INTRODUCTION

In England and Wales, one of the 3 essential requirements for creating a leasehold interest, is that it has a term certain[1]. If there is no term certain, the 'leasehold interest' is void / invalid[2] / ineffective; in other words, the legal relationship (the lease/tenancy relationship[3]) the parties attempted to create (necessarily, lessor and lessee), between them, fails to form - the stipulated tenancy/lease - the proprietary interest - does not come into existence.

While the legal relationship (the lease) the parties attempted to create, between them, fails to form - the parties may still have acted in a way which, properly viewed, did create some kind of legal relationship between the parties. Where the parties entered into a contractual relationship, an element of which, was the bestowing of a leasehold interest on one of the parties, by the other, there will at least be the contractual relationship. But the parties actions may be wider than this. For instance, the actions of the parties may extend to having acted in purported compliance with the void 'lease' - in particular

(a) the putative landlord may have given, and the putative tenant have taken, possession of the property; and

(b) the putative tenant may have paid the putative landlord, money periodically, in respect to the possession and property. 

How will the law approach discerning what, if any, legal relationship did formed between the parties, as a result of these actions?

This issue will be considered in light of:

(1) Lace v Chantler [1944] KB 368; [1944] 1 All ER 305 ('Lace'), Court of Appeal (Lord Greene MR; Mackinnon LJ; Luxmoore LJ on 11.2.44;

(2) Harvey v Pratt [1965] 1 WLR 1025 ('Harvey'), Court of Appeal (Lord Denning MR; Davies LJ; Russell LJ) on 6.5.65;

(3) Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 ('Prudential'), House of Lords (Lord Templeman; Lord Griffiths; Lord Goff; Lord Browne-Wilkinson; Lord Mustill) on 16.7.92;

(4) RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG [2010] UKSC 14 ('RTS'), Supreme Court (Lord Phillips JSC; Lord Mance JSC; Lord Collins JSC; Lord Kerr JSC; Lord Clarke JSC

(5) Mexfield Housing Co-operative Ltd v Berrisford [2012] 1 AC 955 [2011] 3 WLR 1091 ('Mexfield'), Supreme Court - 7 member (Lord Hope DPSC; Lord Walker JSC; Lady Hale JSC; Lord Mance JSC; Lord Neuberger JSC; Lord Clarke JSC; Lord Dyson JSC) on 9.11.11;

(6) Avondale Park Ltd v Miss Delaney's Nursery Schools Ltd [2023] EWCA Civ 641; [2023] L. & T.R. 29 ('Avondale'), Court of Appeal (Lewison LJ; Carr LJ; Nugee LJ) on 7.6.23; 

(7) Pretoria Energy Co (Chittering) Ltd v Blankney Estates Ltd [2023] EWCA Civ 482 [2023] L. & T.R. 28 ('Pretoria'), Court of Appeal (Lewison LJ; Arnold LJ and Birss LJ) on 9.5.23;

(8) AP Wireless II (UK) Ltd v On Tower (UK) Ltd [2025] EWCA Civ 971 ('AP Wireless'), Court of Appeal (Vos MR, Moylan LJ and Asplin LJ) on 25.7.25;

Initial Points

A few initial points can be made:

(1) the leading case in this area is AP Wireless. Readers short on time may wish to skip to the section below on AP Wireless;

(2) where the authorities refer to what is void as the 'lease', they are referring to the leasehold interest being void. And linked to this point - in this article, lease/tenancy are used (interchangeably) in their proprietary sense, rather than in a documentary sense. So where a 'lease' is void, it is the leasehold interest which the 'lease' purported to create, which is void, rather than the lease document being void.

(3) a further point about labels used in the authorities. Some of the judgments refer to the respective parties as 'landlord' and 'tenant' - when the Court is discerning whether or not there is, actually, a legal relationship of landlord and tenant between them (and then, separately, whether an alternative legal relationship arose, whether merely contractual (a contractual licence) or also proprietary (an alternative tenancy - a periodic tenancy)). In this article, the labels 'putative landlord' and 'putative tenant' are used, to indicate the apparent roles each of the parties has (but may, actually, not have). 

(4) the law here is different as between: (1) single term tenancies/leases; and (2) periodic tenancies/leases[4];

(5) there have been some judicial calls for Parliamentary law reform in this area, advocating: (a) the abolish of the rule completely; or (b) a rationalisation of how the law here applies to periodic tenancies[5].

CREATION FREEDOM

The law generally enables parties to create the legal relationships (sometimes called 'legal relations') they want with each other, within a menu of recognised types of legal relationships (contract; fiduciary; bailment, agency etc.). There are however some minimum requirements to the formation of certain types of legal relationships - and this is particularly so for the creation of legal relationships creating proprietary interests - interests in land/property. Proprietary legal relationships can only be created if they have certain specific attributes. If they meet the criteria for that legal relationship, the legal relationship can form. And conversely, when the criteria for that legal relationship is not met, the legal relationship cannot form.

One way legal relationships can form, is from the actions (in a wide sense - including words / communications (written or oral)) of the parties[6]. 

By way of example, when determining what legal relations were formed from communications, Lord Clarke in RTS said that the relevant question was whether the communications between the parties:

'…[lead] objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations.' [bold added]

Moreover, the legal relationships the parties form between themselves (or not), is a matter of law, rather than, strictly speaking, what the parties (subjectively) intended to create. In Mexfield, Lord Neuberger said, at paragraph 17:

'...a tenancy agreement has to be interpreted in the same way as any other written contract, so the precise rights and obligations of the parties under it must depend on the terms which the parties have agreed and the circumstances in which they were agreed. However, in some circumstances, there may be principles of law which result in the parties' intention being frustrated or modified, and, as is clear from the reasoning in Street v Mountford [1985] AC 809, the legal consequences of what the parties have agreed is a matter of law rather than dependent on what the parties intended.'

TERM CERTAIN

The requirement (or rule) that a leasehold interest must have a term certain (known as 'the rule against term uncertainty', or 'rule against uncertainty'), is ancient in origin. It is considered fundamental to the concept of a leasehold interest. 

Single term leases

2 certainties ascertainable from the outset

It is a requirement that the leasehold interest must have: (a) certain beginning; and (b) a certain ending. These can be labelled, the '2 certainties' (though it is sometimes thought of as the 3 certainties - the 3 certainties[7] being (i) in the commencement of the term, (ii) in the continuance of it, and (iii) in the end of it). 

This is because, the leasehold interest - the proprietary interest being created - is an 'estate for years' - i.e. it is an estate, for a term (only). For it to only be for a term, it is said that:

(1) there must be certainty over when this term will be. 'A term of years can only be defined by indicating the commencement and the termination' (Harvey, Russell LJ, at 1027); and

(2) both (a) the certain beginning; and (b) the certain ending, must be known/ascertainable - i.e. be certain - at the creation of the leasehold interest. In Prudential, Lord Browne-Wilkinson said that the rule '...requires the maximum duration of a term of years to be ascertainable from the outset' (at 396-397).

One result of having a certain end date, is that the term cannot be indefinite[8].

In Pretoria, Lewison LJ (with whom Arnold LJ and Birss LJ agreed) posed the question: 'what terms does the law require as essential for the creation of a legally binding agreement for lease?' (paragraph 41). As to this, Lewison LJ in Pretoria said, at paragraphs 40 to 44:

'A lease (or a term of years absolute) is one of two categories of legal estate recognised by the law. Right back to the beginnings of the common law, it has been a requirement of a valid lease that it has a certain beginning and a certain ending. Coke on Littleton put it this way at 45b:

"["Terminus"] in the understanding of the law does not only signify the limits and limitation of time, but also the estate and interest that passes for that time."

Blackstone's Commentaries on the Laws of England, vol. II, says, at 143:

"Every estate which must expire at a period certain and prefixed, by whatever words created, is an estate for years. and therefore this estate is frequently called a term, terminus, because its duration or continuance is bounded, limited and determined: for every such estate must have a certain beginning, and certain end."

These commentators are supported by authority both ancient and modern. In Say v Smith (1563) 1 Plow. 269, 272 Brown J is reported as having said:

"… every contract sufficient to make a lease for years ought to have certainty in three limitations, viz. in the commencement of the term, in the continuance of it, and in the end of it: so that all these ought to be known at the commencement of the lease, and words in a lease, which don't make this appear, are but babble…And these three are in effect but one matter, shewing the certainty of the time for which the lessee shall have the land, and if any of these fail, it is not a good lease, for then there wants certainty."

All these statements were approved by the House of Lords in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386.

Similarly, in the Bishop of Bath's case (1605) 6 Co. Rep. 34b the court held that:

"… every lease for years ought to have a certain beginning, continuance and end."

Lord Templeman in Prudential affirmed that the '500 years of judicial acceptance of the requirement that a term must be certain applies to all leases and tenancy agreements' (Prudential, 394F)

Lord Neuberger in Mexfield also undertook an interesting review of the some of the authorities in this area[9].

Certainty of beginning

While in the majority of authorities referred to in this article, it is certainty of ending, which is in contention, it is helpful to note that certainty of beginning is just as important. Lewison LJ in Pretoria referred to Harvey, wherein Lord Denning MR said at 1026:

'It has been settled law for all my time that, in order to have a valid agreement for a lease, it is essential that it should appear, either in express terms or by reference to some writing which would make it certain, or by reasonable inference from the language used, on what day the term is to commence.'

Lewison LJ in Pretoria made reference to some authorities[10], and then said, at paragraph 57:

'The time from which the term of a lease is to begin is, in my judgment, a term that the law regards as essential to the creation of a binding contract for lease. Thus, even where it is plain that the parties intended to enter into a binding contract for lease, if the time from which the lease is to begin is uncertain, the agreement is incomplete; and there is no binding contract.'

Inference 

It is sometimes possible to determine the term start and end dates, by way of inference, from surrounding facts[11].

Periodic tenancies

The rule against term uncertainty is fairly straightforward, when applied to single term lease. But subsequent to the rule against term uncertainty being established (many centuries ago), the law went on to recognised the concept of a periodic tenancy. And this then caused some serious problems: how exactly does the rule against term uncertainty apply to periodic tenancies? Here we enter an area of law which Baroness Hale in Mexfield described as having an Alice in Wonderland quality about it. It is, frankly, not easy to follow. 

In Mexfield, Baroness Hale started her judgment, at paragraphs 87 and 88, by saying:

'Periodic tenancies obviously pose something of a puzzle if the law insists that the maximum term of any leasehold estate be certain. The rule was invented long before periodic tenancies were invented and it has always been a problem how the rule is to apply to them. In one sense the term is certain, as it comes to an end when the week, the month, the quarter or the year for which it has been granted comes to an end. But that is not the practical reality, as the law assumes a re-letting (or the extension of the term) at the end of each period, unless one or other of the parties gives notice to quit. So the actual maximum term is completely uncertain. But the theory is that, as long as each party is free to give that notice whenever they want, the legal maximum remains certain. Uncertainty is introduced if either party is forbidden to give that notice except in circumstances which may never arise. Then no one knows how long the term may last and indeed it may last for ever.'

These rules have an Alice in Wonderland quality which makes it unsurprising that distinguished judges have sometimes had difficulty with them...'

Later, in Mexfield, Baroness Hale said, at paragraph 93:

'There is a rule against uncertainty which applies both to single terms of uncertain duration and to periodic tenancies with a curb on the power of either party to serve a notice to quit unless and until uncertain events occur.'

Lord Neuberger (with whom Lord Hope DPSC; Lord Walker JSC; Lord Mance JSC; Lord Clarke JSC; Lord Dyson JSC agreed) in Mexfield:

(1) summarised, what the rule against term uncertainty prohibits, in relation to periodic tenancies: it is '...a fetter of uncertain duration on the right to serve a notice to quit...' (paragraph 34). Such are said to be objectionable or repugnant. 

(2) explained, after considering the rule against term uncertainty in regard to single term leases, at paragraphs 28 to 32, that:

'The position with regard to periodic tenancies containing a fetter on the right of either or both parties to serve a notice to quit seems to be much the same. The concept of a periodic tenancy appears to have originated in a suggestion in Burgh v Potkyn (1522) YB 14, Hen 8, f10 pl 6, but it does not seem to have been accepted by the courts until the end of the 17th century, and then only on special facts: see Taylor v Seed (1696) Comb 383. Accordingly, there is not the long established learning which there is in relation to terms of uncertain duration.

In Doe d Warner v Browne (1807) 8 East 165, an agreement provided that a tenancy at £40 per annum would not be determined so long as the tenant paid the rent and did not harm the landlord. At p 166, Lord Ellenborough CJ said in argument that it would be “inconsistent with, and repugnant to” a “tenancy from year to year” that “it should not be determinable at the pleasure of either party giving the regular notice”. In his judgment on the following page, Lawrence J said much the same thing, tantalisingly (as it appears to have been in an unreported case) suggesting that Lord Mansfield had held otherwise, in a view which had “been long exploded.”

Mr Browne subsequently obtained equitable relief from Lord Eldon LC: see Browne v Warner (1807) 14 Ves Jun 156 and (1808) 14 Ves Jun 409. However, these reports only cover the grant of interlocutory relief, and the precise basis for its grant is not entirely clear. In those circumstances, although [counsel for the putative tenant] seeks to derive assistance from Lord Eldon's observations (as did Malins V-C in In re King's Leasehold Estates; Ex p East of London Railway Co (1873) LR 16 Eq 521, 526–527), I do not think that any conclusions can be safely drawn from his decision, save, perhaps, that any conclusion which may be derived from Doe v Browne 8 East 165 may not be as simple as more modern authorities suggest.

Despite what was said in Doe v Browne, the Court of Appeal in Breams Property Investment Co Ltd v Stroulger [1948] 2 KB 1, 6 held that an agreement by a landlord in a periodic tenancy not to serve notice to quit for three years unless it required the premises for its own use was valid. In In re Midland Railway Co's Agreement [1971] Ch 725, the Court of Appeal held that an agreement by a landlord not to determine a half-yearly tenancy until the premises were needed for the purposes of its undertaking was valid. The court distinguished Lace v Chantler [1944] KB 368 on the ground that it did not concern a periodic tenancy, and derived assistance from the Breams case [1948] 2 KB 1.

In the Prudential case [1992] 2 AC 386 the House of Lords overruled the Midland Railway case [1971] Ch 725, effectively on the basis that a fetter of uncertain duration on the service of a notice to quit in relation to a periodic tenancy was as objectionable to the concept of a tenancy as was the existence of an uncertain term. It was not, however, suggested by Lord Templeman that the Breams case [1948] 2 KB 1 was wrongly decided.'

Lord Mance in Mexfield said he operated (as did Lord Neuberger) on the basis that 'an essential characteristic of a contractual tenancy is lacking if the contract provides for a series of periods indefinitely renewable unless and until some future event occurs which may never occur.' (paragraph 97)

Single leases and periodic tenancies - a summary

Lord Neuberger in Mexfield that sought to summarise the position, at paragraph 33:

'Following the decision of the House of Lords in the Prudential case [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.'

Examples of 'leasehold interests' with no term certain - 'lease' relationship fails to form

Lace 

A purported letting 'for the duration [of the Second World War]' could not take effect as 'a good tenancy for the duration of the war' as it was for an uncertain term, and so, consequently, the purported letting, was void.

Prudential

In Prudential, there was a 'lease' of a strip of land by the highway, which was expressed to 'continue until the...land is required by the council [landlord] for the purposes of the widening of' the highway. The House of Lords decided that the 'lease' was void, as it's term was uncertain - it was of potentially perpetual, duration.

Mexfield

Lord Neuberger in Mexfield:

(1) seemed to agree, at paragraph 25, with the following: a grant of land 'until you have taken 40 pounds' is void - 'because it cannot be known how long it may take for so many pounds to be raised from [the] land...' and so the term is 'uncertain and undetermined'.

(2) said, at paragraph 36, that 'A tenancy for life is a term of uncertain duration'. However, note, as discussed below, there is a (short form) 'escape route' for tenancies for life, from being void, in that s.149(6) of the Law of Property Act 1925 effectively converts them into a determinable term of 90 years (so they will have certain ending, and, assuming there is a certain beginning, they will not be void for want of a term certain);

Mexfield itself involved a periodic tenancy which was, it was conceded, void to want of a term certain, due to the putative landlord's right to terminate the periodic tenancy being (unduly) fettered to only 4 specific circumstances (clause 6) (Mexfield, paragraph 23; see also, paragraph 33). 

AP Wireless

In AP Wireless, a land owner ('Original Owner') and a company ('Orange') entered into a written agreement dated 11.3.97 (the 'Agreement'), for the installation and maintenance of telecommunication equipment, including a phone mast, on a site on the Original Owner's land. Subsequently, the rights of: (a) the Original Owner were assigned to AP Wireless II (UK) Ltd ('Owner'); and (b) Orange to On Tower (UK) Ltd ('On Tower') respectively (paragraph 11). Within that Agreement was a clause, clause 2.1 ('Clause 2.1'), which read:

'This agreement shall come into effect on the date shown above and shall continue for no less than the minimum term [ten years from 11 March 1997]. It may be terminated by either party giving to the other not less than 12 months' notice in writing to expire at any time on or after the expiry of the minimum term.' [bold added]

The first issue in AP Wireless was whether this created a term certain. At all 3 judicial levels (First Tier Tribunal, Upper Tribunal (the first appeal court) and Court of Appeal (the second appeal court), it was held that Clause 2.1 did not create a term certain, contrary to the Owner's contentions. 

The clause, Clause 2.1, can be seen to have 2 parts:

(1) the term would start and would then continue for no less than 10 years; and

(2) either party could terminate the term, by giving a certain level of notice, to expire after the 10 year point[12]. 

Part (2) was unproblematic. It was the part (1) that was problematic - in particular, the 'no less than' element, was problematic

Vos MR in AP Wireless, at paragraph 9, said:

'The length of the tenancy purportedly created could not be determined when the agreement was entered into and was, therefore, uncertain and invalid'

(note, in the author's view, the word 'determined' here means, 'calculated', rather than 'terminated').

Similarly, Vos MR in AP Wireless said, at paragraph 46:

'I reject the argument that the agreement created a valid term certain. The term of the tenancy purportedly created by the agreement was uncertain at its inception on 11 March 1997, because it was, on its terms, capable of lasting for an indeterminate period ending (possibly) on any day from 11 March 2007 for ever afterwards. On the clear authority, binding on this court, of both [Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386] and [Mexfield Housing Co-operative Ltd v Berrisford [2012] 1 AC 955], the tenancy purportedly created by the agreement was void at its inception.'[13]

Escape Route 

For periodic tenancies (but not single term tenancies), granted to an individual (as opposed to a company or corporation (Mexfield, paragraph 37)) there is a potential 'escape route' (as I shall label it) from being held to have a term uncertain. It involves two stages[14]:

(1) first, the periodic tenancy must be characterisable as a tenancy for life, as per a certain common law rule, under pre-1926 law. Lord Dyson in Mexfield, at paragraph 116 said:

'The position is well summarised in the last edition of the standard work on land law before the 1925 legislation, Joshua Williams's Law of Real Property, 23rd ed (1920), p 135 in these terms:

“Where land is given to a widow during her widowhood, or to a man until he shall become bankrupt, or for any other definite period of time of uncertain duration, a freehold estate is conferred, as in the case of a gift for life. Such estates are regarded in law as determinable life estates …” (emphasis added).' [bold in italics in original] (the reference to 'freehold' estate can be ignored for present purposes);

Pausing there. This (first) stage alone is not be enough to render the tenancy valid rather than void. This is because a 'tenancy for life is a term of uncertain duration' (Mexfield, paragraph 36)[14a]. But, as we shall see at the second stage, with the intervention of a statutory section (section 149(6)), the term is converted into a term which is undoubtedly a term certain (assuming there is a certain beginning).

(2) section 149(6) of the Law of Property Act 1925[15] applies to what is characterised as a tenancy for life, to convert it into a 90 year term tenancy (see Mexfield). As Lord Dyson in Mexfield said, at paragraph 118 'The effect of section 149(6) of the 1925 Act was to convert such a tenancy into a term for 90 years, subject to earlier termination in accordance with its terms.'

The result of this two stage 'escape route' (where it applies), is that the tenancy in question, has a 90 year (single) term, which will be a term certain (assuming there is a certain beginning). Such a lease is, accordingly, not void for term uncertainty.

This may all seem somewhat convoluted, complicated and unattractive - and it is all those things. Lord Dyson in Mexfield said, paragraph 119:

'This is a just result which plainly accords with the intention of the parties. But it may legitimately be said that it is not satisfactory in the 21st century to have to adopt this chain of reasoning in order to arrive at such a result. It is highly technical. There should be no need to have to resort to such reasoning in order to arrive at the result which the parties intended. That is why the radical solution of doing away with the uncertainty rule altogether is so attractive. There is the further point that the section 149(6) route to the right result can only be followed where the purported tenant is an individual and not a corporate entity. To treat an individual and a corporate entity differently in this respect can only be explained on historical grounds. The explanation may lie in the realms of history, but that hardly provides a compelling justification for maintaining the distinction today.'

ALTERNATIVE LEGAL RELATIONSHIP FORMS? 

Where the 'leasehold interest' fails to form, the parties may not have realised this, and may have acted in such a way as to indicate (to be a bit vague) that some form of legal relationship did form between the parties. Here the focus on the actions of the parties (inc. conduct, words/communications etc.), both:

(1) at the moment the parties attempted (unsuccessfully) to create the desired/expected 'leasehold interest' (the 'first intended' leasehold interest); and

(2) subsequently. The actions of the parties may have been in purported compliance with the void 'lease'. For instance:

(a) the putative landlord gave, and the putative tenant took, possession of the property; and

(b) the putative tenant paid the putative landlord, money periodically, for possession, and other things related to the property.

Where these are the actions of the parties, seemingly, an alternative legal relationship is likely to be found. As to the nature/type of the alternative legal relationship, there are 2 candidates - that of:

(1) a periodic tenancy; or

(2) a contractual licence.

This was not always the case. Prior to Mexfield, there was only 1 alternative legal relationship which might have been found to have arisen - namely a periodic tenancy (see Lace and Prudential). However, Lord Neuberger in Mexfield found that a contractual licence was a further alternative legal relationship, which might be found to have arisen, and in AP Wireless, Vos MR preferred Mexfield to Prudential on this point[16].

We will now consider the authorities of: (a) Prudential; (b) Mexfield; (c) Avondale; and (d) AP Wireless.

Prudential 

As stated above, in Prudential, the 'leasehold interest' (referred to simply as the 'lease' in the report) was held to be void, because it had no term certain. The House of Lords then moved on to consider whether an alternative legal relationship formed. On this, the House of Lords held that a yearly (periodic) tenancy was to be inferred from the tenant's: (a) possession of the property; and (b) payment of rent. The provision allowing termination for road widening was inconsistent with a yearly tenancy and, therefore, inapplicable (see AP Wireless, paragraph 24).

One can turn to AP Wireless, and Vos MR, at paragraphs 25 to 27, for a helpful summary of the salient parts of Prudential:

'Lord Templeman explained at p 392B-C as follows:

"When the agreement in the present case was made, it failed to grant an estate in the land. The tenant however entered into possession and paid the yearly rent of £30 reserved by the agreement. The tenant entering under a void lease became by virtue of possession and the payment of a yearly rent, a yearly tenant holding on the terms of the agreement so far as those terms were consistent with the yearly tenancy. A yearly tenancy is determinable by the landlord or the tenant at the end of the first or any subsequent year of the tenancy by six months' notice unless the agreement between the parties provides otherwise."

Lord Templeman then referred to a number of the old cases before resoundingly endorsing Lace v Chantler and reversing the Court of Appeal, which had inferred a yearly tenancy subject to the road widening clause. He said this at p 394F-G:

"...I consider that the principle in Lace v Chantler [1944] KB 368 reafirming 500 years of judicial acceptance of the requirement that a term must be certain applies to all leases and tenancy agreements. A tenancy from year to year is saved from being uncertain because each party has power by notice to determine it at the end of any year. The term continues until determined as if both parties made a new agreement at the end of each year for a new term for the ensuing year. A power for nobody to determine or for one party only to be able to determine is inconsistent with the concept of a term from year to year..."

It was for those reasons that he held that the road widening term was inconsistent with the periodic tenancy that was to be inferred. He restored the order of Millett J, who had held that six months' notice was a valid notice even though the landlord was, by that time, not the road widening authority and there were no plans to widen the highway.

Lord Browne-Wilkinson concurred at pp 396-397 and described the outcome in Prudential as "bizarre". He said it resulted from the "application of an ancient and technical rule of law which requires the maximum duration of a term of years to be ascertainable from the outset". He said that nobody had "produced any satisfactory rationale for the genesis of the rule", but limited himself to expressing the hope that the Law Commission might see whether there was in fact any good reason for "maintaining a rule which operates to defeat contractually agreed arrangements between...parties". Lords Mustill and Griffiths agreed with that observation.'

Mexfield 

In Mexfield:

(1) Mexfield was a housing association and owner of a property, and putative landlord; and

(2) Ms Berrisford was the putative tenant.

An issue arose as to whether an agreement between the putative landlord and putative tenant, gave rise to the first intended lease. Again, one can turn to Vos MR, at paragraph 28 of AP Wireless, for a summary (here, of the facts in Mexfield):

'The claimant housing association had granted the tenant a monthly tenancy at a weekly rent subject to clauses 5 and 6 limiting termination. Clause 5 allowed the tenant to terminate on one month's written notice, and clause 6 provided that the landlord could bring the tenancy to an end by the exercise of the right of reentry only if rent was in arrears by 21 days or there were other breaches by the tenant or in other specified circumstances, none of which applied in the circumstances of that case. The landlord served one month's notice to quit without relying on clause 6, and argued that the tenancy was invalid and that a weekly or monthly periodic tenancy was to be inferred, which could be determined by the notice it had served. The Supreme Court overruled the lower courts, holding that clause 6 made the tenancy void as being for an uncertain term, but that, since the agreement would have given rise to a tenancy for life prior to 1926, the effect of section 149(6) of the Law of Property Act 1925 was that the agreement was to be treated as a tenancy for a term of 90 years.' (bold in original)

Given that result, the Supreme Court did not need to go on to consider what would have been the case, if the Escape Route (characterise as tenancy for life, then s.149(6) effect applies), but Lord Neuberger did go on to consider what would have been the case if there had not been the Escape Route. Necessarily, what Lord Neuberger said was obiter (not necessary to the decision in the case), but what he said was interesting. At paragraphs 66 and 67, Lord Neuberger in Mexfield said:

'If the agreement cannot give rise to a tenancy, then, if it is not a contractual licence, the only right that [the putative tenant] could claim would be that of a periodic tenant on the terms of the written agreement in so far as they are consistent with a periodic tenancy, because she has been in possession purportedly under the agreement, paying a weekly rent to [the putative landlord]. It is worth briefly considering why she would be a periodic tenant on this basis, not least because it is [the putative landlord's] contention that this is the right analysis.

It would be because the law will infer a contract on these terms from the actions of the parties, namely the terms they purported to agree in the agreement, and [the putative tenant] enjoyment of possession and payment of rent. But the ultimate basis for inferring a tenancy (and its terms) is the same as the basis for inferring any contract (and its terms) between two parties, namely what a reasonable observer, knowing what they have communicated to each other, considers that they are likely to have intended.'

In other words, where the 'lease' cannot create the first intended leasehold interest (because it is void for want of a term certain), the law may infer that the legal relationship between the putative landlord and putative tenant is:

(1) a contractual licence; or

(2) a periodic tenancy. 

How might the law reach the conclusion that there was a periodic tenancy (or indeed, a contractual licence) between the putative landlord and putative tenant? Just as the law infers: (a) the existence of any contract; and (b) the terms of that contract. The law will consider what a reasonable observer, knowing what they have communicated to each other, considers that they are likely to have intended. It is from that vantage point, that the law will look at the relevant actions (in a wide sense) of the parties. Those actions here being:

(1) the terms they purported to agree in the agreement; 

(2) the putative tenant's enjoyment of possession, given by the putative landlord; and

(3) the putative tenant having paid, and the putative landlord having accepted, rent for that putative tenant's enjoyment of possession.

It will be from these 3 key 'actions of the parties', that the Court will infer (or not) what legal relationship the parties intended to exist between them (after the first intended 'leasehold interest' failed to form), whether that is a periodic tenancy or, alternatively, a contractual licence. As will be apparent, in a sense, the law will give the agreement between the parties, contractually effect, though the law does not permit the agreement to create the first intended 'leasehold interest' (because it is void for want of a term certain)[17]. The question is, what does this mean, in terms of legal relationship that was able to form. Another way of viewing this, is that, as between the original contracting parties, there is little reason not to give contractual effect to their agreement (at least, through the recognition of a contractual licence between them). The more probing question is whether their intention was able to create a proprietary interest (different from the first intended leasehold interest, but all the same, a proprietary interest) in the form of a periodic tenancy.

On the facts in Mexfield, Lord Neuberger found that, if the 90 year term leasehold interest had not been formed, then an alternative legal relationship - a contractual licence - would have been found to have formed. Lord Neuberger reasoned, at paragraph 67:

'Given that no question of statutory protection could arise, it seems to me far less likely that the parties would have intended a weekly tenancy determinable at any time on one month's notice than a licence which could only be determined pursuant to clauses 5 and 6.'

Lord Neuberger agreed with what Lord Mance and Lord Clarke also said to similar effect (see Lord Mance, at paragraphs 102 to 103; and, Lord Clarke, at paragraph 109)[18].

Avondale

In Avondale, there was a 3 layer situation: (1) headlandlord (RBKC); (2) intermediate landlord/tenant (Mellcraft - later Avondale Park); and (3) subtenant (MDNS). Amongst other things, the sublease contained a clause (Clause 9), stating that the lease would automatically terminate if by 14.12.14, Mellcroft had not produced to MDNS a completed Deed of Variation in respect to an aspect of the headlease. Though this Deed of Variation was never produced by 14.12.14, on 18.12.14 (4 days later), MDNS: (a) went into possession of the demised premises (the 'Lodge'); and (b) paid rent until spring 2022.

By spring 2022, MDNS were concerned MDNS would not be repaid its security deposit from the intermediate landlord (by then, Avondale Park), so withheld rent from Avondale Park. As a result, Avondale Park, on 26.8.22, purported to forfeit the sublease by peaceable re-entry of the Lodge, on the basis of non-payment of rent (paragraph 2). On the same day, MDNS alleged to Avondale Park that the sublease had automatically terminated on 14.12.14 (as per Clause 9), and that '...MDNS's occupation of the property, coupled with the payment and acceptance of rent, had created a periodic tenancy. That periodic tenancy was protected by Part II of the 1954 Act.' (paragraph 11). 

MDNS applied for an injunction, restraining Avondale Park's interference with MDNS' use of the Lodge. The injunction as granted, the Judge finding that there was a triable issue (the 'Triable Issue') as to whether MDNS was entitled to a periodic tenancy at common law, because: (1) the sublease had terminated; and (2) MDNS had, post sublease termination: (a) 'continued possession' (paragraph 35)[19]; and (b) continued payment of the rent.

Avondale Park, aggrieved by the imposition of the injunction, appealed to the Court of Appeal.

Under the heading 'Periodic tenancy', Lewison LJ (with whom Carr LJ and Nugee LJ agreed) referred to the Judge's decision to hold that there was a Triable Issue, and said, at paragraph 35:

'This is the conventional result at common law where the tenant enters under a void lease, but pays rent calculated by reference to a year. The terms of such a periodic tenancy are the same as those of the void lease, except where they are inconsistent with a periodic tenancy. As Lord Templeman put it in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 A.C. 386, 392:

"When the agreement in the present case was made, it failed to grant an estate in the land. The tenant however entered into possession and paid the yearly rent of £30 reserved by the agreement. The tenant entering under a void lease became by virtue of possession and the payment of a yearly rent, a yearly tenant holding on the terms of the agreement so far as those terms were consistent with the yearly tenancy."'

However, while repeating the position in Prudential, it is not clear from the Avondale report, whether Lewison LJ had been referred to Mexfield, and the obiter observations therein; certainly Lewison LJ gave no consideration to Mexfield in Avondale. In the author's view, without consideration also of the obiter observations in Mexfield, Avondale is not an affirmation of Prudential as representing the law in this area. In any event, in light of the Court of Appeal's decision, directly on point in AP Wireless, the exact status/position of Avondale need not be considered further.

AP Wireless

This is the leading authority in this area.

With the 'lease' in AP Wireless having been found to be void for want of a term certain (i.e the Agreement did not create the first intended leasehold interest), the next issue in AP Wireless was, what, if anything, did the Agreement create then, as between the two parties to it (initially, the roles held by the Original Owner and Orange, later, by the Owner and On Tower)? did it create an alternative legal relationship, instead, either: 

(a) an (annual) periodic tenancy? or

(b) a contractual licence? 

Under the heading 'The inferred periodic tenancy argument', Vos MR:

(1) recorded the respective parties' positions (Vos MR referred to On Tower as the 'occupier'):

'...the owner argued that, assuming the invalidity of the agreement, the judge ought to have inferred a yearly periodic tenancy from the start (as happened in Prudential), rather than holding that the agreement constituted a contractual licence (as would have been held in Mexfield, had section 149(6) of the Law of Property Act 1925 not applied in that case, but not in this case). The occupier supported the judge in allowing the parties' intentions, as expressed in the agreement, to take effect as a contractual licence.'

(2) referred to some relevant passages from Prudential and Mexfield, noting that 'they are not entirely aligned on this point'[20] (paragraph 48)

(3) acknowledged that, on this point, Mexfield was obiter (indeed, Lord Neuberger in Mexfield made this clear[21]). But, took the view that the Court of Appeal in AP Wireless '...should follow the thrust of the court's approach' in Mexfield (paragraph 49) 

(4) described Lord Neuberger's statement of the position, at paragraph 67 of Mexfield, as:

(a) supported by the other members of the (7 member) Supreme court; and

(b) entirely orthodox law.

(5) set out then the law: 

The Law - Reasonable Observer Test 

'First, once a tenancy is void for want of a certain term, the court is faced with the choice of inferring a tenancy or giving effect to the parties' intentions contractually. As Lord Neuberger said, the question is what a reasonable observer, knowing what the parties have communicated to each other, would consider that they are likely to have intended.' (AP Wireless, Vos MR, paragraph 50)

The Law - Best Fit Test 

How then to discern whether to infer: (a) a contractual licence; or (b) a periodic tenancy? To discern this, '...the court must look for the "best fit".' (AP Wireless, Vos MR, paragraph 51). The Court will ask itself which '...best accords with what must be taken to have been the intentions of the parties from the terms of the agreement.' (AP Wireless, Vos MR, paragraph 9), considering the actions of the parties. 

In other words, the Court will look at the actions of the parties, so:

(1) the terms they purported to agree in the agreement; 

(2) the fact of putative tenant's enjoyment of possession; 

(3) the fact the putative tenant paid rent,

to see which are the two candidates, for alternative legal relationship, best fits with the actions of the parties. What in the actions of the parties, is consistent with the parties having intended to create, between them:

(1) a periodic tenancy; and which with,

(2) a contractual licence. 

The first set of actions of the parties, comes from the terms of the agreement. Which terms of the agreement are consistent with:

(a) a periodic tenancy, and which are consistent with

(b) a contractual licence?

and then, take a view on which legal relationship, best fits with these conclusions. 

On the facts in AP Wireless

On the facts in AP Wireless, Vos MR found that the Agreement was to be given effect to, as a contractual licence (paragraph 53). The legal relationship which did form between the parties (the putative landlord and putative tenant), was one of a contractual licence. That best fit with the actions of the parties. In coming to this conclusion, Vos MR, in essence, listed the actions of the parties which were:

(1) consistent with a contractual licence / inconsistent with a periodic tenancy; and 

(2) consistent with a periodic tenancy / inconsistent with a contractual licence, 

then decided which was the 'best fit'. In AP Wireless, Vos MR said, at paragraphs 51 to 53:

'In this case, to infer that the parties intended an annual or daily periodic tenancy on 11 March 1997 is a real stretch. None of the express terms of the agreement accord with that inference. As the occupier put the matter in submissions, the court must look for the "best fit". A periodic tenancy from the outset on 11 March 1997 is not a good fit at all. It is inconsistent with many of the terms the parties agreed. It is inconsistent with clause 2.1 for the reasons I have given. It is inconsistent with the payment days and with the calculation of the tariff from quite a different date than the inception date. It is only really consistent with the exclusive possession that was given and clauses A and 10.1 that do, I accept, imply that the parties thought they had agreed a tenancy.

Conversely, the inference of a contractual licence on the same terms as the agreement respects almost all the terms that the parties agreed, including the termination provision in clause 2.1. I do not think that the court should be willing to disregard the intentions of the parties unless there really is no other possible course.'

The Court also took into account the actions of the parties after the Agreement was entered into. 

Vos MR noted, at paragraph 41 that (the 'occupier' is On Tower):

'It is not disputed that the judge found that the occupier had been given exclusive possession of the site. Nor was it disputed that the occupier paid rent (called a tariff) in accordance with the agreement...'

Showing that these were part of the actions of the parties, which must be evaluated, Vos MR formulated the question the Court must answer, as: whether what was created by the terms of the agreement and these events was a tenancy and, if so, what kind of tenancy. If it was not a tenancy, what was it?' (paragraph 41). 

The actions of the parties after the Agreement did not however, on the facts in AP Wireless, outweigh the importance of the factors the parties agreed as part of the Agreement.

In dismissing the appeal from the (first appeal) Judge's decision, Vos MR concluded, at paragraph 48:

'I am certain that the judge was right to follow Mexfield and to reach the conclusion he did as a matter of law, even if I have perhaps expressed my reasons more shortly.'

SIMON HILL © 2026*

BARRISTER 

33 BEDFORD ROW

Simon Hill practices in the following areas: insolvency, company and business law, with some tax and property law.

Further articles on topics relating to his practice areas can be read under his Insights. Should you wish to instruct Simon Hill then please do not hesitate to contact his clerk Geoff Carr. 

NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole, or the Copyright holder. No attempt has been made to provide an exhaustive review/account of the law in this area. *Copyright is owned by Barrister Search Limited.