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

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

Advertisement

Acquisition of right of way by prescription

In Cheung Yuk Ying v Lo Koon Fuk ([2013] HKEC 932, CFI) the path leading from P’s house to the public footpath crossed the land of a Tso (represented by D). P’s land was landlocked and P claimed a right of way by prescription under the doctrine of lost modern grant. This succeeded. The path over D’s land had been used as the access between P’s property and the public footpath ‘on a reasonably regular basis’ (though perhaps not continuously) since at least the 1940s. On that basis, the doctrine of lost modern grant applied ([146] – [147]). The fact that the house was in ruins between the mid 1950s and the mid 1990s did not matter since the path was still used as an access to the property (perhaps as a way of getting to a chicken farm beyond it) during that time. The fact that, for much of that time, the occupiers and owners were all likely to have been members of the Tso did not mean that the use of the path was a private privilege reserved for members of the Tso.

The court considered, and seems to have been inclined to accept, a second and independent basis on which the easement might have come into existence. There was a re-grant of all Government leases in the New Territories in 1973 (New Territories (Renewable Government Leases) Ordinance) and all Government leases in the New Territories had been extended in 1997 (New Territories Leases (Extension) Ordinance). P’s land was land-locked. The grant of the claimed right of way could be implied on the basis of necessity on the re-grant or extension of the lease of P’s land (with a corresponding reservation on the re-grant or extension of the lease of D’s land). Alternatively, the rule in Wheeldon v Burrows or section 16 of the Conveyancing and Property Ordinance could result in the implied grant of an easement based on the then existing use of the path as a means of access from P’s land to the public footpath.

Michael Lower