Singh & Anor v Sanghera & Ors

An agreement to sell a business together with the right to occupy premises is an agreement relating to land. If it fails to comply with Law Reform (Miscellaneous Provisions) Act 1989, section 2, the agreement is void and no part of it can be sued upon. Restitution may nevertheless be available to reverse unjust enrichment resulting from the parties’ dealings. A purchaser who has no effective lease or licence has no right to remain after forfeiture of the relevant lease. The Protection from Eviction Act 1977 does not protect occupation which is neither residential in character nor supported by a residential tenancy or licence.

The claimants paid £60,000 and took over the operation of a supermarket business. They alleged that the payment purchased the business and a five-year lease, and claimed relief after they were evicted. The freehold belonged to the first defendant and the business was operated by the fifth defendant under a lease. The court had to determine the legal effect of the transaction, whether the claimants acquired any tenancy or licence, whether the eviction was unlawful, and the parties’ restitutionary and goods-related claims.

1. Nature and effect of the transaction. The agreement made on 23 August 2010 was for the sale of the business including an assignment of the existing lease, subject to the landlord’s consent. The possible grant of a new lease had not crystallised as a binding obligation. The agreement therefore related to an interest in land and fell within section 2 of the Law Reform (Miscellaneous Provisions) Act 1989. It was void, and no part of it could be sued upon, applying Keay v Morris Homes (West Midlands) Limited [2012] EWCA Civ 900.
2. Constructive trust and tenancy arguments. No constructive trust arose because the freeholder’s conscience was unaffected and he had not consented to the proposed dealing. No periodical tenancy or tenancy at will arose because the alleged rent payments were not made as rent.
3. Eviction. The claimants occupied under permission from the business tenant. Their licence was not residential and could not survive forfeiture of the tenant’s lease. They therefore had no statutory right to remain without a court order under the Protection from Eviction Act 1977; compare Patel v Pirabakaran [2006] 1 WLR 3112. The eviction was not unlawful as such, although the bailiffs were liable in principle for wrongful interference with retained stock and certain cards.
4. Restitution and counterclaim. The claimants were entitled to recover £60,000 from Anjali because the business and goodwill had no value without the lease and there had been a total failure of consideration. The remedy was restitutionary, to prevent unjust enrichment. The court accepted the same principle in relation to benefits received under the void transaction, referring to Westdeutche Landesbank Girozentrale v Islington LBC [1996] AC 669.
5. Disposition. The contractual, wrongful-eviction and other claims were dismissed, subject to an inquiry into limited goods-related damages. An account and inquiry were ordered to determine Anjali’s restitutionary counterclaim. Immediate payment of the £60,000 was withheld pending that account.