Holding over: parties at cross-purposes

In Shum Tsing Fai v Chiap Heng Cheng (HK) Ltd ([2001] HKEC 296, CFI) a fixed term tenancy came to an end. The tenant had an option to renew for a further two years but did not exercise it. As the tenancy approached its end, the parties discussed a new tenancy and agreed a rent below that specified in the option. The parties were at cross-purposes: the landlord thought that the tenant was, in effect if not formally, exercising the option. The tenant intended the arrangement to be temporary until it had bought replacement premises. The tenant gave notice to quit after a few months and the question was whether it was entitled to do so or whether it was bound for the full term envisaged by the option. It was decided that the tenant was a periodic tenant and had been entitled to give notice to quit.

The court thought that the objective intention was for a temporary arrangement and rejected a tenancy at will or at sufferance. This left the periodic tenancy. It inferred, from the monthly rental payments, an intention to create a monthly periodic tenancy.

As to this, Cheung J. said:

‘Although reference is made [in Woodfall] to the word “presumption”, ultimately it is a matter of inference from all the circumstances of the case as to the nature of the tenancy.’

Michael Lower


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