LANDLORD AND TENANT: MESNE PROFITS AND USE AND OCCUPATION

The law. Mesne profits is the name given to damages for trespass sought by a landlord against his tenant for failing to quit the demised premises upon termination of the lease (Bramwell v Bramwell [1942] 1 K.B. 370). A tenant’s claim for damages for trespass against his landlord is not called mesne profits but is similarly a claim for damages for trespass to land. No mesne profits are payable, nor is a tenant in breach of his covenant to deliver up vacant possession at the expiry of the term, where the tenant has a right to continue in possession under a continuation or statutory emanation of his tenancy (e.g. a continuing business tenancy under Landlord and Tenant Act 1954 Pt II, or a statutory tenancy under the Rent Act 1977) or under a new contractual tenancy deemed to be granted to him (e.g. a statutory periodic assured tenancy under Housing Act 1988 Pt I). But a statutory bar on enforcement of the right to possession, such as Protection from Eviction Act 1977 s.3, does not give any defence to a claim for mesne profits.

Where mesne profits are payable, a landlord may elect to claim these on the basis of the loss suffered by him caused by the trespass (which will usually be at the rate of the current letting value of the premises without the need to prove that he could or would have let the premises during the period of the trespass: Swordheath Properties v Tabet [1979] 1 W.L.R. 285; Inverugie v Hackett [1995] 1 W.L.R. 713) or on the basis of restitution of the benefit conferred on the tenant by the unlawful occupation (Ministry of Defence v Ashman [1993] 2 E.G.L.R. 102; Ministry of Defence v Thompson (1993] 2 E.G.L.R. 107 (see also Bocardo SA v Star Energy UK Onshore Ltd [2009] EWCA Civ 579; [2010] 1 All E.R. 26). In Horsford v Bird [2006] 15 E.G. 136 the Privy Council assessed mesne profits in relation to the value of the land encroached upon (the encroachment in that case being permanent) taking into account the special value of the land to the defendant. This election need not be made until trial, and in any ordinary case the two bases will be the same. Where the lease is terminated by forfeiture, mesne profits are claimed from the date of service of the claim form (Canas Property Co. v KL Television Services [19701 2 Q.B. 433) or, where peaceable re-entry is effected, from the date of physical entry. In other cases (e.g. effluxion of time or notice to quit), mesne profits are claimed from the day after the termination of the tenancy.

A contract to pay reasonable compensation for use and occupation is implied by law from the fact that land belonging to the claimant has been occupied by the defendant with the claimant’s permission. An action for use and occupation lies whenever there is a relationship or an intended relationship of landlord and tenant (Morris v Tarrant [1971] 2 Q.B. 143) except where there is a valid and continuing lease, in which case the landlord’s entitlement is to the rent payable under it.

“In order to recover in the action for use and occupation, the plaintiff must prove the existence of an agreement express or implied between him and the defendant to the effect that the latter shall at least be the tenant at will of the former of the lands or premises occupied, and shall pay for that occupation” (Att. Gen. v De Keyser’s Royal Hotel [1920] A.C. 508 at 533, where the authorities are reviewed).

A tenancy at will is readily inferred if the defendant enters during negotiations for a lease (see Javad v Mohamed Aqil [1991] 1 W.L.R. 1007). In the absence of express agreement, the claimant may only recover “a reasonable satisfaction” for the land occupied (see Churchward v Ford (1857) 2 H. & N. 446 at 449). In such a case, the amount of compensation depends on the value of the premises occupied and the duration of the occupation (see Att. Gen. v De Keyser’s Royal Hotel). In determining what the occupation is worth, the court will examine what it was actually worth to the particular occupier (see Dean & Chapter of Canterbury Cathedral v Whitbread (1995) 72 P. & C.R. 117). Value to the tenant does not mean commercial value but the value the tenant has chosen to enjoy. Ordinarily that will be the open market rental value (see Lewisham LBC v Masterson [2000] 1 E.G.L.R. 134). As soon as the occupation ceases, the implied contract to pay ends; and as no express time for payment is specified, the compensation accrues from day to day (Gibson v Kirk (1841) 1 Q.B. 850; Churchward v Ford, above).

Under the Landlord and Tenant Act 1730, s.l, a landlord has the right to claim double the value of the land where a tenant holds over after the determination of his tenancy and after demand made by notice in writing for possession to be delivered up. The demand and notice may either be served before the expiration of the term or within a reasonable time thereafter. The operation of the statute is confined to “tenants for any term of life, lives or years”. It therefore does not apply to weekly tenants (Lloyd v Rosbee (1810) 2 Camp. 453) or to periodic tenants for less than a year (Wilkinson v Hall (1837) 3 Bing. N.C. 508), but it does apply to a tenant from year to year (Doe d. Hull v Wood (1845) 14 M. & W. 682). The holding over by the tenant must be wilful; in other words, the tenant must have no genuine belief that he is entitled to hold over (see Swinfen v Bacon (1861) 6 H. & N. 846 at 848). If the tenant wrongly but genuinely believes that he is entitled to remain in possession, the Act does not apply (French v Elliott [1959] 3 All E.R. 866). If the demand and notice are served before the expiration of the term then double value will be calculated from the expiration date (see Soulsby v Neving (1808) 9 East 310). However, if they are served after the expiration date then entitlement to double value will run from the date of the demand (see Cobb v Stokes (1807) 8 East 358). In the case of a tenancy from year to year, a valid notice to quit is sufficient to satisfy s.1 (see Wilkinson v Colley (1771) 5 Burr. 2694). Possible defences to an action for double value would thus include a mistaken belief on the part of the tenant that he was entitled to hold over, or the tenancy being a weekly tenancy and so not being subject to s.1, or the inadequacy of the notice in writing.

Where a tenant gives notice to quit but does not give up possession when the tenancy expires pursuant to that notice, the landlord is entitled to double rent under s.18 of the Distress for Rent Act 1737. This section applies only if the tenancy is capable of determination by a notice to quit given by the tenant, if the notice itself is valid and if the landlord treats the notice as valid thereby electing to treat the tenant as a trespasser (see Oliver Ashworth (Holdings) v Ballard (Kent) [1999] 2 All E.R. 791 at 809). Unlike the action for double value, s.18 applies to all tenancies capable of termination by notice to quit. Furthermore, there is no requirement that the holding over by the tenant be wilful. Section 18 itself does not require the notice to quit to be in writing, but it must be sufficient to determine the tenancy and therefore will have to comply with any formal requirements for termination of the particular tenancy (see, e.g. Protection from Eviction Act 1977 s.5(1) (notice to quit any premises let as a dwelling to be in writing)). Possible defences would therefore include an invalid notice to quit or the landlord contending that the notice was invalid.