Lease renewal — Estoppel — Appellant’s predecessor granting leases of plots for development by tenants — Long-standing practice of renewing leases on same terms upon expiry — Appellant refusing to renew respondents’ leases — Whether respondents entitled to renewal — Whether appellant estopped from contending otherwise — Appeal allowed
The appellant was the freehold owner of a number of plots on an estate, upon each of which stood a wooden bungalow. Each plot had originally been empty, but had subsequently been let under a 15-year lease at a ground rent, with a covenant by the tenant to use it “as a site for a dwellinghouse or bungalow”. The leases provided for the tenants to remove those structures upon the expiry of the lease, although, in practice, new leases were invariably granted on the same terms as before. Each respondent held such a lease.
Upon the expiry of the respondents’ leases, the appellant, instead of offering new leases at a ground rent, offered to grant new leases at a rack-rent, or to sell the freehold of the plots to the respondents. The respondents rejected those offers, and the appellant brought possession proceedings against them.
The respondents each contended that the bungalow on their respective plot was their property and did not form part of the freehold title. They submitted that the appellant was estopped from asserting otherwise by, inter alia, the long-standing practice by both it and its predecessor in title of renewing leases on the same terms, in reliance upon which the respondents and other tenants had incurred capital expenditure on building and improving the bungalows. They further argued that the possession claim infringed their human rights. They counterclaimed for a declaration that they were entitled to retain and use the bungalows, subject to payment of a fair market rent for the plot.
The judge dismissed the possession claims, holding that the matters raised by the respondents in their estoppel argument entitled them in equity to renewal of their leases. However, he rejected their contention that they owned the bungalows on the basis that they had become part and parcel of the land to which they were affixed. The appellant appealed. The respondents abandoned a cross-appeal against the finding that they did not own the bungalows after the appellant conceded that they could remove them from the plots within a reasonable time of the expiry of the lease.
Held: The appeal was allowed.
A landlord’s long-standing practice of renewing leases at a ground rent could not in itself justify an expectation on the part of a tenant that that practice would continue in perpetuity. Something more was required before any question of unconscionability could arise. Although it might have been reasonable for a tenant to incur capital expenditure on the basis that the practice was likely to continue, that was not enough to convert that practice into a representation or assurance by the landlord sufficient to found a proprietary estoppel. Moreover, there was nothing in Article 8 of the European Convention on Human Rights, or in Article 1 of the First Protocol to the Convention, to confer upon a tenant a right to lease renewal in circumstances where such entitlement did not exist under domestic law. Accordingly, the respondents were not entitled to renewal of their leases, and possession orders would be granted to the appellant, to be suspended for three months to enable the respondents to reconsider their position and attempt to reach an amicable solution.
John Furber QC and William Hanbury (instructed by Gosschalks, of Hull) appeared for the appellant; Joseph Harper QC and Timothy Hartley (instructed by Thorpe & Co, of Filey) appeared for the respondents.
Sally Dobson, barrister