Charlotte Abigail Reiner v Triplark Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Holroyde,Lord Justice David Richards,Lady Justice Arden |
| Judgment Date | 04 October 2018 |
| Neutral Citation | [2018] EWCA Civ 2151 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: C3/2017/1020T |
| Date | 04 October 2018 |
[2018] EWCA Civ 2151
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL (LANDS CHAMBER)
His Honour Judge Huskinson
LRX/49/2016
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Arden
Lord Justice David Richards
and
Lord Justice Holroyde
Case No: C3/2017/1020T
Edwin Johnson QC (instructed by Payne Hicks Beach) for the Appellants
Brie Stevens-Hoare QC and Stan Gallagher (instructed by Hamlins LLP) for the Respondent
Hearing dates: 16–17 May 2018
Introduction
This appeal arises out of the sale of a flat held on a long lease. The first appellant (Ms Reiner) was the seller and the second appellant (Mr Wismayer) was the buyer.
Consent to the assignment of the lease, or to Ms Reiner subletting or parting with possession of the flat, was required from the landlord under a covenant in the lease (the covenant). Management of the block of flats containing Ms Reiner's flat had been assumed by a right to manage company, Northwood Hall RTM Company Limited (the RTM Company), in accordance with the Commonhold and Leasehold Reform Act 2002 (the 2002 Act). Under provisions of that Act to which I refer below, responsibility for giving or withholding consent was therefore vested in the RTM Company. However, it was not permitted to give consent without first giving 30 days' notice to the landlord, thereby enabling the landlord to object. It was found below that Ms Reiner had applied to the RTM Company for consent to the assignment. The RTM Company, of which at that time Mr Wismayer was the sole director, did not give notice to the landlord. This was a deliberate decision by Mr Wismayer who was concerned that the landlord would object. The RTM Company neither consented nor expressly refused consent to the assignment.
The contract to assign Ms Reiner's interest was completed on 29 July 2015. On 4 August 2015, the landlord, Triplark Limited, the Respondent in this appeal (Triplark), applied to the Land Registry for registration of a restriction to prevent registration of the transfer to Mr Wismayer. On 25 September 2015, it applied to the First-tier Tribunal for a determination that Ms Reiner had breached the covenant. The assignment has not been registered, so that Ms Reiner remains the registered proprietor of the leasehold interest. It is common ground that, unless and until the transfer is registered, there has been no “assignment” to Mr Wismayer for the purposes of the covenant.
On the application made by the landlord, the First-tier Tribunal held that Ms Reiner had parted with possession of her flat in breach of the covenant. On appeal to the Upper Tribunal (Lands Chamber) (HHJ Huskinson) (the UT), which the parties agreed and the UT ordered should proceed by way of a re-hearing, the UT came to the same conclusion.
Two principal issues arise on the appeal. First, did Ms Reiner part with possession of the flat for the purposes of the covenant when the contract to assign was completed? Second, if she did part with possession, was the failure of the RTM Company to give consent an unreasonable withholding of consent within section 1 of the Landlord and Tenant Act 1988 (LTA 1988)?
The facts in more detail
Northwood Hall in Hornsey Lane, London N9 is a block of 194 flats, which, in 2015, was held by Triplark under a head lease dated 19 January 1977. Ms Reiner is the registered proprietor of a leasehold interest in Flat LG-01 under an Underlease dated 12 May 1978 and granted for a period of a little over 123 years.
Under the covenant, contained in clause 3(8)(ii) of the Underlease, the lessee agrees that she will:
“Not at any time assign sublet or part with possession of the whole of the flat or permit or suffer the same to be done without the previous written consent of the Lessors such consent not to be unreasonably withheld.”
The reversionary interest under the Underlease was, in 2015, held by Tripark, under its headlease of Northwood Hall, which interest included another 29 flats which were held “in hand”, i.e, directly out of the headlease and which were not subject to long underleases. Triplark also held one further flat on a long underlease. In 2011, the management of the block was taken over by the RTM Company.
In March 2015, Ms Reiner put her flat on the market. Problems with a major overhaul of the heating system for the block led to a polarisation of views among the tenants about the RTM Company and its board, which appears to have adversely affected her ability to secure a buyer. In June 2015, she contacted the RTM Company to obtain necessary information, leading to communications with Mr Wismayer, its sole director following the resignation of the other three directors in May and June 2015. Mr Wismayer suggested that he might purchase the flat. On 26 June 2015 contracts were exchanged for the purchase of the flat by Mr Wismayer at a price of £445,000, with a deposit of 10% paid at that time. Completion was fixed for 29 July 2015.
The UT found that by 18 June 2015 Ms Reiner had through her communications with Mr Wismayer applied to the RTM Company for the consent required by the covenant. The RTM Company failed to give notice of this to Triplark. Mr Wismayer took a conscious decision not to do so, because Triplark, by virtue of its direct control, in 2015, of 30 of the other flats, was in the opposing camp to Mr Wismayer and he suspected that, on account of that, it would refuse its consent. He did not inform Ms Reiner or her solicitors that he had not notified Triplark nor did the RTM Company give its consent in writing under the covenant
The contract was completed on 29 July 2015. The full amount due by way of the purchase price was paid by Mr Wismayer to Ms Reiner. Ms Reiner moved out of the flat with her possessions and gave up the keys to Mr Wismayer.
The statutory provisions
The issues on this appeal raise questions of the construction of, and interplay between, the LTA 1988 and the 2002 Act. Section 1 of the LTA 1988 applies to covenants in tenancies against assigning, underletting, charging or parting with possession of the demised premises without the consent of the landlord, where the covenant is subject (as it is in this case) to the qualification that consent is not to be unreasonably withheld. Section 1(3) provides:
“(3) Where there is served on the person who may consent to a proposed transaction a written application by the tenant for consent to the transaction, he owes a duty to the tenant within a reasonable time—
(a) to give consent, except in a case where it is reasonable not to give consent,
(b) to serve on the tenant written notice of his decision whether or not to give consent specifying in addition—
(i) If the consent is given subject to conditions, the conditions,
(ii) If the consent is withheld, the reasons for withholding it.”
By section 1(6)(c), it is for the landlord or other person who owed any duty under section 1(3) “if he did not give consent and the question arises whether it was reasonable for him not to do so, to show that it was reasonable”.
Section 2 provides that, in a case where the landlord or other recipient of an application for consent believes there to be another person who may consent (and who he does not believe has received the application or a copy of it), he is under a duty to the tenant to take reasonable steps to secure that a copy of the application is received by that other person within a reasonable time.
Section 4 provides that “A claim that a person has broken any duty under this Act may be made the subject of civil proceedings in like manner as any other claim in tort for breach of statutory duty”.
The 2002 Act introduced the regime whereby tenants of properties held under long leases can require the transfer of the management role from the landlord to a right to manage company.
Sections 98 and 99 make provision in relation to the grant of approvals under long leases of premises to which an RTM company has been appointed. Section 98(2) provides that where a landlord “has functions in relation to the grant of approvals to a tenant under the lease, the functions are instead functions of the RTM company”.
Section 98(4) is of particular importance in the present case:
“The RTM company must not grant an approval by virtue of subsection (2) without having given—
(a) in the case of an approval relating to assignment, underletting, charging, parting with possession, the making of structural alterations or improvements or alterations of use, 30 days' notice, or
(b) in any other case, 14 days' notice,
to the person who is, or each of the persons who are, landlord under the lease”.
Section 99(1) provides:
“If a person to whom notice is given under section 98(4) objects to the grant of the approval before the time when the RTM company would first be entitled to grant it, the RTM company may grant it only—
(a) in accordance with the written agreement of the person who objected, or
(b) in accordance with a determination of (or on an appeal from) the appropriate tribunal.”
The words in section 99(1) “before the time when the RTM company would first be entitled to grant [approval]” refer back to the times specified in section 98(4). If, as here, the covenant precluded the landlord from unreasonably withholding its consent, the same restriction applies to the agreement contemplated by section 99(1)(a): see section 99(2). If objection is made, notice of it must be given to the RTM company and the tenant: section 99(4).
An application to the tribunal for a determination under section 99(1)(b) may be made by, among others, the landlord.
Section 107 provides for the enforcement of duties imposed by these provisions:
“(1) The county...
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Table of Cases
...(Europe) Ltd [2018] UKSC 57, [2018] 3 WLR 1603, [2018] PLSCS 198, [2019] 1 P & CR D25 xi, 84–86, 189, 237 Reiner v Triplark Ltd [2018] EWCA Civ 2151, [2019] 1 WLR 2003, [2019] HLR 7, [2019] 1 P & CR 12 171 Renals v Cowlishaw (1879) 11 Ch D 866, 48 LJ Ch 830, 28 WR 9, CA; (1878) 9 Ch D 125, ......
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Transfer of Burden
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