Conclusion
Whilst Lord Templeman seemed satisfied with the result of the decision in thePrudential case, Lord Browne-Wilkinson did not share his view. He said that the outcome of the case was “unsatisfactory” and did not accord with the agreement of the parties. He said “No one has produced any satisfactory rationale for the genesis of this rule. No one has been able to point to any useful purpose that it serves at the present day” and he urged the Law Commission to examine whether the rule should continue to operate in English law.
The genesis of the rule was, it seems, satisfactorily described by Lord Templeman and its usefulness lies in the fact that it imposes a degree of certainty and reliability on the parties. Each knows from the outset what they have contracted for. Its failing lies in the fact that its operation, as Russell L.J. rightly pointed out, leads to a freely negotiated bargain being defeated. If the Law Commission does examine the rule then clearly the central issue will be the balancing of these two principles and which is to be given effect to. If the law wishes to see certainty and reliability in this area, then Lord Templeman's decision is undoubtedly welcome since the law was clearly in a state of flux and confusion before the case.
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References
[1992] 3 W.L.R. 279.
See, for example,Say v.Smith (1563) 1 Plowd 269.
[1944] 1 K.B. 368.
Per Lord Greene M.R. at page 370. The case was reversed by the Validation of War-time Leases Act 1944 because of the inconvenience caused by the decision.
Ibid., at 281.
1st ed. (1766), at page 143.
19th ed. (1832), vol I para 45b.
See p. 282.
[1986] E.G.L.R. 40.
Ibid., at 40.
33 TLR 114. (1916) 33 T.L.R. 114.
Ibid., at 115.
(1605) 6 Co. Rep 34b.
1906] 2 K.B. 167.
1906] 2 K.B. 167, 170–171. It is interesting to note that the Irish courts seem not to be troubled by such matters and are prepared to uphold leases of uncertain duration of the type found inWood v.Davis (1879) 6 L.R. Ir. 50 where the landlord agreed that the tenants should not be disturbed “so long as the rent for which he had stipulated is paid, and so long as I [the landlord] am in possession of the premises myself”. Such an agreement was held to be valid, creating a tenancy for the lessee's life, if the landlord's estate continued for so long.
[1971] Ch. 725.
Ibid., at 725.
[1946] 46 SR (NSW) 47, 50f.
J. Gray,Elements of Land Law, Butterworths, 1987, 437.
Counsel for the defendants:In Re Midland Railway Company's Agreement, [1971] Ch. 732–33.
[1948] 2 K.B. 1.
[1807] 8 East 165.
(1880) 50 L.J.Q.B. 121.
Supra.
Ibid., at 732.
The decision inIn re Midland Railway Company's Agreement was followed by the first instance decision ofCentrapoly Ltd v.Matlodge Ltd [1974] Ch. 1. In this case there was a term in a periodic tenancy which was determinable only by the lessee and not the lessor. Such a term was held not to make the tenancy void for uncertainty despite the fact that the justification for upholding a periodic tenancy in the light of the certainty rule is the ability of the tenancy to continue for another definite term of a week, a month, etc, unless a valid notice to quit is made by either party. In the case ofCentrapoly the term whereby a lessor would never have the right to determine a periodic tenancy was repugnant to the very nature of the tenancy and thus the term was void. Whitford J. somewhat reluctantly and against his inclination followed the decision inIn re Midland Railway Company's Agreement. He said: InIn re Midland Railway Co.'s Agreement, counsel for the defendants submitted that a periodic tenancy is only an exception to the uncertainty rule, because if both sides are going to be able to determine there is no relevant uncertainty: see [1971] Ch. 725, 730. In the present case a stronger case can be made out on the defendant's side than was made out inIn Re Midland Railway's Co.'s Agreement. It can be urged that as the landlord cannot ever be certain when the agreement is going to be brought to an end there must be relevant uncertainty. As I understand the judgement in the Court of Appeal, what has been held in relation to the issue of uncertainty is that it is better to enforce a clearly expressed bargain than to attempt to introduce yet further refinements into a field where the lines have perhaps already been rather over-finely drawn. On this basis I have reached the conclusion, having regard to what was said in the Court of Appeal inIn re Midland Railway's Co.'s Agreement, that I must reject the defendant's argument on the basis of uncertainty which, but forIn Re Midland Railway Co.'s Agreement, I would have been prepared to accept.
[1989] 1 Ch. 1.
Ibid., at 12.
See, for example, the Court of Appeal's decision in the case ofCanadian Imperial Bank of Commerce v.Alhaji Lateef Adeshoye Bello, [1991] The Times, 18 November followed the case ofAshburn Anstalt v Arnold. In this case X carried out refurbishment works on a property. The owner did not pay X for the works he had carried out to the property, but told him that he could take over the property and use it as he liked until the owner retired to the United Kingdom and paid for the works. At first instance Judge Baker had said that there was no tenancy created since there was no term certain. (Although he had not been referred to the case ofAshburn Anstalt v.Arnold). Dillon L.J. said that it was impossible to distinguish the event upon which the lease was to determine in this case, namely, when Mr. Bello returns to the United Kingdom and pays the lessee in full for the work he carried out to the property from the event inAshburn Anstalt case. InAshburn Anstalt the event was held to be sufficiently under the control of the party not to involve unacceptable uncertainty and therefore the same was true here. Additionally he said the lessee was not bound to continue with the tenancy and could terminate it at any time.
Ibid., at 286.
[1992] 1 E.G.L.R. 47.
Ibid., at 51.
Ibid., at 51.
Ibid., at 285.
Ibid., at 51 G.
Ibid., at 283.
Ibid., at 51.
(1793) 5 Durn and E 471.
Ibid., at 472.
Ibid., at 287 E.
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Thomas, M. Prudential Assurance Co. Ltd. v. London Residuary Body — The end of pragmatism or the beginning of reason?. Liverpool Law Rev 15, 201–214 (1993). https://doi.org/10.1007/BF01079920
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DOI: https://doi.org/10.1007/BF01079920