This case involved premises in London occupied as a nursery school. Miss Delaney's Nursery Schools Ltd (Miss Delaney's) held a sub-lease granted by Avondale Park Ltd (Avondale). Avondale attempted to forfeit the lease and the Court of Appeal considered whether Miss Delaney's could go back to school at the premises or not.
Avondale was the tenant under a head-lease which permitted use of the premises as residential accommodation only. Miss Delaney's was granted a sub-lease of the premises and this sub-lease excluded security of tenure. The sub-lease provided that if Avondale was not able to procure a deed of variation to the lease permitting the change of use from residential accommodation to use as a nursery by 14 December 2014, the sub-lease would be terminated.
Avondale did not procure the deed of variation. Nevertheless, Miss Delaney's continued to use the premises as a nursery school until August 2022. Issues arose in August 2022 between Avondale and Miss Delaney's relating to non-payment of rent and Avondale took steps to forfeit the sub-lease by peaceful re-entry.
Miss Delaney's made an application for an injunction that returned possession of the premises in time for the start of the school year, and the injunction was granted.
Avondale contended that the sub-lease had expired by the time the injunction hearing took place and therefore should not have been granted. Miss Delaney's argued that they had been in occupation since 2014 under a periodic tenancy, which had arisen and was protected by the 1954 Act as the sub-lease ended on Avondale's failure to produce the deed of variation by 14 December 2014.
Avondale appealed against the continuation of the injunction. The Court of Appeal rejected Avondale's appeal on the following basis:
- Failure to provide the deed of variation as stipulated in the sub-lease resulted in the sub-lease being immediately terminated on 14 December 2014;
- The termination of the tenancy and the subsequent continued occupation and payment of rent by Miss Delaney's was consistent with the existence of an implied periodic tenancy protected by the 1954 Act; and
- There was insufficient evidence to support Avondale's argument that the parties conducted themselves on the basis that the sub-lease continued and that Miss Delaney's should be estopped from denying that it did not.
This case is a reminder that it is important to consider the basis upon which a tenant continues to occupy following an expired lease. Although the termination clause in the sub-lease was fairly unusual, the landlord ought to have been alive to the risk of Miss Delaney's acquiring security of tenure if they were allowed to remain in occupation once the deed of variation was not provided.
Tenants should not simply be permitted to remain in occupation of a premises following the lease termination date without any steps being taken to avoid the rise of a periodic tenancy. A periodic tenancy falls within the protection of security of tenure under the 1954 Act and as such cannot be terminated at the expiry of the lease except under the limited grounds in the Act, some of which give rise to compensation payable by the landlord to the tenant.
