Prudential Assurance v London Residuary Body and others [1992] 2 A.C. 386

What’s the case about?

In 1930, Mr Nathan sold some land with frontage onto Walworth Road (a major road in Southwark) to the London County Council.  The LCC wanted the land as part of a scheme to widen Walworth Road.  The LCC weren’t able to widen the road straight away, so they leased the land back to Mr Nathan at a rent of £30 per year. 

Mr Nathan and the LCC agreed that the tenancy would continue until “the said land is required by the Council for the purposes of the widening of Walworth Road”.  Until that time, Mr Nathan was permitted to erect “temporary one storey shops or buildings of one storey and for the retention of such shops or buildings as temporary structures", provided that he left the land clear for the Council as and when they needed it back.

The road widening scheme never happened, and in 1988 Mr Nathan’s successors in title were still paying £30 per year rent.  The open market rental value for the land had risen to £10,000 per year.  London County Council no longer existed and the land was owned by the London Residual Body, the organisation charged with disposing of the LCC’s assets.  The London Residual Body gave the tenant six months’ notice to end the tenancy. The tenant sought a declaration that the notice was void as the tenancy could only be terminated if the road was to be widened.

Where is it on the map?

At point E.

Who won?

The landlord – the London Residuary Body.  The House of Lords held that the 1930 agreement was void as it purported to create a lease of an uncertain length (it was impossible to know when, if ever, the road would be widened).  Instead, the Law Lords found that the parties had created a tenancy that ran from year to year, which could be terminated by either party giving six months’ notice.

What’s the principle of law?

Up until 1926 there were a variety of ways that a person could possess a legal estate (i.e. ownership) in land.  The Law of Property Act 1925 changed that.  It provided that there were only two possible ways that a legal estate could exist –as a freehold title, or as a term of years absolute (leasehold). 

A term of years absolute has to be for a fixed period of time, although it may roll over from one period to the next (an example of this is when people rent their homes on a month to month basis).  The agreement that Nathan and LCC had tried to create was not for a fixed period and therefore could not be enforced by the law.  By studying the characteristics of the arrangement between landlord and tenant, the Court decided that what they had actually created was a yearly tenancy. 

What’s it like today?

Walworth Road still hasn’t been widened, and there do not appear to be any plans to do so.   

Interestingly, the layout of Walworth Road still hints at the plans which now date back over 90 years: it is fronted by single storey shops which look like they were originally built as temporary structures.  

The premises at 263-265 Walworth Road, the subject of this case, is a prime example.  It does not quite match the neighbouring properties.  It is currently occupied by a beauty salon.