Eugenia Villarosa v Robert Ryan
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 25 July 2018 |
| Neutral Citation | [2018] EWHC 1914 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH-2018-000043 |
| Date | 25 July 2018 |
[2018] EWHC 1914 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (CHD)
Royal Courts of Justice
7 Rolls Building
Fetter Lane
London,
EC4A 1NL
Mr Justice Morgan
Case No: CH-2018-000043
Anthony Radevsky (instructed by SZ Solicitors Feltham) for the Appellant
Stephen Acton (instructed by Kenneth Elliott & Rowe Solicitors) for the Respondent
Hearing dates: 28 and 29 June 2018
Judgment Approved
Introduction
This is an appeal against the order dated 31 January 2018 made by Mrs Recorder McAllister sitting in the County Court at Central London. By her order, the Recorder declared, in effect, that a notice dated 6 June 2016, which was purportedly given under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”), was invalid.
The appeal is brought by Ms Villarosa who became the tenant of the relevant property after the date of the notice. The Respondent to the appeal is Mr Ryan who was at all times the landlord of the relevant property.
The appeal raises two distinct issues. The first issue concerns the meaning and effect of section 42(4A) of the 1993 Act which was introduced into the 1993 Act by section 132 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”). In relation to this first issue, Ms Villarosa failed in the County Court and now seeks to challenge the decision of the Recorder in that respect.
The second issue arises in relation to section 43 of the 1993 Act. As Ms Villarosa had failed in the county court on the first issue, it was not strictly necessary for the Recorder to deal with this point but she did so. The Recorder held that she would have decided the second issue in favour of Ms Villarosa. Mr Ryan has served a Respondent's Notice challenging the Recorder's conclusion on this second issue.
Ms Villarosa must succeed on both issues in order to succeed overall.
Mr Radevsky appeared on behalf of Ms Villarosa and Mr Acton appeared on behalf of Mr Ryan.
The facts
By a lease dated 6 June 1991, Flat 2, 49 Coningham Road, London W12 8BS was demised for a term of 99 years from 6 June 1991. Title to the lease was registered at HM Land Registry under title number NGL 686916.
On 15 February 1999, following an assignment to him of the term of the lease, Mr Louis Vambeck became the registered proprietor in relation to the lease under the above title number.
By 19 March 2001, the Respondent, Mr Ryan had become (and thereafter remained) the sole registered proprietor of the reversion on the lease. The reversion was registered at HM Land Registry under title number LN124864.
On 4 December 2007, Mr Vambeck died leaving a will, naming executors. On 27 April 2010, the executors named in the will of Mr Vambeck obtained a grant of probate of the will. It was common ground, on the hearing of this appeal, that the legal title to the lease vested in the executors on the death of Mr Vambeck and even before the grant of probate was obtained. It was also common ground that the effect of section 27(5)(a) of the Land Registration Act 2002 was that the vesting of legal title to the lease in the executors on the death of the testator occurred even though the lease was registered at the Land Registry and even though the executors did not become registered as the proprietor of the lease.
On 6 April 2016, the executors executed a transfer of the lease by completing Form TR1 in favour of the Appellant, Ms Villarosa. Ms Villarosa paid the executors £690,000 for the transfer of the lease. It was common ground that the execution of the TR1 did not have the effect of vesting legal title to the lease in Ms Villarosa. It was accepted that, pursuant to section 27(2)(a) of the Land Registration Act 2002, the transfer required to be completed by registration and by virtue of section 27(1) of that Act, the transfer would not operate at law until the relevant registration requirements were met and those requirements were that the transferee be entered in the register as the proprietor of the lease: see schedule 2, para. 2 to the Land Registration Act 2002.
On 6 June 2016, the solicitor for the executors served on Mr Ryan a notice (or a purported notice) under section 42 of the 1993 Act. The notice contained the following statements:
“3. The Executors were granted probate on 27 April 2010. Accordingly, the Executors are entitled to, and do, serve this notice in exercise of their right to claim a lease extension under the 1993 Act on the basis that they have been the qualifying tenant of the Flat for the whole of the two year period preceding its service, namely, at all times since they were granted probate with the result that, by operation of law, the legal title to the Existing Lease then became vested in them without the need for the registration of the disposition at HM Land Registry (as need be section 27(5)(a) of the Land Registration Act 2001 and section 1(1) of the Administration of Justice Act 1925 shall be relied on on point).
4. As said, the Executors have been the qualifying tenant (within the meaning of and for the purposes of the 1993 Act) of the Flat for the whole of the period of two years immediately preceding the giving of this notice. Accordingly, the Executors are entitled to be granted a lease extension that is claimed under the 1993 Act.”
On 7 or 8 June 2016, the executors assigned (or purported to assign) to Ms Villarosa the benefit of the section 42 notice. The assignment expressly provided that the assignment of the rights and obligations of the tenant arising from the notice should be conditional upon and contemporaneous with the vesting of the legal title to the lease in Ms Villarosa upon the perfection by registration at HM Land Registry of the assignment of the residue of the term of years created by the lease.
On 27 June 2016, Ms Villarosa applied to the Land Registry to be registered as proprietor in relation to the term of the lease under title number NGL686916. In due course, she was duly registered as proprietor and in accordance with section 74 of the Land Registration Act 2002, the effective date of the registration was the date of her application for registration.
On 25 July 2016, the solicitors for Mr Ryan served on the executors and on Ms Villarosa a notice pursuant to section 45 of the 1993 Act. The section 45 counter-notice did not admit the claim pursuant to section 42 of the 1993 Act. The grounds relied upon for this non-admission included the contention that the purported section 42 notice had been given by the personal representatives of a deceased tenant more than two years after the personal representatives had obtained a grant of probate so that the notice was invalidated by section 42(4A) of the 1993 Act and the further contention that the lease had been assigned without the benefit of the section 42 notice which was therefore deemed to have been withdrawn pursuant to section 43(3) of the 1993 Act.
On 19 September 2016, Mr Ryan issued a claim form in the county court claiming declaratory relief pursuant to section 46 of the 1993 Act to the effect that the purported section 42 notice was invalid (as a result of section 42(4A) of the 1993 Act) or was deemed to have been withdrawn (pursuant to section 43(3) of the 1993 Act).
The claim was tried by the Recorder in October 2017 and there was a further hearing before her on 22 January 2018. In her judgment, the Recorder found in favour of Mr Ryan on the first issue. Although this finding meant that it was not strictly necessary to deal with the second issue, the Recorder helpfully did so and held that that she would have decided the second issue in favour of Ms Villarosa. The Recorder made a declaration that the executors had no right under Chapter II of Part I of the 1993 Act to acquire a new lease of the flat on the date on which they gave the purported section 42 notice. The Recorder gave Ms Villarosa permission to appeal and further ordered that if Ms Villarosa did appeal, Mr Ryan should have permission to appeal so as to seek a declaration that any valid section 42 notice was deemed to have been withdrawn pursuant to section 43(3) of the 1993 Act.
Ms Villarosa duly appealed against the declaration made by the Recorder in relation to the first issue and Mr Ryan has served a Respondent's Notice which challenges the Recorder's decision on the second issue.
The first issue: relevant background
As will be seen, the first issue raises a question of interpretation of section 132 of the 2002 Act, which amended the 1993 Act, by introducing into the 1993 Act section 39(3A) and section 42(4A). Before setting out these statutory provisions, it is relevant to refer to the background to the amendments made by the 2002 Act in this and in other respects.
There are three statutory codes which are potentially relevant when considering the amendments made by the 2002 Act. The first code was created by the Leasehold Reform Act 1967 (“the 1967 Act”) which provided for enfranchisement and extension of leases of houses. The second code was created by Chapter I of Part I of the 1993 Act; this code provided for collective enfranchisement by tenants of flats. The third code was created by Chapter II of Part I of the 1993 Act; this code provided for the individual right of a tenant of a flat to acquire a new lease.
Before the amendments made to it by the 2002 Act, section 1 of the 1967 Act, when laying down the circumstances in which a tenant of a leasehold house could seek to acquire the freehold or an extended lease of the house, imposed a requirement that the tenant had occupied the house as his residence for a period in the past: see, in particular, section 1(1)(b) and 1(2) of the 1967 Act.
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