Key Facts
- •Mellcraft Ltd held a headlease of Avondale Park Lodge, expiring September 13, 2022.
- •Mellcraft sublet to MDNS, expiring August 29, 2022; this sublease was successfully contracted out of Part II of the Landlord and Tenant Act 1954.
- •Avondale Park Ltd (controlled by Mr. Moaven) assigned Mellcraft's headlease.
- •Avondale forfeited the sublease due to alleged non-payment of rent on August 26, 2022.
- •MDNS sought an injunction preventing Avondale from interfering with its possession.
- •Clause 9 of the sublease stated termination if a Deed of Variation wasn't produced by December 14, 2014; it wasn't.
- •MDNS remained in possession, paying rent; a Deed of Variation was supplied late.
- •MDNS argued that Clause 9's failure created an automatic termination, leading to a periodic tenancy protected by Part II of the 1954 Act.
- •Avondale argued Clause 9 required an election to terminate by MDNS, and estoppel by convention prevented MDNS from denying the sublease's end.
Legal Principles
Interpretation of contracts: a clause making a contract void on a particular event is often interpreted as giving one party the option to terminate, not automatic termination.
Doe d Bryan v Bancks (1821) 4 B & Ald 401; Roberts v Davey (1833) 4 B & Ad 664; Davenport v R (1877) 3 App Cas 115; Quesnel Forks Gold Mining Co Ltd v Ward [1920] AC 222; BDW Trading Ltd v JM Rowe (Investments) Ltd [2011] EWCA Civ 548
Interpretation of contracts: in the absence of clear contrary intention, a clause will not be interpreted to allow a party to benefit from their own wrong.
Co Litt 206b; New Zealand Shipping Co Ltd v Société des Ateliers et Chantiers de France [1919] AC 1
Common law allows for terms of years that determine on a particular event.
Law of Property Act 1925, section 205; Brudnel’s Case (1591) 5 Co Rep 9a; Doe d Lockwood v Clarke (1807) 8 East 185
A void lease with rent payment can create a periodic tenancy at common law; terms are the same as the void lease unless inconsistent.
Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386
Estoppel by convention: requires an expressly shared assumption, responsibility for the assumption, reliance by the alleging party, subsequent mutual dealing, and detriment.
Tinkler v HMRC [2021] UKSC 39; HMRC v Benchdollar Ltd [2009] EWHC 1310 (Ch)
Estoppel cannot override statutory security of tenure if an actual tenancy exists to which the statute applies.
Keen v Holland [1984] 1 WLR 251; Tinkler v HMRC [2021] UKSC 39; Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993
Interlocutory injunctions: American Cyanamid test applies; consider serious issue to be tried, adequacy of damages, balance of convenience.
American Cyanamid Co v Ethicon Ltd [1975] AC 396
Occupation for business purposes under Landlord and Tenant Act 1954, section 23: considers the nature of the business activities and whether they constitute occupation.
Pointon York Group plc v Poulton [2006] EWCA Civ 1001; Morrison Holdings Ltd v Manders Property (Wolverhampton) Ltd [1976] 1 WLR 533
Outcomes
Appeal dismissed.
Clause 9 caused automatic termination of the sublease; MDNS's continued occupation and rent payment created a triable issue of a periodic tenancy protected by the 1954 Act; estoppel by convention did not override statutory security of tenure; the balance of convenience favoured MDNS.