Tenant running left luggage office at railway station – Tenant holding over after termination of periodic tenancy – Rent paid to agents not remitted to landlord – Tenant withdrawing from negotiations for lease of different unit – Tenant claiming to occupy existing unit as periodic tenant protected by Landlord and Tenant Act 1954 – Whether landlord correctly treating tenant as tenant at will
The claimant (LBC) ran a left luggage centre at Charing Cross Station from premises known as unit 26, having commenced occupation in or about 1994 under a periodic tenancy that, subject to the provisions of the Landlord and Tenant Act 1954, was terminable at any time at six months’ notice. The tenancy agreement reserved a basic annual rent of £18,000, and an additional rent calculated by reference to LBC’s gross receipts.
On 23 February 1998 the landlord (Railtrack) served a notice under section 25 of the Landlord and Tenant Act 1954, stating that possession of the unit was required for purposes of redevelopment. LBC did not serve a statutory counternotice, and the tenancy accordingly terminated on 29 September 1998. LBC remained in occupation, having been informed by Railtrack that it had successfully tendered for a new left luggage unit to be located in another part of the station.
During 1999 LBC made four quarterly payments of the basic rent. These were made by bankers order in favour of the managing agents, who, having been instructed not to accept further sums by way of rent, did not pass those amounts to Railtrack. During the same year, Railtrack, which had modified its redevelopment plan, invited LBC to make a fresh tender for a left luggage office. LBC declined to act upon the invitation and intimated that its occupation of unit 26 was protected by the 1954 Act.
On 25 January 2000 LBC attempted to pay a further quarter’s rent by cheque, but the cheque was returned. On 22 March 2000 Railtrack wrote to LBC, purporting to terminate what it described as LBC’s tenancy at will and requiring delivery of possession by 8 May 2000. LBC instituted proceedings claiming a declaration that it had at all material times since 29 September 1998 occupied unit 26 under a periodic tenancy, and consequently under a tenancy to which the 1954 Act applied.
Held: The declaration was refused.
1. There was no rule that a tender of rent by a holding-over tenant raised a presumption of a periodic tenancy: see Javad v Aqil [1990] 2 EGLR 82, which decided that the intention of the parties had to be gathered from all the surrounding circumstances.
2. The question of whether the test was subjective or objective was unsettled: see Dreamgate Properties Ltd v Arnot [1997] EGCS 121. However, despite contrary dicta in Sector Properties Ltd v Meah [1973] 229 EG 1097 and Longrigg, Burrough & Trounson v Smith [1979] 2 EGLR 42, the court favoured the view, expressed by Scott LJ in Land v Sykes [1992] 1 EGLR 1, that there was no reason why the approach to the formation of a contract in landlord and tenant cases should differ from the objective approach taken to contracts generally.
3. The holding over by a tenant during negotiations afforded a classic instance calling for the implication of a tenancy at will: see Javad (supra). The case advanced by LBC was exceptionally difficult to establish, as it knew from the date of the first invitation to tender that Railtrack had a firm intention to carry out a redevelopment in which unit 26 would not survive as a left luggage office. Viewed objectively, the acts of each party vis-a-vis each other was quite inconsistent with an intention to create a new periodic tenancy falling within the 1954 Act, and at a rent with no profit element. The same conclusion would be reached even on a subjective approach, as the reason why the agents retained three of the payments was the possibility of it proving difficult to recover mesne profits at a later date.
David Lord (instructed by Paul Leach & Company, of Godalming) appeared for the claimant; Edward Cole (instructed by Kennedys) appeared for the defendant.
Alan Cooklin, barrister
