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Landlord and Tenant: Fully Mutual Housing Co-operatives: Till Death Us Do Part

In Berrisford v Mexfield Housing Co-operative Ltd [2011] UKSC 52 the Supreme Court allowed an appeal against a possession order made against the tenant (‘T’) of a fully mutual housing co-operative (‘FMHC’).

The landlord (‘L’) is a FMHC founded as part of a mortgage rescue scheme. The subject ‘occupancy agreement’ provided that T took the property ‘from 13 December 1993 and thereafter from month to month until determined as provided by this agreement’. By cl.5 T could determine the agreement by giving one month’s notice. By cl.6 L could ‘only’ exercise a right of re-entry if (a) rent was unpaid for 21 days; (b) T failed/neglected to perform an express obligation; (c) T ceased to be a member of L; (d) L dissolved.L served notice to quit on T then issued possession proceedings. It contended that, despite the limited circumstances in which (and by which) it could terminate the agreement, it nonetheless was entitled to end the tenancy by serving a NTQ. When its application was refused, it successfully appealed to the High Court.

T’s subsequent appeal to the Court of Appeal was dismissed. It held that, whilst the parties had intended to create a tenancy, cl.6 rendered the term uncertain. Hence, the tenancy was void: Prudential Assurance Company Ltd v London Residuary Body [1992] 2 AC 386. In its place was implied a periodic tenancy from month to month which could be determined by either party giving one month’s notice.

The Supreme Court unanimously allowed T’s appeal. The purpose of the agreement was to provide T with a home. L’s mortgage rescue background suggested T’s occupation was not intended to be precarious. And, although expressed to be an agreement ‘from month to month’, it seemed clear that the parties intended that the arrangement should only be determinable pursuant to cl.5 or 6.

On a review of the authorities, such an agreement could not take effect as a tenancy according to its terms as it was for an uncertain duration. While there is no apparent justification for the centuries-old rule that an agreement for a term of uncertain duration cannot give rise to a tenancy, it should not be lightly jettisoned. However, even before 1925, the common law could treat an agreement for an uncertain term as a tenancy-for-life. The effect of s.149(6) LPA 1925 was to treat the agreement as one for life at common law (defined by statute as 90 years) determinable upon T’s death, subject to cl.5 and 6.

Comment

The implications of this decision for FMHC’s and tenants with similar agreements are considerable. The tenancies will have to be registered; termination will require an express forfeiture clause; and repairing covenants will not be implied under s.11 LTA 1985. However, the protections introduced by s.168 CLRA 2002 and a tenant’s right to seek relief from forfeiture probably ensure that the court, as a ‘public authority’, can be satisfied that the procedure for possession complies with the HRA 1998.

Derek Kerr / 2nd Dec 2011


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