Publity AG v Chesterhill Properties Ltd [2016] EWHC 1994 (Ch) (Not on Bailii. Judgment on Lawtel)
Every now and again there is a reminder of the problems of a contractual tenancy. In this case, the difficulties involved a deposit of £52,000 and a weekly rent of £6,500.
Publity AG decided to rent a property in Mayfair, for the use of its CEO. During late 2015 there were negotiations about the tenancy, in the course of which Chesterhill agreed to carry out various works before the tenancy and Publity agreed to pay a deposit of £52,000. After various disagreements over the start date of the tenancy, uncompleted works, and terms as to the deposit and a letter of guarantee, relations broke down in early February 2016 and Publity’s CEO was not given entry to the property, indeed the locks were changed as his furniture was arriving. Subsequent discussions came to nothing.
Publity brought a claim for a declaration that there was a tenancy, or alternatively the return of the £52,000. Chesterhill counterclaimed on the basis that there was a side agreement that the £52,000 was paid to take the property off the market and for the works to be carried out.
There were three different versions of the tenancy agreement. The first was the “Trustees’ Signed Tenancy Agreement”, the trustees being of a trust which was Chesterhill’s sole shareholder. That agreement was signed by the trustees on 15 January 2016. It was not signed by Publity at that time.
Second, there was the ‘Amended Tenancy Agreement’. That was signed at the property on 27 January 2016 after the claimant’s CEO, its solicitor and another senior officer had met the defendant’s agent there. At that meeting, the CEO had changed the commencement date of the tenancy on the agreement to 1 February 2016 from 14 January 2016, as works weren’t finished and keys were not provided.The agent signed that agreement on the defendant’s behalf.
Then there was the ‘Posted Tenancy Agreement’. That was an agreement which the senior officer of Publity said that he had signed after printing off a copy of the Trustees’ Signed Tenancy Agreement which had been emailed to him by Chesterhill’s agent on 27 January 2016. The officer claimed that when he was at Munich Airport on 1 February 2016 he posted the agreement to an address in Geneva which he had obtained for Chesterhill’s trustees. Chesterhill denied that the agreement had ever been received (and indeed that it had actually been sent).
Publity argued that the ‘posted tenancy agreement’ meant there was a concluded and binding tenancy and denied that there was any side agreement on the £52,000 which was a straightforward deposit.
The Court held:
The ‘posted tenancy agreement’ indeed been signed and sent. Chesterhill’s argument that this was a concocted story was rejected as inherently improbable. However, the ‘posted tenancy agreement’ could not be a concluded agreement because the terms of that ‘offer’ had been rejected in the meeting on 27 Janaury at the property where Publity’s CEO had amended the start date of the tenancy. This amounted to a counter-offer and rejection of the ‘trustees signed agreement’. It was also not a dated agreement in the terms required, although the signature was dated.
While Chesterhill’s agent had signed the amended agreement at the meeting at the property it was far from clear at that time to Publity that the agent had authority to do so, and Chesterhill said that he didn’t.
In short, there was no concluded tenancy agreement, but offer and counter offer. There was therefore no tenancy.
However, Chestherill’s argument for the £52,000 as payable under a side agreement was given short shrift. There was simply no evidence of any such agreement and all parties had consistently refered to the sum as a deposit. Chesterhil to repay the £52,000.
So, despite the involvement of agents, officers of companies, and the hidden power behind a trust, there was no tenancy. Chesterhill and Publity had both shifted their demands as to the detail, amounts and start dates of the tenancy and no conclueded agreement was reached. Chesterhill’s attempt to hang on to the £52,000 despite denying the tenancy also came to nothing.
Everyone should have a housing lawyer with them at all times. I cannot emphasise this enough.
Interesting case. Wonder what would have been the outcome if any payments which could be deemed as rent were made by Polity. I assume this never occurred, but would have put a tenancy beyond doubt (?) even if there were still numerous doubts as to an agreement being reached despite 3 draft contracts. It strikes me that no difference would have been made even if it was on a solely verbal basis in the above case.
Well yes, presumably if there had been exclusive possession, a term and a rent then as long as you could infer intention to enter legal relations you could invoke the holy name of Street V Mountford and there would be a tenancy, even if the written documents could not be relied upon.
Though frankly the idea that anyone would want to plop £52,000 on the table and potentially commit to £6500 a week without a deed, even if one isn’t technically required, baffles my poor northerner sense of finances. Especially since we’re not even dealing with an assured shorthold tenancy at that price.
Must be nice to have that kind of money.
Thanks Giles, Interesting case. I wonder whether the negotiations had been conducted on a ‘subject to contract’ basis, and whether this would have also affected the formality required to conclude the agreement. The comment on the dating requirement is interesting. There was clearly a further formality requirement here – the document stipulated a particular way in which the document had to be dated which had not been done
it would be interesting to know more detail here. I’ll keep an eye out on Bailii.
Not ‘subject to contract’ (and wouldn’t have made a huge difference. This was pure contract law).
Yes, there was a particular formality on the dating of agreement, not just signature, which was a factor, but not the main one I think.
What the heck are these idiots doing? Did no-one involved have access to a first year law student who could explain why this series of transactions might go badly wrong before they started throwing £000s around? Or is it just that these folks have more money than sense? I despair.