Howard de Walden Estates Ltd v Aggio
| Jurisdiction | England & Wales |
| Judge | BARONESS HALE OF RICHMOND,LORD NEUBERGER OF ABBOTSBURY,LORD HOFFMANN,LORD SCOTT OF FOSCOTE,LORD WALKER OF GESTINGTHORPE |
| Judgment Date | 25 June 2008 |
| Neutral Citation | [2008] UKHL 44 |
| Date | 25 June 2008 |
| Court | House of Lords |
[2008] UKHL 44
HOUSE OF LORDS
Appellate Committee
Lord Hoffmann
Lord Scott of Foscote
Lord Walker of Gestingthorpe
Baroness Hale of Richmond
Lord Neuberger of Abbotsbury
and others
and others
Appellant in first appeal:
Edwin Johnson QC
Adam Smith
(Instructed by Bircham Dyson Bell LLP)
Appellant in second appeal:
Anthony Radevsky
(Instructed by Forsters LLP)
Respondents in first appeal:
Philip Rainey
(Instructed by Pemberton Greenish)
Respondents in second appeal:
Judith Jackson QC
Katharine Holland
(Instructed by Speechly Bircham LLP)
My Lords,
I have had the advantage of reading in draft the speech of my noble and learned friend Lord Neuberger of Abbotsbury. For the reasons he gives, with which I agree, I too would allow these appeals.
My Lords,
I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Neuberger of Abbotsbury and for the reasons he gives, with which I am in full agreement, I, too, would allow these appeals.
My Lords,
I am in full agreement with the opinion of my noble and learned friend Lord Neuberger of Abbotsbury, which I have had the advantage of reading in draft. I too would allow these appeals.
My Lords,
For the reasons given in the opinion of my noble and learned friend, Lord Neuberger of Abbotsbury, with which I entirely agree, I too would allow these appeals and restore the decisions of the first instance judge in each case.
My Lords,
Chapter II of Part I of the Leasehold Reform, Housing and Urban Development Act 1993 confers a right on "a qualifying tenant of a flat" to acquire a new long lease of the flat from his landlord. The question raised on these two appeals is whether the lessee of premises (such as a block of flats), which includes property other than flats, can be a qualifying tenant of any of the flats comprised in those premises This issue turns upon the proper construction of the 1993 Act, which has been amended from time to time, most notably by the Housing Act 1996 and the Commonhold and Leasehold Reform Act 2002.
The factual and procedural history
In each of these two cases, the whole (or most) of a self-contained building converted into a number of self-contained units, was let under a lease ("the head lease") for some 60 years at a ground rent. In Cadogan, the building has six storeys, of which the lower three are used as offices, which are in part underlet, and the upper three consist of a maisonette, which had been subject to an assured shorthold tenancy, but is currently vacant. In Howard de Walden, the five storeys of a building have been converted into self-contained residential flats, of which the upper three are subject to long underleases, and the lower two are let by assured short-hold tenancies. Each building includes common parts (that is internal parts, such as entrance hall, landings and stairs, used by all or some occupiers) and external areas for parking. These common parts and parking areas are included in the respective head leases, but not in any of the underleases, although the underlessees have been granted rights over them in their respective underleases.
In each case, the head lessee served notice on the freeholder pursuant to Chapter II of Part I of the 1993 Act ("Chapter II") to acquire, in Cadogan, a new lease of the maisonette consisting of the three upper floors (which is a "flat" for the purposes of the 1993 Act), and, in Howard de Walden, a new lease of the ground floor flat, and, subsequently, a new lease of the basement flat. In each case, the freeholder served a counter-notice denying the head lessee's claimed right, contending that the head lessee was not "a qualifying tenant" of the flat concerned.
This led to proceedings in the County Court, in which the judge (Judge Crawford Lindsay QC in Cadogan, and Judge Paul Collins in Howard de Walden) held that the head lessee was "a qualifying tenant" of the relevant flat. These conclusions followed a decision of Mr David Donaldson QC, sitting as a deputy High Court judge in Maurice v Hollow-Ware Products Ltd [2005] 2 EGLR 71. The freeholders' appeals were heard together by the Court of Appeal [2007] EWCA Civ 499, [2008] Ch 26, who allowed both appeals. The head lessee in each case now appeals to your Lordships' House.
Chapter I of Part I, which extends from sections 1 to 38, of the 1993 Act ("Chapter I") is entitled "Collective enfranchisement in case of tenants of flats". It contains provisions to enable lessees in blocks of flats, who are able to satisfy certain conditions, to get together to enfranchise - viz to acquire the freehold interest in the block.
Chapter II is entitled "Individual right of tenant of flat to acquire new lease". It begins with section 39 which is concerned with identifying the type of lessee who is entitled to have the right to a new long lease. In its current form, it provides as follows:
"(1) This Chapter has effect for the purpose of conferring on a tenant of a flat, in the circumstances mentioned in subsection (2), the right, exercisable subject to and in accordance with this Chapter, to acquire a new lease of the flat on payment of a premium determined in accordance with this Chapter.
(2) Those circumstances are that on the relevant date for the purposes of this Chapter-
(a) the tenant [has for the last two years been] a qualifying tenant of the flat; …
(3) The following provisions, namely-
(a) section 5 (with the omission of subsections (5) and (6)),
(b) section 7, …
shall apply for the purposes of this Chapter as they apply for the purposes of Chapter I; and references in this Chapter to a qualifying tenant of a flat shall accordingly be construed by reference to those provisions. …
(4) For the purposes of this Chapter a person can 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.
…
(8) …'the relevant date' … means the date on which notice of the claim is given … under section 42."
Section 5, part of which is incorporated by reference into section 39 by subsection (3)(a), is in these terms so far as relevant:
"(1) Subject to the following provisions of this section, a person is a qualifying tenant of a flat for the purposes of this Chapter if he is tenant of the flat under a long lease…
(2) Subsection (1) does not apply where-
(a) the lease is a business lease; ….
(3) No flat shall have more than one qualifying tenant at any one time.
(4) Accordingly-
(a) where a flat is for the time being let under two or more leases to which subsection (1) applies, any tenant under any of those leases which is superior to that held by any other such tenant shall not be a qualifying tenant of the flat for the purposes of this Chapter …".
By section 5(5), which applies to Chapter I but not to Chapter II, where a person would otherwise be a qualifying tenant of three or more flats in a building, those flats shall be regarded as having no qualifying tenant. Section 7, similarly incorporated into Part II by section 39(3)(b), defines a "long lease" as being, subject to certain immaterial exceptions, a lease granted for 21 years or more.
Section 40 identifies "the landlord for the purposes of this Chapter". Section 42 provides for a claim under Chapter II to be initiated by a "tenant's notice" which must contain "sufficient particulars of [the] flat to identify the property to which the claim extends" - see section 42(3)(b)(1). By subsection (3)(c), the tenant's notice must also state the premium which the tenant proposes to pay, and, by subsection (3)(f), the date by which the landlord must give a counter-notice (which must be at least two months after the date of the notice). By section 45, the landlord's counter-notice must be served by the specified date, and must either admit or not admit the tenant's right. It must also state which of the terms proposed in the tenant's notice are agreed or rejected, and, in relation to those which are rejected, it must state the landlord's counterproposals.
The County Court is given powers to determine the validity of the tenant's notice under section 46. By section 49(1), if the landlord fails to give a counter-notice, the County Court may, subject to certain exceptions, "make an order determining, in accordance with the proposals contained in the tenant's notice, the terms of acquisition".
Section 56 (1) provides that, where a qualifying tenant has a right to acquire a new lease and has given a notice in accordance with section 42, save where Chapter II otherwise provides:
"the landlord shall be bound to grant to the tenant, and the tenant shall be bound to accept -
(a) in substitution for the existing lease, and
(b) on payment of the premium payable under Schedule 13…
a new lease of the flat at a peppercorn rent for a term expiring 90 years after the term date of the existing lease."
Section 57 is an important section for present purposes, and it includes the following:
"(1) …[T]he new lease to be granted to a tenant under section 56 shall be a lease on the same terms as those of the existing lease, as they apply on the relevant date, but with such modifications as may be required or appropriate to take account-
(a) of the omission from the new lease of property included in the existing lease but not comprised in the flat;
(b) of alterations made to the property demised since the grant of the existing lease; or
(c) in a case where the existing lease derives (in accordance with...
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