Walji and others v Mount Cook Land Ltd
Aldous LJ, Mance LJ, Charles J
Landlord granting underlease of property to company – Company being struck off register of companies – Landlord agreeing to grant new underlease to claimants as partnership – Agreement subject to contract or lease – Whether tenancy protected by Part II of Landlord and Tenant 1954 – Whether claimants tenants at will or quarterly tenants – Judge finding tenancy protected – Landlord’s appeal dismissed
In February 1994 an associate company of the defendant acquired the freehold reversion of 39 Great Portland Street, London, a headlease of which was held by a company called Romula Ltd. Prior to February 1989, the ground floor and basement of the property (the shop premises) had been occupied by the claimant tenants, who were four brothers in partnership, trading from the premises under the name of Fads Boutique. By an underlease dated February 1989, Romula Ltd granted an underlease of the shop premises, for a term of seven years from March 1989, to a company called Fads Ltd, to which the claimants intended to transfer the assets and business of their partnership. However, in August 1991 Fads Ltd was struck off the register of companies. The parties proceeded upon the basis that the underlease became vested in the Crown as a result.
In May 1995 Romula Ltd served notices upon Fads Ltd, under sections 25 and 40 of the Landlord and Tenant Act 1954, in respect of the underlease. No acknowledgement or counternotice was served. However, in May 1995, at a meeting between Romula Ltd and the claimants, the claimants informed Romula Ltd that Fads Ltd no longer existed and that they wanted a new lease. A seven-year lease was proposed, in the same terms as previously, save that the rent was to be £26,000 and was to rise to £28,000 if air conditioning was installed. The parties did not say what the legal position was to be pending the conclusion of the legal formalities.
Landlord granting underlease of property to company – Company being struck off register of companies – Landlord agreeing to grant new underlease to claimants as partnership – Agreement subject to contract or lease – Whether tenancy protected by Part II of Landlord and Tenant 1954 – Whether claimants tenants at will or quarterly tenants – Judge finding tenancy protected – Landlord’s appeal dismissed In February 1994 an associate company of the defendant acquired the freehold reversion of 39 Great Portland Street, London, a headlease of which was held by a company called Romula Ltd. Prior to February 1989, the ground floor and basement of the property (the shop premises) had been occupied by the claimant tenants, who were four brothers in partnership, trading from the premises under the name of Fads Boutique. By an underlease dated February 1989, Romula Ltd granted an underlease of the shop premises, for a term of seven years from March 1989, to a company called Fads Ltd, to which the claimants intended to transfer the assets and business of their partnership. However, in August 1991 Fads Ltd was struck off the register of companies. The parties proceeded upon the basis that the underlease became vested in the Crown as a result.
In May 1995 Romula Ltd served notices upon Fads Ltd, under sections 25 and 40 of the Landlord and Tenant Act 1954, in respect of the underlease. No acknowledgement or counternotice was served. However, in May 1995, at a meeting between Romula Ltd and the claimants, the claimants informed Romula Ltd that Fads Ltd no longer existed and that they wanted a new lease. A seven-year lease was proposed, in the same terms as previously, save that the rent was to be £26,000 and was to rise to £28,000 if air conditioning was installed. The parties did not say what the legal position was to be pending the conclusion of the legal formalities.
Thereafter, there were no continuing negotiations and neither side pressed for the grant of the lease. Romula Ltd continued to send quarterly rent demands to Fads Ltd, which were duly paid out of the claimants’ partnership account. In June 1997 Romula Ltd surrendered the headlease of the property to the associate company of the defendant. In September 1998 the associate transferred the freehold to the defendant.
Subsequently, a dispute arose as to whether the claimants had gone into occupation as tenants at will or as quarterly tenants and whether they were, as such, protected by Part II of the 1954 Act. The county court held, applying Javad v Aqil [1990] 2 EGLR 82, that the claimants had a quarterly tenancy protected by Part II of the Act. The defendant appealed.
Held: The appeal was dismissed.
1. At the meeting in May 1995, the parties had agreed to enter into a new lease in the same terms as the underlease, save that the rent was to be £26,000 and was to rise to £28,000 if air conditioning was installed. That agreement had been subject to contract or lease, and, accordingly, the crucial question was: what was the legal nature of the occupation by the claimants pending the completion of the legal formalities in relation to the new underlease?
2. The following facts led to, and supported, the conclusion reached by the judge that, applying the principle confirmed and identified in Javad v Aqil, the claimants had a periodic tenancy of the shop premises: (i) the claimants had been in occupation and paying rent for some time; (ii) Romula Ltd had been told in May 1995 that Fads Ltd no longer existed; (iii) with that knowledge, Romula Ltd had accepted rent from the claimants and permitted them to remain in occupation; (iv) the terms of the proposed new underlease to the claimants were agreed subject to contract or lease; (v) there were no continuing negotiations and neither side had pressed for the grant of the lease; and (vi) there was no indication that Romula Ltd was concerned that the claimants should not have statutory protection.
David Lonsdale (instructed by Regan & Co) appeared for the claimants; David Holland (instructed by Speechly Bircham) appeared for the defendant.
Thomas Elliott, barrister
