Battle Of The Tenancies: Tenancy At Will v Periodic Tenancy

Summary

In the recent case of Barclays Wealth Trustees (Jersey) Ltd v Erimus Housing Ltd (2014) EWCA Civ 303 (CA (Civ Div) the tenancy at will trounced its old enemy, the periodic tenancy. This was despite the fact that the negotiations for a new lease (which was the key factor which gave rise to the implication of a tenancy at will) had the pace and impetus of a lazy tortoise. The important fact was that the negotiations never in fact ceased.

Whilst the case shows that slow and steady negotiations can be enough for the court to imply that there was a tenancy at will, the real lesson is not to end up in court in the first place. In the short term, it may seem easier to bury your head in the sand about the legal status of tenant's occupation if the rent is at an acceptable level and being paid regularly. However, the legal status can have a significant impact on notice periods and security of tenure.

The moral of the story in the Erimus case is that parties should act quickly following lease expiry to agree the basis of any ongoing landlord and tenant arrangement and ensure that this is clearly documented so that you don't end up asking the court to imply what was agreed.

Background Facts

In the Erimus case, the Court of Appeal had to consider whether a tenancy at will or a periodic tenancy had been created where negotiations for a renewal lease had been painfully slow following the expiry of the original lease which was contracted out of the Landlord and Tenant Act 1954 ("the 54 Act").

The original lease was for a term of 5 years at an annual rent of £170,209 per annum payable quarterly in advance on the usual quarter days. After the expiry of the contractual term on 31 October 2009, Erimus remained in occupation paying rent at the same rate.

The negotiations for a new lease, which was also intended to be contracted out of the 54 Act, proceeded following expiry of the contractual term, albeit at a snail's pace. The terms of the lease were agreed in June 2011, over 2 years after the contractual expiry. By August 2011, no new lease had been entered into and Erimus informed Barclays Wealth Trustees that they wished to vacate the premises in around March 2012. In June 2012, Erimus gave the landlord formal notice that it wished to vacate in September 2012 and subsequently vacated on 28 September 2012.

The Issue

What was the basis of the tenant's occupation in the period of almost 3 years following expiry of the original lease until it vacated...