Posts Tagged ‘tenancy at will’

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

Conveyance of reversion determines tenancy at will when the tenant knows of it

May 28, 2013

In Doe d Davies v James Thomas (155 E.R. 792) T was L’s tenant at will. L’s own estate in the property was vested in a third party and T knew of this. It was held that a conveyance of the reversion brings a tenancy at will to an end when the tenant has knowledge of it:

‘The moment the tenant knows that the landlord has done an act which is inconsistent with the continuance of his will – which he has done when he has parted with the reversion, – that is a determination of the will, and the tenant must know that it is his duty to quit at once.’ (Alderson, B)

Michael Lower

Holding over during negotiations for new lease. Tenancy at will? How to calculate rent?

May 22, 2013

In Dean and Chapter of the Cathedral and Metropolitan Church of Christ, Canterbury v Whitbread ((1996) 72 P. & C.R. 9) a lease had come to an end. The parties tried to negotiate a new lease. The tenant remained in occupation during the negotiations. There had been some discussion as to the rent that they should pay during the period of holding over but they were never concluded. In the end, the tenant changed its mind and moved out. The court had to decide on the nature of the tenant’s occupation during the holding over and as to the sum that the tenant should pay for its use and occupation of the property during the holding over. The period of the holding over was a little more than a year.

First, the court decided that the tenant was a tenant at will during the holding over:

‘I think that the critical test is (a) that this was a holding over for all practical purposes except, arguably, rent, as if the old tenancy had continued, (b) that it was, as I found, wholly consensual, and (c) the initial purpose was to negotiate terms for a new tenancy. When that purpose was exhausted nothing was done by either party to change the nature of the arrangement.’ (13, H.H. Judge Cooke)

As to the payment for use and occupation, the first question was whether it should be the same as the rent payable under the old lease. The court said that there was a presumption to this effect but that it was rebutted where, as here, there was evidence of disagreement between the parties as to the sum to be paid (and the same would be true if they had agreed that the rent was to be some other, perhaps unspecified, figure) (15)

The landlord had to elect (before judgment) for a sum calculated either on the basis of the loss to the landlord or the gain to the tenant (but there was likely to be no difference in this case whichever approach was taken). The ordinary measure is the proper letting value of the property for the relevant period (16).

The judge set out his basic approach:

‘On my view of the basic law, one is entitled to look not at what some hypothetical market would have been for a 12-month lease with no security, but what a holding-over tenant and this tenant carrying on this business and dealing with these landlords would pay for a further year at the end of his tenancy, on the basis that it would be his last year (I think that one is entitled to use hindsight) in order to evaluate the asset of the tenancy that the tenant actually got.’ (19)

The court took the rent paid by the new tenant who subsequently took a lease of the property as its basis of valuation but making adjustments to take account of the fact that the new tenant took on a more extensive repairing covenant, the fact that the new tenant was not as strong a covenant as the outgoing tenant and the fact that the lease was only for a period of one year.

Michael Lower