land. Although the notices to quit were served under the Agricultural Holdings Act 1986, it was common ground that each had to be valid at common law which meant that the notice to quit had to be given by the person entitled to the landlord’s reversionary estate in relation to the whole of the land comprised in the tenancy. Since no valid notice had been given in relation to the plot, notice to quit had not been given in relation to all of the land comprised in the holding.
The county court held that the second appellant’s notice to quit was invalid. The appellants appealed.
Held: The appeal was dismissed.
(1) There was a well-established and coherent body of law in support of the proposition that where a legal right to bring a tenancy to an end by notice to the tenant was being exercised, it was the person in whom the reversionary estate was vested who had to give the notice. For the purpose of giving notice to quit, the landlord was the person who was legally entitled to the reversion and a person entitled in equity might not serve a notice to quit. A notice to quit would be invalid if served by a person with an equitable interest, eg the disponee of a registered estate pending registration. Under section 27(1) and 74 of the Land Registration Act 2002 the legal estate did not pass to the purchaser until the transfer was registered and prior to that date the purchaser was unable to serve a valid notice to quit: Stait v Fenner [1912] 2 Ch 504, Schalit v Nadler [1933] 2 KB 79, Freeman v Hambrook [1947] LR 70, Thompson v McCullough [1947] KB 447, Smith v Express Dairy Ltd [1954] JPL 45, Lever Finance Ltd v Needleman’s Trustee [1956] Ch 375, Divall v Harrison [1992] 2 EGLR 64, Brown & Root Technology Ltd v Sun Alliance [1997] 1 EGLR 39, Renshaw v Magnet Properties South East LLP [2008] 1 EGLR 42 and Lankester v Rennie [2014] EWCA Civ 1515; [2014] PLSCS 336 considered.
(2) Section 96 of 1986 defined for the purposes of the Act the term “landlord” to mean “any person for the time being entitled to receive the rents and profits of any land” unless the context otherwise required. The appellants’ argument that, since the second appellant was, following completion of the transfer of the plot, entitled to receive the 16p rent, it was also the landlord entitled to serve a notice to quit, was inconsistent with the agreed position that a notice to quit under the 1986 Act had to comply with the common law. Notice to quit might only be given by the landlord to his immediate tenant notwithstanding the wide definitions of “landlord” and “tenant” in the 1986 Act.
(3) By virtue of section 141(2) of the Law of Property Act 1925, although the benefit of a covenant or condition remained annexed to the reversionary estate, the person entitled to the income was given the procedural right to enforce that benefit directly without joining the person entitled at law or suing in that person’s name. The notice to quit in the present case was not served in the right of any contractual provision in the tenancy agreement. The respondent had an annual periodic tenancy and the right to serve a notice to quit arose from the nature of the estate granted and held: the relevant relationship was “privity of estate” not “privity of contract”. The notice to quit could only be served by the legal owner of the reversion, not the equitable owner: in this case that was the first appellant: Scribes West Ltd v Relsa Anstalt [2005] 1 EGLR 22 distinguished.
(4) Section 24 of the Land Registration Act 2002 provided that a person was entitled to exercise owner’s powers in relation to a registered estate if he was entitled to be registered as the proprietor. However, the fact that a person had acquired the right to be registered as proprietor under a registrable disposition which had not yet been completed by registration, and which therefore took effect in equity only until registered, of itself meant that his powers of disposition under the general law were limited. A person who was entitled to be registered as a proprietor, but who had not been, would not necessarily enjoy all the powers that he would have had if registration had been effected. Section 24 could not mean that the powers of a person entitled to be registered as a proprietor were automatically to be equated with those of a registered proprietor. The question was whether an equitable owner would be permitted under the general law to make dispositions of the relevant kind: Bank of Scotland v King [2007] EWHC 2747 (Ch); [2008] 1 EGLR 65 and Skelwith Leisure v Armstrong [2015] EWHC 2830; [2016] EGLR 9 considered.
(5) In the present case, the second appellant could not, as equitable owner of the reversion and as the person entitled to be registered as proprietor of it, terminate the respondent’s tenancy of the plot by notice to quit and the respondent’s tenancy continued.
W E Hanbury (instructed by Atkinson & Firth, of Shipley, West Yorkshire) appeared for the appellants; Jamie Sutherland (instructed by Loxley Solicitors, of Sheffield) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Stodday Land Ltd and another v Pye
