Decision Nº LRA 123 2012. Upper Tribunal (Lands Chamber), 18-09-2013
| Jurisdiction | UK Non-devolved |
| Judge | Martin Rodger QC, Deputy President |
| Date | 18 September 2013 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRA 123 2012 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2013] UKUT 0443 (LC)
Case Number: LRA/123/2012
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LEASEHOLD ENFRANCHISEMENT – flat – effect of covenant to use only as a dwelling for lessee and family – whether sub-letting prohibited – power to vary terms of lease on enfranchisement – Leasehold Reform, Housing and Urban Development Act 1993, s.57(6) - appeal dismissed
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
LEASEHOLD VALUATION TRIBUNAL FOR THE LONDON
RENT ASSESSMENT PANEL
BETWEEN:
AARON WILLIAM M BURCHELL Appellant
and
RAJ PROPERTIES LIMITED Respondent
Re: Third Floor Flat
344 City Road
London EC1V 2PY
Before: Martin Rodger QC, Deputy President
Sitting at: 43-45 Bedford Square, London WC1B 3AS
on 5 September 2013
Mr Sandham instructed by Housing and Property Law Partnership, solicitors, for the appellant
Mr Matthew Boyden, instructed by Mr Ajay Arora, in-house solicitor for the respondent
© CROWN COPYRIGHT 2013
The following cases are referred to in this decision:
Raj Properties Limited v Costello LON/00AM/LBC/2007/0025
Sweet & Maxwell Limited v Universal News Services Limited [1964] 2 QB 699
Lewis Lee’s application [2012] UKUT 125 (LC)
Direct Travel Insurance v McGeown [2003] EWCA Civ 1606; [2004] 1 ALL ER (Comm) 609
Gordon v Church Commissioners for England LRA/110/2006 (Lands Tribunal)
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If a lessee covenants to use a flat as a private dwelling for himself and his family and for no other purpose, is he thereby precluded from sub-letting the flat to a person who is not a member of his own family? If the answer to that question is affirmative, has a leasehold valuation tribunal the power to vary such a covenant so as to permit the sub-letting of the flat under the terms of a new lease to be granted pursuant to Part I of the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”).
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Those two short questions arise on this appeal from a decision of the leasehold valuation tribunal for the London Rent Assessment Panel (“the LVT”) given on 20 May 2011, subsequently corrected by a correction certificate issued on 12 March 2012.
The relevant statutory provisions
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The 1993 Act confers the right on qualifying tenants of flats to acquire a new lease of their flat on the terms and subject to the procedures contained in Chapter II of Part 1 of the Act. The new lease is in substitution for the existing lease and is granted at a peppercorn rent for a term expiring 90 years after the term date of the existing lease.
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Section 57(1) of the 1993 Act establishes the general principle that the new lease is to be “on the same terms as those of the existing lease, as they apply on the relevant date”. Subsections (1) to (5) of section 57 identify a number of specific exceptions to that basic rule. Section 57(6) then provides that:
“Subsections (1) to (5) shall have effect subject to any agreement between the landlord and tenant as to the terms of the new lease or any agreement collateral thereto; and either of them may require that for the purposes of the new lease any term of the existing lease shall be excluded or modified in so far as –
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It is necessary to do so in order to remedy a defect in the existing lease or
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It would be unreasonable in the circumstances to include, or include without modification, the term in question in view of changes occurring since the date of commencement of the existing lease which affect the suitability on the relevant date of the provisions of that lease.”
The facts
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From the facts found by the LVT and the documents included in the appeal bundle I take the following facts as the basis of my consideration of the appeal.
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Mr Burchell, the appellant, is the lessee of a flat (“the Flat”) on the 3rd floor of a converted house at 344 City Road, London EC1V 2PY (“the Building”). Raj Properties Limited, the respondent, owns the freehold of the Building and is the appellant’s immediate landlord under the terms of a lease of the Flat granted on 11 May 1988 by Inner City Estates Limited to Mr Robert McCairley (“the Lease”).
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The Lease was granted for a term of 99 years from 31 December 1987. The parties are referred to throughout the Lease as “the Lessor” and “the Lessee” and on the first reference to those terms they are stated to include “where applicable their respective successors in title”. On 9 November 2007 the appellant acquired the Lease and became the Lessee for the time being.
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The Lease includes at clause 2(16) a covenant by the Lessee with the Lessor:
“To use the flat as a private dwelling for the lessee and his family and for no other purpose”.
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The Lease contains no conventional alienation covenant expressly restricting assignment, sub-letting or other forms of dealing but at clause 2(13) the Lessee covenants:
“Within one calendar month after every assignment transfer charge mortgage or devolution of any interest in the demised premises or any part thereof to give to the Lessor’s Solicitors notice in writing of such assignment transfer charge mortgage or devolution specifying the name and place of abode of the assignee transferee chargee mortgagee or other person in whom the said interest is thereby vested and to pay to the Lessor’s Solicitors a fee of £20 plus VAT for the registration of every such notice”.
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The Flat is one of five flats in the building each of which is let on a long lease granted in a five month period between the end of March and the middle of August 1988; each lease contains a covenant by the Lessor at clause 4(iii) that the remaining flats in the Building would be let on substantially the same terms, and a further covenant that in the event of default the Lessor will enforce each lessee’s obligations at the request (and expense) of any other lessee.
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On 4 February 2010 the appellant gave notice under section 42 of the 1993 Act exercising his right to claim a new lease of the Flat at a peppercorn rent for a term equal to the unexpired residue of the term of the Lease plus a further 90 years. He proposed that the new lease should be substantially on the same terms as the existing Lease. In its subsequent counter-notice the respondent admitted the appellant’s right to a new lease but suggested a number of very minor modifications to the existing terms. The parties failed to reach agreement on those terms or on the premium payable for the new lease and on 22 October 2010 the appellant applied to the LVT for it to determine the terms of acquisition.
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The application came before the LVT on 8 March 2011. By that time a premium of £11,845 had been agreed and the principal issue between the parties was whether the Flat included a small loft area which had been incorporated into the main living room by the removal of a previous ceiling. Apart from trivial drafting points, the only disputed term of the new lease was contained in a rider proposed by the appellant to a deed of grant which had been prepared by the respondent. The applicant’s contentious proposal was that the words “for the lessee and his family” should be deleted from clause 2(16) of the Lease, so that it would become a covenant by the Lessee “to use the flat as a private dwelling and for no other purpose”.
The LVT’s decision
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On 20 May 2011 the LVT issued a decision finding in favour of the appellant that the disputed loft space was part of the demise. It then dealt quite briefly with the only contentious term of the new lease, whether the words “for the lessee and his family” should be deleted from clause 2(16). It recorded the appellant’s submissions that, in principle, a lessee had the right to sublet unless restricted from doing so by clear words, and that clause 2(16) of the Lease contained no words sufficient to prohibit or restrict dispositions. It expressed its conclusion on the dispute in a single sentence at paragraph 22 of its decision where it said:
“The new lease should be granted in the form as amended on pages 100-102 in the bundle: The Tribunal considered that there was no right to delete the user clause.”
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