West Law Report

Preservative effect of tenant’s notice

Posted in Times Law Report by mrkooenglish on February 2, 2009

From The TimesJanuary 15, 2009

Preservative effect of tenant’s notice
Court of Appeal
Published January 15, 2009
Portman Estate Nominees (One) Ltd and Another v Ackerman and Another
Before Lord Justice Tuckey, Lord Justice Jacob and Sir William Aldous
Judgment December 16, 2008

Service of a notice by a tenant seeking to acquire a new lease of a flat had the effect of preserving the position pending determination of the claim and did not provide for continuation of only a part of the lease.

The Court of Appeal so held in dismissing an appeal brought by the tenants, Mark Ackerman and Barry Ackerman, against the decision of Judge Cowell, at Central London County Court on November 30, 2006, that a notice under section 8 of the Leasehold Reform Act 1967 served on the landlords, Portman Estate Nominees (One) Ltd and Portman Estate Nominees (Two) Ltd, who were substituted by an order of August 9, 2007, for the original claimants, in respect of 59 Great Cumberland Place, Westminster, was invalid and the tenants were not entitled to enfranchise the freehold.

Paragraph 5 of Schedule 12 to the Leasehold Reform, Housing and Urban Development Act 1993 provides: “(1) Where by a notice under section 42 a tenant makes a claim to acquire a new lease of a flat, then during the currency of the claim and for three months thereafter the lease of the flat shall not terminate …”

Mr Anthony Radevsky for the tenants; Mr Jonathan Gaunt, QC and Mr Edward Cole for the landlords.

SIR WILLIAM ALDOUS said that the tenants contended that they were entitled to acquire the freehold by enfranchisement under the 1967 Act.

The landlords disputed that contention on two grounds. Only the first was relevant, namely that on the date when the claim was made the tenants were no longer tenants of the whole of No 59 under a tenancy to which the 1967 Act applied. That depended upon whether the termination of the lease was prevented by service of a section 42 notice under the 1993 Act.

The landlords were freehold owners of No 59. It was let for a term of 50 years expiring on September 29, 2001, at a ground rent of £225 per annum. That term was assigned to the tenants on May 28, 1998.

No 59 comprised five flats. The tenants resided in Flat 3. By an initial notice served under section 13 of the 1993 Act, the tenants sought collective enfranchisement of No 59. A counter-notice was served and proceedings started. That claim was dismissed on the ground that No 59 did not consist of a single flat. By notice dated September 24, 2001, served under section 42 of the 1993 Act, the tenants claimed to exercise the right to acquire a new lease of Flat 3. Subsequently, the tenants first gave notice to acquire the freehold under section 8 of the 1967 Act and then gave notice claiming to acquire the freehold of No 59 under section 8 of that Act.

The landlords’ case, which succeeded before the judge, was that when the tenants served their notice under section 42 they were no longer tenants of the whole of the property because the lease had expired by effluxion of time on September 28, 2001. To arrive at that conclusion the judge rejected the submission of the tenants that the lease had been extended by service of the section 42 notice on September 24, 2001.

His Lordship accepted the submission of the landlords that the wording of paragraph 5 of Schedule 12 to the 1993 Act was clear. There was no reason why the lease in so far as it demised the flat should not be severed. All that paragraph 5 was doing was to preserve the position pending determination of the claim.

That being so, the only construction which provided a sensible and commercial result and which was consistent with the Act as a whole, limited continuation to the lease in so far as it demised flat 3.

Lord Justice Jacob and Lord Justice Tuckey agreed.

Solicitors: Wallace LLP; Farrer & Co

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