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05/03/2011

Unwillingly at will

Katana & Anor v Catalyst Communities Housing [2010] EWCA Civ 630

A slight oddity of a case, an application for permission to appeal, not strictly a housing matter, despite the Respondent. But it is of interest in the way it deals with tenancies at will

CCH were the freehold owners of business premises since 2004. It was an old filling station that they intended to redevelop it for residential use. While planning permission etc. was underway, they granted a business tenancy to a Mr Roberts:

he was granted a tenancy of the property for a fixed term of three months from the date of the agreement. The tenancy was not excluded from the provisions of Part II of the Landlord and Tenant Act 1954 (“the 1954 Act”), presumably because the landlords had in mind that a tenancy for a term of less than six months certain is an excluded tenancy under s.43 of the 1954 Act.

There was a further term that provided that “if the tenant were to hold over at the end of the term this tenancy would be terminable by the giving of not less than one week’s notice by either party, regardless of the way in which the rent payable in respect of their occupation was either calculated or paid”.

Mr Roberts continued in occupation after the 3 month term, and paid rent until a point in 2006. It turned out, however, that Mr R had purportedly granted leases of 2 parts of the property to Mr Katana and Mr Abraham, probably in 2005, for terms of 10 years and 8 years respectively and they were in occupation, paying rent (of £13k to £18k per annum) to Mr R who had otherwise vanished from the scene.

In 2008, the Claimant served notices under s.25 by leaving them at a kiosk in Mr Katana’s part of the site. The following possession proceedings were the subject of this application for permission to appeal. Mr Roberts sustained his absence at first instance trial (and subsequently). Mr K and Mr A defended on the basis that:

1. Mr R was in fact a tenant, not a tenant at will, as the relevant clause converted the tenancy into a contractual periodic tenancy, either weekly or monthly. Or Mr R’s continued occupation and payment of rent after the 3 month term gave rise to a implied periodic tenancy.
2. The s.25 notices had not been served correctly.

If 1. was right, then Mr a and Mr K themselves arguably had periodic tenancies, and these would fall under the protection of Part II of the Landlord and Tenant Act 1954, despite those tenancies being granted in breach of covenant of Mr R’s tenancy. (D’Silva v Lister House Development [1971] 1 Ch 17).

At first instance, the Judge found that there was no implied tenancy, following Javad v Aqil [1991] 1 WLR 1007, the position was that at the expiry of a fixed term, a tenancy at will arose unless there was further contractual provision by the parties. The clause in the tenancy agreement did not make continued occupation anything other than a tenancy at will. The landlord wished to develop the property, it was not in its interests to create a tenancy to which Part II L&T Act 1954 would apply. The clause made clear in its first sentence that the parties were confirming that the 3 month tenancy would end in 2005. The provisions were not inconsistent with the continuation as a tenancy at will.

The Judge found that the s.25 notices were properly served. Possession order made

Mr A and Mr K appealed on both issues.

On appeal, Patten LJ held that on the tenancy at will issue, there was nothing before the judge that would indicate that the parties had intended anything but a tenancy at will. The key point was the dealing between the parties up to but not later than the expiry of the three month tenancy. While contra proferentem had been raised in relation to the interpretation of the clause in the tenancy, this was a matter of last resort and was not a necessary aid to construction in this case. The clause was clear on both ‘holding over’ at the end of the term, should there be any, and that this would be on one week’s notice. So the protection of the 1954 Act did not apply.

On the service of the s.25 notices, while the kiosk was clearly part of the premises occupied by Mr K. There was an office, but the Act did not draw a distinction between parts of the premises. However, Mr A’s premises were separate. That service could only succeed if the Judge had sufficient evidence to find that Mr A had in fact received the notice. While there was evidence that Mr A and Mr K had discussed the notices and Mr A knew what was going on, Patten LJ was not satisfied that the first instance Judge had made a finding that Mr had received the notice.

However, in view of the finding that Mr R had a tenancy at will, and that therefore so did Mr A and Mr K, nothing turned on this possible failure of service.

Mr A and Mr K also put forward an argument in proprietary estoppel. In the Court below, this had been put in terms that the Claimant had acquiesced in their occupation such that they had a right in equity to new tenancies. This got short shrift. Silence could not found an estoppel.

On appeal the estoppel argument was put more broadly, that standing by while another acted to their detriment and knowing that that other believed themselves to be entitled to an interest in land gave rise to an estoppel, Crabb v Arun DC [1976] Ch 179. However, while the Claimants were aware of the occupation by Mr A and Mr K since 2005, there was no evidence that the Claimant was aware of the terms on which the Defendants believed themselves to be in occupation, so could not be siad to have affirmed their right to be there as tenants, let alone as tenants of 8 and 10 year terms. Mr R had placed the Defendants in this position, but this did not set up an equity against the landlord, unless the landlord knew of the details of their presumed tenancies and acquiesced in that knowledge.

No grounds of appeal had a realistic prospect of success. Application dismissed.

Now it may be just that I am thinking as a residential L&T Person, but something about that ‘week notice in the clause niggles with me. Tenancy at will with a contractual notice prior? Hmm.

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

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