No CrossRef data available.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
Published online by Cambridge University Press: 24 August 2015
This article explains the rule that leases have a certain term from the outset by placing the lease within the wider context of the system of estates in land. There are no perpetual estates in land. However, some uncertain terms risk creating genuinely perpetual estates, conflicting with the nemo dat principle. All leases for uncertain terms cause considerable difficulties if a superior estate comes to an end. The article shows that the common law addressed this difficulty, not entirely consistently, before 1925, but there are still real difficulties in the operation of escheat were uncertain terms to be permitted.
1 The fullest expositions are S. Bright, “Uncertainty in Leases – Is It a Vice?” (1993) 13 L.S. 38 and K. Gray and S.F. Gray, Elements of Land Law, 5th ed. (Oxford 2008), 321–26.
2 Mexfield Housing Co-Operative Ltd. v Berrisford [2011] UKSC 52; [2012] 1 A.C. 955, at [34], per Lord Neuberger, and at [115], per Lord Dyson.
3 Prudential Assurance Co. Ltd. v London Residuary Body [1992] 2 A.C. 386, 396.
4 Mexfield Housing Co-Operative Ltd. [2011] UKSC 52; [2012] 1 A.C. 955, at [34].
5 Prudential Assurance Co. Ltd. [1992] 2 A.C. 386, 390. One risk here is in altering the nature of the proposed arrangement. While Lord Templeman suggested the parties could have created a five- or 10-year term determinable on the land being needed for road widening, it seems likely that the short-term arrangement envisaged by the parties was not intended to last even that long.
6 Mexfield Housing Co-Operative Ltd. [2011] UKSC 52; [2012] 1 A.C. 955, at [87]–[88], per Lady Hale.
7 Say v Smith (1563) Plowd 269; 75 E.R. 410 seems to fall into this category. The lease in question involved periodic payments to be made after each 10-year period and was described as “perpetual”. For problems with perpetual renewability and the statutory approach to the problem, see M. Pawlowski and J. Brown, “Perpetually Renewable Leases – A Reappraisal” [2014] Conveyancer 482.
8 Prudential Assurance is an example.
9 Low, K.F.K., “Leases and the Fixed Maximum Duration Rule Yet Again, but with a Twist” (2011) 127 L.Q.R. 31, p. 35Google Scholar.
10 Hansmann, H. and Kraakman, R., “Property, Contract, and Verification: The Numerus Clausus Problem and the Divisibility of Rights” (2002) 31 J.L.S. S373, p. S403CrossRefGoogle Scholar.
11 M. Dixon, “The Past, the Present and the Future of Land Registration” [2013] Conveyancer 463.
12 Bright, “Uncertainty in Leases”, p. 49 (considering this to be a policy issue); Gray and Gray, Elements of Land Law, p. 325 (identifying a possible conflict with the “perpetual” nature of the fee simple).
13 Bright, “Uncertainty in Leases”, p. 45.
14 See text at notes 40 and 41 below. Uncertain or perpetual leases are possible if the lease is not granted out of a freehold estate, but directly by the Crown, see note 78 below.
15 There are, of course, exceptions to the nemo dat principle (see D. Sheehan, The Principles of Personal Property Law (Oxford 2011), 426–27), but nemo dat remains the explanatory principle here.
16 Re Leach [1912] 2 Ch. 422, 428–9. The case concerned equitable rights, but the logic is applicable to legal rights too. Challis considers this a general rule applicable to all estates (H.W. Challis, The Law of Real Property: Chiefly in Relation to Conveyancing, 2nd ed. (London 1892), p. 227).
17 Distinguishing between the two types of estate is difficult; see C. Harpum, S. Bridge, and M. Dixon (eds.), Megarry and Wade, the Law of Real Property, 8th ed. (London 2012), 64–65. The distinction is less important in relation to leasehold estates as the principal practical consequence (the requirement of entry to determine a conditional fee) does not apply in relation to leaseholds; see L.A. Goodeve, The Modern Law of Real Property, 5th ed., H.W. Elphinstone and F.T. Maw (eds.) (London 1906), p. 195.
18 Darley v Langworthy (1774) 3 Bro. PC 359; 1 E.R. 1369. A widow's life estate on condition that she continued to reside in the premises became absolute when it became impossible to fulfil the condition.
19 If the approach to construction taken in Bracton were taken, this would be construed as a determinable freehold life estate (see text at notes 30 and 31 below).
20 See text at notes 40 and 41 below.
21 Bright, “Uncertainty in Leases”, p. 39.
22 Ibid., at pp. 41–42.
23 Breams Property Investment Co. Ltd. v Stroulger [1948] 2 K.B. 1.
24 Mexfield Housing Co-Operative Ltd. [2011] UKSC 52; [2012] 1 A.C. 955, at [33], per Lord Neuberger.
25 Ibid., at para. [88], per Lady Hale. The same point is made by Lord Templeman in Prudential Assurance Co. Ltd. [1992] 2 A.C. 386, 395.
26 The possible formalities consequences of this reasoning were not raised in Mexfield. Lord Neuberger's description of the situation as “equivalent to” a fixed-term tenancy avoids the problem (Mexfield Housing Co-Operative Ltd. [2011] UKSC 52; [2012] 1 A.C. 955, at [55]).
27 Mexfield Housing Co-Operative Ltd. [2011] UKSC 52; [2012] 1 A.C. 955, at [55].
28 J.M. Kaye, Medieval English Conveyances (Cambridge 2009), 254–55.
29 E.g. S.E. Thorne (ed.), Bracton on the Law and Customs of England (Cambridge, MA, 1968), vol. 2, p. 92.
30 It is made clear in Thorne, Bracton, p. 57, that a grant for the term of life takes effect as a free tenement, unlike a term of years. Medieval law did sometimes use the language of lessor and lessee for life interests seemingly granted as term of years, but the estates were freehold (see T. Littleton, Littleton's Tenures in English, E. Wambugh (ed.) (Washington, DC, 1903), §57, p. 2).
31 Thorne, Bracton, p. 92.
32 Thorne, Bracton, p. 92.
33 The language of seisin was used more flexibly in earlier periods; see Maitland, F.W., “The Seisin of Chattels” (1885) 1 L.Q.R. 324Google Scholar.
34 Thorne, Bracton, p. 92.
35 See Baker, Introduction to English Legal History, pp. 299–301. The position changed from the late fifteenth century.
36 This paragraph suggests that the description of the “rule” applied by the Supreme Court in Mexfield Housing Co-Operative Ltd. [2011] UKSC 52; [2012] 1 A.C. 955, at [49], [50], [54], was mistaken in several respects. The Supreme Court held that there was a common law rule that an attempt to grant a lease to a living human being for an uncertain period failed, but instead created a lease for life, which is now converted by the Law of Property Act 1925, s. 149(6) into a lease for 90 years, determinable on the tenant's death. The statement of the common law rule in this process is flawed (for similar, but not identical, criticism, see Low, K.F.K., “Certainty of Terms and Leases: Curiouser and Curiouser” (2012) 75 M.L.R. 401, pp. 404–06CrossRefGoogle Scholar). First, Bracton considers that an attempt to create an uncertain term creates only a freehold life estate, not a term of years for life. The estate created is therefore not within s. 149(6). Instead, it seems that that the conversion of uncertain terms to life estates was abolished as a consequence of the impossibility of creating freehold life estates in s. 1 of the Law of Property Act 1925. Second, rather than a rule that a lease which failed for uncertainty could be a life estate, the actual rule of construction was that a grant for a certain term denied the possibility of a freehold, whether in fee or for life. Third, the reasoning in Berrisford focuses on livery of seisin simply as a “formality” requirement (ibid. at e.g. para. [25], per Lord Neuberger, at para. [89], per Lady Hale), which could be abolished (ibid., at para. [41], per Lord Neuberger, referring impliedly to Real Property Act 1845, s. 3, requiring a deed in addition to livery of seisin and Law of Property Act 1925, s. 51, abolishing livery of seisin). As Kaye notes, in the medieval period, livery of seisin was needed to make it “clear that some sort of freehold was meant to be given” (Kaye, Medieval English Conveyances, p. 241) and so was essential for the conferral of a freehold life estate. When one understands that seisin was a substantive right, one realises that the reasoning in the Supreme Court is like suggesting that giving possession in a lease is merely a “formality” requirement, rather than the conferral of an essential element of the estate itself. Further incisive historical criticism of the Supreme Court's reasoning in Mexfield can be found in J. Roche, “Constitutional Land Law: Mexfield and the 40-Shilling Freehold” in W. Barr (ed.), Modern Studies in Property Law: Vol 8 (Oxford 2015), ch. 16.
37 In relation to wills, the rule was abolished by the Wills Act 1837, s. 28.
38 Newlon Housing Trust v Alsulaimen [1999] 1 A.C. 313, 317, per Lord Hoffmann.
39 Western Australia v Ward [2002] HCA 28, at [432].
40 There is a good demonstration of this difficulty in a commentary on Littleton by the Elizabethan lawyer William Fleetwood (British Library Manuscript Harley 5225, f. 14).
41 Ibid., at §1, p. 1.
42 Administration of Estates Act 1925, ss. 45(1)(d), 46.
43 Insolvency Act 1986, ss. 315, 178, applied in Scmlla Properties Ltd. v Gesso Properties (BVI) Ltd. [1995] B.C.C. 793. It is arguable that this is not a form of escheat as temporal limitation, in that it is not a situation where the tenant in fee simple ceases to exist (Hardman, F.W., “The Law of Escheat” (1888) 4 L.Q.R. 318, 326–27Google Scholar). Insolvency law was also unknown for much of English legal history.
44 Coke's extra-judicial view that a fee simple estate granted to a corporation does not escheat, but rather reverts to the grantor seems to have been rightly rejected by the Privy Council in Armbrister v Lightbourn [2012] UKPC 40; [2013] 1 P. & C.R. 17, at [41], following the strong criticism of that view in Re Wells [1933] Ch. 29, especially by Lawrence L.J., 54–55.
45 Companies Act 2006, s. 1012.
46 Companies Act 2006, s. 1013.
47 Re Wells [1933] Ch. 29, 54–55.
48 Land Registration Act 2002, Explanatory Notes, at [133], confirmed as still accurate by the Crown Estate in an email to the author, 31 January 2014. According to the Crown Estate, in the financial year 2012–13, there were 776 instances of escheat in England, Wales, and Northern Ireland. This figure is higher than normal and affected by the use of escheat in personal insolvencies in Northern Ireland when the property in question was in negative equity. For an example of the application of escheat in a case of personal insolvency in Northern Ireland, see Ulster Bank v Dynes [2012] N.I.Ch. 29. The Crown Estate suspects that they do not learn of all dissolutions of foreign companies, such that the actual number of escheats may be higher than the figures given here, email to the author, 31 January 2014.
49 Bruton v London & Quadrant Housing Trust [2000] 1 A.C. 406.
50 E.g. Bright, S., “Leases, Exclusive Possession and Estates” (2000) 116 L.Q.R. 7Google Scholar.
51 Bruton [2000] 1 A.C. 406, 415.
52 For criticism in this vein, see Bright, “Leases, Exclusive Possession”, p. 9, and Dixon, M., “The Non-Proprietary Lease: The Rise of the Feudal Phoenix” (2000) 59 C.L.J. 25, pp. 27–8CrossRefGoogle Scholar. This type of distinction is not without precedent. In the mid-twentieth century, Megarry similarly distinguished between a “lease” and the “leasehold interest” (R.E. Megarry, A Manual of the Law of Real Property, revised impression (London 1949), 352.
53 Nemo dat reasoning also lies behind Lord Templeman's explanation for the proprietary effect of negative freehold covenants in Rhone v Stephens [1994] 2 A.C. 310.
54 Milmo v Carreras [1946] K.B. 306. The various “exceptions” to the rule all arise where the head lease may endure beyond the subtenancy, confirming that the underlying justification lies in the nemo dat principle (see A. Hill-Smith, “The Principle in Milmo v Carreras: When the Term of a Sub-Lease Equals or Exceeds that of the Head Lease” [2013] Conveyancer 509, pp. 510–11).
55 As Bracton put it, “though nothing is more certain than death nothing is more uncertain than the hour of death” (Thorne, Bracton, p. 92).
56 Smith v Widlake (1877) 3 C.P.D. 10.
57 Earl of Bedford's Case (1586) 7 Co.Rep. 7; 77 E.R. 421.
58 A. Fitzherbert, The New Natura Brevium of the Most Reverend Judge Mr Anthony Fitz-Herbert (London 1794), vol. 2, p. 198 (first printed in 1534).
59 Quare eject infra terminum was available for ejections of the tenant during the leasehold against the landlord, including successors in title of the original landlord.
60 Scmlla Properties Ltd. [1995] B.C.C. 793, 806–08.
61 Baker, Introduction to English Legal History, p. 242.
62 Baker, Introduction to English Legal History, p. 241.
63 Baker, Introduction to English Legal History, pp.272–4.
64 For the undermining and abolition of such rights, see Baker, Introduction to English Legal History, p. 257.
65 William Blackstone, Commentaries on the Laws of England (Oxford 1766), vol. 2, p. 245; Scmlla Properties Ltd. [1995] B.C.C. 793, 804–05.
66 <http://www.thecrownestate.co.uk/our-business/faqs/escheats-faqs/> (accessed 25 May 2015).
67 Hardman, “The Law of Escheat”, p. 329.
68 Gray and Gray, Elements of Land Law, p. 325.
69 <http://www.thecrownestate.co.uk/our-business/faqs/escheats-faqs/> (accessed 25 May 2015). Quite what would constitute “best price” would also be problematic. While actuarial calculations can be used when valuing a life interest, it seems less likely that an actuary would be able to provide calculations about some of the uncertain terms which appear in the cases, such as requiring land for road widening or the date of the Second World War ending.
70 M. Wonnacott, History of the Law of Landlord and Tenant (Clark, NJ, 2012), p. 144. It is questionable whether these rights to land were always regarded as creating a lease situation or whether the language of “tenancy” should be thought of as reflecting the idea of feudal tenancy. For discussion about the complicated nature of the tenancy by statute merchant, see McNall, C., “The Nature of the Tenancy by Statute Merchant” (2002) 23 Journal of Legal History 37–44CrossRefGoogle Scholar.
71 Tenancy by statute merchant in the Statute of Merchants 1285 (13 Edw.1. stat.3); tenancy by statute staple in the Statute of the Staple 1353 (27 Edw.3. stat.2, c.9) and tenancy by elegit in the Statute of Westminster II 1285 (13 Edw.1. c.18).
72 For leases to pay debts: Blamford v Blamford (1615) 3 Bulstrode 98, at 100; 81 E.R. 84, at 86, obiter per Coke C.J. For leases to raise a certain sum of money, Sir Andrew Corbet's Case (1599) 4 Co.Rep. 81b, 81b–82a; 76 E.R. 1058, 1059.
73 For the tenancy by statute merchant, see Thomas Fitzwilliam's reading in 1466, referring to “the certainty of their term” (a reading on the Statute of Merton 1236 in S.E. Thorne (ed.), Readings and Moots at the Inns of Court in the Fifteenth Century, vol. 1 (London 1952), vol. 71, p. 44). In relation to executors, in Sir Andrew Corbet's Case ((1599) 4 Co.Rep. 81b, 81b–82a; 76 E.R. 1058, 1059), there was discussion about the term coming to an end when the requisite sum has been raised, or would have been raised if the executors had collected it, preventing executors from extending the duration of the tenancy and showing that the end of the tenancy was seen as a predictable (and hence certain) event. Analogies are drawn to tenancy by elegit and statute merchant, to which the same rules seem to have applied (on which see McNall, “The Nature of the Tenancy”, p. 41).
74 Stat.37.Hen.8.c.9.
75 E.g. Australia (Fisher v Deputy Federal Commissioner of Land Tax (NSW) (1915) 20 C.L.R. 242, 248–49) and Canada (Wotherspoon v Canadian Pacific Ltd. (1987) 39 D.L.R. (4th) 169, 205–6).
76 City of London v Wood (1701) 12 Mod. 669, 687–88; 88 E.R. 1592, 1602.
77 Wotherspoon (1987) 39 D.L.R. (4th) 169, 205.
78 Australian perpetual leases are granted by the Crown, which does not grant them out of a fee simple estate.
79 There may also be further benefits in such a change; see Harpum, C.a, “Does Feudalism Have a Role in 21st Century Land Law?” (2000) 23 Amicus Curiae 21, 23–25Google Scholar.
80 This does not mean perpetual or uncertain terms would be desirable, simply that one objection to such terms would be overcome. Other objections, rooted in policy, would still remain.
81 On adverse possession's continuing justifications in registered land, see The Law Commission, Land Registration for the Twenty-First Century: A Consultative Document (Law Com., No. 254, 1998), 10.13–10.16.
82 Walker v Burton [2012] EWHC 978 (Ch), at [16]. The quoted text is from a decision made by a deputy adjudicator to the Land Registry.
83 Walker v Burton [2013] EWCA Civ 1228; [2014] 1 P. & C.R. 9, at [102]. The High Court was more sceptical, but regarded the “limbo” point as a technical one about genuinely ownerless property ([2012] EWHC 978 (Ch), at [111]–[112]), rather than taking the approach of the Court of Appeal, that “limbo” referred to uncertainty about, rather than absence of, ownership of the land.
84 The Law Commission, Land Registration for the Twenty-First Century: A Conveyancing Revolution (Law Com., No. 271, 2001), 11.26, 11.27.
85 Northern Ireland Law Commission, Consultation Paper Land Law (NILC 2, 2009), 2.17. Their final proposals, however, would not address the issue relating to certainty of term. Following concerns raised by the Treasury Solicitor, the Northern Ireland Law Commission proposed abolition of escheat in a manner which would continue to allow the Crown to continue to avoid liability in relation to leaseholds over escheat land (Northern Ireland Law Commission, Report on Land Law (NILC 8, 2010), 2.10–2.13).
86 Any reference to feudal land law is missing from The Law Commission's twelfth programme (The Law Commission, Twelfth Programme of Law Reform (Law Com., No. 354, 2014)), following a decision in the eleventh programme that greater public benefit would flow from other projects (The Law Commission, Eleventh Programme of Law Reform (Law Com., No. 330, 2011), 3.2–3.3. It seems that public benefit assessments can in fact defend the “indefensible”. For further discussion of continuing feudal elements in English land law and the difficulties of their interaction with land registration, see E. Nugee, “The Feudal System and the Land Registration Acts” (2008) 124 L.Q.R. 586.
87 Abolition of Feudal Tenure etc. (Scotland) 2000, ss. 2, 58. See the explanatory notes, at [24], [189]. The Crown in Scotland has a prerogative right to bona vacantia which is expressly unaffected by the abolition of feudal tenure (s. 58(2)(b)(i)). The relevant law is discussed in Re The Scottish Environmental Protection Agency [2013] C.S.I.H. 108, at [104]–[109].
88 See text at notes 65–68 above.
89 Authorised by Land Registration Act 2002, s. 82 (especially s. 82(2)(b)) and implemented by Land Registration Rules 2003, r. 173(1).
90 See notes 43–47 above.
91 Companies Act 2006, s. 1017(4). Such conditions can include the payment of money, although it seems likely that, if a fee simple were subject to a perpetual or potentially perpetual leasehold estate, any such payment would be very low.
92 One of the benefits of escheat is that, like relativity of title, it avoids a possible proprietary vacuum. The current position, where the Crown Estate may decline to grant a new fee simple in difficult situations (see text at note 69 above) undermines this benefit. Replacing the role of the Crown Estate with the court seems likely to encourage resolution in such difficult situations, although it must be acknowledged that s. 1017 of the Companies Act only states that a court “may” make a vesting order, so the court is not required to do so.
93 Examples of situations where the Crown chooses to disclaim bona vacantia to avoid such liabilities include: property in negative equity, property subject to onerous covenants and contaminated land (see <https://www.gov.uk/government/publications/bona-vacantia-dissolved-companies-bvc1/bona-vacantia-dissolved-companies-bvc1#disclaimers> (accessed 25 May 2015)). All of these situations might also apply when a decision is made to disclaim in insolvency, e.g. Ulster Bank [2012] N.I.Ch. 29 (property in negative equity) and J. Stephens, “Environmental Considerations in Pending Insolvency Proceedings” (2010) 5 Corporate Rescue and Insolvency 202 (contaminated land). My thanks to Riz Mokal for discussion on the contaminated land point.
94 See text at note 69 above.
95 This problem was noted in relation to forfeiture under the mortmain legislation by Earl Jowitt in Attorney-General v Parsons [1956] A.C. 421, 435.
96 E.g. Hanchett-Stamford v Attorney General [2008] EWHC (Ch) 330; [2009] Ch. 173, at [37], [47], where Lewison J. rejected the view that the assets of an unincorporated association with only one surviving member were bona vacantia for the Crown, describing such a position as a “divesting” of the remaining member and invoking the guarantee of peaceful enjoyment of possession found in Article 1 of the First Protocol of the European Convention of Human Rights. In Re DWS [2001] Ch. 568, the majority of the Court of Appeal also avoided finding that property passed as bona vacantia under the Administration of Estates Act 1925. Interestingly, the only judge (Sedley L.J.) to support a finding of bona vacantia did so seemingly on the premise that the Crown would make an “equitable” payment to someone not entitled under the statute but otherwise deserving (at [39], [41]).
97 The Law Commission, Land Registration for the Twenty-First Century: A Consultative Document, 10.13, 10.15.