Implied surrender

A tenancy can be brought to an end prematurely in a number of ways, one of which is by a surrender.? This cannot be done unilaterally.? It is a two-way thing.? Both landlord and tenant need to agree for a surrender to occur. Such an agreement can either be express, or it can be implied.? Another name for an implied surrender is a surrender by operation of law.?

It seems that an express surrender needs to be by deed (see Woodfall para. 17.009).? Section 52(1)(a) Law of Property Act 1925 (“LPA”) provides that all conveyances of land or of any interest must be made by deed.? LPA s. 205(1)(ii) defines “conveyance” as meaning a number of things including a disclaimer, a release and “every other assurance of property or of an interest therein by any instrument, except a will”.? LPA s. 52(2)(c) provides that s. 52 does not apply to surrenders by operation of law, including surrenders which may, by law, be effected without writing.? There is no exception for express surrenders.? Similarly, LPA s. 54(2) disapplies the provisions of that part of the act to the creation of certain oral leases.? However, there is no exception for the termination of leases.? In Woodfall the view used to be expressed that such oral leases could be surrendered orally, but in the current edition the opposite view is taken, by analogy with the fact that it seems that oral tenancies cannot be assigned except by deed, again because of the same statutory formalities requirements (Crago v Julian [1992] 1 W.L.R. 372).?

Nevertheless, in the absence of a deed, the parties’ conduct – sometimes including, but not limited to, what they say – can justify the implication that a tenancy has been surrendered.?

A form of estoppel

The implication of a surrender is a form of estoppel.? In Bellcourt Estates Ltd v Adesina [2005] EWCA Civ 208; [2005] 2 E.G.L.R. 33 Peter Gibson L.J. explained:

“30. The doctrine of surrender by operation of law is founded on the principle of estoppel, in that the parties must have acted towards each other in a way which is inconsistent with the continuation of the tenancy. That imposes a high threshold which must be crossed if the tenant is to be held to have surrendered and the landlord is to be held to have accepted the surrender.”

However, it is a special form of estoppel, not subject to the requirements for estoppels in general, such as reliance, detriment and unconscionability.? In Artworld Financial Corp v Safaryan [2009] EWCA Civ 303 Dyson L.J. cited the above passage from Bellcourt (at para. [28]) and continued:

“There is reference in some of the authorities to the circumstances having to be such as to render it “inequitable” for the landlord or tenant to dispute that the tenancy has ceased: see, for example, Bellcourt, at [19]–[21] in the judgment of Longmore L.J.. But I would accept the submission of Mr Dowding Q.C. in his skeleton argument, […] where he says that the references:

“are not to be read as importing inequity as a separate requirement. The doctrine is not based on conscience. Where possession is unequivocally offered and retaken, it will, without more, be inequitable for the landlord to deny that the tenancy has ended, because he cannot at one and the same time have both possession and continuing rent under the tenancy. […]””

This point is elucidated further in QFS Scaffolding Ltd v Sable [2010] L. & T.R. 482 in which Morgan J. (with whom Longmore and Smith L.JJ. agreed) referred to Artworld, and continued:

“14.? The authorities in this area all say that the underlying principle is one of estoppel. Where the conduct of a party is inconsistent with the continuation of the tenancy, that party is estopped from contending that the tenancy subsists. In general, the case law in this area has not involved a separate examination of questions such as reliance, or detriment, or change of position, or unconscionability, or whether the effect of the estoppel is temporary or permanent. It may be that the principles as to surrender by operation of law have evolved along their own path. The result which has been produced is that where both parties act on the basis that the tenancy has ended, the result will be that the tenancy has ended.”

As in the context the statutory formalities requirements, discussed above, again there is an interesting parallel between surrender and assignment.? Like a surrender, an assignment can also occur, in the absence of a formal assignment, by estoppel.? In Rodenhurst v Barnes [1936] 2 All ER 3, the landlord had granted a licence to assign, and the proposed assignee went in and paid the rent, although no assignment was ever actually completed.? In the circumstances of that case, the occupant was later estopped from denying that it had become liable for the rent.? However, it seems from the obiter comments in Brown And Root Technology Ltd v Sun Alliance and London Assurance Co Ltd [1996] Ch. 51 (at 68) that in this context the ordinary requirements of representation and detrimental reliance apply, so there may be a limit to this parallel, and the form of estoppel giving rise to a surrender may be a special case.?

Unequivocal

What is required for this special kind of estoppel to arise is some act or acts which are unequivocally inconsistent with the continuance of the tenancy in question (see Woodfall para. 17.018).? The classic cases are the relinquishing of possession by the tenant followed by the landlord going into possession, or granting possession to a new tenant.? In Brent LBC v Sharma (1993) 25 H.L.R. 257 Stuart-Smith L.J. explained:

“In my judgment, the court is entitled to look at the whole of the conduct of the landlord prior to the issue of proceedings. If, by the time of the issue of the proceedings, it is quite plain that the landlord has accepted by his conduct, or shown by his conduct, that the tenancy no longer existed, then the conditions giving rise to a surrender by operation of law are established. It is quite plain that the tenant, the second defendant, treated the tenancy as at an end […]”.?

As said by Dyson L.J. in the Artworld case (at para. 29, citing the Judge below), the authorities justify the following propositions:

(1)????? The issue of whether there has been a surrender by operation of law after a tenant’s abandonment of the leased premises must be determined by evaluating the effect of the landlord’s conduct as a whole. The totality of such acts can amount to a resumption of possession even though individual acts might each be only equivocal.

(2)????? The test is whether the landlord’s conduct is ‘so’ inconsistent with the continuation of the tenant’s lease that it could only be justified as being lawful on the basis that the landlord has accepted the tenant’s implied offer to give back possession, and has taken possession of the premises beneficially for himself.

(3)????? Accepting back the keys without more will always be equivocal.

(4)????? Any act of the landlord which is consistent with its rights under the lease, such as entering the premises to inspect or to repair them, will not in itself give rise to a surrender because, by definition, it is not inconsistent with the lease continuing.

(5)????? Any further act of the landlord which amounts to protecting or preserving the property, such as taking security measures or doing necessary repairs, will not in itself give rise to a surrender because such self-help, necessary to preserve the landlord’s interest in the value of his property, is a reasonable response to the tenant’s evinced intention not to perform the obligations of the tenancy.?

(6)????? Similarly, any act of the landlord which amounts to the landlord’s performing the tenant’s covenants under the lease, such as keeping the garden tidy, would not necessarily amount to a resumption of possession as it is not inconsistent with holding the defaulting tenant to performing the lease.

(7)????? Any further act of the landlord referable to the landlord’s seeking to re-let the premises will not necessarily give rise to a surrender by operation of law, as it is no more than what the landlord might reasonably be expected to do in the circumstance for the potential benefit of all parties.

(8)????? However, if the landlord goes further and uses the premises for his own benefit beyond the totally trivial — and certainly, in my judgment, if such use amounts to occupation of the premises — then he re-takes possession of the premises inconsistently with the continuance of the lease. This will give rise to a surrender by operation of law, since it is only on the basis of having accepted such a surrender that the landlord’s acts would be lawful.

It takes acts by both the tenant and the landlord to bring about an implied surrender. As explained by Sedley L.J. in his concurring judgment, a surrender by operation of law occurs where what the landlord does turns abandonment by the tenant into a surrender of the tenant’s estate.? Nevertheless, it is often the acts of the landlord that are the controversial ones, in respect of which the question arises whether they are an unequivocal acceptance that the tenancy is at an end, or something more ambiguous or equivocal, consistent with its continuation.? What the Artworld case illustrates, on its particular facts, is that contemporaneous assertions made on behalf of the landlord that the lease is continuing do not necessarily make the landlord’s conduct, viewed as a whole, equivocal in this sense, and may not be sufficient to prevent an implied surrender occurring, depending upon what else the landlord does.?

The law on implied surrender was reviewed recently by the Court of Appeal in Rahimi v Westminster City Council [2024] EWCA Civ 73.? The issue in the case was whether the appellant had succeeded to his grandmother’s secure tenancy of a flat.? On the particular facts of that case (and given the legal requirements for succession), for that to have occurred there had to have been a prior surrender of the joint tenancy which she had held with her husband, and a regrant to her alone.? Her husband had left the flat, was rehoused by the landlord elsewhere, and the landlord changed its records to record her as the sole tenant, and thereafter only received rent from her.?

The first instance Judge held that there had been a surrender and regrant.? On the first appeal, the Judge held that there had not been a surrender (and so there was no regrant).? ?Lane J. decided that there was no evidence of unequivocal concurrence in any surrender by the landlord.? In reaching that decision he said:

“62.? The submission that one should look holistically at the alleged re-grant and other conduct said to point towards surrender is one I cannot accept if, as is apparent here, it amounts to the suggestion that a collection of what are, at best, individually equivocal events can somehow be combined to surmount the high evidential threshold which the case law demands.”

On the second appeal Lewison L.J. (with whom Newey L.J. agreed) reviewed the authorities on implied surrender.? He noted the requirement that the relevant conduct be unequivocal, meaning that the conduct of both parties must be inconsistent with the continuance of the existing tenancy. ?Referring to the Judgments in Brent LBC v Sharma, Lewison L.J. said that in his judgment Lane J. was wrong to say at [62] that individually equivocal acts cannot be combined to surmount the evidential threshold.? So this case re-emphasises the importance of looking at the parties’ conduct, and in particular that of the landlord confronted with an abandonment by its tenant, in the round.? Individual acts which, viewed in isolation, might be considered consistent both with the continuation and the termination of the tenancy, and therefore as equivocal for these purposes, can nevertheless cumulatively amount to an unequivocal acceptance that the tenancy is at an end.? Nevertheless, on the facts of that case the Court of Appeal agreed that the conduct of the landlord had been equivocal, and rejected the appeal, which serves to illustrate just how fact sensitive such cases are.?

?

Greville Healey

Falcon Chambers

20 March 2024