Occupation of premises for business purposes, at a rent, creates security of tenure under the Landlord and Tenant Act 1954.
A claim for possession of property arising from a family dispute failed in Alam v Alam and another [2023] EWHC 1460 (Ch).
The claim concerned a store in Cheetham Hill, Manchester, acquired by second defendant Alam Investments Ltd in 2008. AIL permitted WWF Rusholme to take possession of the store and commence business, repaying loan repayments for the purchase of the property by way of rent from its business revenue.
Arshad Alam was appointed to manage the business and did so until 30 November 2015. On that date he transferred the business to WWF Cheetham Hill without the consent of his brother, Pervez Alam. Both brothers were directors of WWF Rusholme and WWF Cheetham Hill.
AIL claimed that WWF Cheetham Hill had no contractual right to possession and demanded that the company vacate. Proceedings ensued. WWF Cheetham Hill argued that AIL held the property on constructive or resulting trust for Arshad or the company, that AIL was estopped from denying that either had a beneficial interest in the company, and that the company was entitled to a periodic tenancy of the property protected by the 1954 Act.
Cheetham Hill was purchased on behalf of AIL, not Arshad, with the intention that AIL would retain it. While it was envisaged that WWF Rusholme would set up business there to repay the bank loan, ownership would remain with AIL so there was no constructive or resulting trust for Arshad. The same applied to WWF Cheetham Hill, which was only set up in 2015, seven years after the acquisition of the property and the commencement of business.
Arshad’s estoppel claim based on his role in causing WWF Rusholme and then WWF Cheetham Hill to make mortgage payments also failed. It was never understood that Arshad would own the Cheetham Hill business. Neither had WWF Cheetham Hill acquired an interest in the store by proprietary estoppel. While Pervez did not take immediate action after the company took over the business without his knowledge or approval, it was inherently unlikely that Arshad would have acted any differently so as to establish an estoppel.
AIL had invoiced WWF Rusholme from June 2011 to November 2015 for “monthly rent” calculated on a yearly basis. From November 2015 to December 2017, when the loan was repaid, such invoices were sent to and paid by WWF Cheetham Hill. WWF Rusholme became entitled to a yearly tenancy of the store which had not been terminated, surrendered or formally assigned. WWF Cheetham Hill was entitled to a yearly sub-tenancy and, since it was in occupation for the purposes of a business, it was entitled to statutory protection under the 1954 Act.
Louise Clark is a property law consultant and mediator
