England and Wales Court of Appeal (Civil Division) Decisions

Court of Appeal

		21 November 1991

1. Giving judgment, SIR DONALD NICHOLLS V-C said: Mrs Julian has lived in a rented flat on the first floor, 55 Hollingbourne Road, London SE24, since early 1966. She lived there with her husband, and subsequently with their children, from the time of their marriage in March 1966. The flat was rented on a weekly tenancy from the plaintiff, Mrs Crago. The flat was the Julians' matrimonial home and, although it was in the sole name of Mr Julian, they assumed that the tenancy belonged to them jointly.
2. In 1982 Mr and Mrs Julian were divorced. Mr Julian left the flat and had nothing further to do with it. In the matrimonial proceedings he gave an undertaking:

. . . within 14 days of the granting of the Decree Absolute herein to do all acts and things as may be necessary to transfer to the Petitioner the tenancy of the flat situate at 55 Hollingbourne Road, London SE24 and which Tenancy is presently vested in his sole name.

Nothing was done to transfer the tenancy. Mr and Mrs Julian assumed that nothing further needed to be done. They assumed that the effect of the document was to transfer Mr Julian's interest in the flat to his wife.

3. Mrs Julian stayed in the flat. The two children grew up and eventually left. Mrs Julian paid the rent. She alone dealt with the managing agents. She spent substantial sums of money on the flat in the belief that she was a protected tenant. New rent books were issued by the agents, one in February 1983 and another in November 1986, both naming Mr Julian as the sole tenant. In 1987 Mrs Julian experienced some difficulty with housing benefit. She wrote to the managing agents and asked them to change the name of the tenant shown in the rent book from her former husband to herself. She thought there would be no difficulty about this. She wrote:

Could I now have the tenancy (of 55 Hollingbourne Rd) changed over to my name please. If you still need a letter from my ex-husband, it could be arranged. . . . P.S. Here is a copy of the divorce paper stating transferring the tenancy to me. Thanking you.

That was on October 8 1987.

4. Unfortunately for Mrs Julian, the agents were not willing to do this. They refused to accept further payments of rent from her. Until they received this letter the agents did not know that Mr Julian had moved away and given up all interest in the tenancy. A few months later they served on Mr Julian a notice to quit dated February 18 1988, terminating his tenancy from March 14 1988. Because he was no longer in possession, he did not become entitled to any statutory protection. Proceedings against Mrs Julian, seeking possession of the flat, were begun by Mrs Crago in Lambeth County Court on March 28 1988. The trial took place before Judge MacNair and he gave judgment in favour of the lessor, Mrs Crago, on May 17 1990.
5. There were several issues before the judge. He held, first, that the contractual tenant was Mr Julian alone; second, that the tenancy was never assigned to Mrs Julian; third, that the tenancy was not determined until the expiry of the notice to quit in March 1988; and, fourth, that the plaintiff was not estopped, by the conduct of herself or her agents, from claiming possession from Mrs Julian. On this appeal, brought by Mrs Julian, only the second of those four determinations is being challenged. That is the only issue before us in this court. Counsel for Mrs Julian accepted that for him to succeed on this appeal he must establish that, before the notice to quit expired, Mr Julian had assigned the tenancy to his former wife.
6. On the issue of assignment the judge found that the tenancy did not include a term prohibiting assignment. But he decided against Mrs Julian on two grounds: first, that as a matter of law, the tenancy could be assigned only by deed and, second, that even if an assignment could be made orally, there were here no words or conduct which could give rise to an assignment. The judge reached his overall conclusion with reluctance. He said that the consequences for Mrs Julian, if she lost, were very serious. No reason had been given by Mrs Crago for wishing to get Mrs Julian out of the flat which for so long had been her home and Mrs Julian's lack of statutory protection stemmed simply from these parties, inexperienced in legal matters, not having executed a formal deed of assignment of the tenancy. Had either Mrs Julian or her former husband realised a deed was necessary, there would have been no difficulty in getting one drawn up by a solicitor and executed by them.
7. I turn, first, to the question of law: could this tenancy be assigned effectively only by deed? I can start with the summary of the law set out in Megarry and Wade on the Law of Real Property, 5th ed, p665:

A legal lease, once created, can be transferred inter vivos only by deed, in accordance with the general rule. This applies to all legal leases, even those created orally, eg a yearly tenancy. However, on principles similar to those applicable to the creation of leases, an oral or written assignment will be effective in equity as between the assignor and the assignee as a contract to assign, if sufficiently evidenced by writing or part performance.

8. In the present case nothing less than an assignment at law will assist Mrs Julian. The view stated in Megarry and Wade is also expressed in all the other leading textbooks on this subject. Undaunted, Mr Phillips contended that these views are erroneous. The general rule mentioned by Megarry and Wade is a reference to certain provisions in the Law of Property Act 1925. Mr Phillips submitted that, properly interpreted, these provisions do not preclude a valid assignment otherwise than by deed of a lease which has been created orally. The statutory provisions are to be found in Part II of the Law of Property Act 1925. The material parts of the relevant sections, sections 52 to 54, provide:

52.--(1) All conveyances of land or of any interest therein are void for the purpose of conveying or creating a legal estate unless made by deed.

(2) This section does not apply to--

(a)   assents by a personal representative;

(b)  disclaimers made in accordance with section 54 of the Bankruptcy Act 1914 or not required to be evidenced in writing;

(c)   surrenders by operation of law, including surrenders which may, by law, be effected without writing;

(d)  leases or tenancies or other assurances not required by law to be made in writing;

(e)   receipts not required by law to be under seal;

(f)   vesting orders of the court or other competent authority;

(g)  conveyances taking effect by operation of law.

53.--(1) Subject to the provisions hereinafter contained with respect to the creation of interests in land by parol --

(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorised in writing, or by will, or by operation of law;

54.--(1) All interests in land created by parol and not put in writing and signed by the persons so creating the same, or by their agents thereunto lawfully authorised in writing, have, notwithstanding any consideration having been given for the same, the force and effect of interests at will only.

(2) Nothing in the foregoing provisions of this Part of this Act shall affect the creation by parol of leases taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without taking a fine.

9. This is a hotchpot of sections reproducing, with some amendments, provisions which before 1925 were to be found in the Statute of Frauds 1677 and the Real Property Act 1845. I consider section 53 first. The grant of a tenancy is the creation of an interest in land. An assignment of a tenancy of land is the disposal of an interest in land. Thus, both the grant of a tenancy and the assignment of a tenancy fall four-square within section 53(1)(a). A tenancy of land cannot be created or assigned save by writing, or by will, or by operation of law. Para (a), however, is expressed to be 'subject to the provisions hereinafter contained with respect to the creation of interests in land by parol' (emphasis supplied). Section 54(2) is such a provision. Section 54(2) provides that the statutory requirements of Part II of the Act do not affect 'the creation' by parol of leases taking effect in possession for a term not exceeding three years at a full market rent. I pause to observe that, thus far, there can be no doubt as to the meaning of the statutory provisions: interests in land cannot be created or disposed of except in writing, but a lease in possession at a market rent for up to three years can be validly created orally. Hence, and this is to be noted, the effect of these statutory provisions is indubitably to draw a distinction between the manner in which a short lease may be created and the manner in which it may be assigned.
10. The point is not wholly free from authority. Section 53(1)(a) derives from section 3 of the Statute of Frauds and section 54 derives from sections 1 and 2. In Botting v Martin (1808) 1 Camp 317, Serjeant Best argued that by the leases mentioned in section 3, as requiring to be assigned in writing, must be intended such leases as are required by sections 1 and 2 to be created in writing, viz, leases conveying a larger interest to the party than a term for three years. He submitted:

As a lease from year to year could be originally made by parol, there was no reason why it might not be assigned by parol; and the words of the statute would bear this interpretation, which was clearly consistent with its general import.

11. McDonald CB rejected the submission.
12. In my view, section 53 provides an insuperable obstacle for Mrs Julian in the present case. Like McDonald CB, I consider the statutory language really leaves no room for reaching a different conclusion, even though the result is the curious distinction I have mentioned. Even if there were room for doubt I would be slow to upset an interpretation of statutory provisions which has been accepted by conveyancers for a very long time.
13. This conclusion is sufficient to dispose of this appeal, because here there was no assignment in writing. However, I do not think I should leave the arguments of law there, given the existence also of section 52. One of the arguments advanced by Mr Phillips, if correct, would have the effect that, although section 53(1)(a) requires writing for the assignment of an orally created tenancy, section 52 does not apply. Such an assignment does not require to be made by deed.
14. This submission raises a point on the interpretation of section 52, which seems not to have been the subject of decision. I see force, as a matter of common sense and practicality, in the arguments of Serjeant Best in Botting v Martin. But, as I have already said, the language of sections 53 and 54 does not admit of that interpretation. Quite apart from section 52, the law imposes a formal requirement on the assignment of an orally created lease which does not apply to its creation. With that in mind, I can see no justification for interpreting the exception in section 52(2)(d) as applicable to the assignment of leases not required to be in writing as well as to their creation. Section 52 (1) must be read with the definition of 'conveyance' in section 205. It bites on particular types of transactions effected by instruments in writing (see Rye v Rye [1962] AC 496): conveyances, mortgages, leases and so forth. They are void, for the purpose of conveying or creating a legal estate, unless made by deed. Section 52(2) then excepts from the requirement of a deed certain instruments: for example, assents by a personal representative, certain disclaimers, surrenders by operation of law and (para (d)) leases or tenancies not required by law to be made in writing. That is the ambit of the exception. In the case of leases, the exception does not touch anything other than the lease itself. Subsequent dispositions of the lease, whether by way of mortgage, charge, assignment or otherwise, are not within para (d), unless they themselves qualify as 'other assurances not required by law to be made in writing'. An assignment of a lease does not so qualify.
15. I am confirmed in this construction of section 52 by the terms of its ancestor section, section III of the Real Property Act 1845. So far as material, this provided as follows (for ease of reading I have numbered the separate limbs):

. . . [1] a lease, required by Law to be in Writing, of any Tenements or Hereditaments, and [2] an Assignment of a Chattel Interest . . . in any Tenements or Hereditaments, and [3] a Surrender in Writing of an Interest in any Tenements or Hereditaments . . . not being an Interest which might by Law have been created without Writing . . . shall also be void at Law, unless made by Deed . . .

16. A 'chattel interest' in land is a reference, in modern terminology, to a leasehold interest. This harks back to the old classification whereunder an interest in land for a term of years was classed as a chattel: a chattel real. Again, the wording of this section leaves no room for doubt. A clear distinction is drawn between leases and assignments of leases. In the former case, but not the latter, there is an exception for leases not required by law to be in writing.
17. In my view, therefore, the law concerning the need for a deed is correctly stated in Megarry and Wade. To be effectual as a legal assignment, a transfer of Mr Julian's tenancy required to be by way of deed.
18. Mr Phillips sought to place some reliance on the decision of this court in Thomas Pocklington's Gift Trustees v Hill (1989) 21 HLR 391.* There the court based its decision on a finding of an oral assignment of a periodic tenancy. But, so far as one can see, the attention of the court was not drawn to the provisions of the Law of Property Act. No argument seems to have been addressed to the court on sections 52 to 54, nor is the need for a deed mentioned or alluded to in the judgments. This case, therefore, is in no sense an authority on the interpretation of those sections. All that can be said is that it seems to have been assumed on all sides that a deed was not necessary. But that is not a decision by the court on the point.
19. This appeal, therefore, must fail. The judge's decision was correct. Accordingly, I shall not prolong this judgment by considering whether there was a purported oral assignment in the present case, beyond observing that I should not be taken as necessarily agreeing with the judge's conclusion on this issue. As it is, however, I would dismiss this appeal. Mrs Julian never became the tenant. Of course, a deed would not have been necessary if Mrs Crago or her agents had expressly or impliedly agreed to Mrs Julian's becoming the tenant and had accepted her as the tenant in place of her former husband. There could then have been a new tenancy, which could have been created orally. Unfortunately for Mrs Julian, that never happened.
20. RUSSELL and LEGGATT LJJ agreed and did not add anything.

The electronic text of this judgment was provided by Estates Gazette, whose assistance is gratefully acknowledged.