Archive for the ‘leases’ Category

Periodic tenancy: service of notice to quit on the tenant’s solicitor

September 7, 2014

In Hau Gay Yau v Wong Muk Din ([2014] HKEC 1456, CA) a landlord served notice to quit to determine a periodic tenancy on the solicitor acting for the tenant. The Court of Appeal, overturning the first instance decision, held that the notice had been validly served. Sections 62(2) – (4) of the Conveyancing and Property Ordinance do not exclude other modes of service than those that they specify ([22]). It was clear that the solicitors on whom the notice had been served had been instructed by the tenant in relation to this matter ([23]). The tenant’s actions showed that he regarded his solicitors as having had authority to receive the notice ([23]).

Michael Lower

Interpretation of user clause: was there a positive obligation to use the property for the specified use

August 16, 2014

Youseffi v Musselwhite ([2014] EWCA Civ 885, CA (Eng)) is an English Court of Appeal case arising out of a lease renewal application under Part II of the Landlord and Tenant Act 1954. It does, however, raise a general issue about the construction of user clauses.

The clause in question read:

‘at all times during the said term to use the Premises for the purposes of any retail trade within Classes A1 and A3 of the Town & Country Planning (Use Classes) Order 1987 and not to use the Premises or any part thereof for any other purpose without the written consent of the Landlord (such consent not to be unreasonably withheld)…’

There was no keep-open clause.

The tenant had not used the demised premises for the permitted use and the question was whether this covenant positively required the property to be put to the permitted use or whether it was only negative, restraining other uses of the property.

The Court of Appeal, Gloster LJ giving the only full judgment, noted that the clause began with a positive obligation and that, therefore, it did impose a positive obligation to put the property to the permitted use.

Michael Lower

Break clause: right to repayment of rent for period after the termination?

June 11, 2014

In Marks & Spencer plc v Bnp Paribas Securities Services Trust Company (Jersey) Ltd ([2014] EWCA Civ 603, CA (Eng)) a lease contained a break clause. If exercised, the lease would determine in between the quarter days on which rent payments were to be made. The tenants exercised the break clause. On the next quarter day, they paid a full quarter’s rent. After the lease had come to an end, the tenants argued that they were entitled to a repayment of that portion of the rent attributable to the period after the end of the lease.The lease provided that rent was payable ‘yearly and proportionately for any part of a year by equal quarterly payments in advance on the Quarter Days.’ At first instance, it was decided that a term should be implied requiring the landlord to repay the portion of the final rent payment attibutable to the period after the termination of the lease. The landlords successfully appealed against this.

Arden LJ gave the only full judgment. After the decision of the  Privy Council in A.G. of Belize v Belize Telecom Ltd , the approach to implied terms has become an aspect of the general principles of contractual interpretation:

‘The test in Belize requires the court to ask whether the agreement has the meaning that such a term would achieve, because, even though the parties did not expressly include that term in their agreement, that is what their agreement means.’ ([23]).

In the next paragraph:

‘the implication of terms by interpretation requires a high level of loyalty to the parties’ agreement, read against the admissible background. The party seeking to establish an implied term must therefore show not simply that the term could be a part of the agreement but that a term would be part of the agreement.’ ([24])

The starting point is that no term should be implied ([25]). It must be necessary to imply a term to achieve the parties’ express agreement (determined in the usual way) ([26]).

Here, the parties must have realised that this question would arise and could have dealt with it by express words ([35]). The state of the case law at the time of the lease (part of the admissible background) was such as to point to the conclusion that there was no right to recover the rental for the period after termination. This reinforces the need for express words ([39]) No term was to be implied ([43])

Michael Lower

 

Holding over with landlord’s consent: tenancy at will or periodic tenancy?

April 22, 2014

In Erismus Housing Ltd v Barclays Wealth Trustees (Jersey) Ltd ([2014] EWCA Civ 303, CA (Eng)) EHL were tenants of Barclays under the terms of a five year lease that expired on 31 October 2009. They held over at the end of the lease and continued to pay the rent payable under the expired lease while they negotiated the terms of a new lease. The negotiations progressed slowly and by fits and starts but were never abandoned. The tenants then decided to move to new premises. They gave notice to terminate their possession on 31st August 2012. Barclays contended that EHL had been periodic tenants during the holding over; it was agreed between the parties that, if this were so, EHL could not give a notice to quit that would expire before 31st October 2013. Thus, this is a case about the factors to be borne in mind when considering whether or not an implied periodic tenancy has arisen during a holding over. The Court of Appeal turned to the judgment of Nicholls LJ in Javad v Aqil for the relevant principles.

Patten LJ, giving the leading judgment, then said:

‘When a party holds over after the end of the term of a lease he does so, without more, as a tenant on sufferance until his possession is consented to by the landlord.  With such consent he becomes at the very least a tenant at will and his continued payment of the rent is not inconsistent with his remaining a tenant at will even though the rent reserved by the former lease was an annual rent.  The payment of rent gives rise to no presumption of a periodic tenancy.  Rather, the parties’ contractual intentions fall to be determined by looking objectively at all relevant circumstances.  The most obvious and most significant circumstance in the present case, as in Javad v Aqil, was the fact that the parties were in negotiation for the grant of a new formal lease.  In these circumstances, as in any other subject to contract negotiations, the obvious and almost overwhelming inference will be that the parties did not intend to enter into any intermediate contractual arrangement inconsistent with remaining parties to ongoing negotiations.  In the landlord and tenant context that will in most cases lead to the conclusion that the occupier remained a tenant at will pending the execution of the new lease.  The inference is likely to be even stronger when any periodic tenancy would carry with it statutory protection under the 1954 Act which could be terminated by the tenant agreeing to surrender or terminating the tenancy by notice to quit: see Cardiothoracic Institute v Shrewdcrest Ltd [1986] 1 WLR 368.’ ([23])

EHL held over as tenants at will and not as periodic tenants.

Michael Lower

No liability to tenant in nuisance where landlord lacks possession or control of neighbouring property

November 26, 2013

In Habinteg Housing Association v James ((1995) 27 HLR 299, CA (Eng)) HHA owned an estate. J was HHA’s tenant in a flat on the estate. The flat had its own separate entrance and there were no common parts. HHA covenanted to keep the structure and exterior in repair. J covenanted to give HHA access if necessary for the purposes of complying with the repairing covenant. J’s property suffered from an infestation of cockroaches for around six years until HHA took remedial action. J suffered damage valued at GBP 10,0000.

It was held, however, that there was no basis on which HHA was liable to J.

J sought to rely on the principle in Wringe v Cohen ([1940] KB 229). Waite LJ accepted that it was possible that the principle could be extended to read:

‘If a person suffers injury to their person or property as a result of a nuisance of any kind emanating from premises in the ownership of another person, that owner will be liable, notwithstanding that his premises may be let to, and occupied by, a tenant, if the owner has retained sufficient control under the terms of the tenancy to give him the power to step in and abate the nuisance.’ (at 305).

Even then, however, it would not apply to the facts of the case since (a) it had not been shown that the cockroach infestation had started in any property of the landlord’s and (b) the landlord did not have a sufficient degree of control over the rest of the estate for the principle to operate.

Michael Lower

 

Lease: estoppel; Lands Tribunal’s jurisdiction to award specific performance

October 22, 2013

In Fordtime Industrial Ltd v Yip Shing Lam ([2013] HKEC 1613, LT) F had acquired a shop and the cockloft above it (which was a separate property). The acquisition of the cockloft was subject to a tenancy in favour of the previous owner of the shop. The tenancy had come to an end but the tenant refused to leave. The landlord sought vacant possession and mesne profits and was successful.

The tenant contended that the subject matter of the lease did not exist since the cocklofts were not referred to in the DMC. The judge found as a matter of fact that the cockloft did exist at the time of the execution of the DMC. The developer (as owner of all of the unassigned shares) was free to allocate a share to it. In any event, the tenant having enjoyed undisturbed possession during the lease term was estopped from denying the landlord’s title ([33] – [37]).

The landlord also sought an order for specific performance of the tenant’s covenant to reinstate the property by replacing the floor slab between the shop and cockloft at the end of the lease. The Lands Tribunal decided that it did not have jurisdiction to grant specific performance in an action for possession (see Lands Tribunal Ordinance ss. 8(8) and 8(9)).

Michael Lower

Possession claims and the Lands Tribunal

August 1, 2013

In Chan Kwong Ho v Yeung Chi Keung Eric ([2013] 2 HKLRD 812, LT) the Lands Tribunal ordered Y to give up possession of property to C following the expiry of the lease. It indicated, however, that in future the Lands Tribunal will consider transferring non-landlord and tenant possession claims to other courts that have more appropriate procedures ([30]).

Michael Lower

Holding over: parties at cross-purposes

June 5, 2013

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

Tenancy void for illegality

May 31, 2013

In Li Wing-Sun v Wu Man ([1978] HKLR 575, CA) L was a licensee of the Government. The licence prohibited any ‘transfer’. In breach of the licence terms, L granted a lease to T. The question was whether the lease was valid (the proceedings were L’s claim for rent arrears and mesne profits). The Court of Appeal pointed out it had been admitted that there was a tenancy so, on the face of it, the decision could not rest on the contention that there was not.

At the time that the tenancy agreement was entered into, however, it was an offence to occupy Government land without a permit. The lease clearly envisaged that T would occupy the land (even though it had no permit) and so was illegal. The tenancy was void and L could not recover rent or mesne profits.

Michael Lower

Notice to quit: validity of notice giving a specified date and then using a fall-back formula which might give a different date

May 30, 2013

In Leung Chung Ting (No 2) v Tin Yat Co ([1963] HKLR 304) T held under a monthly periodic tenancy. L gave T notice ‘to quit and deliver up possession by 19 November, 1961, or on the last day of your tenancy which shall expire next after one calendar month from the date of service of the said notice to quit.’ T argued that the notice have two date and was therefore invalid on account of its ambiguity. This argument failed.

Several authorities, commentaries and published precedents used this formula (the formula was applied in a slightly garbled way in this case and should have referred to ‘the month of your tenancy’). In this case, the general wording referred to the same date as that specified but even if the effect of the formula were to identify two different dates the notice would be valid. If the first date was valid, the rest of the formula could be treated as surplusage ((310, Hogan C.J.).

Huggins J. said:

‘It is, therefore, clearly permissible to add such general words even though the result be (as it will be if the date expressed is wrong) to name two different dates for the giving up of possession. One knows that in practice practitioners almost invariably do include such general words and, speaking for myself, I would think that at the present day they would be lacking in prudence if they did not. The basis upon which the alternative date is allowed to be stated is no doubt to mitigate the strictness of the old law. No prejudice results to the tenant, because the form of the general words makes it abundantly clear to him that the landlord is merely guarding himself against the consequence of a mistake as to the date upon which the periodic tenancy commenced and that the date expressed is to be the operative date only if the tenancy may lawfully be determined on, that day.’ (315)

Michael Lower