Javad v Mohammed Aqil

Whether consented occupation and periodic payments create a periodic tenancy depends on the parties’ objectively inferred intention, assessed from all the circumstances. Payment described as rent and calculated by reference to a period is important, but it is not conclusive.

Where occupation is permitted as an interim arrangement while material terms of a proposed lease remain under negotiation, the absence of agreement is normally a weighty consideration. The court should not infer a periodic tenancy merely from conduct undertaken in anticipation of a formal lease. A tenancy at will may therefore subsist during such negotiations.

The claimant allowed the defendant into business premises while they negotiated a proposed ten-year lease. The defendant paid sums described as quarterly rent in advance, but the parties did not agree all material lease terms, including a deposit. When negotiations failed, the claimant sought possession and mesne profits.

Judge Stucley in the county court held that the defendant occupied as a tenant at will and ordered possession. The defendant appealed, contending that the payments and occupation created a quarterly tenancy protected by Part II of the Landlord and Tenant Act 1954. The sole issue was whether the occupation was a tenancy at will or a periodic tenancy.

1. Appeal dismissed. Nicholls LJ, with Mustill and Ralph Gibson LJJ agreeing, upheld the finding that the defendant occupied as a tenant at will rather than as a quarterly tenant.
2. A tenancy is a consensual interest in land. Its nature depends primarily on the parties’ intention, objectively inferred from what they agreed and the surrounding circumstances. Possession with consent and payment of rent by a weekly, monthly or quarterly reference may support an inference of a periodic tenancy, but only where there is nothing more to explain the arrangement.
3. The court must therefore make a fair assessment of all the circumstances. The periodicity and amount of payments are important, but they are only one consideration. The court approved the approach that payment of rent may be explained by the circumstances in which it was made, rather than conclusively establishing a periodic tenancy.
4. Occupation pending negotiation of a proposed lease is a setting in which particular caution is required. Where the prospective tenant enters or remains as an interim measure before material lease terms have been agreed, payments made in accordance with the anticipated lease do not ordinarily show an intention immediately to grant a periodic tenancy. The parties may instead intend only a limited, revocable right of occupation. As Hagee (London) Ltd v A B Erikson and Larson [1976] QB 209 illustrated, this is a classic setting for a tenancy at will.
5. Here, the judge was entitled to find that entry was conditional upon the parties later agreeing a lease, that important terms remained unresolved, and that no overall agreement was ever reached. The quarterly payments did not displace that conclusion. Since a tenancy at will falls outside the business-tenancy protection in Part II of the Landlord and Tenant Act 1954, the possession order stood. The appeal was dismissed with costs.

• Court of Appeal: dismissed the defendant's appeal and upheld the conclusion that his occupation was a tenancy at will.
• County Court: Judge Stucley gave judgment for the claimant on 14 December 1987, ordering possession and mesne profits on the basis that the defendant was a tenant at will.