​Lie v Mohile

Abstract

Landlord and tenant – Business premises. The parties were in partnership and operated from the respondent’s premises under a tenancy granted to the partnership. Following an attempted dissolution of the partnership, the applicant applied to the court for the grant of a new tenancy. The judge found that the applicant had not satisfied s 41A(1)(d) of the Landlord and Tenant Act 1954 and dismissed his application. The Court of Appeal, Civil Division, held that if, as the applicant contended on appeal, he had been the only tenant because the respondent could not have granted himself a tenancy, then s 41A had had no application at all and the appeal was dismissed.

Summary

Section 41A of the Landlord and Tenant Act 1954 provides, so far as material: ‘(1) The following provisions of this section shall apply where— (a) a tenancy is held jointly by two or more persons (in this section referred to as the joint tenants); and (b) the property comprised in the tenancy is or includes premises occupied for the purposes of a business; and (c) the business (or some other business) was at some time during the existence of the tenancy carried on in partnership by all the persons who were then the joint tenants or by those and other persons and the joint tenants’ interest in the premises was then partnership property; and (d) the business is carried on (whether alone or in partnership with other persons) by one or some only of the joint tenants and no part of the property comprised in the tenancy is occupied, in right of the tenancy, for the purposes of a business carried on (whether alone or in partnership with other persons) by the other or others.’

The judgment is available at: [2014] EWCA Civ 728

The parties were in partnership as medical practitioners who provided medical services from the same premises (the property). The property was owned by the respondent and he had granted a periodic tenancy to himself and the applicant as partners. The parties were the only partners to the partnership. The parties fell out and the respondent served on the applicant, first, a notice purporting to terminate the partnership and, secondly, a notice (given also to himself) under s 25 of the Landlord and Tenant Act 1954 terminating the tenancy of the property. The second notice informed the applicant that the respondent opposed the grant of any new tenancy and that he would oppose any application for a new tenancy on the ground that he wished to continue his medical practice from the property and required the same for his own use. The applicant issued an application under s 24 of the 1954 Act for the grant of a new tenancy of the property. 

The respondent defended that application on the ground, inter alia, that he wished to continue the practice at the property as a sole general practitioner. The judge held that, as the partnership had been the tenant of the property, the termination of the partnership had automatically brought the tenancy to an end. Further, the applicant was not personally entitled to a new tenancy and the respondent was entitled to oppose the application on the basis that the partnership no longer existed. Accordingly, she dismissed the application. 

The Court of Appeal, Civil Division, held that the notice of dissolution to dissolve the partnership had been ineffective. It allowed the applicant’s appeal and remitted the application for a new tenancy for rehearing ([2013] All ER (D) 212 (Nov)). A preliminary issue arose as to the construction of s 41A of the 1954 Act and, in particular, as to whether the applicant was entitled to make an application for a new tenancy under s 24 of the 1954 Act. The judge found in favour of the respondent. She noted that the condition in s 41A(1)(d) had not been satisfied. It had been accepted by the claimant that the premises continued to be occupied by both partners for the purposes of the partnership business. Therefore, it could not have been said that the business was carried on ‘by one or some only of the joint tenants’. The applicant appealed.

He submitted that he satisfied the conditions in s 41A(1)(d) because, as a matter of law, he had been and remained the only tenant of the premises under the existing tenancy because the respondent was not capable of granting a tenancy to himself. Consequently, he satisfied the condition in s 41A(1)(d) because his continuing partnership with the respondent was a business carried on ‘in partnership with other persons’. Further, that that was the legal effect of the grant of the periodic tenancy was based upon s 82 of the Law of Property Act 1925.

The appeal would be dismissed.

If the applicant was the sole tenant of the property, then s 41A of the 1954 Act had no application at all because neither the first nor the fourth of the conditions at sub-s (1) were satisfied. As a sole tenant, the applicant had not needed s 41A at all, he could have relied upon s 24(1). Further, s 82 of the 1925 Act had no application to the grant of the tenancy in the instant case (see [14], [15], [19], [20] of the judgment).

Jacobs v Chaudhuri [1968] 2 All ER 124 applied; Rye v Rye [1962] 1 All ER 146 considered.

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