The crucial issue in Berrisford -v- Mexfield, at least as far as I am concerned, was the relatively short point (which I am going to keep very short for now!) that it is well established that there can be no lease where there is no certainty of term (Lace -v- Chantler [1944] KB 368 (CA), Prudential Assurance Co Ltd -v- London Residuary Body [1992] 2 AC 386). Lord Neuberger, giving the leading judgment, said this (beginning at paragraph [33] – sorry, paragraph numbers left out of quote itself for technical reasons!):

Following the decision of the House of Lords in Prudential [1992] 2 AC 386, the law appeared clear in its effect, intellectually coherent in its analysis, and, in part, unsatisfactory in its practical consequences. The position appears to have been as follows. (i) An agreement for a term, whose maximum duration can be identified from the inception can give rise to a valid tenancy; (ii) an agreement which gives rise to a periodic arrangement determinable by either party can also give rise to a valid tenancy; (iii) an agreement could not give rise to a tenancy as a matter of law if it was for a term whose maximum duration was uncertain at the inception; (iv) (a) a fetter on a right to serve notice to determine a periodic tenancy was ineffective if the fetter is to endure for an uncertain period, but (b) a fetter for a specified period could be valid.

If we accept that that is indeed the law, then, subject to the point to which I next turn, the Agreement cannot take effect as a tenancy according to its terms. As the judgment of Lady Hale demonstrates (and as indeed the disquiet expressed by Lord Browne-Wilkinson and others in Prudential [1992] 2 AC 386 itself shows), the law is not in a satisfactory state. There is no apparent practical justification for holding that an agreement for a term of uncertain duration cannot give rise to a tenancy, or that a fetter of uncertain duration on the right to serve a notice to quit is invalid. There is therefore much to be said for changing the law, and overruling what may be called the certainty requirement, which was affirmed in Prudential [1992] 2 AC 386, on the ground that, in so far as it had any practical justification, that justification has long since gone, and, in so far as it is based on principle, the principle is not fundamental enough for the Supreme Court to be bound by it. It may be added that Lady Hale’s Carrollian characterisation of the law on this topic is reinforced by the fact that the common law accepted perpetually renewable leases as valid: they have been converted into 2000-year terms by section 145 of the Law of Property Act 1922.

However, I would not support jettisoning the certainty requirement, at any rate in this case. First, as the discussion earlier in this judgment shows, it does appear that for many centuries it has been regarded as fundamental to the concept of a term of years that it had a certain duration when it was created. It seems logical that the subsequent development of a term from year to year (ie a periodic tenancy) should carry with it a similar requirement, and the case law also seems to support this.

Secondly, the 1925 Act appears to support this conclusion. Having stated in section 1(1) that only two estates can exist in land, a fee simple and a term of years, it then defines a term of years in section 205(1)(xxvii) as meaning “a term of years … either certain or liable to determination by notice [or] re-entry”; as Lord Templeman said in Prudential [1992] 2 AC 386, 391B, this seems to underwrite the established common law position. The notion that the 1925 Act assumed that the certainty requirement existed appears to be supported by the terms of section 149(6). As explained more fully below, this provision effectively converts a life tenancy into a determinable term of 90 years. A tenancy for life is a term of uncertain duration, and it was a species of freehold estate prior to 1926, but, in the light of section 1 of the 1925 Act, if it was to retain its status as a legal estate, it could only be a term of years after that date. Presumably it was converted into a 90-year term because those responsible for drafting the 1925 Act thought it could not be a term of years otherwise.

Thirdly, the certainty requirement was confirmed only some 20 years ago by the House of Lords. Fourthly, while not a very attractive point, there is the concern expressed by Lord Browne-Wilkinson, namely that to change the law in this field “might upset long established titles” – [1992] 2 AC 386, 397A. Fifthly, at least where the purported grant is to an individual, as opposed to a company or corporation, the arrangement does in fact give rise to a valid tenancy, as explained below. Finally, it has been no part of either party’s case that the Agreement gave rise to a valid tenancy according to its terms (if, as I have concluded, it has the meaning for which Mr Wonnacott contends).

So, there we have it. Notwithstanding the criticism that has been leveled at the requirement for there to be certainty of term in order for a lease to be valid, the Supreme Court has refused to depart from that position on this occasion. My own view is that this was the right decision so today’s results produce a 50% rate of satisfaction from my perspective!

The claimant (“C”) claimed damages for trespass against the first defendant (“D1″) in relation to a hoarding which had been erected on a shared boundary wall between C and D1′s properties (D1 was a long leaseholder who subsequently appears to have acquired the reversionary interest in the freehold). The C’s land had originally been owned by the Railway Executive which had granted D1′s predecessors in title consent to erect such a hoarding. The second defendant third party (D2) had obtained planning permission to erect the hoarding (which permission had previously been refused by the planning authority) and D1 had granted D2 an exclusive licence for D2 to do so. D2 removed the hoarding when requested to do so by the C’s predecessor in title and played no part in the proceedings.

D1 defended the claim on the basis that (1) the Railway Executive’s original consent had lapsed and D1 had, by operation of the doctrine of adverse possession, acquired possession of what was otherwise C’s airspace; and (2) in the alternative, D1′s right to maintain a hoarding on the boundary wall had passed to D1 by operation of section 62 of the Law of Property Act 1925 upon conveyance of the reversionary interest in the freehold to D1.

Both defences were rejected by the court. In response to (1) it was held that the consent originally granted by the Railway Executive (a previous owner of C’s land) was not limited in its terms and subsisted until such time as it was expressly revoked by C’s immediate predecessor in title (who had assigned any right to damages arising from an action in trespass to C). Therefore, even if possession of airspace was theoretically possible, in this case such possession was by consent and, therefore, not adverse to the owner. The limited analysis which I have been able to find (Lawtel and Westlaw) says that there was obiter to the effect that it was doubtful whether title to an area of airspace not contiguous to land under it could exist at law; the right to airspace was contingent on the right to own the land under it. These responses by the court raise a couple of interesting questions (the absence of a full transcript of the judgment makes it impossible to determine whether these issues were fully explored by the court). Firstly, can the consent which was given by the Railway Executive really be said to have endured (at least) two subsequent changes in ownership, unless expressly renewed? And secondly, why would there be doubt that is it theoretically possible to be in possession of airspace?

In answer to the first point, clearly it would be necessary to know the full facts but it seems unlikely that a permission which is personal and revocable could survive a change of ownership without something more (say, the operation of section 62 which I will come to shortly). Regarding the second point, if real property is capable of ownership, it is surely capable of being adversely possessed, subject to the test for actual possession which is adverse to the paper owner and the requisite animus possidendi being met. Whilst they are rare in practice, flying freeholds demonstrate that it is not necessary, in order to own property, to own the actual soil over which the property concerned is situated.

In respect of (2) the court held that section 62 could not be established to have applied because the conveyance concerned (ie the conveyance of the reversionary interest in the freehold) had not been put in evidence and it was, therefore, impossible to determine whether there was anything in the conveyance to expressly exclude the operation of section 62 as required by section 62(4). It was also said that, in any event, even if the section did apply (which it had been held not to), the enjoyment of the right would not have afforded itself to D1 as lessee (which it was prior to acquiring the reversionary interest in the freehold) but would have been for the benefit of the freehold owner.

It is very difficult to make any further comment on this case given the woeful lack of information available. However, it does appear that it may well raise some extremely interesting points which might warrant further consideration if the transcript of the judgment ever becomes widely available. If anyone out there finds it before I do, please pass it on!

Ms Jones and Mr Kernott bought a property, 39 Badger Hall Avenue, in 1985 and the property was conveyed into their joint names. The purchase price was £30,000 of which £6,000 was contributed by Ms Jones. The remainder was financed by an interest only mortgage, supported by an endowment policy. The mortgage and endowment policy payments were shared between the couple. The following year a further loan of £2,000 was taken out against the property for the purpose of building an extension and this was built and paid for largely by Mr Kernott. This is estimated to have enhanced the value of the property by almost 50%, from £30,000 to £44,000. Ms Jones and Mr Kernott shared the household expenditure (including bills and mortgage repayments) until the couple split up and Mr Kernott moved out of the property in 1993 (some 8 years later). Thereafter, Ms Jones made all of the interest only mortgage payments together with the payments against the endowment policy and met all expenditure in relation to the upkeep of the property. There were two children of the relationship who remained with Ms Jones. Mr Kernott made little or no contribution to their maintenance and none had been sought by Ms Jones.

Some time after the relationship had ended a life insurance policy was cashed and the proceeds split between the parties. In part this was to enable Mr Kernott to purchase a property for himself which he did in 1996, acquiring 114 Stanley Road, which he then financed alone. It is undisputed that Ms Jones never acquired any interest in the Stanley Road property. It is also undisputed that until the couple split up and Mr Kernott moved out of the property in 1993, the beneficial shares in the property were owned equally. The question for the court was whether, following the couple’s separation in 1993, the beneficial shares in the property were altered. At first instance the judge held that they had altered and concluded that Ms Jones was entitled to a 90% beneficial interest in the property on the basis that it was “fair and just”.

On appeal, Nicholas Strauss QC (sitting as a Deputy Judge of the High Court) reviewed the main authorities quite extensively. Unsurprisingly, he undertook a fairly lengthy analysis of the Oxley v Hiscock and Stack v Dowden decisions. On the facts Jones v Kernott was contextually more similar to Stack v Dowden given that the property with which the litigation was concerned had been conveyed into the joint names of the couple and the question for the court was whether the presumption of joint beneficial ownership in circumstances where there was joint legal ownership could be rebutted, as it had been in Stack v Dowden. The relevance of Oxley v Hiscock, despite being factually distinct because the property there had been conveyed into the sole name of one of the parties, was the extent to which the decision in Stack v Dowden had endorsed (to a large extent) the approach of the Court of Appeal in Oxley v Hiscock in respect of the proper approach to quantification of shares in the family home.

The starting point, according to Stack v Dowden, is that where property is conveyed into joint names there is a presumption that the beneficial shares are owned equally (in the absence of any express declaration to the contrary). Establishing that the shares are held other than equally will depend upon identifying a common intention that the shares should be so held; only in very unusual cases is this likely to be established according to the House of Lords in that case. The reality, of course, is that such a common intention is very unlikely to have ever been expressly stated and agreed upon; it will be for the court to look at the evidence and determine whether the facts speak to there having been such an intention. In so doing the courts will look at the whole of the parties’ conduct.

There is a fine distinction between inferring the intention of the parties from the facts and imputing their intention. This is a line which Lord Neuberger (dissenting as to the reasoning but not as to the result in Stack v Dowden, para [125]) thought ought not to be crossed. The former being the product of some objective analysis and the latter being essentially an invention of the court where no such intention could be identified from examining the parties’ actions and statements.

Of course, in Stack v Dowden the parties had never really had a domestic partnership in the financial sense, the finances having been kept separate throughout their relationship, whereas until the time Ms Jones and Mr Kernott separated there appears to have been a clear financial partnership between them. Even after Mr Kernott moved out of the property, until 2008 the Badger Hall Avenue property continued to be held under a beneficial joint tenancy, Mr Kernott serving a notice of severance of the joint tenancy in May of that year.

Given that the financial contributions of the parties to the property were clearly very different once Mr Kernott had left the property it is not at all surprising that Ms Jones should acquire a greater interest in the property, thus rebutting the presumption of beneficial joint ownership. However, the quantification in this case is open to question. On appeal Nicholas Strauss QC said that whilst he is not sure that he would have arrived at exactly the same result (in terms of the proportions apportioned to the parties) as the judge he did not think that the attribution of 90% of the property to Ms Jones was unjustifiable. On the facts it is clear that Mr Kernott had contributed far more than 10% to the purchase and increased value of the property. The fact that Ms Jones had paid all of the mortgage payments and household expenses once Mr Kernott had left the property is only to be expected; she also enjoyed the whole benefit of the property. A point which had been pursued on behalf of Ms Jones in the County Court was a suggestion that once Mr Kernott had acquired his own separate property he did not intend to have a subsisting interest in the Badger Hall Avenue property. This was not pursued on appeal. Also, it was clearly a feature of the case that Mr Kernott had made no payment for the maintenance of the children although Ms Jones had never pursued such contributions from him. It is, however, something which both the trial judge and the judge on appeal thought would be a legitimate consideration.

Nicholas Strauss QC recognised that the trial judge, in coming to the conclusion which he did, had attributed to the parties a common intention which they did not have, or at least did not express to each other. In other words, he had imputed to the parties an intention which was not apparent from their conduct. This, he said, was the right thing to do in this case. This, whilst being consistent with the approach advocated by the majority in Stack v Dowden, really is to be questioned. If the courts are entitled, in the absence of any evidence, and arguably in defiance of the evidence, to invent common intentions and graft those onto the minds of the litigating parties, we are left with a level of discretion which will provide unacceptably high levels of uncertainty when it comes to the quantification of shares in the family home upon the dissolution of relationships. It is precisely this sort of outcome which Lord Neuberger warned against in his dissenting speech in Stack v Dowden and he was right to be concerned; the rot is setting in.

Postscript

For another view on this decision, see here. See also a piece I wrote for the NLJ on this here.

In this case, Mr Barron, a retired fireman, and his partner, Miss Fowler, purchased a property in Bognor Regis in 1998. They had an unmarried relationship from 1983 to 2005 and had two children together. The couple consciously decided to put the property into joint names but there was no agreement or discussion between them as to how the property should be held. The (unsigned) transfer document did not contain any declaration of trust but stated that the survivor of them could give a valid receipt for capital money arising on the disposition of property, implying that the right of survivorship was intended to apply. However, the declaration was held not to be dispositive.

Mr Barron paid the mortgage repayments and other house related expenses out of his pension. He also paid for most other things including the weekly shopping bill. While Miss Fowler went out to work Mr Barron looked after the children. Her income was spent largely on herself and the children. Eventually the relationship broke down and the couple separated.

It will be recalled that in Stack v Dowden the presumption of joint tenancy was rebutted on the basis that the evidence showed there had been unequal financial contributions to the property. It is perhaps a little ironic that in this case, where one party has made no obvious contribution to the property she should find herself better off, enjoying a 50% share, than Mr Stack who had contributed financially to the acquisition of the property. This is, of course, a gross over simplification of the case, but serves to illustrate a slightly curious result.