Lie v Mohile

A purported dissolution of a partnership does not automatically end the partnership’s business tenancy where the partnership has not been validly terminated under section 26 of the Partnership Act 1890. An appellate court should not determine whether opposition to a new tenancy succeeds when the trial judge made neither an express nor an implied finding on that issue. Nor should it make a first-instance factual finding about the prospects of the opposition. The proper course is to set aside the relevant order and remit the application for rehearing under Part II of the Landlord and Tenant Act 1954.

Dr Sonnie Lie and Dr Rajan Mohile were medical practitioners in partnership and occupied premises under a business tenancy granted to them as partners. After their relationship broke down, Dr Mohile served a notice purporting to dissolve the partnership and a notice under section 25 of the Landlord and Tenant Act 1954, opposing a new tenancy on the ground in section 30(1)(g).

HHJ Taylor held that the partnership was not for a fixed term within section 26 of the Partnership Act 1890, that it had been dissolved, and that the tenancy consequently ended. She dismissed the application. On appeal, Dr Mohile conceded that section 26 did not permit termination by notice. The central issue was whether the Court of Appeal should determine the opposition to a new tenancy or remit the application.

1. Appeal allowed. The respondent conceded that the judge was wrong to hold that section 26 of the Partnership Act 1890 entitled him to terminate the partnership by notice. The partnership therefore continued. Since it remained the tenant, the judge’s consequential conclusion that the tenancy had automatically ended was also wrong.
2. The judge had made no finding, express or implied, on whether the respondent’s opposition to a new tenancy under section 30(1)(g) of the Landlord and Tenant Act 1954 was sound. Her reasoning was that dissolution of the partnership had ended the tenancy, so the question of opposition did not arise. The Court of Appeal rejected the submission that she had implicitly decided the issue in either party’s favour.
3. The court also rejected the claimant’s invitation to find that the opposition had no prospect of success. It was not in a position to make that factual determination. The respondent’s contrary invitation, that the issue had already been decided below, was plainly wrong.
4. The court raised the separate question whether section 41A of the Landlord and Tenant Act 1954 required an application to be made by both business tenants. That issue had not been considered below and was not before the court for decision.
5. Paragraphs 1 and 3 of the judge’s order were set aside. The application for a new tenancy was remitted to the county court for rehearing. Lord Justice Christopher Clarke and Lady Justice Sharp agreed.

• Central London County Court: On 1 March 2013, HHJ Taylor dismissed the application with costs, holding that dissolution of the partnership had ended the business tenancy.
• Court of Appeal (Civil Division): The appeal was allowed. Paragraphs 1 and 3 of the order were set aside, and the application was remitted to the county court for rehearing.