City Permanent BS v Miller [1952] Ch 840

Court of Appeal

Basic Facts: D orally agreed to lease two floors of a house to T for three years and one week rent in advance. D then acquired a 99-year lease and executed a legal charge with C. T took possession but did not pay rent. D defaulted on the mortgage, and C sought possession against both D and T.

Issue for the Court: Does an oral lease create an overriding interest?

Held: The court held that a mortgagor’s failure to make full repayment under the terms of the mortgage does not necessarily lead to forfeiture of the property.

 Evershed MR:

• Lease Requirements: A lease exceeding three years must be created by deed to be valid. The lease here was not created by deed, so no legal or equitable tenancy was established.

• Overriding Interest: For a lease to create an overriding interest, it must be in a deed. The oral agreement did not meet this requirement. A lease needs to be effective to create a term to be an overriding interest, and thus an oral lease does not qualify.