In Lai Mai-yu v The Attorney-General ([1977] HKLR 382, SC) the Crown granted T a lease for a fixed term of one year and thereafter to be a quarterly tenancy. The lease provided that ‘the term hereby created may be determined at any time by either party giving to the other not less than three calendar months’ notice in writing to that effect.’ The Crown gave three months’ notice in accordance with the lease. The notice did not expire at the end of a quarter. The Crown, by mistake, demanded and accepted rent for a period after the expiry of the notice to quit.
Trainor J. held that when T remained in possession at the end of the fixed term, it did so in accordance with the express terms of the agreement; this was not a case of an implied periodic tenancy as a result of a holding over. Thus, the notice was valid. He went on to say that even if this had been an implied periodic tenancy, it would have been impressed with the provision as to notice and that the words ‘at any time’ in that clause were enough to give validity to a notice to quit that did not expire at the end of a quarter.
Once notice to quit had been given, the lease was at an end. It could not be withdrawn. At most, the demand and acceptance of rent could have been evidence of an intention to create a new lease but the evidence did not point to this as being the intention of the parties.
Trainor J. provides a useful summary of the possible relationships that can arise when a tenant holds over:
‘Holding over simply means that on the expiration of a term the tenant remains in occupation of the demised premises. If he does so without either the consent or disapproval of the owner he is a tenant at sufferance; if it is with the approval of the owner then there is a tenancy at will. If the occupant remains with the consent of the owner and pays him rent there arises between them by a presumption of law a relationship of landlord and tenant. When the rent paid is expressed to be at an annual rate, even though payable by instalments, then the nature of the relationship is presumed to be that of a tenant from year to year and such of the terms of the expired lease as are applicable to a yearly tenancy will apply. It is a presumption, however, that is rebuttable by the circumstances. It is when rent is paid and received that the relationship of landlord and tenant is established and the nature of the relationship can be ascertained, e.g. is the occupant a yearly tenant.’
Michael Lower
