Mortgage rescue tenant cannot be evicted by housing association

A woman who rented her house back from a mutual housing association after struggling to pay the mortgage was a tenant and could not be evicted unless certain conditions were met, the Supreme Court unanimously ruled this morning.

Lord Neuberger said that tenancies granted to members of mutual housing associations had no statutory protection apart from under the Protection of Eviction Act 1977.

He said that Mexfield made an 'occupancy agreement' with Ruza Berrisford after buying her house in Barnet. The housing association could terminate it if she failed to pay the rent, and Berrisford did, apparently through no fault of hers, fall behind with the rent.

However, Lord Neuberger said that, instead of relying on the written agreement, Mexfield served a notice to quit on the grounds that the terms of the agreement did not give rise to a valid tenancy.

Delivering the leading judgment in Berrisford v Mexfield Housing Co-operative [2011] UKSC 52, Lord Neuberger said the 'mortgage rescue background tends to support the notion that Ms Berrisford's right of occupation was not intended to be precarious'.

Lord Neuberger said a tenancy agreement had 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'.

He said that, in this case, it seemed clear that the parties intended that the arrangement created by the agreement should only be determinable pursuant to clause 5 or 6.

However, both parties accepted that the arrangement contained in the agreement was too uncertain to give rise to a valid tenancy.

Lord Neuberger overcame this by saying that, before the Law of Property Act 1925 came into force, agreements on uncertain terms were treated as tenancies for life.

He concluded that 'by virtue of well-established rules and section 149(6) of the Act ' Berrisford had a tenancy for a term of 90 years, determinable on her death or on the terms set out in clauses 5 or 6 of the agreement.

As a result he allowed her appeal. Lords Hope, Walker, Mance, Clarke, Dyson and Lady Hale agreed for their own reasons.

Lord Neuberger commented during the ruling that 'there was much to be said' for changing the traditional rule preventing the agreements for terms of uncertain duration or with fetters of uncertain duration on the right to serve notices to quit from being recognised as tenancies.

'There is therefore much to be said for changing the law, and overruling what may be called the certainty requirement, which was affirmed in Prudential [1992] 2 AC 386, on the ground that, in so far as it had any practical justification, that justification has long since gone, and, in so far as it is based on principle, the principle is not fundamental enough for the Supreme Court to be bound by it.'

However, Lord Neuberger said he would not support 'jettisoning the certainty requirement' in this case.