Barclays Wealth Trustees (Jersey) Ltd v Erimus Housing Ltd
| Jurisdiction | England & Wales |
| Judge | Mr J Jarvis |
| Judgment Date | 22 July 2013 |
| Neutral Citation | [2013] EWHC 2699 (Ch) |
| Docket Number | Case No: HC12D04636 |
| Court | Chancery Division |
| Date | 22 July 2013 |
[2013] EWHC 2699
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Royal Courts of Justice
The Strand
London, WC2A 2LL
Mr J Jarvis QC
(Sitting as a Deputy High Court Judge)
Case No: HC12D04636
Ms E Betts (instructed by Reed Smith) appeared on behalf of the Claimant
Mr A Rosenthal (instructed by Bond Dickinson) appeared on behalf of the Defendant
(As approved)
THE DEPUTY JUDGE:
Background
This case raises what appears to be a simple question whether the defendant, Erimus Housing Limited, the tenant, occupied premises owned by the claimant, Barclays Wealth Trustees (Jersey) Limited and Walbrook Properties Limited, the trustees of the Centre Unit Trust, the landlord, as a tenant at will or as tenant subject to a periodic tenancy. Until the expiry of the lease on 31 October 2009, the tenant held the property under the terms of a lease dated 9 November 2004, which had a term defined as approximately five years commencing on that date and expiring 31 October 2009. The rent was £170,209 per annum, together with service charges, insurance charges and value added tax, as applicable.
On 29 December 2005 the landlord became registered as freehold owner. Before the expiry of the lease Mr Andrew Arkle, on behalf of the tenant, started negotiations with the then agent for the landlord, Mr Stephen Gilroy of Storeys SSP. By 6 October 2009, there appeared to be proposals put forward with modest rent increases and a service charge increase, with a rent review in a third year. The suggestion was that there would be further discussions.
As I have indicated the lease expired on 31 October 2009. Negotiations then appear to have been reactivated at some date prior to 15 January 2010, when Mr Arkle wrote to Mr John Irwin, who was the landlord's agent, and discussed, again, various terms, including the rental, flexibility over a break clause, a term of some six years, with break clauses on three months notice, on second, third, fourth and fifth anniversaries, and, as with the previous lease, contracting out of the provisions of the Landlord and Tenant Act 1954.
The next stage appears to be that on 16 November 2010 Mr Arkle wrote to Mr Paul Richardson, who was now the representative for Commercial Estates Group, the newly appointed agents for the landlord, and referred to there having been conversations about car parking. The reference appeared to relate back to the old lease which had provided for a use of 60 cars and the fact that Middlesbrough Council had sent some 75 parking passes and the tenant did not wish to have the additional 15 passes.
More importantly, Mr Arkle wrote:
"On the matter of our occupation, we are holding over under the terms of the original lease and continue to make rent, service charges and insurance payments on the due dates. When we met at John Irwin's offices some time ago we discussed the background to our occupation, but that was just before legal completion of the building sale. We have not received any specific proposals from you in terms of lease documentation. I was therefore wondering whether this is something that you'll be progressing in the near future. In the meantime, we assume that both sides are content for matters to continue as they currently exist."
There appears then to be a gap between 16 November 2010 and 15 June 2011. What appears to have happened on 15 June is Mr Arkle wrote to Mr Richardson and told him that he had the agreement on his side to the lease renewal and that he had instructed the tenant's solicitors, Dickinson Dees, to act on its behalf and to whom the documentation should be sent. The response from Mr Richardson on the same day was thanking him for that and saying that instructions would be issued to the landlord's solicitors, Reed Smith, to draft documentation on the basis of agreed heads of terms.
Those heads of terms included a term of three years from completion of documentation with 1 July being the target date, a rent of £133,665 per annum, plus value added tax and the various sums for service charges and parking. There was to be a break clause on 30 June 2013, subject to six months notice. So, at that point it looks as though there was agreement as to the terms upon which the renewal would take place. But, as it transpired, it never occurred.
What in fact happened was there was a telephone conversation between Mr Richardson and Mr Arkle in which Mr Arkle said that the tenant had now reviewed its occupational requirements and wanted bigger accommodation and was proposing to move. This led Mr Richardson to make an offer to Mr Arkle to provide for 30,000 square feet with 120 parking places with a stepped rent, hoping that there could be discussion as to that. That is contained in the email dated 25 August 2011.
That was not accepted by the tenant, because the next day, 26 August 2011, Mr Arkle wrote back to Mr Richardson apologising for the departure from what had been intended in relation to the property at Centre North East, Middlesbrough, saying that they had advanced designs and incurred significant costs on what was to be a new build proposal. He then said:
"Unfortunately, this means we are unable to progress with the two year minimum commitment as originally expected in good faith. We are anticipating vacating Centre North East around March of 2012 and are therefore suggesting that we continue to hold over paying as we have to date, such payments being comparable with what was intended in terms of the sums involved."
Very little seems to have happened after that. There was no response to that letter from Mr Arkle. Then on 3 February 2012 Mr Richardson wrote to Mr Arkle referring to the discussions in 2011 saying:
"I would be grateful if you could please provide an update in respect of your indicative operational timescales for relocating, as we will need to begin the formalities associated with a tenant vacating."
Again, there is no further correspondence immediately after that, but there were plainly conversations which took place, because in an email dated 24 May 2012 Mr Arkle says to Mr Richardson that there had been conversations and that they now had a move date agreed and that was to be 31 August 2012. Mr Arkle asked the question when the landlord required the tenant to give formal written notice or whether it could be dealt with by an exchange of emails.
On 30 May 2012 Mr Arkle sent a formal letter of intent to vacate on 30 May 2012, with the vacation date being 31 August 2012. Subsequently, the tenant's solicitor wrote on 21 June 2012 indicating that the tenant now wished to terminate its tenancy and the letter was to give at least three written months notice to terminate on 28 September 2012. To complete this chapter, on 26 June 2012 Reed Smith, acting for the landlord, said that the position in law was that the premises were occupied by the tenant on a yearly basis, which would require notice of at least six month, expiring with the end of the lease period, 31 October 2013.
There was then further correspondence, which eventually led to an acceptance that if there were a periodic tenancy it would not be a quarterly tenancy, but would in fact be an annual tenancy, the tenant's solicitor having asserted on 7 August 2012 that it was a quarterly tenancy. On 25 September 2012 the property was vacated and the keys were given up by the tenant.
The Issues
Originally, in these proceedings, two declarations were sought. The first, which remains relevant, is whether there was an implied annual tenancy. The second was in relation to whether a licence for alterations dated 9 November 2004 bound the defendant, the tenant, and obliged him to reinstate the premises. That second declaration has now been conceded and is subject to discussion as to the state of dilapidations. It is only the first matter which concerns me. The practical effect of what I am asked to decide concerns whether rent of some 13 months, namely approximately £185,000, should be paid by the tenant to the landlord so as to cover the period to 31 October 2013.
The Law
There has not been any serious dispute as to the applicable law. I can set out the principles quite simply: (1) Where property is let at the will of the lessor and the lessee is a tenant at will he or she has no certain or sure estate, because the lessor may put him out at any time he pleases; (2) A tenancy at will can be created expressly or by conduct; (3) Either party can determine a tenancy at will at any time; (4) If the tenant wishes to terminate the tenancy, merely giving notice is not enough; the tenant must also give up possession in order to terminate the tenancy: Woodfall at paragraph 6.074; (5) A landlord is not required to allow the tenant a reasonable time within which to vacate the premises, although the tenant may be allowed to re-enter solely to remove his goods: Doe D Nicholl v M'Kaeng [1830] 10 Bd&C 721.
The leading case on the distinction between a tenancy at will and a periodic tenancy is Javad v Aqil [1991] 1 WLR 1007. The analysis of Nicholls LJ concerning the position where a tenant is in possession and making payments of rent is set out at paragraphs 1011H to 1013D.
In summary: (1) A tenancy or a lease is an interest in land. With exceptions immaterial for present purposes, a tenancy springs from a consensual arrangement between two parties (1012C); (2) The extent of the right granted and accepted depends primarily upon the intention of...
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