Where a T has vacated, or returned the keys, L must be careful not to do anything that may inadvertently amount to an acceptance of T’s surrender of the lease.

Such surrender is based on the principle of estoppel. It requires L and T to act in a way that is inconsistent with the continuation of the tenancy. Whether that will have been the case is, of course, a matter of argument and is very much fact-dependent. But, a recent case involving a large mansion does illustrate how such disputes should be approached.

The mansion was being let for three years at £390,000pa. T made various complaints about failure to carry out repairs relating to the central heating and swimming pool. With 15 months left, T claimed it was entitled to treat the lease as ended and vacated the property, returning the keys to L. After T had vacated, L redecorated, used the property for parking cars, and an associated person moved into the property for several months. Throughout that time, L’s solicitors wrote to T saying that the lease was continuing and that T remained liable for the rent. In its decision, the CA looked at the issue in the round: it looked at the overall intentions of L, and not merely what was said in correspondence by L’s solicitors. Although some of L’s actions could be justified individually, they were – taken together – inconsistent with the continued existence of the lease. Importantly, the CA noted:

‘as a matter of practicality and common sense, one party has to hold the keys to prevent an absurd situation in which they are passed back and forth because neither party wants to risk it being suggested that it has made an admission by holding them.’ So, mere acceptance of the keys by L will not, of itself, be an acceptance of a surrender;

L can look for a new, replacement, T without losing his rights against the original T. This is all part of L reasonably mitigating his losses. This should not, of itself, be an acceptance of a surrender;

L should be wary of allowing someone else into occupation, since that may well amount to an acceptance of surrender. The CA said that ‘if such use amounts to occupation of the premises, then L retakes possession of the premises inconsistently with the continuance of the lease’.

Although this case involved residential property, the principles are identical for commercial premises. Thus, the court will look at all the acts of L (eg even if the individual acts can be explained away, the composite effect of them all may be to confirm that there has been an acceptance of surrender). See commentary on ?Artworld v Safaryan [2009] EWCA Civ 303 (access free at www.practicalconveyancing.co.uk) [2009] 237 PLJ 13.