Katana & Anor v Catalyst Communities Housing Ltd

On expiry of a fixed-term tenancy, the law presumes a tenancy at will. That presumption is displaced only by evidence of a different contractual arrangement, assessed by reference to the parties’ dealings up to expiry or to the agreement itself. A holding-over clause providing for one week’s notice may remain consistent with a tenancy at will. Where that conclusion is supported by the evidence, neither the tenant nor purported subtenants obtain security under Part II of the Landlord and Tenant Act 1954. Proprietary estoppel requires evidence that the owner knew of the claimant’s belief in a relevant interest, knew of detrimental reliance, and acquiesced. Awareness of occupation and business expenditure, without knowledge of the claimed long-term terms, is insufficient.

The respondents, freeholders of premises in Hounslow, granted Mr Roberts a three-month tenancy while planning and environmental matters were resolved. After the term expired, Mr Roberts remained in occupation and purported to grant longer leases to the appellants, who operated businesses on parts of the site.

The County Court made an order for possession against the appellants. They applied to the Court of Appeal for permission to appeal and for a stay of execution. They challenged the finding that the arrangements created only tenancies at will, the service of section 25 notices, and the rejection of a proprietary estoppel argument. The central issues were whether the appellants had protected periodic tenancies under Part II of the Landlord and Tenant Act 1954 or an equity requiring the grant of new tenancies.

1. Disposition. The applications for permission to appeal and for a stay of execution were refused. The possession order therefore stood.
2. Nature of the tenancy. Following the expiry of a fixed-term tenancy, the law presumes a tenancy at will unless the parties’ dealings establish a different contractual arrangement, as explained in Javad v Aqil [1991] 1 WLR 1007. The relationship had to be assessed by reference to the position no later than expiry of the fixed term, while the holding-over clause had to be construed in its contractual and factual context.
3. The clause confirming that the three-month tenancy would end, and providing for termination on one week’s notice if the tenant remained, was consistent with a tenancy at will. The landlord’s intention to keep the property available for development, and the absence of evidence that Mr Roberts was intended to receive more extensive rights, supported that construction. The appellate question was whether the County Court judge was entitled to reach that conclusion on the evidence, not what view the Court of Appeal might itself have formed. The proposed appeal had no realistic prospect of success.
4. Because the head tenancy was a tenancy at will, Part II of the Landlord and Tenant Act 1954 did not protect it or the appellants’ derivative occupations. The alternative proposition that protected periodic subtenancies could arise despite a covenant against subletting, illustrated by D’Silva v Lister House Development [1971] 1 Ch 17, did not affect the result because the necessary periodic tenancy was absent.
5. Service. The court considered, but did not need to determine, the service issue. Under section 23 of the 1927 Act, as incorporated by section 66 of the Landlord and Tenant Act 1954, leaving a section 25 notice at a tenant’s business premises could constitute deemed service. Leaving the notice in a kiosk forming part of Mr Katana’s premises was sufficient. Service on Mr Abraham was arguable because his separate premises were inaccessible, although actual receipt could have sufficed.
6. Proprietary estoppel. Standing by may found an equity where the owner knows that the claimant believes, or expects, that he will acquire an interest in the land, the claimant acts to his detriment, and it would be unconscionable for the owner to assert inconsistent rights. The principle was considered in Crabb v Arun District Council [1976] Ch 179. The respondents knew of the appellants’ occupation and possible breaches of covenant, but there was no evidence that they knew the terms of the purported eight- and ten-year leases, or that the appellants were spending money in reliance on the respondents’ acquiescence. The proprietary estoppel defence was consequently not realistically arguable.

• Court of Appeal (Civil Division): On 28 January 2010, Lord Justice Patten refused permission to appeal and refused a stay of execution.
• Brentford County Court: HHJ Powles QC made an order for possession against the appellants on 16 December 2009. The Court of Appeal held that the proposed grounds had no realistic prospect of success.