Landlord and tenant – Commercial premises – Oral lease – Periodic tenancy – Injunction – Claimants occupying premises owned by defendants – Claimants seeking injunction to protect alleged right to tenancy until trial – Defendants applying for strike out of claim or summary judgment – Whether claimants having arguable right to some form of tenancy of premises – Whether injunction should be granted to protect and enforce right until trial – Claim allowed in part – Defendants applications dismissed
The claimants occupied commercial premises comprising units 6, 7 and 8 of 1-11 Assembly Passage, London owned by the defendants, with the benefit of interim relief given (by consent) to protect them. The claimants sought an injunction to protect and enforce their alleged rights until trial. The defendants applied to strike out the claim or for summary judgment.
The claimants argued that the third claimant was and remained the lawful tenant of the property pursuant either to a ten-year oral lease alleged to have been granted on 13 April 2012 or a periodic tenancy, either quarterly or monthly, arising or to be inferred from the conduct of the parties. In either case, the claimants contended that the tenancy was a business tenancy which was subject to and protected by Part II of the Landlord and Tenant Act 1954.
The defendants argued that oral agreements for leases for more than three years were prohibited by section 52 of the Law of Property Act 1925. It followed that that iteration of the claimants’ case failed. The alternative case that a periodic tenancy was to be inferred, only put forward when that insuperable difficulty was raised, was unsustainable on the facts and should be struck out or summarily dismissed.
Held: The claim was allowed in part. The applications were dismissed.
(1) Although the tests for strike out and summary judgment were different, in that a strike out was ordinarily to be determined by reference to the pleadings and whether the case as pleaded could be proved whereas for the purposes of summary judgment the viability of the claim on the evidence might be considered if the factual context pleaded was unsustainable or fanciful, there was a clear overlap. In both contexts, the ultimate decision called for was whether there was any sufficient reason shown why it would be unjust for the claim to be disposed of without a full trial on the evidence and after disclosure.
In this case, the defendants’ application to strike out was primarily based on the contention that the pleaded case relied upon a legal impossibility. That was a true basis for striking out if the contention was established. However, that was also relied on in the defendants’ application for summary judgment on the basis that it was the existence of a ten-year oral lease which was legally impossible.
(2) By section 52 of the Law of Property Act 1925, leases of land, except such as were not required by law to be made in writing, were void for the purpose of creating a legal estate unless made by deed. A lease for a term not exceeding three years might be made orally (whether or not the lessee was given power to extend the term). Although a lease otherwise than by deed for more than three years, though void for the purpose of creating a legal estate, might be treated as a valid contract, such a contract itself, being for the disposition of an interest in land, was required to be in writing in a document setting out all the terms: see section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 which imposed more stringent requirements than had previously been required, and in effect abolished the old doctrine of part performance under which an oral contract might yet become enforceable if there were sufficient acts of part performance. Therefore, a lease for a term of more than three years had to be made by deed: an oral lease for more than three years was void. It followed that, as a matter of law, the claim to a 10-year oral lease could not succeed, and had to be struck out, as the defendants contended.
(3) The claimant’s alternative case to the effect that, by virtue of the third defendant’s occupation of the premises over a significant period of time (since at least June 2012) in exchange for the payment of rent on a periodical basis pursuant to quarterly invoice demands, a periodic tenancy had arisen from the conduct of the parties. It was well established that a periodic tenancy might be created by inference where a person occupied land with the owner’s consent and rent assessed on a periodic basis was paid and accepted; but it was up to the person asserting the tenancy to make good his claim. A periodic tenancy was capable of being protected by Part II of the 1954 Act (i.e. the security of tenure provisions). In the case of a tenancy granted for a term of years certain the parties might contract out of the security of tenure provisions before the tenancy was entered into, subject to following and satisfying prescribed statutory requirements. But that did not apply to periodic tenancies; and in any event there was no suggestion that there was any attempt or intention to contract out. The claimants appeared to have an arguable case that they had the protection of Part II of the 1954 Act in respect of the third claimant’s occupation of the premises under an alleged periodic tenancy. Having regard to conflicts in the evidence which the court could not resolve, the amendment to plead a periodic tenancy was allowed and, with that amendment, the matter could not properly and fairly be disposed of summarily. The claimants were entitled to have those matters tested at trial, after disclosure: London Baggage Company v Railtrack Plc [2000] L&TR 439 followed.
(4) As the defendants’ summary judgment and strike out application had failed, on the basis that the claimants’ claims had a real prospect of success, it followed that there was a serious question to be tried. The court would grant an injunction to maintain the status quo until the case proceeded to trial in the county court, subject to the claimants paying all outstanding arrears of “rent” and any outstanding rates or council tax.
The claimants appeared in person; Kerry Bretherton QC (instructed by Riverstone Solicitors) appeared for the defendants.
Eileen O’Grady, barrister
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