Certainty of Terms and Leases: Curiouser and Curiouser

Certainty ofTerms and Leases:Curiouser and Curiouser

Kelvin F. K. Low*

The common law rule that requires leases to have a fixed terminus from the outset is one thathas been much criticised. In Berrisford v Mexfield Housing Co-operative Ltd, the Supreme Courtmanaged to blunt its effect by suggesting that most leases of uncertain duration can be transformedinto 90-year tenancies. However, it is suggested that their Lordships have possibly misunderstoodand overstretched an ancient common law ‘rule’ and have not fully considered some of theimplications of their decision.

‘Begin at the beginning, . . . and go on till you come to the end; then stop.’1

Beginnings and endings,particularly endings, feature no more prominently in thelaw than in the context of leases. In particular, the law requires that a leaseholdestate,or a term of years absolute,must from the outset have a fixed terminus.Thisrule of law would thus invalidate the grant of a fixed term lease until Englandwins theWorld Cup.Likewise,a periodic tenancy which forbids either party fromexercising its right to terminate unless England wins the World Cup would alsobe rendered void.Though much criticised, the courts seem resigned to deferringto the respectability this rule has built up simply through the passage of time.‘Itis far from clear’, it has been said, ‘that the historic rationales for the rule retaintoday the force which they may once have enjoyed.’2 In Prudential Assurance CoLtd v London Residuary Body,3 (Prudential Assurance) although Lord Browne-Wilkinson joined in affirming the rule, his Lordship nevertheless described it as‘ancient and technical’, productive of ‘bizarre outcome[s]’ and devoid of ‘satis-factory rationale’ or ‘useful purpose’.4 The rule is said to be objectionable ‘on theground that it frequently denies efficacy to perfectly sensible arrangementsderived from a process of conscious bargain between autonomous persons.’5

In Berrisford v Mexfield Housing Co-operative Ltd,6 (Berrisford v Mexfield) a sevenmember panel of the Supreme Court echoed his Lordship’s views.Although therule was retained, their Lordships avoided the ‘bizarre outcome’ which a straight-forward application of the rule to the facts of the case would have engendered bytransforming a lease of otherwise uncertain duration into a 90-year tenancy.

THE FACTS AND THE LOWER COURTS

Mexfield Housing Co-operative Ltd was founded by a bank as a fully mutualhousing association as part of a mortgage rescue scheme. In 1993, Mexfield

*School of Law, Singapore Management University.

1 L. Carroll, Alice’s Adventures in Wonderland (London: Macmillan, 1865) 85.2 K. Gray and S. F. Gray, Elements of Land Law (Oxford: OUP, 5th ed, 2009) 326.3 [1992] 2 AC 386.4 ibid, 396.5 Gray and Gray, n 2 above, 326.6 [2011] UKSC 52.

Kelvin F. K. Low

© 2012 The Authors.The Modern Law Review © 2012 The Modern Law Review Limited.401(2012) 75(3) MLR 387–436

purchased 17 Elton Avenue, Barnet, from Ms Ruza Berrisford and let it back toMs Berrisford under an ‘Occupancy Agreement’. The premises were to be let‘from month to month’ until determined in accordance with the agreement.Whereas there was no restriction on when Ms Berrisford could determine thetenancy,Mexfield’s rights to bring the tenancy to an end were specifically limitedby clause 6 of the agreement.One of the limited instances under which Mexfield’srights to determine the tenancy would become exercisable was upon MsBerrisford’s failure to pay rent for 21 days. When Ms Berrisford did fall intoarrears, Mexfield served upon her a notice to quit, though without apparentlyrelying on its right to do so under clause 6. It argued that the ‘OccupationAgreement’ could not create a valid tenancy as envisaged by the parties because,on the basis of the rule in Prudential Assurance,7 any fetter on the right of eitherparty to determine a periodic tenancy would render the period of the tenancyuncertain,which would have the effect of invalidating the lease. In its place,by MsBerrisford’s actions in taking possession of the premises and paying a monthlyrent, would be a monthly tenancy without the offensive fetter.As such, Mexfieldwould have been perfectly entitled to determine the tenancy by serving a month’snotice on Ms Berrisford for no reason at all.This is all trite law and it is no surprisethat Mexfield succeeded by way of summary judgment before Peter Smith J.8

This defeat came,however,when Ms Berrisford was unrepresented.On appealto the Court of Appeal,9 Ms Berrisford came to be represented by MrWonnacottwhose ‘highly learned’‘yet cleverly economical’10 arguments persuadedWilson LJof the merits of his client’s case.

Three arguments were presented though one was abandoned midway throughthe hearing as‘an academic question too far’.11 First,it was submitted that,althoughPrudentialAssurance had the effect of negating the offending clause at common law,nevertheless equity could intervene to prevent Mexfield,as an immediate party tothe tenancy agreement, from seeking possession as against Ms Berrisford, anotherimmediate party to the tenancy agreement. Secondly, it was argued that, to theextent that no effect could be given to the clause as a term of a tenancy, the partiesshould be taken to have entered into a licence for Ms Berrisford to occupy thepremises so that the clause could nevertheless constrain Mexfield’s right to recoverpossession.Although Wilson LJ was persuaded by the first submission, ingenuitynevertheless failed to prevail against authority and the majority of the Court ofAppeal (Aikens and Mummery LJJ) reluctantly ruled against Ms Berrisford.

MISGIVINGS BEFORE THE SUPREME COURT

On appeal to the Supreme Court, MrWonnacott presented even further reasonswhy his client’s appeal should be allowed.There may be disappointment in some

7 n 3 above.8 Mexfield Housing Co-operative Ltd v Berrisford [2009] EWHC 2392 (Ch).9 [2010] EWCA Civ 811; [2011] 1 Ch 244,noted by K.F.K. Low,‘Leases and the maximum duration

rule yet again, but with a twist’ (2011) 127 LQR 31.10 ibid at [5].11 ibid at [12]. Mr Wonnacott had sought to argue that equity could provide relief against forfeiture

even in favour of non-owners of property rights.

Certainty of Terms and Leases

© 2012 The Authors.The Modern Law Review © 2012 The Modern Law Review Limited.402 (2012) 75(3) MLR 387–436

quarters that a call was not made for the rule to be abandoned12 but there was inany event no inclination to effect such a dramatic change to a long-establishedrule.13 Not only was there a fear that such a change in the law ‘might upset longestablished titles’,14 such a change would be incompatible with the Law ofProperty Act 1925 which envisages only two estates in English law, the fee simpleand the term of years. Nevertheless, like Lord Browne-Wilkinson before them,some of their Lordships were equally vociferous in their criticism of the rule.Lady Hale described the rules as having an ‘Alice in Wonderland quality’ aboutthem,15 a ‘Carrollian characterisation’ reinforced by Lord Neuberger.16 Indeed,judicial criticism of the rule appears to have grown in strength since PrudentialAssurance. Whereas Lord Browne-Wilkinson’s was a lone voice in PrudentialAssurance, Lord Dyson joined Lord Neuberger and Lady Hale in open criticismof the rule’s apparent irrationality.17 Given that the remaining Law Lords con-curred in Lord Neuberger’s leading judgment, it cannot be a stretch to imaginethat they share in some at least of his Lordship’s misgivings as to the rule.

Their Lordships’ misgivings are, however, arguably misguided, as are muchof the criticisms. Had the lease not left its roots in contract and evolved into aspecies of property rights, complaints about unnecessary interference with partyautonomy may well be valid. However, it has long been recognised that con-tracting parties may not create property rights willy nilly as they fancy whichthereafter bind their successors.18 However the numerus clausus principle is justi-fied, it no doubt exists and not simply in common law systems either.This doesnot mean, of course, that the rules relating to leasehold estates may not continueto evolve but a consideration of their Lordships’ actual decision will demonstratethat an abandonment of the rule on certainty of terms for leases has far-rangingimplications on our understanding of the law of property well beyond theimmediate concern of upsetting long established titles.

MR WONNACOTT’S EVIDENCE

That a consideration of the abandonment of the rule was unnecessary in this casewas the result of Mr Wonnacott’s ‘impressive and scholarly research’19 and ‘con-spicuously clear and learned submissions’.20 Three different arguments were put

12 n 6 above at [37].13 ibid at [35]–[37] per Lord Neuberger, [96] per Lady Hale and [115] per Lord Dyson.14 ibid at [37] per Lord Neuberger citing Lord Browne-Wilkinson in Prudential Assurance n 3 above,

397.15 ibid at [88].16 ibid at [34].17 ibid at [115].18 B. Rudden,‘Economic Theory v Property Law:The Numerus Clausus Problem’ in J. Ekelaar and J.

Bell (eds), Oxford Essays in Jurisprudence (Third Series) (Oxford: Clarendon Press, 1987) 239. Forspecific case law to this effect, see Keppel v Bailey (1834) 2 My & K 517, 535 per Brougham LC;Hill v Tupper (1863) 2 Hurlst & C 121 per Pollock CB;StockportWwks v Potter (1864) 3 H & C 300,314 per Wilde B, 321 per Bramwell B. See also O.W. Holmes, The Common Law (Boston: Little,Brown & Co, 1881) 407.

19 n 6 above at [116] per Lord Dyson.20 ibid at [11] per Lord Neuberger. See also [86] per Lord Walker.

Kelvin F. K. Low


before their Lordships. First, that the grant of leasehold estates of uncertaindurations were treated as grants of determinable freehold life estates by an ancientcommon law rule, which by the operation of section 149(6) of the Law ofProperty Act 1925, are transformed into determinable 90-year leasehold estates.A90-year tenancy with the same fetters would not fall foul of the certainty of termrule so that the fetters would remain valid and enforceable as between landlordand tenant. Secondly, if the ‘Occupation Agreement’ did not create a valid lease, itnevertheless created a valid and enforceable licence as between the parties. Finally,the fetters,even if they were not enforceable in rem as a term of the tenancy,shouldnevertheless be enforced by the courts in personam as a matter of contract.

IT’S ALWAYS 90 YEARS NOW

Over the course of her adventures inWonderland,Alice is informed by the Hatterthat, in retaliation for ‘murdering the time’,Time wouldn’t do a thing he askedso that ‘[i]t’s always six o’clock now.’21 According to Berrisford v Mexfield, by aprocess of transmogrification and re-transmogrification, all grants of leaseholdestates of uncertain durations are always grants of 90-year leases now.As they nowhave a fixed terminus, the fetters would now be valid after all.The process takestwo stages, the first through the operation of a supposed ancient rule of thecommon law22 and the second via statutory intervention necessitated by Parlia-ment’s ‘murder’ of the freehold life estate.23 Owing to its apparent pedigree inauthority, this argument demonstrated itself to be the path of least resistance totheir Lordships. As their Lordships explained, the absence of this argument inPrudential Assurance was explicable as it would not have made any difference inthat case.24 However, Lady Hale admitted that it was ‘curiouser and curiouser’.25

This conclusion is perhaps less curious than it is precarious.The rule identifiedin the first stage, traceable as far back at least as Bracton’s De Legibus et Consue-tudinibus Angliae,26 does not appear to have originated as a rule to rescue failedleases of uncertain duration at all. It is discussed in Bracton under the heading ‘Ofthe Assize of Novel Disseisin’, in which the author sought to discuss the rights oftenants of a disseisor should the disseisee recover his estate. It is not evident thatBracton regarded the ‘rule’ as one of law.According to Thorne’s translation, thetext of Bracton reads:27

But if he says ‘I give and grant to you so much land until you have taken thence fortypounds,’ because it cannot be known how long it may take for so many pounds tobe raised from so much land, because the term is uncertain and undetermined, it is evidentthat the tenement will remain a free tenement until so many pounds are raised, since it

21 L. Carroll, Alice’s Adventures in Wonderland n 1 above, ch 7 ‘A Mad Tea-Party’.22 n 6 above at [43]–[44] per Lord Neuberger and at [117] per Lord Dyson.23 Law of Property Act 1925, s 1.24 n 6 above at [92] per Lady Hale.25 ibid at [93].26 G. E. Woodbine (ed), Bracton on the Laws and Customs of England vol 3 (Cambridge, Massachusetts:

Belknap Press, S. E. Thorne trans, 1977).27 ibid at 50.



cannot be known or determined in how long a time they may be raised, in howmany years, as [may be done in the case] above of ‘so many harvests,’ [where] a termcertain may be fixed, since each harvest has its year, one in each. (Emphasis added.)

The language is not self-evidently demonstrative of a rule of law. In Littleton,28

the ‘rule’ is discussed in the chapter ‘Estates Upon Condition’. It appears that thepassage quoted by Lord Neuberger29 was once translated by Coke from theoriginal French as:30

[I]f an abbot make a lease to a man for yeares, to have and to hold to him during thetime that the lessor is abbot; in this case the lessee hath an estate for the term of hisown life: but this is upon condition in law, scilicet,That if the abbot resigne or bedeposed, that then it shall be lawfull for his successor to enter. (Emphasis added.)

This would prove, however, to be a problematic translation. Ritso commentsthat the emphasised words ‘are an interpolation, and involve a contradiction interms.’31 In a revised and corrected edition of Coke, Hargrave and Butler remarkthat ‘it is observable that the original French does not warrant the insertion, in thetranslation, of the words in question’.32 The emphasised words are omitted in theedition of Littleton edited by Wambaugh in 190333 nor do they appear in LordNeuberger’s quote from Littleton but it is not Coke’s mistranslation34 that isinstructive but Ritso’s criticism of the mistranslation. It demonstrates that the rulewas not regarded as one applicable where the conceived grant was that of a termof years.

The reference to Coke by Lord Neuberger likewise does not support theirLordships’ conclusion.The passage referred to by his Lordship provides:35

If a man grant an estate to a woman dum sola fuit, or durante viduitate, or quamdiu sebene gesserit, or to a man and a woman during the coverture, or as long as the granteedwell in such a house, or so long as he pay s l. & c. or until the grantee be promotedto a benefice, or for any like incertaine time, which time, as Bracton saith, is tempusindeterminatum: in all these cases, if it be of lands or tenements, the lessee hath injudgment of law an estate for life determinable, if livery be made.

The passage appears in the chapter ‘Of Tenant for life’ and can readily be read tosimply mean that such a grant of a freehold estate in such a form creates adeterminable life estate rather than some other sort of freehold estate such as a

28 T. E. Tomlins (ed), Lyttleton, HisTreatise ofTenures book 3 (London: S. Sweet, 1481; reprinted Clark,New Jersey:The Lawbook Exchange, 2006) 382.

29 n 6 above at [39].30 F. Hargrave and C. Butler (eds), Coke, Commentary Upon Littleton vol 2 (London: J. & W.T. Clarke;

R. Pheney; and S. Brooke, 18th ed, 1823) s 382.31 F. Ritso, The Science of the Law (London:W. Clarke and Sons, 1815) 112.32 Hargrave and Butler (eds), n 30 above, s 382, n (B).33 E. Wambaugh (ed), Littleton’sTenures book 3 (Washington: John Byrne & Co, E. Coke trans, 1903)

s 382.34 This is not Coke’s translation strictly speaking but appears to be a translation by ‘some early and

rather unscholarly translator’ but ‘adopted by Coke’: see Wambaugh (ed), ibid, v-vi.35 Hargrave and Butler (eds), n 30 above, s 56.

Kelvin F. K. Low


determinable fee simple or a life estate subject to a condition subsequent.Thiswould also explain why the same ‘rule’ appears in Littleton in the chapter ‘EstatesUpon Condition’. Indeed, the reference to the grant of an estate ‘of lands ortenements’ may also be regarded by some as suggesting that the rule is notintended to apply to leaseholds. Even as late as 1890, it was disputed that a termof years could be regarded as a tenement.36

It is true that Sheppard’s reference to the rule in The Touchstone of CommonAssurances37 appears in his chapter ‘Of a Lease’, suggesting that the rule is perhapsapplicable to leases void for failure to comply with the common law’s strictrequirement of certainty. However, it is said that such uncertain leases may beregarded as determinable life estates rather than void terms of years only if therehad been livery of seisin. As a ‘rule’ to save leaseholds of uncertain duration, itmust be of dubious value.Leasehold tenants never had seisin. If one were mindedto grant a term of years, it would be most peculiar to do so by livery of seisin.Atthe time of Sheppard’s writing, as a result of the enactment of the Statute ofEnrolments 1535, even freeholders avoided livery of seisin as a means of con-veying their estates, preferring instead the device of lease (of a term of years) andrelease.The lease and release remained the popular means of conveying a freeholdestate until 1841 when an Act of Parliament authorised conveyance by release (bydeed) alone.38 It is not inconceivable to envisage that by this point the rule hadmetamorphosed into a rule of construction in an age where the intellectualbaggage associated with construction had yet to be mostly discarded.39We are stilltoday familiar with the maxim ut res magis valeat quam pereat. Between theapplication of the maxim and the unlikelihood that a term of years would havebeen granted by livery of seisin, such a rule would have been entirely sensible.Nor does the citation of Williams’ seminal pre-1925 work40 provide convincingsupport for their Lordships’ conclusion.The quote by Lord Dyson41 is taken fromthe chapter ‘Of An Estate For Life’ and much like the reference to Coke, it maysimply be a means of determining whether such grants create determinable lifeestates as opposed to a determinable fee simple or a life estate subject to acondition subsequent. It does not purport to lay down a rule of law whereby,parties clearly intending to create a leasehold estate of uncertain duration, theywill nevertheless be regarded by the law as instead creating a freehold life estate.This is confirmed by the cross-referencing in the text42 cited by his Lordship tothe author’s chapter on ‘Of An Estate In Fee Simple’ rather than his later chapter‘Of A Term Of Years’. The ‘rule’ also appears to have been treated as one ofconstruction by all the modern authorities.43

36 H.W. Challis, ‘Are Leaseholds Tenements?’ (1890) 6 LQR 69.37 W. Sheppard,TheTouchstone of CommonAssurances vol 2 (London:Samuel Brooke,8th ed,1826) 275.38 4 & 5Vict, c 21.39 Cf Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912 per

Lord Hoffmann.40 T.C.Williams (ed), J.Williams’ Law of Real Property (London: Sweet & Maxwell, 23rd ed, 1920) 135.41 n 6 above at [116].42 Williams (ed), n 40 above, 135, nn r and s.43 See,eg,Kusel v Watson (1879) 11 Ch D 129;Zimbler v Abrahams [1903] 1 KB 577 and Lace v Chantler

[1944] 1 KB 368.



Yet even as a rule of construction, the rule would not be justifiable merely bythe maxim ut res magis valeat quam pereat if there were not also livery of seisin toemphasise that a freehold estate was likely intended by the grantor. Despitesuggestions that leasehold estates are separated from freehold estates merely byaccident of history, important distinctions remain. Leasehold covenants moreeffectively bind successors-in-title than freehold covenants.The latter only bindsuccessors-in-title if they are substantively negative44 whereas positive leaseholdcovenants can also bind successors-in-title.45 By sections 2(1) and 3(1) of theLandlord and Tenant (Covenants) Act 1995, the requirement that a covenanttouch and concern land before it can bind successors-in-title, which used to becommon to both species of covenants, is no longer necessary for leaseholdcovenants.Thus, if the maxim ut res magis valeat quam pereat were simply appliedwhen the parties’ intentions were otherwise clear that a leasehold estate wasintended to presume that the parties intended a freehold, some covenants whichparties intended to bind their successors-in-title may turn out to be ineffectual asagainst them.This would run contrary to modern rules of construction.As a ruleof law, it would simply replace one set of consequences contrary to the parties’autonomous bargain with another set of such consequences. It is not obvious thatthe parties’ intentions as to the duration of the lease are more obviously worthpreserving than their intentions that their successors be bound. Even if one canconfidently hold that view, the transmogrification process does not actuallypreserve the parties’ bargain anyway.

It is possible that their Lordships believed that these difficulties would beavoided by the re-transmogrifying effects of section 149(6) of the Law ofProperty Act 1925 by which freehold life estates are statutorily re-transmogrifiedinto 90-year determinable leasehold estates. However, it is not self-evident thatsection 149(6) of the Law of Property Act 1925 has this curative effect. Section149(6) is no doubt intended to preserve the validity of freehold life estates insome form after their abolition by section 1 of the same Act. If this is the case,then covenants which were not efficacious as against successors-in-title asfreehold covenants ought not to be magically transformed into efficacious cov-enants as determined by the very different rules relating to leasehold covenants.This is especially so given that section 149(6) applies to all such leases ‘madebefore or after the commencement of this Act’. If this is correct, then some atleast of Ms Berrisford’s and Mexfield’s intended leasehold covenants (such asthose, if any, relating to repairs)46 will not survive the process of transmogrificationfrom leasehold to freehold and re-transmogrification from freehold back toleasehold, at least not as against assignees.That can hardly be regarded as satis-factory. Nor does section 149(6) of the Law of Property Act 1925 apply wherethe lease is not granted at a rent or in consideration of a fine. In such a case,presumably the ‘rule’ is ineffectual since there seems little point transforming alease invalid for being of uncertain duration into an invalid freehold life estate.47

44 See eg Rhone v Stephens [1994] 2 AC 310.45 See eg Williams v Earle (1868) LR 3 QB 739.46 Contra Williams v Earle ibid.47 Law of Property Act 1925, s 1.

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The characterisation of this rule as one of law rather than construction alsoraises the possibility that other similar rules may be so characterised, particularlyin light of modern attitudes towards interpretation. For example, the rule inParker v Taswell48 that a failed grant of a lease may be regarded as an agreementto grant a lease, sits somewhat uneasily with the modern approach to construc-tion since it presupposes that the court has first determined that the partiesintended a grant of a lease, which having failed as such because of non-compliance with formalities, may nevertheless be regarded as an agreement togrant a lease.As a rule of law, this difficulty is averted.However, the question mustsurely be asked where the limits of the courts’ jurisdiction to rescue failedtransactions lie. It surely cannot be suggested that leases are especially deservingof rescue over other transactions.

Finally, the efficacy of the solution may also be imperilled by the compul-sory registration scheme envisaged by the Land Registration Act 2002, atleast in the context of periodic leases. If registration is to be a necessary for-mality in the future, then Lord Neuberger’s remark that ‘[s]uch formalities havenow largely been done away with’49 would no longer hold true. It is highlyunlikely that periodic leases would be registrable lest they clutter the register.Yet unless they are registered, the rule may not apply to transmogrify theinvalid periodic lease into a valid life estate upon which section 149(6) of theLaw of Property Act 1925 can apply to re-transmogrify back into a determin-able 90-year lease.

Even assuming the first stage of this process is properly to be regarded as a ruleof law and the process of re-transmogrification may well be deemed to preventthe invalidation of some leasehold covenants, their Lordship’s preferred solutionis nevertheless not universally applicable and hence arguably undesirable. It isconceded by their Lordships that this solution is unavailable to corporate tenantssince life estates may not be granted to corporations so that the same lease wouldnot be rescued by the rule of transmogrification from uncertain leasehold tofreehold and re-transmogrification back to certain leasehold.50 Nor is it availablewhere the uncertain lease takes the form of a sublease since one cannot carve afreehold estate out of a leasehold estate.51

THE MOCK LICENCE’S STORY

Once,Alice was told, the MockTurtle was a real turtle.52 According to Berrisford vMexfield, if a lease of uncertain duration may not be rescued by the aforemen-tioned process of transmogrification and re-transmogrification, then it maynevertheless take refuge from the rule on certainty of duration by pretending to bea mock licence.Although concurring in the 90-year rule solution, Lord Mance53

48 (1858) 2 De G & J 559.49 n 6 above at [41].50 ibid at [92] per Lady Hale.51 ibid at [43] per Lord Neuberger. See also Kusel v Watson n 43 above.52 L. Carroll, Alice’s Adventures in Wonderland n 1 above, ch 9 ‘The Mock Turtle’s Story’.53 ibid at [99]–[102].



and Lord Clarke54 appear to have favoured this second argument,which also foundsome favour with Lord Neuberger.55 However,Lady Hale regarded this solution as‘even more bizarre’ than the first,56 which she had already considered ‘curiouserand curiouser’.57

If this solution were elevated to a solution of first resort, it would have thebenefit at least of universal application. Whenever anyone, freeholder or lease-holder, purported to grant a lease of uncertain duration, then the grantee,whether corporation or individual, would always only get a licence. Alas, as analternative solution, it lacks even the elegance of universality. Some of theirLordships suggest that a mock licence better reflected the parties’ intentions thanthe orthodoxy, which would imply a periodic lease as between the partieswithout any contractually agreed but legally offensive fetter. As such, it accordsbetter with ordinary principles of construction. Such a conclusion is surelyquestionable. In theory, the rights of a tenant could not be more distinct fromthose of a licensee.A tenant acquires rights of exclusive possession.58 A licenseedoes not, since a licence is a mere permission which makes it lawful for thelicensee to do what would otherwise be a trespass.59 If this distinction werestrictly held, then the use of the device of a mock licence to rescue a failed leasewould surely be absurd since the parties did not intend mere permissive use. Intruth, the line between a lease and a licence is far from precise.Thus, the courtshave conceived of the possibility that some licensees may acquire sufficientpossessory rights to bring actions in trespass60 or nuisance.61 However, the abilityof such licensees to bring such actions against their licensors’ successors-in-titlehas never been tested and it may not be desirable to further blur the line betweentenants and licensees by permitting such actions. Moreover, even if such claimsin tort are permitted both as against complete strangers and their licensors’successors-in-title, it surely cannot be envisaged that the binding effect of lease-hold covenants would be replicated for such licensees. Even if it were not aconcern in Berrisford v Mexfield,62 there must surely be many cases of leases ofuncertain duration where the parties expected their rights to persist against thesuccessors-in-title of their counterparties.

This is not to suggest that the orthodox solution reflects the parties’ intentionswell. The lease implied by the orthodox view is as much a fiction as thequasi-contractual promise to repay a mistaken payment.The orthodox solution

54 ibid at [107]–[110].55 ibid at [58]–[68].56 ibid at [95].57 ibid at [93].58 Street v Mountford [1985] AC 809.59 Thomas v Sorrell (1673)Vaugh 330, 351.60 See, eg, Hounslow LBC v Twickenham Garden Developments Ltd [1971] Ch 233, 257 per Megarry J;

Manchester Airport plc v Dutton [2000] QB 133.61 See, eg, Newcastle-under-Lyme Corporation v Wolstanton Ltd [1947] Ch 92, 106–108 per Evershed J;

Hunter v CanaryWharf Ltd [1997] AC 655, 688, 692 per Lord Goff of Chieveley and 717 per LordCooke of Thorndon.

62 Particularly owing to the non-assignment clause (clause 6(c)) on the part of Ms Berrisford: see[2011] UKSC 52 at [44] per Lord Neuberger. However, it must be noted that there is no similarclause on the part of Mexfield.

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was fashioned before the law of unjust enrichment was recognised, much lessmature, though even today it is not obvious that a restitutionary solution isobviously superior given the proprietary nature of the lease.

EXPLOITING AN IDENTITY CRISIS

At one point in her adventures, Alice suffers from a particularly serious case ofan identity crisis.63 Like Alice, the lease at common law suffers from an identitycrisis – is it a contract or a property right?64 This identity crisis can cause nosmall degree of discomfort among lawyers trying to make sense of the rules. Forexample, it appears as if a lease may be determined by such contractual doc-trines as frustration65 and repudiatory breach.66 Yet its determination as a vestedestate has never been satisfactorily explained. Neither frustration nor repudia-tory breach has the effect of divesting vested property rights. The cases seemexplicable only on the basis that a landlord’s grant to the tenant of the latter’sleasehold estate is somehow in a perpetually executory state even where thelease is a fixed term lease, simply because rent is payable periodically, whichcannot be correct.

However, paradoxically, this identity crisis provides us with arguably the mostprincipled solution to the problem of grants of leases of uncertain duration.Unfortunately not considered by their Lordships, a glimpse of this argument maybe derived from Wilson LJ’s judgment in the Court of Appeal. There, MrWonnacott argued that although Prudential Assurance had the effect of negatingthe offending clause at common law, nevertheless equity could intervene toprevent Mexfield, as an immediate party to the tenancy agreement, from seekingpossession as against Ms Berrisford, another immediate party to the tenancyagreement.67 Prudential Assurance involved a dispute between the landlord and thetenant’s successor-in-title and may thus be regarded as inapplicable to disputesbetween the immediate parties to the lease. Whatever the reasons may be forexcluding leases of uncertain duration from the numerus clausus of property rightsrecognised by the common law, there is little reason to disregard their agreementinter partes. It is surely possible for parties to agree a periodic lease with nooffensive fetters and then separately agree by way of contract that either or bothwere not to exercise their rights to determine the lease except upon fulfilment ofcertain conditions. Should it matter then that the parties’ collateral agreement iscontained within the same document as the lease? Scots law appears to reach thesame result according to Lord Hope.68 Nor is the treating of a failed or unen-forceable grant of a lease as a valid contract particularly innovative given the

63 L Carroll, Alice’s Adventures in Wonderland n 1 above, ch 5 ‘Advice from a Caterpillar’.64 See, eg, S. Bridge, ‘Leases – Contract, Property and Status’ in L. Tee (ed), Land Law: Issues, Debates,

Policy (Devon:Willan Publishing, 2002) 98.65 See, eg, National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675.66 See, eg, Progressive Mailing House Proprietary Ltd v Tabali Proprietary Ltd (1985) 157 CLR 17;

Hussein v Mehlman [1992] 2 EGLR 87; Tan Soo Leng David v Lim Thian Chai Charles [1998]1 SLR(R) 880.

67 n 9 above at [16].68 n 6 above at [74]–[80] per Lord Hope.



familiar rule in Parker v Taswell.69 It may be that Mr Wonnacott’s invocation ofequity at the Court ofAppeal was unnecessary given that it was Mexfield that wasseeking possession. If Mexfield were to be bound by contract, then Ms Berrisfordsurely need not rely on equity to remain in the property. After all, ‘[a]n unac-cepted repudiation is a thing writ in water’.70 Ms Berrisford would only have hadto resort to equity’s auxiliary jurisdiction had she been unlawfully turned out andhad herself sought possession as against Mexfield.

PEERING THROUGH THE LOOKING GLASS

For those tantalised by the decision in the Court of Appeal, the SupremeCourt’s decision would likely be viewed with some disappointment.As a solu-tion, the dual transmogrification exercise will not be available where the grantis made by a leaseholder, where the grantee is a corporation, or where the grantis made to a volunteer. In any of the latter three instances, it is a matter of someuncertainty whether the purported lease would be treated by the law as alicence or whether the orthodox solution of an unfettered periodic tenancytaking hold upon the tenant taking possession would prevail. This dual (orpotentially triple)71 solution approach to what parties otherwise intend as thesame type of transaction, a leasehold grant of uncertain duration, is arguablyunnecessarily complex and pointlessly capricious. Even where the transmogri-fication and re-transmogrification does take place, the efficacy of originallyintended leasehold covenants which would not be efficacious as freehold cov-enants following the two stage process remains an unanswered question.Thereis thus uncertainty both as to the efficacy of the licence solution where thedual transmogrification exercise is unavailable and the efficacy of the dualtransmogrification solution where either the lease or the reversion has beenassigned. It is also unclear whether the solution preferred by their Lordships willsurvive the introduction of compulsory registration as envisaged by the LandRegistration Act 2002.The disappointment is particularly acute since, whateverits imperfections, the solution in Scots law seems far simpler and more elegant.Such a solution could readily have been reached by exploiting the dual naturesof the lease.

This critical study of Berrisford v Mexfield also demonstrates that, whatever thecriticisms of the rule of certainty of terms for leases, the divide between freeholdand leasehold estates remains worth defending.Freehold estates are not kept apartfrom leasehold estates purely by accident of history.Their very natures remaindistinct. Leasehold covenants more readily bind successors-in-title than freeholdcovenants, particularly following the intervention of the Landlord and Tenant(Covenants) Act 1995. An abolition of the rule of certainty of terms for leaseswould thus not simply blur the line between leasehold and freehold estates. Itwould effectively undo our entire learning on restrictive covenants since the

69 (1858) 2 De G & J 559.70 Howard v Pickford Tool Co Ltd [1951] 1 KB 417, 421 per Asquith LJ.71 If the licence solution prevails in some instances where dual transmogrification is not possible but

not in others.

Kelvin F. K. Low


device of a perpetual lease could then be used to create binding positivecovenants which need not even touch and concern land.72 Should that occur,English common law would be the first legal system to come close to effectivelyabolishing the numerus clausus principle and permit parties freedom to createalmost any proprietary ‘fancy’ of their choosing.73 Furthermore, apart fromeffectively contradicting the raison d’etre of the Law of Property Act 1925, anabolition of the rule would permit the creation of a perpetual lease with a rentobligation, effectively circumventing the Rentcharges Act 1977.

Rectifying the Course of Rectification

Paul S. Davies*

In Daventry District Council v Daventry & District Housing Ltd [2011] EWCA Civ 1153, the majorityof the Court of Appeal held that a contract should be rectified because of a common mistake.This note discusses that decision and recent developments in the law of rectification. Itis argued that the approach of the majority in Daventry is unsatisfactory, and that an emphasisupon ascertaining whether the parties have objectively made a common mistake may be inappro-priate: rectification should only be granted in order to reflect the parties’ subjective intentions.Such an approach might help to distinguish common mistake rectification from unilateral mistakerectification.

INTRODUCTION

In Chartbrook Ltd v Persimmon Homes Ltd,1 (Chartbrook) Lord Hoffmann, in hisfinal speech before retirement, considered a variety of issues concerning theinterpretation and rectification of commercial contracts. However, importantareas of uncertainty remain.As Sir Richard Buxton has observed,‘[m]uch is thusleft in the air, not only with regard to the relationship between construction andrectification, but also within the jurisprudence of rectification itself.’2 There arethree main difficulties. First,what is the scope afforded to rectification?The more‘liberal’ approach to the interpretation of commercial agreements, driven in nosmall part by Lord Hoffmann himself,3 means that many mistakes are now

72 Whilst there are concerns over the efficacy of the current regime, such a development would besignificantly more drastic than the recommendations of the Law Commission in its report MakingLand Work: Easements, Covenants and Profits à Prendre, Report, Law Com No 327 (2011). Seeparticularly 5.44–5.70.

73 Cf B. Rudden, n 18 above, 239.

*Fellow, Gonville and Caius College, Cambridge. I am grateful to Neil Andrews, Richard Hooley, JanetO’Sullivan and an anonymous referee.The usual disclaimers apply.

1 [2009] UKHL 38; [2009] 1 AC 1101. For notes of the case, see D. McLaughlin, (2010) 126 LQR10; J. O’Sullivan, (2009) 68 CLJ 510; P. Davies, (2009) LMCLQ 420.

2 Sir R. Buxton, ‘ “Construction” and rectification after Chartbrook’ (2010) CLJ 253, 261.3 See eg Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896;

Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38; [2009] 3 WLR 267.

Rectifying the Course of Rectification


Documents

Certainty of Terms and Leases: Curiouser and Curiouser