Surrey County Council v Single Horse Properties Ltd

Section 64(1)(c) of the Landlord and Tenant Act 1954 does not itself create a continuing tenancy. It operates only where the landlord’s notice or tenant’s request is effective under the Act and, apart from section 64, would terminate the tenancy within the specified three-month period.

For a fixed-term business tenancy, a section 25 notice cannot operate after the term date unless the tenancy has been continued under section 24(1). If the tenant has left and is not in occupation at the term date, the tenancy ends by effluxion of time, the notice has no effect, and section 64 does not generate post-term rent liability. Misleading conduct may nevertheless create estoppel.

Single Horse Properties Ltd held a fixed-term office tenancy from Surrey County Council. The landlord served a section 25 notice terminating the tenancy on 24 June 2000. The tenant served a counter-notice and applied for a new tenancy, but vacated before the term date and returned the keys.

The Epsom County Court ordered the tenancy to continue for three months after the landlord’s application was made, making the tenant liable for rent after the term date. The tenant’s appeals to District Judge Sturdy and His Honour Judge Hull QC failed. The central issue before the Court of Appeal was whether section 64(1)(c) continued the tenancy despite the tenant’s pre-term departure.

Lady Justice Arden delivered the judgment, with Sir Denis Henry and Lord Justice Potter agreeing.

1. Appeal allowed. The tenant was not liable for rent referable to any period after 24 June 2000. Costs were agreed at £19,500, and leave to appeal to the House of Lords was refused.
2. Construction of section 64. Section 64(1)(c) requires the court to ask whether, apart from section 64, the effect of the notice or request would terminate the tenancy before the end of the three-month period beginning with final disposal of the application. The only assumption authorised is that section 64 has not been enacted. The notice or request must otherwise be effective under the relevant provision of Part I or Part II of the Landlord and Tenant Act 1954.
3. Effect of the section 25 notice. The requirement in section 25(1) that the notice concern a tenancy to which Part II applies relates to the act of termination, not merely to service of the notice. A fixed-term tenancy ends at common law on expiry of the term. It can therefore be terminated by a section 25 notice only if it has first been continued under section 24(1). The Court applied the reasoning in Esselte AB v Pearl Assurance Ltd [1997] 1 WLR 891, where occupation for the statutory business purposes at the term date was treated as necessary for continuation.
4. Application to the facts. The tenant was not in occupation at the term date. The tenancy therefore expired by effluxion of time, leaving the section 25 notice with nothing on which to operate. Section 64(1)(c) was not satisfied, and no interim continuation or post-term rent liability arose merely because the tenant had made an application to court. The court agreed with the conclusion in Arundel Corporation v Financial Training Company Limited (27 March 2000), paragraph 55. It regarded I&H Caplan Limited v Caplan (No.2) [1963] 1 WLR 1247 as of little assistance because the precise term-date issue had not arisen there.
5. Practical qualification. A tenant who leaves before the term date after serving a counter-notice and making an application should inform the landlord so that the application can be dismissed. If the tenant’s conduct leads the landlord reasonably to believe that occupation continues, the tenant may be estopped from denying occupation and may remain liable for rent, as illustrated by Benedictus v Jalaram Limited [1989] 1 EGLR 251.

• Court of Appeal (Civil Division): [2002] EWCA Civ 367 — appeal allowed, with costs agreed at £19,500.
• Epsom County Court: District Judge Coni ordered the tenancy to continue for three months from 22 August 2000 with rent payable. District Judge Sturdy dismissed the tenant’s application to vary that order, and His Honour Judge Hull QC dismissed the subsequent appeal on 20 April 2001.