Ahmed v Ahad & Anor

Whether an arrangement creates a tenancy depends on its substance and the parties’ arrangement, not on labels such as rent, tenant or lease. Regular payments and occupation do not establish a tenancy where the surrounding circumstances show conditional permission to occupy and payments intended to meet mortgage liabilities.

Where a preliminary issue binding linked proceedings removes the only defence to a mortgage possession claim, the court may make a possession order without a further trial if this advances the overriding objective. A party who did not raise the issue or seek an adjournment at trial cannot ordinarily rely on procedural unfairness on appeal.

Two linked appeals arose from orders made by HH Judge Cowell on 20 April 2010 following a trial of preliminary issues. The first was a mortgage possession action brought by National Westminster Bank plc concerning premises at 61 Berwick Street. The second was a partnership action brought by Mohammed Abdul Ahad and Ful Miah concerning the restaurant business and the sale of the property.

The appellant claimed that he occupied the property under an oral tenancy and that the tenancy bound the Bank. The judge found that the parties had created only conditional permission to occupy, that Dinepark Ltd had occupied under a licence, and that no permission survived its termination. Possession orders were made in favour of the Bank and the other respondents. The appeals concerned the tenancy finding, procedural fairness, the Bank’s possession order and costs.

Both appeals were dismissed.

1. The Court of Appeal upheld the finding that no tenancy had been granted to the appellant. References in documents to rent, tenant or lease were not conclusive. The payments made were materially higher than the alleged annual rent and were directed towards discharging the mortgage. The alleged rent was therefore uncertain, and the evidence had to be assessed as a whole. The appellant’s reliance on Javad v Aqil [1991] 1 WLR 1007 did not overcome the surrounding circumstances.
2. The judge’s statement that the partnership element precluded a tenancy required clarification. The relevant inconsistency was between a tenancy granted to one co-owner and the purpose of the co-ownership arrangement, namely preserving and ultimately selling the property. An oral commercial tenancy lacking ordinary lease terms was not consistent with that purpose. The evidence also did not establish exclusive possession because the appellant’s wife and Dinepark occupied the premises and the payments were consistent with Dinepark’s occupation.
3. Although the two actions had not been formally consolidated, the orders directing them to run together plainly intended the preliminary findings to bind both actions. The tenancy issue had been raised by the appellant, made a preliminary issue, and was not challenged by an appeal from the case-management order. Once the judge found that no tenancy existed, the appellant had no remaining defence to the Bank’s possession claim. It was therefore within the judge’s powers, consistently with the overriding objective in Part 1 of the Civil Procedure Rules 1998, to make the possession order without a further trial.
4. The complaints about disclosure and adjournment failed because the appellant had not sought appropriate relief before or during the resumed hearing. The argument based on section 36 of the Administration of Justice Act 1970 also failed: the point had not been raised before the judge and no objection had been made to the possession order.
5. The costs decisions were within the trial judge’s discretion. The order for no costs as between the partnership parties was plainly within the permissible range.

• Court of Appeal (Civil Division): by [2011] EWCA Civ 51, dismissed both appeals.
• Central London County Court: HH Judge Cowell, on 20 April 2010, determined the preliminary issues, found that the appellant had no tenancy or surviving permission to occupy, and made possession and sale orders.