Fitzkriston LLP v Panayi & Ors

For registered land, a purchaser for valuable consideration takes priority over pre-existing interests whose priority was not protected on registration, subject to statutory overriding interests under Schedule 3 of the Land Registration Act 2002.

An oral tenancy ordinarily has only the force of a tenancy at will under section 54(1) of the Law of Property Act 1925. The exception for a lease not exceeding three years requires the best rent reasonably obtainable. Best rent means market rent; the rent agreed by the parties is not conclusive. Without a valid tenancy, Part 2 of the Landlord and Tenant Act 1954 cannot protect a periodic business tenancy. An unfair trial does not require a retrial where an independent legal ground conclusively disposes of the appeal.

Fitzkriston LLP, the registered owners of Unit C, obtained an order for possession in Shoreditch County Court against Mr Panayi and his company. HHJ Cotran accepted Fitzkriston’s evidence and ordered possession, with damages to be assessed and costs.

On appeal, the defendants argued that the trial had been unfair because of the judge’s conduct and interventions. Fitzkriston relied on a respondent’s notice, contending that, even assuming a tenancy had been created through an unsigned lease document, it was an oral lease not granted at the best rent. The central issue was whether that statutory point disposed of the appeal without a retrial.

Disposition

The appeal was dismissed on the respondent’s notice. The Court of Appeal held that the trial had been unfairly conducted, but the statutory point independently defeated the defendants’ claimed right to remain in Unit C.

1. Per Lord Justice Rix, the judge’s comments at the outset of the trial and his interruptions during the evidence deprived the defendants of a fair opportunity to present their case. A retrial would otherwise have been required.
2. Under section 29 of the Land Registration Act 2002, registration of a registrable disposition for valuable consideration postpones an earlier interest unless its priority was protected. Schedule 3 paragraph 1 provides the relevant protection for a leasehold estate granted for a term not exceeding seven years, subject to the stated exception for a lease whose grant is a registrable disposition.
3. Section 54(1) of the Law of Property Act 1925 gives an oral interest in land which is not written and signed only the force of an interest at will. Section 54(2) preserves an oral lease taking effect in possession for no more than three years if granted at the best rent reasonably obtainable.
4. Best rent means market rent. The agreed rent cannot, by itself, be treated as the best rent, since that would make the statutory requirement meaningless. The contemporaneous surveyor’s evidence showed that £4,000 per annum was materially below market rent.
5. Accordingly, even giving the defendants’ evidence its fullest effect, no valid oral tenancy had been created. There was therefore no continuing periodic tenancy under Part 2 of the Landlord and Tenant Act 1954 capable of overriding Fitzkriston’s registered interest. Lord Justice Jacob and Lord Justice Laws agreed.

• Court of Appeal (Civil Division): In [2008] EWCA Civ 283, the appeal was dismissed on the respondent’s notice. The court held that the trial was unfair but that no retrial was necessary because the statutory issue was decisive.
• Shoreditch County Court: On 5 April 2007, HHJ Cotran ordered possession of Unit C, with damages to be assessed and costs, including £10,000 on account of costs.