Javad v Mohammed Aqil
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NICHOLLS,LORD JUSTICE RALPH GIBSON,LORD JUSTICE MUSTILL |
| Judgment Date | 15 May 1990 |
| Judgment citation (vLex) | [1990] EWCA Civ J0515-11 |
| Docket Number | 90/0467 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 May 1990 |
[1990] EWCA Civ J0515-11
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SHOREDITCH COUNTY COURT
(HIS HONOUR JUDGE STUCLEY)
Royal Courts of Justice
Lord Justice Mustill
Lord Justice Ralph Gibson
Lord Justice Nicholls
90/0467
MR. COLIN CHALLENGER (instructed by Messrs. Hawker & Co.) appeared on behalf of the (Plaintiff) Respondent
MR. PETER HARVEY (instructed by Messrs. Kumar & Co. of Essex) appeared on behalf of the (Defendant) Appellant.
This case turns on the distinction between a tenancy at will and a periodic tenancy. Shortly stated, a tenancy at will exists where the tenancy is on terms that either party may determine it any time. A periodic tenancy, on the other hand, is one which continues from period to period indefinitely until determined by proper notice. For example, from year to year, quarter to quarter, month to month, or week to week. Failing agreement to the contrary, the notice of determination required is half a period in the case of a yearly tenancy but a full period in other cases.
Given that a periodic tenancy can exist where the period is very short indeed, a layman could be forgiven for being surprised to find that the distinction between a periodic tenancy and a tenancy at will can be all-important for the purposes of the statutory protection afforded to business tenancies. But such, it is now established, is the effect of Part 2 of the Landlord and Tenant Act 1954: see Wheeler v. Mercer [1957] A.C. 416 and Hagee (London) Ltd. v. A.B. Erikson and Larson [1976] Q.B. 209. Hence the dispute in the present case. The defendant was let into occupation of business premises owed by the plaintiff while negotiations proceeded for the grant to him of a 10-year lease. For some months he was there with the plaintiff's consent. On three occasions he paid rent on a quarterly basis before negotiations broke down, and the plaintiff told him to leave. Was the defendant in occupation as a tenant at will, as contended by the plaintiff and as decided by the judge? If he was, then the judge was right to order him to give up possession. On that basis his tenancy, as a tenancy at will, was not within the protection of the 1954 Act. Or was he a quarterly tenant, as he contends? If so, he had the statutory protection afforded to business tenants.
The history
Unhappily the judge, Judge Stucley, D.S.C., died shortly after the hearing. So counsel's note of the judgment was not approved by the judge. But, working from the available note and the contemporary correspondence, the salient facts are these. The plaintiff owned a property at 188 Brick Lane, London, E.l. On 25th June 1985 he met the defendant for the first time. The defendant had lost his place of business and had nowhere to continue his business of manufacturing leather goods. The two of them discussed the terms for the grant of a lease of the property to the defendant. From the beginning there were difficulties. For instance, there was disagreement on whether the defendant should be free to sublet part only of the property.
The defendant was in an awkward situation. He had nowhere to go and he needed somewhere to leave his stock. The plaintiff took pity on him. The defendant paid the plaintiff £2,500, and the plaintiff gave him the keys. This was in anticipation that they would be able to agree the terms of a lease in due course. The plaintiff signed a receipt dated 26th June 1985, in the presence of a witness, and handed it to the defendant. The receipt read:
"
I Mr. S. Javid of 188 Brick Lane, London E.l. confirm that I have received £2,500 as rent for three months in advance for property 188 Brick Lane, E.l. from Mr. M. Aqil of 30 Natal Road, Ilford, Essex."
The defendant moved in. But the plaintiff had workmen there, carrying out structural repairs. This led to serious disagreement between the parties. So much so that after about a fortnight the defendant walked out. At the outset each party had instructed a firm of solicitors to act for him in connection with the proposed lease. On 27th June a draft lease was sent by the plaintiff's solicitors, Messrs. Suriya & Co., to the defendant's solicitors, Messrs. Jennings Son and Ash. The draft was returned with amendments on 2nd July. When the defendant left the property his solicitors asked for "the deposit" to be returned.
After a short while, the parties composed their differences sufficiently for the defendant to move back into the premises. The plaintiff agreed that the defendant could sublet the upper part of the building but not the shop downstairs. On 4th August the plaintiff's solicitors were once more in communication with the defendant's solicitors regarding the terms of the proposed lease. They stated that the defendant was to pay three months advance rent as deposit and that the rent was payable three months in advance. As before, their letter was headed "Subject to contract". On 9th September the plaintiff's solicitors sent an engrossment of the lease to the defendant's solicitors, and asked for "3 months' deposit". By 30th September matters had progressed to the stage of the plaintiff's solicitors sending to the defendant's solicitors an amended engrossment of the counterpart lease for execution together with a completion statement. The lease was for a term of ten years, at a rent of £10,000 per year, reviewable after twelve months. The rent was payable quarterly in advance on the usual quarter days. In addition, the tenant was to reimburse the insurance premiums paid by the landlord. The completion statement was made up as at 21st October. It provided for the defendant to pay on completion (1) a deposit of £2,500, (2) rent for the period, of less than a whole quarter, from 21st October to 23rd December inclusive, in the sum of £1,753.60 (this equalled rent at the rate of £2,500 per quarter) and (3) the plaintiff's solicitors' costs of £230.
Eventually the plaintiff's workmen left the property. When this occurred is not clear. The defendant found the property still had many shortcomings. He spent £2,000 installing electrical wiring so that he could carry on the manufacture of leather garments, but the plaintiff did not know of this. I interpose: in reliance on this and other expenditure, a case founded on estoppel was put forward by the defendant in the county court. This was rejected by the judge, and no appeal was brought in respect of that part of the judge's decision.
Completion did not take place on 21st October. The defendant was prepared to pay the rent quarterly in advance, but he objected to paying an additional £2,500 as a deposit in respect of potential damage to the property and arrears of rent. On 11th November he made a second payment to the plaintiff. The amount was £1,878.42. The difference, of about £125, between this sum and the amount of rent stated in the abortive completion statement seems to have represented the insurance premium.
The judge made no finding on why the second rent payment was calculated from 21st October. Indeed, he thought that the money paid as rent did not add up to an annual amount of £10,000. However, before us it was accepted that on this the judge must be wrong, in that the explanation for the amount of the first two payments seems to be that they represented rent for approximately two quarters, from 26th June to Christmas 1985, plus the insurance premium, but less an allowance by way of a rent-free period of some three weeks or so agreed by the plaintiff, possibly covering the period when the defendant was out of possession in late July and early August.
By mid-December the plaintiff's solicitors were pressing for completion. On 10th January 1986 the defendant paid another £2,500 to the plaintiff as the next quarter's rent in advance. The plaintiff's solicitors pressed again for completion to take place by 14th January. But the parties were, it seems, unable to resolve their disagreement about payment of the deposit. On 14th February the plaintiff's solicitors wrote to the defendant's solicitors requiring the property to be vacated by the end of February. The defendant did not leave. On 4th July the plaintiff commenced proceedings in the county court for possession and mesne profits. Judge Stucley gave judgment in favour of the plaintiff on 14th December 1987. It is from this decision that the defendant has appealed.
The issue on this appeal
As already foreshadowed, the sole issue on this appeal is whether the defendant went into occupation as a tenant at will or as a quarterly tenant. This is the sole issue, because the parties have pleaded and presented their cases in this way. Thus, as to the plaintiff, his particulars of claim assert that at the defendant's request the plaintiff allowed the defendant into possession of the property as a. tenant at will pending the outcome of the negotiations. The trial was conducted on that basis. Before us the plaintiff sought leave to amend his pleading to put forward an alternative claim that the defendant went into occupation as a licensee. We refused this application, because had such a case been advanced before the judge it is likely that material points which were not canvassed at the trial would have been raised with the parties in the course of their evidence.
As to the defendant, his case, as pleaded and presented at the trial, was that he held a periodic tenancy. At one stage in the argument before us there was some suggestion that at the outset the defendant might have been granted a term certain of three months. Quite rightly in view of the course of the proceedings in the...
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