Manton Securities Ltd v Nazam (t/a New Dadyal Cash & Carry)

Business premises – Repairs – New tenancy – Respondent tenant agreeing to carry out repairs in expectation of new lease – Dispute arising over payment for further work – Appellant landlord refusing to grant new lease – Recorder finding respondent establishing equitable tenancy – Whether judge erring in law – Appeal dismissedThe respondent occupied business premises as a quarterly tenant and claimed to be protected by the Landlord and Tenant Act 1954. He maintained that he had spent money in repairing and improving his premises with the appellant landlord’s encouragement in the expectation that he would be granted a 21-year tenancy of the premises. A dispute arose concerning the respondent’s contribution to the cost of further building works. He served a request for a new tenancy, pursuant to section 26 of the Act, but the appellant objected. It contended that the respondent occupied the premises as a tenant at will and was not protected by Part II of the Act so that: (i) he was not entitled to a new tenancy; (ii) his claim to the equitable tenancy was unfounded; and (iii) even if he were in principle entitled to ask for a new tenancy, this should not be granted, by virtue of section 30(1)(b) of the Act, because of his persistent delay in paying rent.The appellant counter-claimed for possession of the premises. The respondent contended that the appellant was prevented by the principles of proprietary estoppel from denying his entitlement to such a tenancy, whatever the legal nature of his occupation. The recorder held that the respondent was a tenant at will and not a quarterly tenant. However, the respondent had established an equitable tenancy and because equity should regard as done that which ought to have been done, the respondent was entitled to a 21-year tenancy. The proper way to give effect to that equitable entitlement was to order the grant of a new tenancy under Part II of the Act; he rejected the assertion that the respondent’s claim was not defeated by his rent payment record. Thus, directions were given for the determination of the terms of a new tenancy, to include a warehouse on land to the rear. The appellant appealed.Held: The appeal was dismissed.The foundation of the proceedings as a claim for a new tenancy under the 1954 Act was mistaken, as was the recorder’s decision that the respondent was entitled to such a tenancy. Section 26(1) of the Act provided that such a request might be made only by a tenant with a tenancy “for a term of years certain exceeding one year, whether or not continued by (section 24), or granted for a term of years certain and thereafter from year to year”. The claimed quarterly tenancy was not such a tenancy. Further, even assuming that a claim for an equitable tenancy gave the respondent a “term certain” for section 26 purposes, that did not entitle him to serve his section 26 notice. By section 26(2), such a notice was by way of a request for a new tenancy “beginning with such date, not more than twelve nor less than six months after the making of the request,… : Provided that the said date shall not be earlier than the date on which… the current tenancy would come to an end by effluxion of time or could be brought to an end by notice to quit given by the tenant”. The respondent’s notice purported to request a new tenancy commencing on 25 April 2007. However, his equitable tenancy would not expire until 2018 and he had no right to terminate it by a notice to quit before that date.However, the judge had correctly concluded that the respondent had established his equitable claim, relying not upon specific performance of a contract to grant him a lease but upon the broader principle that his expenditure on the premises, encouraged by the appellant, in expectation of the grant of a 21-year lease, estopped the appellant from denying the respondent’s right to such a lease: Coatsworth v Johnson (1886) 54 LT 520 considered.The judge’s order would be varied to include a declaration that the respondent was entitled to a 21 year tenancy. That order was not affected by the respondent’s poor rent payment record since, but for the dispute concerning repair works, the appellant had been willing to grant a new tenancy despite that record. John de Waal (instructed by Shakespeare Putsman, of Birmingham) appeared for the appellant; Giles Harrison-Hall (instructed by Grove Tompkins Bosworth, of Birmingham) appeared for the respondent.Eileen O’Grady, barrister