Company must pay 13 months’ rent after tenancy dispute

The High Court has ruled that a commercial tenant that continued to occupy its premises after the lease expired had effectively created a new annual periodic tenancy and so was liable to pay 13 months’ rent.

The issue arose after the tenant’s lease expired in 2009. No new lease was signed but the tenant remained on the premises for another three years. During this time it conducted occasional negotiations with the landlord but nothing was agreed.

In June 2012, the tenant found new premises and gave three months’ notice that it intended to vacate. The landlord responded by saying that a new annual periodic tenancy had been created and so the lease could not be terminated for a further 13 months.

The High Court found in favour of the landlord.

It held that in all cases where there was a holding over after the expiry of a fixed term, the question arose as to whether the conduct of the two parties allowed for the implication of a periodic tenancy.

The suggestion in this case was that both sides had been content for the tenant to continue in occupation and there had been no push from either for negotiations. A relationship had developed where it was accepted that the landlord would not take steps to get rid of the tenant without notice. It had also been accepted on both sides that notice was relevant and that occupation had been allowed on that basis.

These factors meant that their relationship had developed to create a continuing protected tenancy, which here the court was on an annual basis, and so the tenant was liable to pay the 13 months’ rent remaining on that tenancy.

Please contact Santokh Singh if you would more information about the issues raised in this article or any aspect of commercial property law.