Landlord and tenant – Surrender by operation of law – Respondent tenants vacating premises and returning keys – Appellant landlord allowing another to reside at the property for several weeks and carrying out redecoration – Appellant asserting in letters that lease continuing – Whether appellant’s conduct amounting to unequivocal acts demonstrating acceptance that lease ended – Claim for rent rejected – Appeal dismissed
By a lease commencing in September 2004, the appellant company let a substantial and luxurious residential property, in London W14, to the respondents for a term of three years. The rent of £390,000 pa was payable by three-month instalments in advance. During the currency of the lease, the property suffered from technical problems, with the respondents complaining of defects in the central heating and the swimming pool. The respondents decided to leave the property and, in May 2006, returned the keys to the appellant even though the lease had 15 remaining.
The appellant brought proceedings to recover the rent for the remainder of the term, plus interest, in the sum of £487,000. The respondents denied liability and contended that the appellant, by its actions, had accepted the surrender of the lease. The actions relied on included: (i) the appellant’s acceptance of the keys; (ii) the obtaining by of a “checkout report” and inventory; (iii) certain works of redecoration; (iv) the use of the drive for parking the car of T, a beneficiary of the trust of which the appellant company was a vehicle; and (iv) T residing at the property for a period of six weeks from June 2006.
In the county court, HH Judge Hazel Marshall QC ruled in favour of the respondents. She found that the appellant had accepted the surrender of the lease from June 2006, notwithstanding subsequent solicitor’s letters in which it had asserted that the lease was continuing. The judge held that although some of the appellant’s acts, such as the acceptance of the keys and the obtaining of the checkout report, were equivocal, its actions as a whole went significantly beyond anything consistent with the continued existence of the tenancy. The appellant appealed.
Held: The appeal was dismissed.
A surrender by operation of law required unequivocal acts of acceptance on the part of the landlord; the landlord would have to do something that went significantly beyond anything consistent with the continued existence of the tenancy: Bellcourt Estates v Adesina [2005] EWCA Civ 208; [2005] 2 EGLR 33; [2005] 18 EG 150 applied. The residence of T at the property for his own benefit was the key act of possession. Entering and living in a property, thereby effectively taking it over and treating it as one’s own, was inconsistent with the continuance of a lease. The other findings of the judge cast evidential light on the nature of that key act. The appellant’s assertion that the lease was continuing, as stated in its solicitor’s letters, did not prevent a surrender from taking place. Surrender by operation of law did not depend on the intentions of the parties but on the doctrine of estoppel. Accordingly, the matter is judged not by the landlord’s stated intention but by the intention as demonstrated on an objective basis through its conduct as a whole. Although the burden of proof for surrender by operation of law lies with the party asserting surrender, there had been sufficient material before the judge to justify the finding that a surrender had taken place in June 2006; that was the date on which the act of accepting the surrender and entering the property had occurred.
Michael Driscoll QC (instructed by Nasir & Co) appeared for the appellant; Nicholas Dowding QC (instructed by LG) appeared for the respondents.
Sally Dobson, barrister
