Jones v Wrotham Park Settled Estates
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ORR,LORD JUSTICE GOFF,LORD JUSTICE STEPHENSON |
| Judgment Date | 26 January 1978 |
| Judgment citation (vLex) | [1978] EWCA Civ J0126-1 |
| Docket Number | No. LR/116/1975 LAT 15 |
| Court | Court of Appeal (Civil Division) |
| Date | 26 January 1978 |
[1978] EWCA Civ J0126-1
In The Supreme Court of Judicature
Court of Appeal
Appeal from the Lands Tribunal
Lord Justice Stephenson
Lord Justice Orr
and
Lord Justice Goff
MR. N.T. HAGUE (instructed by Messrs. Andrew Rountree) appeared on behalf of the Tenant (Appellant).
MR. T.M.E.B. ETHERTON (instructed by Messrs Farrer & Co) appeared on behalf of the Reversioner (1st Respondent).
MR. E.G. MUGEE (instructed by Messrs Boodle Hatfield & Co) appeared on behalf of the Freeholder (2nd Respondent).
( Reserved)
This is an appeal by the lessee of a house, 45 Wellesley Crescent, Potters Bar, against a decision of the Lands Tribunal (Mr. V.G. Wellings) on 15th October 1976 whereby it was determined, on a reference to the Tribunal under Section 21 of the Leasehold Reform Act 1967 (which I will call 'the Act'), that the price payable by the lessee on the exercise of her rights under the Act to acquire the ownership of the premises is, in respect of the freehold estate in the premises £4,000, but that in respect of a superior lease of the premises, which I shall call "the concurrent lease", no sum is payable.
The facts of the case can be shortly stated. On 2nd October 1962, a company named Dugdale Hill Estates Company Limited leased the premises to the appellant, Mrs. Jones, and her husband who has since died, at a yearly rent of £15 for a term of 87 years from 25th December 1961 (and therefore expiring in December 2048), and by a leaseholder's notice under the Act, dated 5th October 1973, but not served until 8th October, notice was given in the names of Mr. and Mrs. Jones to the second respondents, Wentworth Securities Company Limited, who had acquired the freehold title from Dugdale, of their desire to acquire the freehold. It is common ground that had the matter rested on these facts the sum payable for the freehold would have been £300, but on 6th October 1973, between the date of the tenant's notice and the date of its service, the landlords, Wentworth, interposed between their freehold and the lease to Mr. and Mrs. Jones the concurrent lease to which I have earlier referred, being a lease of the premises to Wrotham Park Estate Company, since renamed Wrotham Park Settled Estates and the first respondents in this appeal (and whom I shall call "Wrotham"), for a term of 300 years from 25th December 1970, subject to and with the benefit of the lease to Mr. and Mrs. Jones. We have been told, and it is not in dispute, that a large number of similar leases were on or about the same date granted by Wentworth to Wrotham in respect of some 100 other houses in the same locality; that the tenants were informed of what was being done; and that Want worth and Wrotham are connected companies having at least one commondirector. All these leases granted to Wrotham a term of 300 years from the 25th December 1970, subject to and with the benefit of the pre-existing leases, the rents payable under the concurrent leases being, by paragraph 1 of the 4th Schedule to each lease, a peppercorn (if demanded) until 23th December 2048 (the date of expiry of the Jones's and the other original leases), and thereafter, by paragraphs 2 and 3 of the same Schedule, rack rents to be determined by an arbitrator for the periods from 23th December 2048 to 23th December 2098, and from the latter date until the end of the term; such rack rents to be based on values at the commencement of each period. Paragraph 5 which is the crucial provision for the purpose of the present appeal, and paragraph 6 of the same schedule provided as follows:
(5) If and so often as a sub-lease (not being a tenancy from year to year or any lesser interest) is granted by the Tenant of the whole of the Premises the annual rent payable hereunder shall for the period beginning with the commencement of the term granted by the sub-lease and ending with the termination thereof (however the same determines and if the term is extended by virtue of any enactment then ending with the termination of the term so extended) be (in lieu of the foregoing rents) an amount equal to the best yearly rent for which the Premises could be let in the open market at the commencement of such terms with vacant possession free from all incumbrances (including the existing lease) for a term equal to the term granted by the sub-lease such amount to be ascertained (in default of agreement) by arbitration as aforesaid.
(6) PROVIDED ALWAYS that if (whether by virtue of the provisions of Paragraph (3) of this Schedule or otherwise) the yearly rent which would (apart from this paragraph (6) be for the time being payable hereunder shall be more than the yearly rent reserved by any sub-lease granted by the Tenant (whether in pursuance of the provisions of the Leasehold Reform Act 1967 or any attachment or re-enactment thereof or otherwise howsoever) then the yearly rent payable hereunder under paragraphs (2) and (3) of this Schedule shall be reduced to a peppercorn during a period (hereafter called 'a rent free period') from the actual termination of the term of such sub-lease (howsoever the same shall determine and if the term shall be extended by Statute then from the termination of the term as so extended) on the 25th December 2048 or the expiration of any rent free period referably to any earlier sub-lease (whichever shall be the later date) until the expirationof the term hereby granted (whichever shall last occur)".
Before turning to the proceedings before the Lands Tribunal it will be convenient to refer to the relevant provisions of the Leasehold Reform Act 19671 which may be summarised as follows.
Section 1 of the Act provides that Fart 1 of the Act shall have effect to confer on a tenant of a leasehold house, occupying the house as his residence, a right to acquire on fair terms the freehold or extended lease of the house and premises where (a) his tenancy is a long tenancy at a low rent and the rateable value of the house and premises is (if outside London) not more than £200, and (b) he has, at the time when he gives notice of his desire to assert this right, occupied the house under a long tenancy, at a low rent, and as his residence, for a specified time. It is not in dispute that all these conditions were satisfied in the present case and it is unnecessary to make any further reference to them.
Section 8(1) provides that where a tenant of a house has under Part I of the Act a right to acquire the freehold and gives to the landlord written notice of his desire to have the freehold, then except as provided in Part I of the Act, the landlord shall be bound to make to the tenant and the tenant to accept (at the price and on the conditions so provided) a grant of the house for an estate in fee simple absolute subject to the tenancy and to tenants' incumbrances, but otherwise free from incumbrances.
Section 9(1) provides that the price payable for a house and premises on a conveyance under Section 8 shall be the amount which at the relevant time the house and premises, if sold in the open market by a willing seller … might be expected to realise on the following assumptions:
"(a) on the assumption that the vendor was selling for an estate in fee simple, subject to the tenancy but on the assumption that this Part of this Act conferred no right to acquire the freehold; and if the tenancy has not been extended under this Part of this Act, on the assumption that (subject to the landlord's rights under Section 17 below) it was to be so extended: …"
Section 14(1) provides that where the tenant of a househas under Part I of the Act a right to an extended lease and gives to the landlord written notice of his desire to have it, then except as provided by Part I of the Act the landlord shall be bound to grant to the tenant, and the tenant to accept, in substitution for the existing tenancy, a new tenancy of the house and premises for a term expiring 50 years after the term date of the existing tenancy, and Section 15(2) provides that the rent payable under such a new tenancy is to be a ground rent in the sense that it shall be the letting value of the site, without including anything for the value of buildings on the site, for permitted uses to which the house and premises have been put during the existing tenancy, and that such rent may, if the landlord so requires, be adjusted on the expiry of 25 of the 50 years to accord with letting values then current.
Section 23(1) provides as follows:
"Except as provided by this section, any agreement relating to a tenancy (whether contained in the instrument creating the tenancy or not and whether made before the creation of the tenancy or not) shall be void in so far as it purports to exclude or modify any right to acquire the freehold or an extended lease or right to compensation under this Part of, this Act, or provides for the termination or surrender of the tenancy in the event of a tenant acquiring or claiming any such right or for the imposition of any penalty or disability on the tenant in that event".
Schedule I to the Act, entitled "Enfranchisement or Extension by Sub-Tenants" includes the following provisions relevant to the present case:
1(1) Where a person (in this Schedule referred to as 'the claimant') gives notice of his desire to have the freehold or an extended lease of a house and premises under Part I of this Act, and does so in respect of a sub-tenancy (in this Schedule referred to as 'the tenancy in possession'), then except as otherwise provided by this Schedule -
(a) the rights and obligations of the landlord under Part I of this Act shall, so far as their interests are affected, be rights and obligations respectively of...
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