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Tenancy at will

Periodic tenancy inferred

Walji v Mount Cook Land Ltd
[2002] 1 P&CR 13, CA.

Where a person is in occupation pursuant to negotiations for a lease he is a tenant at will (Javad v Aquil [1991] 1 WLR 1007). However, circumstances can develop whereby a periodic tenancy is inferred. That is what occurred in this case. Factors that led to this conclusion included the length of time that the tenant was in occupation paying rent, the fact that the terms were agreed subject to contract or lease, the end of the negotiations without either party pressing for a formal lease and a lack of concern on the landlords part that the tenant was acquiring statutory protection.

Holding over after expiry of contracted out tenancy – business tenancy case

Tenancy at will

Erimus Housing Ltd v Barclays Wealth Trustees (Jersey) Ltd
[2014] EWCA Civ 303

Summary

A tenant holding over after the expiry of a tenancy contracted out of the Landlord and Tenant Act 1954 and negotiating, even in a “leisurely” manner, was held to be a tenant at will and not a periodic tenant.

Facts

T took a lease of premises in 2004. The lease was for a term expiring on 31 October 2009 and was contracted out of the security of tenure provisions of the Landlord and Tenant Act 1954. When the fixed term came to an end, T remained in occupation and continued negotiations (which had started before the expiry of the lease) with L for a new lease. These negotiations continued in a desultory manner. T held over under the terms of the original lease and continued to pay the rent, service charge and insurance payments on the due dates.

Terms for a new lease appeared to have been agreed about seven months later but shortly thereafter T advised L that it wished to vacate. This was repeated and then T’s solicitor wrote more formally in June 2012 giving notice to bring the tenancy to an end on 28 September 2012.

First instance

The High Court decided that the parties had created a new yearly periodic tenancy of the premises, which could not be terminated without service of a six months’ notice to quit and which in any event could not be brought to an end before 31 October 2013. The Court held that T was therefore liable to pay L approximately £185,000 rent. T appealed to the Court of Appeal.

Decision on appeal

Appeal allowed.

The court confirmed that were the tenancy a periodic tenancy it would be an annual periodic tenancy because it was a tenancy at a yearly rent (see Richardson v Langridge (1811) 4 Taunt 128, 131).

However, it was not clear when any yearly tenancy could have come into existence. Although the negotiations were “slow and lacking any urgency” there was no evidence that these had ceased or been abandoned by the parties because of an inability to agree terms. There was nothing to suggest that either party intended to grant a new lease except upon terms which were to be agreed.

The court referred to Javad v Aqil [1991] 1 WLR 1007. It pointed out that where a tenant remains in occupation after the expiry of a lease, where new lease terms are being negotiated it is unlikely that a periodic tenancy will be created regardless of the payment of rent. As Nicholls LJ said in Javad v Aqil the parties:
    "…cannot sensibly be taken to have agreed that [the tenant] shall have a periodic tenancy, with all the consequences flowing from that, at a time when they are still not agreed about the terms on which the prospective tenant shall have possession under the proposed lease and when he has been permitted to go into possession or remain in possession merely as an interim measure in the expectation that all will be regulated and regularised in due course when terms are agreed and a formal lease granted."
Lord Justice Patten confirmed this approach adding that in general a party holding over after the expiry of its lease does so as a tenant on sufferance and when the possession is consented to he becomes a tenant at will. He added:
    "[where] the parties were in negotiation for the grant of a new formal lease…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…[and] the occupier remained a tenant at will pending the execution of the new lease."
The inference, Lord Justice Patten added, is likely to be even stronger when any periodic tenancy would be protected under the 1954 Act and where the new lease was intended to be contracted-out of the Act as the old one had been.


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