Prudential Assurance Co Ltd v London Residuary Body [1992] 2...

Facts

• Prudential Assurance Co Ltd sold a strip of land to the London Residuary Body's predecessor, with an agreement to lease it back until the council required the land for road widening.
• The agreement did not specify a clear end date, stipulating only that possession would last until needed for road works.
• Prudential remained in possession and continued to pay rent after the transaction.
• The London Residuary Body, as successor in title, served notice to quit in order to regain possession of the land.
• Prudential challenged the validity of the notice, arguing it could not be effective until the land was actually needed for road widening.

Issues

1. Whether the original agreement created a valid lease despite the absence of a certain term.
2. Whether possession and payment of rent by the tenant and acceptance by the landlord created a periodic tenancy.
3. Whether the landlord could terminate the periodic tenancy by notice, regardless of the original purpose of the agreement.
4. Whether the parties’ intentions could override the legal requirement for certainty of term in leases.

Decision

• The court held that the original lease agreement was void due to uncertainty as to its maximum duration, applying the rule from Lace v Chantler.
• The court found that the conduct of the parties created a periodic tenancy, since possession was taken and rent paid and accepted.
• The periodic tenancy could be terminated by notice to quit, without the need for the land to be required for road widening.
• The court rejected Prudential’s argument that the original intentions of the parties could render the agreement effective in law.

Legal Principles

• For a lease to be valid, the maximum duration must be certain or ascertainable at the time the lease commences.
• An agreement for a lease for an uncertain term is void; this rule is established in Lace v Chantler [1944] KB 368.
• Possession and acceptance of rent can establish a periodic tenancy, which provides legal certainty as it is terminable by proper notice.
• Contractual intention cannot override the legal requirement for certainty of term in property law.

Conclusion

The case confirms that a lease lacking a certain term is void, regardless of the parties’ intentions. However, where there is possession and payment of rent, a periodic tenancy is created, which may be terminated by notice from either party. The court’s strict adherence to the requirement for certainty of term ensures clarity and predictability in leasehold arrangements, reinforcing established property law principles.