Landlords agreeing to assignment of tenancy to tenant’s son – Agreement including provision for part-redemption clause in new tenancy – Separate assignment of tenancy never executed – Whether tenant estopped from denying legal assignment – Whether landlords having benefit of part-redemption clause – Appeal dismissed
St John’s Hospital was a charity, and held 2.1ha of pastureland as part of its endowments. In 1961 the appellant trustees of the hospital (the landlords) let that land to K. The tenancy agreement contained an unqualified prohibition on assignment. It did not contain any provision enabling the landlord to resume possession of part of the holding for any non-agricultural use (a part-resumption clause).
In 1989 K, his son, and a chartered surveyor acting as agent for the landlords entered into discussions concerning the tenancy. An increase in rent was provisionally agreed and there was discussion of K’s wish to transfer the tenancy to his son. In 1992 an agreement was signed by the landlords, K and K’s son, in which the landlords permitted the assignment of the benefit of the tenancy agreement to the son (the successor). It also provided that “the successor further agrees that… the tenancy agreement… shall be deemed to include an additional clause”, namely, a part-resumption clause. No separate assignment of the tenancy was ever executed. However, the son treated himself as the tenant and so did the landlords.
In 1973 a compulsory purchase order was made in relation to the land, which the Highways Agency sought to acquire for the construction of a bypass. Substantial compensation was payable upon compulsory acquisition of the land. The issue of division of the compensation between the landlords and tenant was raised. Questions were referred to the Land’s Tribunal, namely: (i) whether the father or the son was the tenant; and (ii) upon what terms the land was held, in particular, whether the landlords had the benefit of a part-redemption clause.
Relying upon Rodenhurst Estates Ltd v WH Barnes Ltd [1936] 2 All ER 3, the landlords contended that K and his son were estopped from denying that there had been a legal assignment. The judge held that if there was estoppel, it was an estoppel by convention, which could only be established if there had been detrimental reliance on the part of the landlords. He observed that there was no pleading of detrimental reliance, and that the issue had only really been addressed in the counsel’s closing submissions. Accordingly, the judge held that K was still the tenant, and the part-resumption clause was not part of the terms of the tenancy. The landords appealed.
Held: The appeal was dismissed.
The judge was correct to approach the case as a possible case of estoppel by convention, since there was no representation, by either K or his son, to the landlords. He was also right to recognise the risk of injustice arising from an assertion of estoppel, which was raised, almost for the first time, during closing submissions. If estoppel was at the forefront of the landlords’ case, then their position as to detrimental reliance should have been made much clearer. The judge was entitled to conclude that the landlords’ unpleaded case on detrimental reliance was inadequate. In any event, he would have been entitled to decline to consider it. The overall balance of justice was not in favour of estoppel in the instant case: Rodenhurst and John v George [1996] 1 EGLR 7 considered.
Ann McAllister (instructed by Thring Townsend, of Bath) appeared for the appellants; Anthony de Freitas (instructed by Forrester & Forrester, of Chippenham) appeared for the respondents.
Sarah Addenbrooke, barrister
