Parties negotiating lease — Claimant signing draft lease — Claimant taking possession of premises under tenancy at will — Defendants withdrawing from lease negotiations — Claimant commencing action on basis that defendants estopped from withdrawing from lease — Claim struck out
The parties entered into negotiations for a lease of premises that formed part of a school. By January 2001, the principal heads of terms had been agreed, and the defendants wrote to the claimant setting out the terms of the lease. The letter was headed “Subject to Contract” and clearly indicated that a draft lease was being prepared. In February 2001, the defendants granted the claimant a licence to enter the premises for the purpose of refitting them. That licence was expressed as being valid until such time as the lease was ready to complete. Further correspondence passed between the parties, including a copy of the draft lease, which the claimant had signed and returned to the defendants, notwithstanding that it contained a number of blanks that the claimant had failed to fill in, and also lacked an accompanying plan.
Difficulties arose between the parties, and the defendants decided to withdraw from the lease arrangement. In February 2003, they informed the claimant that the tenancy at will had been terminated, and demanded vacant possession of the premises. The claimant commenced an action against the defendants on the basis that she had incurred considerable costs in starting up her business, in the belief that she had the security of a 10-year lease. She maintained that an express grant of, or a concluded agreement for, a lease had resulted from her returning the signed documentation to the council. In the alternative, she argued that the expenditure incurred as a result of her reliance upon the lease had led to a tenancy by estoppel. The defendants contended that she had no grounds for initiating the action, and applied to have her case struck out or, alternatively, for summary judgment.
Held: The claim was struck out.
The claimant’s argument was unsustainable. All discussions regarding the lease had clearly been made “Subject to Contract” and, as such, entirely negated the creation of any lease or any agreement for lease or any form of estoppel. The final form of the lease had never been agreed, given, for instance, the lack of a finalised lease plan, nor had the term commencement date been confirmed or inserted into the documentation. Neither had rent been paid in advance.
The claimant had held the premises as a tenant at will: given that the parties clearly intended the tenancy to take effect outside the protection of the Landlord and Tenant Act 1954, the parties could not have intended to create some anterior agreement anticipatory of the 10-year lease that would itself attract statutory protection. In addition, the terms of the letter identified the tenancy at will as being no more than an interim measure and, as such, terminable at any time, and the claimant could not have acted in reliance upon it.
The claimant appeared in person; Samuel Waritay (instructed by the solicitor to Southwark London Borough Council) appeared for the defendants.
Vivienne Lane, barrister
