England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SHOREDITCH COUNTY COURT
HIS HONOUR JUDGE COTRAN
ON APPEAL FROM DISTRICT JUDGE MANNERS

		Royal Courts of Justice Strand, London, WC2A 2LL
		20th December 2006

Lord Justice Lloyd:

Introduction

1. On 7 June 1995 the Council of the London Borough of Hackney ("Hackney") granted a ten year lease ("the Lease") to Mr Grant, the Defendant, of premises at 71 Broadway Market, Hackney. The property consists of a basement, ground floor and first floor. The essential issue in this appeal is whether the tenancy created by the Lease was, at the time when the proceedings were started, a business tenancy governed by Part II of the Landlord and Tenant Act 1954, or rather an assured tenancy under the Housing Act 1988. According to a witness statement made by the Defendant in circumstances which I will mention later, he had first taken a licence agreement of them in 1993, when they were derelict and little more than a shell. He started work to make them habitable and by the date of the Lease they were in a state in which he could, and did, move in to live in the upper part. By January 2000 he had made the lower part fit for use and since then he has been running a shop there, selling fish and groceries, as he still does.
2. The Lease is described on its front page as being of Shop Premises, at the given address. It has various definitions including "Permitted Use", which allows for the use of the lower part of the premises for the sale and catering for fish, and the upper part for residential purposes only. Clause 4 sets out the tenant's covenants. By clause 4(4) the Defendant covenanted to carry out specified works to the premises within 12 months. The list of works relates to all parts of the premises. Clause 4(19) is an obligation to use the premises only for the Permitted Use. Clause 4(20) obliges the tenant to keep the premises open as a shop for carrying on the Permitted Use at all times of the year during the usual business hours of the locality, and at all times to maintain in good order an adequate and appropriate display in the shop windows. The initial rent was no more than £1,000 per year, but there was a rent review provision, effective after 5 years.
3. In November 2001 Hackney made arrangements to dispose of its freehold interests in the premises and neighbouring properties. They were due to be put up for sale by auction on 13 December 2001. Hackney wrote to the Defendant offering him the opportunity of buying the freehold in advance of the auction, for £100,000, on condition that contracts be exchanged before the day of the auction, and that a deposit of £10,000 be paid on exchange.
4. The Defendant sought to take up that offer, though apparently only at the last moment, handing a cheque for £10,000 to Hackney's agents on the day of the auction. Despite this the property was sold at the auction, and the Claimant was the buyer, becoming the registered proprietor by April 2002. Mr Grant's cheque was returned to him after the auction, not having been presented. He is highly aggrieved at these events, and sought at the outset of these proceedings to claim that he had the benefit of a contract to buy the property which was binding on Hackney as a party to the contract, and on the Claimant as purchaser as being an overriding interest. He has never been able to produce a document constituting a signed contract and, though he asserts that he did sign what he believed to be a contract, that allegation no longer features as an issue in the case.
5. Mr Grant also complained that he was unable to find out the name of the purchaser for several years. However, it seems clear that he was given the name of the Claimant no later than 10 July 2002 when agents on behalf of the Claimant gave notice to the Defendant to bring into operation the rent review, naming the Claimant as the current landlord. On Mr Grant's behalf a smaller increase in the rent was proposed. A surveyor was then instructed as an expert in accordance with the Lease, and on 15 April 2003 he determined that the increased rent should be £8,100 per year. The Claimant's agents then demanded payment of the increased rent, back to 6 March 2002 (which I assume was the date of completion of the purchase of the freehold), as well as a share of the expert's fees. Mr Grant did not pay the increased rent at that stage, or at all, though he has from time to time made payments towards the rent arrears. By the time these proceedings were commenced, on 8 February 2005, the arrears were not far short of £25,000. They increased further during the proceedings, though we were told that they have now been reduced to less than £19,000.

The proceedings

6. The Claimant issued the Claim Form seeking possession by way of forfeiture, arrears of rent and mesne profits, with interest and costs. Mr Grant was able to obtain public funding at that stage, and put in a Defence and Counterclaim in which he asserted a binding contract to buy the property, and also claimed relief against forfeiture under section 138 of the County Courts Act 1984. On 13 June 2005, however, District Judge Manners struck out the counterclaim and gave directions for trial of the remaining issues, also ordering the Defendant to make payments for his occupation of the premises pending trial. The striking out of the counterclaim would not have prevented the Defendant from seeking relief from forfeiture at trial.
7. Mr Grant failed to make the payments required by the order and the Claimant then applied to strike out the defence and for summary judgment. That application was dismissed but an early trial date was ordered. So the matter came before District Judge Manners on 28 October 2005. By that time the Defendant no longer had public funding, but he did have assistance from a Mr Shuter as a McKenzie friend. Mr Grant first tried to have Hackney and their agents added as parties. The District Judge dismissed that application as being irrelevant to the claim by the Claimant.
8. So far as the Claimant's claim is concerned, with the benefit of a transcript of the hearing, we can see that Mr Frith, for the Claimant, mentioned to the District Judge that there was no statutory protection for the tenancy, but that because the property included residential accommodation upstairs, it had been necessary to apply for a court order. He then showed the District Judge the witness statement in support of the claim, and called the maker of the statement to verify the statement, to bring the figures up to date (by then the arrears were more than £28,000), and to be available for cross-examination. Mr Grant said that he could not afford to pay the rent and arrears in full. His offer was to pay £3,000 immediately, the monthly rent as it accrued, and a sum to be fixed by the court towards the rest of the arrears. Mr Shuter tried to introduce the prospect that a substantial sum would be obtained from Hackney, but the District Judge was sceptical about that.
9. The judge made a possession order effective in 28 days' time. She said:

"It is a business tenancy, so I do not have all the rights I would have if it was residential, if it counted as a residential tenancy, which it does not. This is a business tenancy and I would have to be looking at getting the rest of this £25,000 paid within 2 years or so at £1,000 per month which you simply cannot afford."

She also ordered payment of the sum then due, and costs assessed at £7,000, and refused permission to appeal.

The Defendant's appeal

10. With Mr Shuter's help the Defendant sought to appeal. He filed his Appellant's Notice some 8 days late. The grounds of appeal stated were these:

"(1) Due consideration not given to the full facts of the case.

(2) As a result of the failure of the Claimants to properly identify themselves arrears accrued over a 3-4 year period. In the interests of justice a similar period for repayment is appropriate.

(3) Due to the failings on the part of the Claimants, a further review of the validity of the rent review is required and necessary.

(4) Due consideration should be given to the circumstances relating to the original lease terms, the rent increases and the rent review.

(5) My application dated 24/10/05 was dismissed without being properly considered."

In a separate document submitted at the same time, called a skeleton argument, an offer was put forward of £10,000 immediately, together with staged payments to achieve full settlement.

11. On 5 December 2005 His Honour Judge Latham ordered that the Appellant's Notice be treated as including an application for an extension of time for appealing, and that a hearing be fixed for 27 January to consider that application alone, with evidence from the Defendant as to the circumstances of the delay.

Extension of time for appealing

12. That hearing came on before His Honour Judge Cotran, the Claimant represented as before by Mr Frith and the Defendant in person but with Mr Shuter's assistance, each of them having made a witness statement dealing with the delay. We have a transcript of the hearing and the judgment delivered on that occasion, as also of the two later hearings before the same judge. The judge granted an extension of time, against Mr Frith's opposition. He took the view that, the delay being small and not such as to cause prejudice, it would not be right to prevent the Defendant from appealing on the grounds of the delay. He declined to consider the merits or otherwise of the appeal, save to note that a new offer of payment had been made which he considered the court should be able to consider on an appeal. In the course of giving his judgment, he picked up the point about the status of the tenancy, and queried whether it lacked statutory protection in respect of the residential part of the premises, but that point was not further pursued at that stage. He directed that the application for permission to appeal should come before him on 6 February.

Permission to appeal

13. At that hearing the parties were in the same position as before as regards representation and assistance. The judge granted permission to appeal. On the day before the hearing Mr Grant had made the further witness statement to which I referred in paragraph 1 above, in which he described the premises and gave an account of what he had done at the property over the years, and the use he had made of them. He confirmed some of those details in response to questions from the judge in the course of the hearing. The judge reverted to the question whether the tenancy enjoyed any statutory protection by virtue of the residential element. Taking together what he said in the course of argument by Counsel and what he said in his judgment, it seems clear that he gave permission to appeal on the basis of, first, the new offer of payment, and secondly the question whether the residential nature of the premises gave rise to statutory protection other than that of Part II of the Landlord and Tenant Act 1954. He seems to have regarded the other points taken in the Appellant's Notice as hopeless, but although at one point he mentioned amending the grounds of appeal, he did not require or suggest any such amendment, so that on the face of it the permission to appeal was given on the grounds originally specified and not any new point.

The appeal, and amendment of the grounds of appeal

14. The appeal itself came on before the same judge on 12 April. By this time the Defendant again had the benefit of public funding and therefore representation by Counsel, Mr Watkinson. On the day of the hearing he put forward an amended Appellant's Notice, with an additional ground of appeal namely:

"(6) whether the learned District Judge failed to properly consider and determine whether the Defendant's tenancy was within Part IV Housing Act 1985 or Part I Housing Act 1988."

15. He also provided a skeleton argument directed to that point. In that document he contended that whether the 1954 Act or one or other of the Housing Acts applied was a question of fact and degree, that if the point had been taken before the District Judge she would have had to address the question of fact, and that the appeal ought to be allowed to the extent of the order being set aside and the case remitted for a determination of the status of the tenancy. Against opposition from Mr Frith, the judge treated the point as open on the appeal.
16. Mr Frith was willing to accept that it might be arguable that the tenancy was an assured tenancy, subject to the facts being investigated. He took his stand on the point that the issue had never been raised below and that it was far too late to take it on appeal. As it seems to me, that was not Mr Frith's best point. Under the Rent Acts, the court was required to consider whether those Acts applied, in any case in which they might apply, regardless of whether the tenant took the point at all, and even if the point was first taken on appeal, by way of an exception to the general rule against allowing new points to be taken on appeal: see, for example, Barton v Fincham [1921] 2 KB 291 and Boyer v Warbey [1953] 1 QB 234, and Woodfall, Landlord and Tenant, paragraph 23.084. It seems to me that the court would be justified in taking the same stance as regards premises which may be held on an assured tenancy, still as an exception to the general rule which continues to apply under the Civil Procedure Rules.
17. The judge allowed the appeal. He held that the District Judge had been wrong to regard the Lease as creating a business tenancy, or necessarily such a tenancy, when she knew that residential accommodation was included. However, he did not follow the course urged on him by Mr Watkinson, of sending the case back for the status of the tenancy to be decided on the facts. Instead he set aside the absolute possession order and substituted an order suspended on terms that Mr Grant pay the arrears, then of £25,367.13, by paying £1,000 per month off the arrears, in addition to the current rent of £675 per month. Such an order could have been made if the tenancy was an assured tenancy. It may be open to question whether it would have been a proper order to make if the tenancy was a business tenancy.
18. Pursuant to permission granted by Jonathan Parker LJ, the Claimant appeals against the judge's order, contending principally that the District Judge's order was correct and should not have been set aside.
19. It seems to me that, if there had been a reasonably arguable case for saying that the tenancy created by the Lease was, at the relevant time, an assured tenancy under the Housing Act 1988, then the judge might have been justified in allowing the appeal and remitting the case for a decision on the facts as to whether it was an assured or rather a business tenancy. If, on the other hand, there was no such reasonable prospect, the judge should not have set the District Judge's order aside. On no basis could the judge legitimately make the order that he did. While Mr Watkinson did not formally concede that, he was unable to put forward any argument in support of the judge's order. He invited us, by a Respondent's Notice, to remit the case for trial. In those circumstances we invited Counsel to address us on the question whether it was reasonably arguable that the tenancy was an assured tenancy.

The legislation

20. Section 23(1) of the Landlord and Tenant Act 1954 provides as follows:

"Subject to the provisions of this Act, this Part of this Act applies to any tenancy where the property comprised in the tenancy is or includes premises which are occupied by the tenant and are so occupied for the purposes of a business carried on by him or for those and other purposes."

21. When the Lease was granted, the choice as regards status would have been between a business tenancy under the 1954 Act and a secure tenancy under the Housing Act 1985, because of the landlord being a local authority. Under the 1985 Act, section 79(1):

"A tenancy under which a dwelling-house is let as a separate dwelling is a secure tenancy at any time when the conditions described in sections 80 and 81 as the landlord condition and the tenant condition are satisfied."

That is, however, subject to exceptions set out in Schedule 1, of which paragraph 11 is as follows:

"A tenancy is not a secure tenancy if it is one to which Part II of the Landlord and Tenant Act 1954 applies."

22. After the sale of the freehold by Hackney to the Claimant, the landlord condition would not have been satisfied. Accordingly, at that stage the choice was between a business tenancy and an assured tenancy under the Housing Act 1988. By section 1(1) of that Act:

"A tenancy under which a dwelling-house is let as a separate dwelling is for the purposes of this Act an assured tenancy if and so long as

(a) the tenant or, as the case may be, each of the joint tenants is an individual; and

(b) the tenant or, as the case may be, at least one of the joint tenants occupies the dwelling-house as his only or principal home; and

(c) the tenancy is not one which, by virtue of subsection (2) or subsection (6) below, cannot be an assured tenancy."

Subsection 1(2) refers to exceptions set out in Schedule 1. Paragraph 4 of that Schedule is:

"A tenancy to which Part II of the Landlord and Tenant Act 1954 applies."

Did Part II of the 1954 Act apply to the tenancy after January 2000?

23. On Mr Grant's evidence I am content to assume, without deciding, that the 1985 Act and, in turn, the 1988 Act applied to the tenancy created by the Lease, unless they were excluded by the application of the 1954 Act.
24. The question posed by section 23 of the 1954 Act is a factual one. Does the tenant occupy all or part of the premises comprised in the tenancy, and if so does he occupy them, or part of them, for the purposes of a business carried on by him, or for those and other purposes?
25. On the basis of the facts to which I have referred already, it seems difficult to see how there could be any doubt as to that. Mr Grant does occupy the premises, and he does so, as regards the ground floor and basement, for the purposes of his shop business carried on in that part of the premises. He says in his witness statement that he did not carry on business there until January 2000. Even if that is so, from that date onwards he did occupy the shop for the purposes of that business, and he was still doing so at the date when the proceedings were commenced and at the date of the hearing.
26. Mr Watkinson contends that the question is not as simple as that. He relies on observations in the Court of Appeal in Cheryl Investments v Saldanha [1978] 1 W.L.R. 1329. The court was there considering two cases which raised issues as to whether the tenant occupied the premises for the purposes of his business. They were both borderline cases on the facts.

i) In the first case, the landlords let to the tenant a residential flat consisting of a bed-sitting room, bathroom and toilet and an entrance hall with a cooker in it. The tenant was a partner in a business which did not have trade premises and which the partners carried on from their respective homes. The tenant installed a telephone in the flat, and placed office equipment consisting of a table, a typewriter, files and a lot of paper in the entrance hall. Notepaper headed with the name of the business gave as the telephone number of the business that of the flat. The tenant issued business statements on the notepaper from the flat and had frequent visitors to the flat carrying brief cases. There was evidence that a considerable volume of trade was carried on from the flat.

ii) In the second case, the residue of a lease of a maisonette constructed as a separate dwelling was assigned to the tenant. The tenant was a medical practitioner who had his consulting rooms nearby and who took the lease in order to live in the maisonette as his home. However, he wished to see patients at the maisonette occasionally and obtained the landlords' consent to do so. He occupied the maisonette as his home, but entered the address of both his consulting rooms and the maisonette in the Medical Directory and printed the telephone numbers for both addresses on the separate notepaper he had for each address. In fact the only professional use he made of the maisonette was to see a patient there once or twice a year in an emergency.

27. In both cases the question was whether the tenancy was protected by the Rent Acts or whether Part II of the 1954 Act applied instead. As under the Housing Acts, the tenancy would have been protected under the Rent Acts unless it was one to which Part II of the 1954 Act applied. Lord Denning MR explained the issue, in general terms, as follows, at [1978] 1 W.L.R. 1333-4:

"There was much discussion before us as to the meaning of the Business Tenancy Act (I use those words because I think 'Landlord and Tenant Act 1954, Part II' is a little confusing), especially the word 'purposes' in section 23(1); and the time or times at which those 'purposes' had to exist; and the effect of a change by the tenant in the use to which he put the property. Could he take himself in or out of the Act at his option? I found all these matters so confusing that I do not propose to attempt a solution today. I am only going to take four simple illustrations to show how the statute works; for they will suffice for our present cases.

First, take the case where a professional man is the tenant of two premises: one his office where he works; the other his flat, conveniently near, where he has his home. He has then a 'business tenancy' of his office; and a 'regulated tenancy' of his home. This remains the situation even though he takes papers home and works on them at evenings or weekends and occasionally sees a client at home. He cannot in such a case be said to be occupying his flat 'for the purposes of' his profession. He is occupying it for the purpose of his home, even though he incidentally does some work there: see Sweet v Parsley [1970] AC 132 at 155 per Lord Morris of Borth-y-Gest.

Second, take the case where a professional man takes a tenancy of one house for the very purpose of carrying on his profession in one room and of residing in the rest of the house with his family, like the doctor who has a consulting room in his house. He has not then a 'regulated tenancy' at all. His tenancy is a 'business tenancy' and nothing else. He is clearly occupying part of the house 'for the purposes of' his profession, as one purpose; and the other part for the purpose of his dwelling as another purpose. Each purpose is significant. Neither is merely incidental to the other.

Third, suppose now that the first man decides to give up his office and to do all his work from his home, there being nothing in the tenancy of his home to prevent him doing it. In that case he becomes in the same position as the second man. He ceases to have a 'regulated tenancy' of his home. He has only a 'business tenancy' of it.

Fourth, suppose now that the second man decides to give up his office at home and to take a tenancy of an office elsewhere so as to carry on his profession elsewhere. He then has a 'business tenancy' of his new premises. But he does not get a 'regulated tenancy' of his original home, even though he occupies it now only as his home, because it was never let to him as a separate dwelling, unless the landlord agrees to the change."

28. Lord Denning decided the two cases with the help of these illustrations. He held that in the second case the tenant occupied the flat for only one significant purpose, namely as his home. Such use as he made of it for his profession was not significant, and was only incidental to his use of it as his home. On the facts, however, in the first case he said (at page 1336) that the tenant's business use of the flat was "a significant purpose for which he was occupying the flat as well as a dwelling. It was his only home and he was carrying on his business from it." He therefore held that the 1954 Act applied in that case, though not in the second case.
29. Geoffrey Lane LJ observed that the Landlord and Tenant Act 1927 had spoken of premises "used wholly or partly for carrying on thereat any trade or business". He said this about the distinction between the concepts of premises used for carrying on a business and premises occupied for the purposes of a business, at 1338-9:

"It is obviously a very fine distinction, but the words in section 23 seem to have been used in an attempt to make it absolutely clear that activities on the premises which are merely incidental to residential occupation do not bring the premises within the section although they may properly be described as using them for carrying on a trade or business. The businessman, for example, who takes work home in the evening which he does in a study set aside for the purpose may very well be using the premises partly for carrying on thereat a business, but he could scarcely be said to be occupying the premises for the purposes of a business, any more than the person who watches the television regularly every evening can be said to be occupying his house for the purpose of watching television. It is only if the activity is part of the reason for, part of his aim and object in occupying the house that the section will apply. Lord Morris of Borth-y-Gest expressed the concept clearly when dealing with the meaning of the words of section 5 of the Dangerous Drugs Act 1965 in Sweet v Parsley [1970] AC 132 at 154–155:

'It seems to me, therefore, that the words "premises … used for the purpose of smoking cannabis" are not happily chosen if they were intended to denote premises in which at any time cannabis is smoked. In my opinion, the words "premises used for any such purpose …" denote a purpose which is other than quite incidental or casual or fortuitous; they denote a purpose which is or has become either a significant one or a recognised one though certainly not necessarily an only one.'

As is so often the case in matters of this kind it will in the end come down to a question of degree, and borderline cases will produce their usual difficulties."

Geoffrey Lane LJ agreed with Lord Denning as to the result on the facts of the two cases, as did Eveleigh LJ.

30. We were also shown the recent decision of this court in Patel v. Pirabakaran [2006] EWCA Civ 685 in which the court held that premises which included both business and residential accommodation were "let as a dwelling" within the meaning of the Protection from Eviction Act 1977, so that the landlord had to obtain a court order in order to recover possession. That is a quite separate question from that which we have to consider, though it is consistent with the position explained to District Judge Manners, namely that because there was a residential element, the landlord had to take proceedings for possession.
31. Reverting to what the Court of Appeal said in Cheryl Investments, Mr Watkinson placed reliance on Lord Denning's reference to business use being incidental to use as a home, in the second case on the facts, and on Geoffrey Lane LJ's phrase that the business activity has to be "part of the reason for, part of his aim and object in occupying the house" if it is to count as occupation for the purposes of a business and bring into play section 23 of the 1954 Act.
32. Mr Watkinson's adroit use of these phrases, to suggest that it was relevant to enquire into Mr Grant's subjective motive or intention at the time of taking the tenancy, must not be allowed to obscure the reality of the case. This is a tenancy under which not only was Mr Grant allowed to use the ground floor and basement for business purposes, and for no other purpose, but he was positively required to do so, by virtue of clause 4(20) of the Lease. He has in fact done so, according to his own evidence, from the time when the premises were fit for such use. No doubt part of his purpose in taking the Lease was to provide himself with a home, but the terms of the Lease are not compatible with a proposition that, once the shop was open for business, his use of that part of the premises was only incidental to his use of the other part of the premises as his home, or that running the shop was not part of the reason for, or part of his aim and object in, occupying the premises.
33. In my judgment the case is plainly within Lord Denning's second illustrative example. I am content to assume that, until the date on which Mr Grant started to trade from the shop, the 1954 Act did not apply, because until then he did not occupy any part of the premises for the purposes of any business. It may be, therefore, that until then, with Hackney as landlord, he had a secure tenancy. That situation changed, however, when he did start to trade at the shop, and from then on I can see no possible argument on his part for saying that Part II of the 1954 Act did not apply.
34. It follows that the District Judge was right in her approach to the case. The order she made was one which she was entitled to make, and was reached on the correct basis. It should not have been set aside on appeal. I would allow the appeal and make an order for possession in 28 days, unless by that date the Defendant pays whatever sum is now due by way of rent arrears, in accordance with section 138(3) of the County Courts Act 1984, and I would also make an order for payment of that sum.
35. From what we were told, not only has the overall arrears total been reduced to below £19,000, but Mr Grant believes that he has the prospect of receiving a substantial sum from Hackney by way of backdated housing benefit, which would enable him to pay off most of those arrears, leaving a much more manageable sum to be cleared off over a period. If Mr Grant's representatives can persuade the Claimant that there is a real prospect of a large sum becoming available from this source, and of the balance being cleared over a reasonably short period, then I dare say that the Claimant will not insist on immediate enforcement of the order. The material before us does not amount to enough for us to make an order by way of relief from forfeiture on this basis. Mr Grant still has his rights to seek relief under section 138 of the County Courts Act 1984.

The landlord's alternative reliance on ground 8 under the Housing Act 1988

36. One point taken by Mr Frith was that, even if the tenancy had been an assured tenancy, Mr Grant ought not to be allowed the opportunity to argue that at a remitted hearing, because there would have been no discretion to refuse the Claimant an order for possession, ground 8 in Schedule 2 to the 1988 Act applying because more than a quarter's rent was more than three months in arrear. It is not necessary to decide that point, but it seems to me that the judge could properly have remitted the case, if the point was otherwise arguable, notwithstanding this submission on Mr Frith's part. Before taking proceedings for possession of premises let on an assured tenancy, the landlord must serve a notice under section 8 of the 1988 Act, must specify the ground or grounds on which possession will be sought, and must begin the proceedings within time limits required by the Act. The point of this requirement is to enable the tenant to take steps to preserve the tenancy by remedying the state of affairs which is to be relied on. One of the grounds on which a landlord can rely, and which allows the court no discretion, is ground 8 under which, as relevant to this case, at least one quarter's rent is more than three months in arrears both at the date of service of the notice under section 8 and at the date of the hearing. The court does have power to waive the requirement of a notice under section 8, if it considers it just and equitable, but if it does so, the landlord cannot rely on ground 8: see section 8(5). Therefore, if there had been an assured tenancy, the Claimant could have brought new proceedings for possession relying on ground 8, but it could only have done so after giving a section 8 notice to that effect, and the tenant would therefore have known that, in order to resist this mandatory ground for possession, he would have to try to reduce the arrears so far that, by the time of the hearing, less than a quarter's rent was outstanding. That may or may not have been feasible, but it would have justified the judge in remitting the case, if it had been arguable that the tenancy was an assured tenancy, because successful reliance on ground 8 would not have been a foregone conclusion.

The conduct of the proceedings

37. Much of the Claimant's grounds of appeal and original skeleton argument were devoted to complaints about the judge's conduct of the proceedings. That was an element in the reasons for which Jonathan Parker LJ granted permission for what is a second appeal governed by section 55 of the Access to Justice Act 1999. It is unnecessary to refer to that conduct in order to dispose of the appeal, because regardless of that it is clear, both that the judge's order could not be justified on any basis and that there was no good ground for remitting the case, as Mr Watkinson had invited the judge, and in turn this court, to do. Nevertheless it is right to say something about the course of the proceedings.
38. As I have said, at the hearing before the District Judge and at the first two hearings before Judge Cotran, Mr Grant was not professionally represented. It was therefore understandable that the judge might feel the need to be more interventionist in that situation than he would if both parties were professionally represented. Mr Grant had, however, had the benefit of lawyers representing him earlier in the proceedings, who plainly had addressed the question of the basis on which he could properly resist the claim for possession, and had not taken the point that the tenancy was an assured tenancy. For the reasons given above, this is likely to have been because they would have seen that it could not be argued to be an assured tenancy on the facts.
39. It is perhaps unfortunate that the questions of an extension of time and permission to appeal were directed to be heard separately. The main objection to the application for an extension was that there was no prospect of success on the appeal, so that the two points could well have been decided at one hearing. Given that they were to be decided separately, I would not criticise the judge for granting an extension of time at the first hearing, the delay itself having been small.
40. At the next stage, it seems to me that it was wrong for the judge to grant permission to appeal without requiring that the ground or grounds on which the appeal was to proceed be specified in some way. Of course, Mr Grant could not be expected to do it properly without help, and Mr Shuter may not have been able to help sufficiently for the purpose. In that situation the judge should have undertaken an exercise, in which Mr Frith would have had to have assisted, of seeking to define the issue, so that both the court and the parties would thereafter have known what the point was. The judge rightly regarded all the existing grounds of appeal as hopeless. It was therefore seriously unsatisfactory to allow the appeal to proceed with no statement of the issue or issues to be relied on.
41. It is also unfortunate that, at the hearing of the appeal, Mr Frith's submissions were cast in such a way as to allow the judge to suppose that there might be some substance in the question whether the tenancy might have been an assured tenancy. He did attempt to persuade that judge that, even if there was an arguable point on that, he ought not to set aside the order and remit the case, because of the ground 8 point to which I have referred. It is possible that this led the judge to think that he could properly set the order aside and impose a suspended order instead of remitting the case for a decision on the facts.
42. Nevertheless, I have to say that the transcripts of the three hearings show that these were conducted in a thoroughly unsatisfactory manner by the judge. Repeatedly he gave an appearance of bias in favour of the tenant. At several points what he said appeared to amount to deciding the application in favour of the tenant without having heard Counsel for the landlord. The effect of that was not effectively moderated by his then saying to Counsel, for example "I will hear you. I am not stopping you from saying everything you like" (transcript 27 January pages 11-12), especially since he continued to interrupt Counsel's attempt to develop his submissions.
43. At the second hearing he said, for example:

"You are entitled to the protection of the law and he is entitled to the protection as a very long standing tenant and he has more rights than you do, as you well know. He has residential rights and he has shop premises rights." (transcript 6 February, appeal bundle page 76)

At the third hearing he made the comment, unfortunate on the part of a judge, even in passing, "I do not care what the law says" (transcript 12 April appeal bundle page 125).

44. At each of the three hearings Mr Frith had to seek to insist that the judge hear his arguments, and had great difficulty in developing any point. It seems to me that the judge displayed impatience with Mr Frith's submissions to an excessive degree, to the extent of giving an appearance of bias against the Claimant, all the more so taken with some more direct indications to that effect, and of prejudging the case.
45. In his judgment on the appeal he said, at paragraph 31, that it was wrong and unjust for the District Judge to have eliminated a consideration of the residential aspects of the case, and he went on at paragraph 32 to give a clear indication of his view of the justice of the case as meaning justice to the tenant:

"In my judgment it is a serious error in this case because this man had been a tenant of Hackney for a very very long time, paying his rent. The problem arose when the new owners, the claimants, took over. He wanted to buy, but he did not buy, so looking at it from a justice point of view it seems that by this judgment this man was deprived of a right which he clearly had"

by which in context the judge appears to mean the right to statutory protection for his residential property. As with a number of the judge's other observations, that displays a distinctly one-sided view of the case, and an assumption that the tenant did have statutory protection, which had not been investigated, still less established.

46. However, as I have said, it is not necessary to decide the case on any ground concerned with the judge's conduct of the hearings. For reasons already given the order which the judge made was one which cannot be justified on any basis, and there is no proper ground on which he could have set aside the order originally made by the District Judge.

Lord Justice Leveson

47. I agree

Master of the Rolls

48. I also agree.