Wroe (t/a Telepower) v Exmos Cover Ltd

A tenancy by estoppel cannot arise merely because a party represents that statutory protection will be treated as applying. The underlying agreement must first constitute a tenancy. A representation that a person will be treated as having equivalent statutory protection may nevertheless found an estoppel, but only where the representee relied on it to his detriment and it would be inequitable to resile from it. Remaining in occupation or applying for a new tenancy will not necessarily constitute reliance where those steps were independently intended and would have been taken in any event. A procedural mistake in conducting proceedings does not, without more, prevent a party from raising the absence of a tenancy, particularly where the issue goes to the court’s jurisdiction.

The appellant occupied a business room under an agreement described as a licence. The respondent later served a notice under Landlord and Tenant Act 1954, section 25, and initially conducted the proceedings on the basis that Part II applied. The appellant applied for a new tenancy.

At a preliminary hearing, the county court judge considered whether the agreement created a tenancy. She held that it created a licence, and later rejected the appellant’s contention that the respondent was estopped from denying a tenancy because of a letter accepting that the appellant was holding over under the Act. The central questions were whether the letter created an estoppel and whether the respondent’s procedural conduct prevented it from raising the licence-or-tenancy issue.

1. Appeal dismissed. The agreement of 23 September 1994 created a licence, not a tenancy. The appellant did not challenge that conclusion.
2. A tenancy by estoppel rests on the common-law principle that a grantor cannot deny the validity or effect of his own grant where the agreement properly construed creates a tenancy. It does not apply where the agreement did not create a tenancy and the question is whether the parties should nevertheless be treated as if it had done so. This distinction was explained by reference to First National Bank Plc v Thompson [1996] Ch 231 and Bruton v London & Quadrant Housing Trust [1999] 3 WLR 150.
3. The respondent’s letter of 24 November 1997 represented that the appellant would receive the six-month notice period and interim-rent treatment that would have applied if Part II of the Act applied. It did not represent that an application for a new tenancy would succeed or would not be opposed.
4. The representation did not create an estoppel because the appellant failed to establish detrimental reliance. He remained in occupation because his solicitors advised that he was entitled to do so, and he applied for a new tenancy because he wanted one. The notice gave him the opportunity to apply but did not induce the application. The respondent had not deprived him of the represented notice period.
5. Daejan Properties Ltd v Mahoney [1995] 2 EGLR 75 illustrated that a representation to treat a person as having statutory rights may support an estoppel where it is relied on to the representee’s detriment. The necessary reliance was absent here.
6. Keepers and Governors of the Possessions Revenues and Goods of the Free Grammar School of John Lyon v Mayhew [1997] 1 EGLR 88 was distinguishable. There, the tenant’s conduct led the landlords to refrain from correcting a defective notice. Here, the appellant was not lulled into a false sense of security and suffered no comparable detriment.
7. The respondent’s failure to raise the licence-or-tenancy issue earlier, and its invitation to try the section 30(1)(g) issue as a preliminary issue, amounted at most to a procedural mistake. It did not amount to approbation and reprobation or abuse of process. Benedictus v Jalaram Ltd [1989] 1 EGLR 251 therefore provided no assistance.
8. The respondent was ordered to pay the appellant’s costs of the wasted hearing below and its costs of the appeal. The appellant was ordered to give up possession by 28 February 2000. Permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): appeal from the West London County Court dismissed; the order determining that the agreement created a licence and rejecting estoppel was upheld.
• West London County Court: Her Honour Judge Uziell-Hamilton held that the agreement created a licence and that the respondent was not estopped from denying a tenancy.