West Law Report

Head lessee of flats can be a ‘qualifying tenant’

Posted in House of Lords (case), Times Law Report by mrkooenglish on June 29, 2008

From The TimesJune 27, 2008

Head lessee of flats can be a ‘qualifying tenant’
House of Lords
Published June 27, 2008
Howard de Walden Estates Ltd v Aggio and Others
Earl Cadogan and Another v 26 Cadogan Square Ltd Before Lord Hoffmann, Lord Scott of Foscote, Lord Walker of Gestingthorpe, Baroness Hale of Richmond and Lord Neuberger of Abbotsbury Speeches June 25, 2008

A head lessee of a block of flats could be a qualifying tenant of an individual flat in the block so as to be entitled to claim a lease extension for it under the Leasehold Reform, Housing and Urban Development Act 1993.

The House of Lords so held in allowing appeals by head lessees against the decision of the Court of Appeal (Lord Justice Mummery, Lady Justice Arden and Lord Justice Jacob) ([2008] Ch 26) to allow appeals: (i) by Howard de Walden Estates Ltd, the freehold owner of 19 Upper Wimpole St, Westminster, from the decision of Judge Collins in Central London County Court that the head lessees, Les Aggio, Sam Rogoff and David Forecast, could acquire a new lease of one of the flats therein; (ii) by Earl Cadogan and Cadogan Estates Ltd, the freehold owners of 26 Cadogan Square, Victoria, from the decision of Judge Crawford Lindsay, QC, in Central London County Court to similar effect in favour of the head lessee, 26 Cadogan Square Ltd.

Chapter II of Part 1 of the 1993 Act conferred a right on “a qualifying tenant of a flat” to acquire a new long lease of the flat from the landlord on payment of a premium.

By section 5(1), incorporated by reference into section 39, a person was a qualifying tenant “if he is a tenant of the flat under a long lease …” and, by section 39(4), could be “the qualifying tenant of each of two or more flats at the same time, whether he is tenant of those flats under one lease or under two or more separate leases.”

Mr Anthony Radevsky for the head lessees in de Walden; Miss Judith Jackson, QC and Miss Katharine Holland for de Walden Estates. Mr Edwin Johnson, QC and Mr Adam Smith for the head lessee in Cadogan; Mr Philip Rainey for the freeholders.

LORD NEUBERGER said that the question was whether the lessee of premises, such as a block of flats, which included property other than flats, could be a qualifying tenant of any of the flats comprised in those premises.

In each appeal, a self-contained building converted into a number of self-contained units had been let under a lease for 65 years at a ground rent. Each building included common parts such as entrance hall which were included in the respective headleases but not in any of the underleases.

In Cadogan, the building included a maisonette which had been subject to an assured shorthold tenancy but was currently vacant. In de Walden two of the flats were vacant.

In each case the head lessee had served notice on the freeholder under the 1993 Act to acquire a new lease of, respectively, the maisonette and each of the two flats. In each case a counter-notice had been served denying that the head lessee was a qualifying tenant of the flat concerned.

The freeholder in de Walden had contended that a lessee could not be a qualifying tenant if the premises demised by his lease consisted of a building which included a number of flats. The freeholders in Cadogan contended that a lessee could not be a qualifying tenant if his lease included property other than flats.

His Lordship, however, said that it was clear from section 39 of the Act that the lessee of a number of flats could, in relation to each flat, be “a tenant of a flat”. It followed, as a matter of logic, that the lessee of any property which included one or more flats was, in relation to each such flat, “a tenant of a flat”.

On the statutory language, a lessee under a lease which included a flat together with other premises, be it another flat, other flats, or other property of whatever nature, was, according to ordinary principles of interpretation and subject to any clear indication to the contrary in the Act, a “tenant of a flat” for the purpose of Chapter II.

There was no indication to the contrary. The freeholders had argued that it could not have been intended that property investors, whether public companies or private individuals, should normally be able to benefit from the provisions of Chapter II.

However, the notion that the Act was not intended to benefit any lessee other than a resident occupier could not be justified, particularly now that the requirement in the Act as originally drafted for the tenant to have occupied the flat as his home for a stipulated period had been removed by the Common-hold and Leasehold Reform Act 2002.

The freeholders had also pointed to the difficulties in implementing a claim for a new lease where it was by a lessee of a block of flats, or of premises which included property other than flats, as demonstrating that it could not have been intended that they could benefit from Chapter II.

However, any difficulties as to the terms of the new lease or the precise boundaries of the flat to be comprised in it were matters which the members of the Leasehold Valuation Tribunal had the ability, experience and qualifications to deal with. The legislature had left such issues to the good sense of the tribunal.

Lord Hoffmann, Lord Scott, Lord Walker and Lady Hale agreed.

Solicitors: Forsters LLP; Speechley Bircham LLP. Bircham Dyson Bell LLP; Pemberton Greenish.

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