Posts Tagged ‘holding over’

Tenant holding over and negotiating new lease: when is there a periodic tenancy?

February 8, 2020

In Erimus Housing Ltd v Barclays Wealth Trustees (Jersey) Ltd ([2014] EWCA Civ 303) Erimus Housing occupied office premises under a five year lease. When the lease came to an end, they continued paying rent. The parties engaged in negotiations for the grant of a new lease but without any great sense of urgency. Eventually, after two years, the terms of a new lease were agreed. Then the tenants changed their mind and gave notice that they intended to vacate the property.

The landlords argued that by holding over and paying rent the tenants had entered into an implied yearly tenancy and had to give six months’ notice to quit expiring at the end of a complete year of the tenancy. The tenants argued that their possession was on the basis of a tenancy at will.

Patten LJ referred to the judgment of Nicholls LJ  Javad v Aqil:

‘Of course, when one party permits another to enter or remain upon his land on payment of a sum of money, and that other has no statutory entitlement to be there, almost inevitably there will be some consensual relationship between them. It may be no more than a licence determinable at any time or a tenancy at will. But when and so long as such parties are in the throes of negotiating larger terms, caution must be exercised before inferring or imputing to the parties an intention to give to the occupant more than a very limited interest, be it licence or tenancy. Otherwise the court would be in danger of inferring or imputing from conduct, such as payment of rent and the carrying out of repairs, whose explanation lies in the parties’ expectation that they will be able to reach agreement on the larger terms, an intention to grant a lesser interest, such as a periodic tenancy, which the parties never had in contemplation at all. ‘ (Javid v Aqil [18])

It is all a question of what the parties could reasonably be taken to have intended.

Thus:

‘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’ (Erimus Housing at [23] per Patten LJ).

In  Erimus Housing, it was unlikely that the parties intended to create a periodic tenancy:

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.’ (Erimus Housing at [23]).

There was no implied periodic tenancy.

Michael Lower

Unlawful holding over: meaning of possession and calculating mesne profits

April 27, 2016

In Fordtime Industrial Ltd v Yip Shing Lam ([2016] HKEC 812, LT) the tenant of a cockloft unlawfully held over at the end of the tenancy. After a dispute lasting several years, it wrote to its former landlord on 2 December 2014 notifying the landlord that it could re-take possession. The tenant had, however, built a wall that blocked off access to the cockloft. The landlord was finally able to demolish the wall on 7 March 2015. Had possession been given to the landlord on 2 December 2014 or 7 March 2015? Since the wall erected by the former tenant prevented the landlord from enjoying possession, possession was given on 7 March 2015 when the wall was demolished.

The tenant had removed the floor slab from the cockloft to adapt it to its purposes. The market value of the cockloft was much higher if it was let with a floor slab in place. Should mesne profits be calculated on the basis of the value with the slab or without it? The Tribunal held that the restitutionary basis should be adopted in this case: the aim was to prevent the tenant from being unjustly enriched. Actual losses suffered by the landlord would only come into the calculation if they were higher than the value of the benefit received by the tenant. This was not the case here. Mesne profits were to be calculated by reference to the use contemplated by the parties (without the floor slab).

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

Holding over

June 4, 2013

In Pang Kin Hang v Tsui Hung Restaurant Ltd ([1986] HKEC 12) T refused to leave the demised premises at the end of the term. L sought vacant possession and mesne profits by summary judgment. It was held that a full trial was needed as to whether or not there was an estoppel or oral agreement to grant a new tenancy.

The judgment contains this passage:

‘[I]t is well established that if a tenant whose lease has expired be permitted to continue in possession pending a treaty for a further lease, he is not a tenant from year to year, but a tenant strictly at will, until some other interest is granted to him.’ (Hon. Deputy Judge Saied)

Michael Lower