City PBS v Miller [1952] Ch 840

• Defendant 1 contracted to give Defendant 2 a lease for 3 years and on a week-by week basis thereafter. The lease wasn’t registered.

• Defendant 1 gave a mortgage on the property to Plaintiff, who claimed possession against Defendant 1 and Defendant 2 after Defendant 1 defaulted on payments.

• CA held that Plaintiff could take possession.

• Under LRA 1925, for a lease to be an overriding interest, it had to be “a lease ... for any term or interest not exceeding twenty-one years, granted at a rent”. “Granted” means the actual creation of a lease by an agreement for a set number of years / using a deed, etc., and does NOT include mere agreements with simply a contractual effect.

• Therefore Defendant 2 had not shown that she had an interest that took priority.

Evershed MR

• Defendant 2 never got a lease but a mere contractual right to obtain a lease from Defendant 1. 

Jenkins LJ

• Agreements to lease are not overriding interests in the way that actual leases are.

• Here, a lease could have been created by deed and therefore this agreement could not have been a lease.