Landlord and Tenant Act 1954 — Negotiations for new lease ‘subject to contract’ and ‘subject to lease’ — Tenant failing to apply to court — Whether landlord estopped from denying tenant’s entitlement to new lease
The defendant
held a lease of the first-floor premises at 439 Welford Road, Leicester, by
assignment, the contractual term of which expired on September 29 1986; the
defendant remained in possession under a tenancy continued by the 1954 Act. On
December 21 1990 the plaintiff landlord served a notice under section 25 of the
Landlord and Tenant Act 1954 terminating the tenancy on July 1 1991, and
stating that the grant of a new tenancy would be opposed on the ground of
persistent delay in paying rent. The defendant served a counternotice on
January 9 1991. The parties continued to negotiate the terms of a new lease. By
a letter marked ‘subject to lease’ and dated March 22 1991 the defendant’s
solicitors stated that the defendant was prepared to enter into a new lease on
certain terms; the plaintiff’s solicitors accepted by a letter marked ‘subject
to lease’ and dated April 15. No further steps were taken until May 15 when the
plaintiff’s solicitors enclosed the counterpart lease for signature; the signed
counterpart was not returned until June 24 1991. The plaintiff refused to
complete because the defendant’s cheque for the completion moneys was not
accepted. The defendant’s solicitors failed to make any application to the
court for a new tenancy. In proceedings by the plaintiff for possession of the
premises, the defendant contended that the plaintiff was estopped by her
solicitors’ correspondence from contending that the defendant was not entitled
to a new lease, alternatively that the forbearance to issue an application to
the court under the 1954 Act was consideration for a collateral contract that a
lease in the terms of the final draft would be adopted. In Leicester County
Court Judge Pitchers made an order for possession of the premises. The
defendant appealed.
a departure from the well-established rule as to the meaning of ‘subject to
lease’ that either party may withdraw before exchange of lease and counterpart.
There had never been a physical exchange of lease and counterpart;
that indispensable condition for the formation of a contract was never
satisfied. Even if the letters had not had the protective words, there was no
promise by the landlord to grant a lease in consideration of the tenant’s
forbearance in not applying for a new tenancy. The tenant could not be said to
rely on any representation by the landlord when all such representations were
marked ‘subject to lease’.
is that the defendant gave up his right to apply for a new tenancy. There was a
representation that the plaintiff no longer objected to the grant of a new
tenancy in the terms agreed. It was sufficient to show a representation merely
that the defendant’s statutory right to a new tenancy was acknowledged.
Accordingly ‘subject to lease’ would not allow a party to go back on an
assumption where it would be unjust or unfair to allow him to do so.
The following
cases are referred to in this report.
Amalgamated
Investment & Property Co Ltd (in liquidation) v
Texas Commerce International Bank Ltd [1982] QB 84; [1981] 3 WLR 565;
[1981] 3 All ER 577; [1981] Com LR 236, CA
Attorney-General
of Hong Kong v Humphreys Estate (Queen’s
Gardens) Ltd [1987] 1 AC 114; [1987] 2 WLR 343; [1987] 2 All ER 387, PC
Derby
& Co Ltd v ITC Pension Trust Ltd [1977]
2 All ER 890; (1977) 245 EG 569, [1978] 1 EGLR 38
Hughes v Metropolitan Railway Co (1877) 2 App Cas 439
Longman
v Viscount Chelsea (1989) 58 P&CR 189;
[1989] 2 EGLR 242, CA
This was an
appeal from a decision of Judge Pitchers in Leicester County Court, who had
made an order for possession of premises at 439 Welford Road, Leicester, in an
action by the plaintiff, Helen Salomon, for possession of the premises against
the defendant, Stephen Paul Akiens.
Alison Hampton
(instructed by Dixon Coles & Goddard, of Leicester) appeared for the
appellant; David Pittaway (instructed by Josiah Hincks Son & Bullough, of
Leicester) represented the respondent.
Giving the
first judgment, DILLON LJ said: This is an appeal by the defendant in
the action against a judgment of Judge Pitchers, given at the trial of the
action in Leicester County Court on November 29 1991. The decision and order of
the judge was that the plaintiff was entitled to possession of premises known
as the first floor, 439 Welford Road, Leicester.
These were
business premises within the meaning of Part II of the Landlord and Tenant Act
1954, as amended. The plaintiff was the landlord and the defendant had been the
tenant by assignment. It appears that there had been a lease granted in
December 1982 to a Mr Henry, who was the father-in-law of the defendant. That
lease expired on September 29 1986, but the tenant remained in possession and
the tenancy was then transferred to the defendant, who was his son-in-law, and
the defendant carried on business in those premises under the name of West End
Taxis, a taxi business.
The landlord
and tenant, through representatives, ultimately began negotiating terms for a
new lease well before any question of the termination of the business tenancy,
continued under the Act, had arisen. In those negotiations the documents were
marked, first, ‘subject to contract’, then later ‘subject to contract/lease’
and then ‘subject to lease’.
On December 21
1990 the plaintiff served a notice under the 1954 Act to terminate the lease,
stating that there would be objection to the grant of a new tenancy on the
ground of delay by the tenant in paying rent. The defendant duly served a
counternotice on January 9 1991, giving formal notice that he was not willing
to give up possession of the property and required a new lease. This was given
by his solicitors on his behalf.
It was then
the defendant’s task, if he wished to obtain a new lease from the court, to
apply to the court for the grant of a new lease and, under the terms of the
Act, the application had to be made not less than two nor more than four months
after the date of service of the landlord’s notice. That gave April 21 1991 as
the final date, according to the timetable in the statute, for the application
to the court. In the meantime the parties continued to negotiate the terms of a
new lease.
On March 22
1991 the plaintiff’s solicitors wrote the defendant’s solicitors a letter
headed ‘subject to lease’ and, for good measure, ‘without prejudice’ as
follows:
We are
shortly coming to the time when we shall have to issue court proceedings under
The Landlord and Tenant Act to protect our client’s position. Our client fears
that this matter of the new lease has dragged on for far too long, which is a
view you no doubt share. He is therefore prepared to sign a new Lease in the
terms proposed including the new repairing obligations. The existing Counterpart
Lease we hold
— that, I
think, refers to the circulating draft —
is for a
period of 12 years commencing on the 29th September 1989 at a rent of £1,650
per annum. Our client is currently paying rent at the rate of £1,200 per annum
and he would propose that the new 12 year period commence on the next quarter
day, being 25th of this month when the new rent will become payable. This would
seem a reasonable compromise as your client will have a lease drawn in the
terms that she requires and also be receiving the increased rent somewhat
earlier than under the terms of The Landlord and Tenant Act notice provided of
course a new Lease was granted. Our client will have the benefit of a slightly
longer term if the 12 years run from 25th March next.
That was
acknowledged by the plaintiff’s solicitors who merely said that they were
taking their client’s instructions and would contact the defendant’s solicitors
in due course.
On April 9 the
defendant’s solicitors wrote again, and again marking the letter ‘subject to
lease’. They said:
In order to
protect our client’s position we shall have to issue a summons under the
Landlord and Tenant Act unless we hear from you by Monday, 13th April. We hope
that this will not be necessary.
The reply to
that from the plaintiff’s solicitors, again marked ‘subject to lease’, is dated
April 15:
. . . we
confirm that our client is prepared to accept your client’s proposals to enable
this matter to proceed to a prompt completion.
Please return
the 2travelling draft Lease to us duly approved so that we can arrange to
engross same.
Please note
that we would like to complete this matter before the end of April.
That was April
15 and the defendant’s solicitors replied on April 17:
We thank you
for your letter of the 15th April which arrived just as we were about to issue
the Landlord and Tenant Act proceedings. On the basis of this agreement we now
return the travelling draft amended in yellow.
I take the
amendments to give effect to what had been put forward in the letter of March
22. That letter of April 17 was also marked by the defendant’s solicitors
‘subject to lease’. Nothing further happened in fact until May 15, except of
course that the time-limit of April 21 passed without any application to the
court having been made. That however was not irrevocable because it has been
held that the statutory time-limits are procedural rather than mandatory and
are capable of being waived, except that any application has to be made before
the existing tenancy, as continued by Part II of the Act, comes to an end
because the court can have no jurisdiction to entertain an application under
the Act once the landlord and tenant relationship has come to an end. The
terminal date for the tenancy to expire, having regard to the notice under the
Act which had been given on December 21 1990, was July 1 1991.
The
plaintiff’s solicitors had said in their letter of April 15 1991, which I have
read, that they would like to complete the matter before the end of April. That
could, I apprehend, have been achieved with a certain amount of expedition, but
I cannot suppose that anyone would have thought, around April 15 and 17, that
it would not have been completed before July 1.
Be that as it
may, the reply to the letter of April 17 did not come from the plaintiff’s
solicitors until May 15 1991. Their letter of that date is also marked, as the
earlier letters were, ‘subject to lease’. They say that they enclose the
counterpart lease for signature by the defendant and apologise for the delay in
forwarding the same. They also say:
We . . .
enclose a Completion Statement. Can we suggest that you telephone the writer
once your client has signed the Lease to discuss completion.
The completion
statement provided for the payment to the plaintiff or her solicitors of the
solicitors’ charges in respect of the grant of the lease and VAT thereon —
these the defendant had already agreed in the course of correspondence that he
would pay on the grant of any lease — and also the difference between the new
rent and the old rent under the previous tenancy, which would be payable under
the new lease on the March quarter day of 1991.
There was no
reply of relevance to the letter of May 15, to which I have referred, until
June. On June 5 the plaintiff’s solicitors wrote, and again ‘subject to lease’,
and stated that they held their ‘client’s part of the lease duly signed and can
see no reason for the delay in
completion’. Nothing happened until June 24.
The reason for
the delay at this stage, we have been told, was not so much inactivity on the
part of the solicitors, but that the defendant was having matrimonial troubles,
which raised difficulties in his use of his bank account. In any event, on June
24 the defendant’s solicitors wrote to the plaintiff’s solicitors enclosing the
counterpart lease duly signed and they said they had sent their client a copy
of the completion statement and would forward his cheque as soon as they
received it.
That was
followed by a letter of June 26, sent by fax, which seems to have been sent
without regard to the letter of June 24, which was received by the plaintiff’s
solicitors on June 26. The plaintiff’s solicitors’ letter of June 26 reminded
the defendant’s solicitors that the defendant’s lease expired under the 1954
Act notice on July 1, and said that, if the new lease is not completed by June
28, they would advise their client ‘to terminate the Lease on the 1st July and
. . . relet the property on the open market’.
There was an
acknowledgment of that saying that the executed counterpart notice should have
been received. That was on June 27. On June 28 there is another letter form the
plaintiff’s solicitors to the defendant’s solicitors, ‘subject to lease’,
stating that they were not able to complete until they were in receipt of the
moneys detailed in the completion statement of May 17 and advising that the
plaintiff had received no cheque for the June quarter-day payment of rent and
was requiring therefore the larger sum of £1,171.25 in all upon completion.
That did not in fact reach the defendant’s solicitors until after the suggested
completion day of June 28.
There were
further letters on July 1, 2 and 3, but cheque for £1,171.25 sent on July 3 was
not accepted, and on July 7 notice was given by the plaintiff’s solicitors of
their client’s termination of the licence under which he was holding because of
the tenancy having expired on July 1.
In those
circumstances, the primary case for the appellant is that, as a result of the
correspondence in April, in particular the letters of April 9, 15 and 17, the
plaintiff is estopped from contending that the defendant is not entitled to a
new lease of the premises in the terms of the engrossment of the finally agreed
draft. Alternatively, it is said that the forbearance to issue the application
to the court under the 1954 Act on or before April 21 was consideration for a
collateral contract that a lease in the terms of that final draft as engrossed
would be adopted.
That depends
on the meaning of the words, ‘subject to lease’, which were consistently used
by both parties in all the documents in the course of their correspondence
before and after the service of the notice terminating the tenancy under Part
II of the 1954 Act. The meaning of those words has, to my mind, been made
abundantly clear in a large number of cases. There is, for instance, the
decision of this court in Longman v Viscount Chelsea (1989) 58
P&CR 189*. There in the opening paragraph of his judgment at p190, Nourse
LJ said:
It is
axiomatic amongst conveyancers that negotiations for the sale of land which are
expressed to be ‘subject to contract’ cannot mature into a concluded agreement
unless and until there is an exchange of contracts in accordance with ordinary
conveyancing practice, before which either party can withdraw; see Eccles v
Bryant and Pollock [[1948] Ch 93]. Broadly stated, the question in the
present case is whether an analogous rule applies to negotiations for the grant
of a lease which are expressed to be ‘subject to the completion of a lease’, so
that either party can withdraw before there has been an exchange of lease and
counterpart. So stated, the question would appear to readily susceptible of an
affirmative answer.
*Editor’s note:
Also reported at [1989] 2 EGLR 242.
To the same
effect is the decision of the Privy Council in Attorney-General of Hong Kong
v Humphreys Estate (Queen’s Gardens) Ltd [1987] AC 114 especially at
pp127-128, in the opinion delivered by Lord Templeman. To the same effect is
the judgment of Oliver J, as he then was, in Derby & Co Ltd v ITC
Pension Trust Ltd (1977) 245 EG 569, [1978] 1 EGLR 38, especially at the
foot of p572.
Is there
anything in this case to justify a departure from the well-established rule,
which indeed in Longman v Viscount Chelsea Nourse LJ at p193 held
ought to be more highly regarded than the merits of individual cases? To my mind there clearly is not. The parties
were negotiating throughout on the basis that neither would be bound until the
terms of the lease had been embodied in formal lease and counterpart and these
had been exchanged in the usual way. They had been negotiating on the basis
that accepted, as each of the solicitors must have known, that either could
withdraw from the negotiations at any point before the exchange had taken
place. There was no change in the stated basis of the negotiations in the
subsequent documents. Moreover, the passing of the date, April 21 1991, as I
have mentioned, was not irrevocable and there was no reason for supposing at
that stage that it would not be possible to complete the exchange of lease and
counterpart on the terms of the circulating draft speedily. It could not
automatically be assumed that there would be no point taken on the final yellow
amendment, to which I have referred, in the April letter that I have read.
I see nothing,
therefore, in this case to distinguish it from the ordinary case of a
negotiation subject to lease. It is not enough that they were negotiating
against the background of a right, which could not be indefinitely deferred, on
the part of the defendant to apply to the court for the grant of a new lease to
which, if he could overcome such objection as was taken on the ground of delay
in payment of rent, he would be entitled. That was a negotiating factor no
doubt of value. But I do not find it enough to warrant giving the words
‘subject to lease’ in this case a different meaning from their ordinary and
well-accepted meaning. I would therefore dismiss this appeal.
Agreeing, STEYN
LJ said: Three issues arise. I will deal with them in logical order.
In a skeleton
argument lodged on behalf of the appellant, the first issue raised was whether
a contract in writing for the grant of a new lease pursuant to section 2 of the
Law of Property (Miscellaneous Provisions) Act 1989 came into existence. Prima
facie the contract would only come into existence upon the physical
exchange of a duly executed lease and counterpart: see Longman v Viscount
Chelsea (1989) 58 P&CR 189.
The question
is not whether there was a meeting of minds or a concurrence of an offer and
acceptance. The question is whether an indispensable condition to the coming
into existence of a contract had been fulfilled. Plainly it had not been
fulfilled. There had been no physical exchange of an executed lease and
counterpart of the lease. It was of course open to the parties to agree on a
constructive form of exchange such as, for example, an arrangement that the
contract would come into existence when the solicitors confirm telephonically
or by letter that their respective clients had signed the lease and the
counterpart of the lease: see Longman v Viscount Chelsea (supra).
Plainly there was no express agreement providing for a constructive exchange.
Moreover, counsel did not suggest that there was anything in the correspondence
or conduct of the parties which could conceivably warrant the implication of a
term allowing a constructive exchange.
In these
circumstances both sides were entitled to withdraw from the negotiations at any
stage. The first argument, which counsel did not support by oral argument, must
therefore be rejected.
The second
issue was whether the forbearance of the tenant from issuing an application for
a new tenancy under section 24 of the 1954 Act, in consideration for the
‘promise’ by the landlord that she would grant a new lease, created a
collateral agreement pursuant to which the parties agreed to execute a new
lease. Even if none of the contemporaneous exchanges had been marked ‘subject
to lease’, I would have taken the view that there was no such ‘promise’ by the
landlord. But the ‘subject to lease’ stipulation makes it clear beyond any
doubt that neither party was intended to be bound contractually to the other in
any way until a formal lease had come into existence. It is therefore
impossible to construct a collateral contract from the exchanges of the
parties.
The third
issue is whether the landlord is estopped from refusing to complete or
acknowledge the validity of the lease of the premises in the form of the
counterparts of the lease signed by both parties. Put in this way the argument
again founders on the ‘subject to lease’ stipulation. The tenant cannot be
heard to say that there was a representation that there was in existence a
binding agreement in circumstance where every relevant communication was
expressed to be ‘subject to lease’, thereby reflecting a clear and communicated
understanding that there would be no binding contract until a duly executed
lease and counterpart had been exchanged: see Derby & Co Ltd v ITC
Pension Trust Ltd (1977) 245 EG 569 at p572 (col 2), [1978] 1 EGLR 38. That
only means that the particular estoppel put forward by counsel in this case is
defeated. It does not mean that the stipulation ‘subject to lease’ would by
itself necessarily eliminate the operation of any estoppel. If the landlord
had, for example, expressly represented in
are in negotiation and without giving reasonable notice of her intention to do
so, an estoppel could have arisen. The landlord’s strict legal rights could
have been suspended; see Hughes v Metropolitan Railway Co (1877)
2 App Cas 439. And, in such a case, the stipulation ‘subject to lease’ would
not preclude the operation of an estoppel. It can also readily be accepted that
the very fact of negotiations can sometimes give rise to an implied estoppel.
That happened in Hughes v Metropolitan Railway. In that case the
landlord gave his tenant notice requiring him to do repairs within six months.
During that period the landlord negotiated with the tenant to buy his lease.
Understandably, the tenant did not do the repairs. When the negotiations
eventually broke down, the landlord tried to rely on his notice and tried to
forfeit the lease. It was held that the landlord had led the tenant to believe
that he would not enforce his notice without giving the tenant reasonable time
to do the repairs.
Relying on
this analogy, can it now be said that in the present case the tenant’s
solicitor was led to believe by an implied representation that the landlord
would not rely on time-limits until he had given the tenant reasonable notice
of his intention to rely on his strict legal rights? I fear the answer to that is ‘no’.
Miss Hampton
told us that the solicitor thought that he had negotiated a binding agreement
by April 17, that is, a few days before the lapse of the statutory period for
the lodging of the application for a new tenancy. That explanation is difficult
to reconcile with the correspondence, including the letters of April 17 and
June 24, written by the tenant’s solicitor in which the words ‘subject to
lease’ appear boldly in capital letters. But I accept the solicitor’s
explanation as tendered by counsel. I am satisfied that the solicitor was
negligent in coming to such an astonishing conclusion. As Oliver LJ (as he then
was) said in the Derby case, at p572 (col 2), everybody knows that where
parties negotiate subject to contract, there is a risk that at the end of the
day either side may back out of the negotiations, up to the point where leases
are exchanged. If the solicitor’s conduct is judged by the objective standard
of what a reasonable solicitor would have done, it is, in my judgment, a plain
case where the solicitor ought to have lodged a protective application for a
new tenancy within the statutory period. The cost of such an application is
£30. Nothing had been said or done which could reasonably have encouraged him
to conclude that the landlord was content to treat the strict time-limit as in
suspense. The judge said that the solicitor was ‘walking towards a precipice
over which he would fall’ unless he took action. To that I would only add that
the misfortune which befell the tenant was one entirely of the solicitor’s
making. In oral argument I raised with the appellant’s counsel the impact of
the solicitor’s negligence on the alleged estoppel. In my judgment, the
solicitor’s negligence is inconsistent with the hypothesis that he was misled
by an implied representation coming from the landlord’s side. Clearly, this is
not a case where the tenant’s solicitor thought the strict time-limit was
suspended. On analysis the analogy with Hughes v Metropolitan Railway
breaks down. It follows that, in my judgment, no estoppel arises.
For these
reasons, and despite the attractive argument of Miss Hampton, I would dismiss
the appeal.
Dissenting, EVANS
LJ said: I have the misfortune to differ from my lords. In the circumstance
I will give my reasons briefly. The essential question is whether the plaintiff
was estopped from April 21 onwards from denying that the defendant was entitled
to a new lease; conversely, that the defendant was permitted to stay in
occupation on the premises beyond July 1 when the statutory tenancy expired.
My lord has
referred to the relevant correspondence, which consists solely of the letters
dated March 22 through to April 17 1991. The effect of that exchange of
correspondence was that the defendant gave up his right to apply for a new
tenancy within the statutory time-limit, and he did so with the full knowledge
of the plaintiff that he was acting on the basis that the lease terms were
agreed. Unfortunately, those letters and subsequent letters continued to be
headed ‘subject to lease’.
There was no
question of extending the time for an application. There was no application
because the plaintiff agreed that no application was necessary. The possibility
of applying for an extension was not in anyone’s mind. In fact, neither party
contemplated failure to agree, precisely because the terms were agreed; unless,
that is, the words ‘subject to lease’ meant that they were not agreed so as to
bind the parties. But that could not contradict what both parties said and what
the defendant did by refraining from making the statutory application which he
otherwise would have made.
There is some
authority for the proposition that the words, ‘subject to contract’ and, by
analogy, ‘subject to lease’ may be disregarded in certain circumstances. In the
present case it seems to me that they should probably not be disregarded
altogether. It was clearly intended that the terms which had been agreed should
be carried forward into a formal document or documents.
Thereafter
both parties proceeded on the basis that a lease would be created by agreement
until, that is, the very end of June when the plaintiff imposed a deadline, at
first June 28 and later July 1. In fact, as late as June 28 her solicitor
demanded payment of rent due under the terms which the defendant’s solicitors
correctly regarded as having been agreed, subject only to the effect of the
words ‘subject to lease’. Then at that late stage the plaintiff asserted her
right to withdraw on the ground that no binding contract had been entered into
— that is something which may be assumed to be correct — and on the further
ground that she was free to withdraw, notwithstanding the ‘agreement’ — and I
put that word in quotation marks because it appears in the defendant
solicitor’s letter dated April 17 — reached in April upon which the defendant
had clearly and expressly relied, to his very great detriment if the plaintiff
is correct.
The advice of
the Board of the Judicial Committee of the Privy Council in Attorney-General
of Hong Kong v Humphreys Estate (Queen’s Garden’s) Ltd [1987] 1 AC
114 is clear authority that no estoppel can arise except possibly in
exceptional circumstance from ‘subject to contract’ negotiations. Both parties
to such negotiations are free to withdraw. Both parties accept the risk that
the other party will do so. In the course of the Board’s advice, Lord Templeman
significantly, in my judgment, adopted the statement of the principle by Lord
Denning MR in Amalgamated Investment & Property Co Ltd (In Liquidation) v
Texas Commerce International Bank Ltd [1982] QB 84 at p122. Lord
Templeman said:
Lord Denning
MR [in that passage] reduced the doctrine of estoppel:
‘. . . into
one general principle shorn of limitations. When the parties to a transaction
proceed on the basis of an underlying assumption — either of fact or of law —
whether due to misrepresentation or mistake makes no difference — on which they
have conducted the dealings between them — neither of them will be allowed to
go back on that assumption when it would be unfair or unjust to allow him to do
so.’
In the course
of Lord Templeman’s judgment he refers to the judgment of Woolf J, as he then
was, in what I will call the Salvation Army case* (1980) 41 P&CR
179. Suffice it for me to read from p127 of Lord Templeman’s judgment the
following passages:
But the fact
that the arrangement was ‘subject to contract’ was irrelevant. The Salvation
Army did not enter on the new site and build the new hall because they hoped
that an arrangement ‘subject to contract’ would eventually result in a
concluded binding agreement. The Salvation Army took possession of the new site
and built the new hall in consequence of the expressed intention on the part of
the city council to acquire the old site for a purpose for which the city
council held compulsory acquisition powers.
*Editor’s
note: Salvation Army Trustee Co Ltd v West Yorkshire Metropolitan
County Council.
In this case,
the defendant gave up his statutory right to obtain the grant of a new tenancy.
It was not a case where both parties were conducting what is called, in another
of the cases to which we have been referred, a normal ‘subject to contract’
negotiation. It was a case where the defendant could obtain a new lease from
the court if his negotiations with the plaintiff failed. The defendant gave up
that right when the plaintiff agreed the terms which were to be embodied in a
formal document. The plaintiff now says that, despite that agreement, she
became free from April 21 to behave as if the defendant’s right no longer
existed. If the plaintiff is correct, the agreement was worth nothing to the
defendant, and all this because the words ‘subject to lease’, continue to be
used in the letter headings, words which were capable of referring to the
continued need, which both parties recognise and accepted, to prepare formal
documents. On the other hand, if the plaintiff is correct, the agreement is
worth a great deal to her because the defendant had been led to believe that a
court application was not necessary in order to preserve his statutory rights,
and his solicitors had said as much in the correspondence.
In my judgment
these facts, on any view, come within the principle stated by Lord Denning and
approved by Lord Templeman and the Board in the passage already sited. If it is
useful to define the representation which, in my judgment, was clearly made, it
was that the plaintiff no longer objected to the grant of a new tenancy in the
terms which had been agreed. It followed that the defendant could continue in
possession beyond July 1 when his statutory right to possession would otherwise
expire. The defendant need not show, in my judgment, a representation that
there was a lease; merely that his statutory right to obtain one was
acknowledged.
I append two
remarks. It is not necessary, in my judgment, to consider what the position
would have been if the terms of the lease had not been agreed before April 21,
nor if the defendant had unreasonably failed to proceed to completion of the
lease. That is a contention which the plaintiff does not raise.
Finally, if
the views I have expressed are correct, it does not follow that the defendant
was nevertheless free to withdraw after April 21, as Mr Pittaway in the course
of his submissions has suggested. That is not necessarily a consequence of the
view which, in my judgment, should be adopted here. The question of negligence
by the defendant’s solicitors has not been argued before us and, needless to
say, I express no view whatsoever on that particular matter.
Appeal
dismissed with costs.