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

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

Advertisement

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

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

‘Licence’ pending completion of agreement for lease: A Street v Mountford exceptional case?

In Cameron Limited v Rolls-Royce plc ([2007] EWHC 546 (Ch)) RR was C’s tenant (with the benefit of two leases contracted out of Part II of the Landlord and Tenant Act 1954). The parties exchanged agreements for the grant of two further leases of the same properties, also to be contracted out of the 1954 Act security of tenure provisions). The agreements were conditional on the obtaining of the necessary court order sanctioning the contracting out and on obtaining the superior landlord’s consent to the proposed leases. In the meantime, RR was to remain in possession pursuant to licences contained in the agreements for lease.

It was accepted that these licences gave RR exclusive possession for a term at a rent. Did the licence agreements actually give rise to leases?

The court held that they did not. They fell within one of the exceptions identified by Lord Templeman in Street v Mountford. The licences were not ‘stand-alone’ arrangements but formed part of a bigger picture. Mann J. said:

‘As I have said, Mr. Small accepted that if the licence did not fall to be treated as a stand-alone document, then the vendor/purchaser exception to the prima facie Street v. Mountford position would obtain. He is right to accept that. I have come to the conclusion that this is plainly a case of a licence being granted in the context of the acquisition of the larger interest and, as such, the nature of the interest granted by Cameron and obtained by Rolls-Royce under the agreement itself and pending the grant of the lease is that of a licence only.’ ([26])

Michael Lower

Lease or licence? Licence coupled with option to call for the grant of a lease

In Essex Plan Ltd v Broadminster ((1988) 56 P & C.R. 353) D gave E a licence to occupy premises. It also gave E an option to call for the grant of a lease. The licence and option periods expired but E remained in possession. Negotiations for the grant of a further licence did not come to fruition. D conveyed the property to B. B gave notice to terminate the licence. E argued that it was a tenant, not a licensee, with the benefit of the security of tenure conferred by part II of the Landlord and Tenant Act 1954. They argued that they had exclusive possession for a term at a rent and therefore the Street v Mountford criteria for the grant of a lease were present. 

E failed. The case belonged to one of the exceptions identified by Lord Templeman in Street (occupation by a purchaser pending completion):

‘The option gave Essex Plan the right to call for the grant of the lease and therefore gave it in equity an immediate interest in the land. Its entry into occupation pending the exercise or expiry of the option was ancillary and referable to that interest. There is therefore no need to infer the creation of a tenancy which would give Essex Plan a different interest in the same land.’ (Hoffmann J, 356)

Hoffmann J. addressed the separate question as to whether E had exclusive possession. Had it been necessary, he would have held that E did not have exclusive possession. The licence expressly provided that D retained possession and there was no evidence to show that this was a sham. Had D entered during the licence period E could not have brought an action in trespass. The absence of any express right for D to enter was an interesting indicator that it did not need to be given a right to enter since it retained possession (356 – 357).

Michael Lower