Nathan R Jones v Roundlistic Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Underhill,Sir Andrew McFarlane P,Lord Justice Singh |
| Judgment Date | 19 October 2018 |
| Neutral Citation | [2018] EWCA Civ 2284 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: C3/2016/4072 |
| Date | 19 October 2018 |
[2018] EWCA Civ 2284
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL (LANDS CHAMBER)
His Honour Judge Huskinson
[2016] UKUT 325 (LC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Sir Andrew McFarlane
(President of the Family Division)
Lord Justice Underhill
(Vice President of the Court of Appeal (Civil Division))
and
Lord Justice Singh
Case No: C3/2016/4072
Mr David Grant and Ms Elizabeth Grace (instructed through the Bar Pro Bono Unit) for the Appellants
Mr Henry Webb (instructed by Colman Coyle Ltd) for the Respondent
Hearing dates: 26 th June 2018
This appeal concerns the applicability of the Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCR”) in circumstances where the contract concerned is a domestic lease granted as an extension to an earlier lease under the provisions of the Leasehold Reform, Housing and Urban Development Act 1993 (“LRHUDA 1993”).
The appeal, which is a second appeal, is from a decision of the Upper Tribunal (Lands Chamber) [HHJ Huskinson] handed down on 11 May 2016, and is brought by the lessees of 22 St Ann's Road, London SW 13. The property at 22 St Ann's Road is divided into two maisonettes; number 22 is the lower maisonette and number 22A occupies the upper floors. Paragraph 4 of the First Schedule (“paragraph 4”) to the Appellants' lease is in the following terms:
“4. Not to use the premises hereby demised or permit the same to be used for any purpose whatsoever other than a single private dwelling house in the occupation of the Lessee and his family.”
On 7 April 2015 the Appellants let their premises to a tenant for a period of 12 months and the tenant went into occupation. In consequence the lessor, Roundlistic Limited, made an application to the First-tier Tribunal (“FtT”) for a determination under the Commonhold and Leasehold Reform Act 2002, s168(4) that the Appellants had breached the terms of their lease.
The Appellants' case before the FtT included an assertion that paragraph 4 was an “unfair term” within the meaning of the UTCCR and that it consequently was not binding upon them. On that point the FtT concluded that paragraph 4 was, indeed, an “unfair term” and, by virtue of UTCCR, reg 8, was not binding on the Appellants. Roundlistic Ltd successfully appealed to the Upper Tribunal on the UTCCR issue with the result that the UT judge (HHJ Huskinson) held that paragraph 4 was not rendered invalid by the UTCCR with the consequence, in the light of other determinations made by the FtT and UT which are not relevant to this appeal, that, in accordance with the Commonhold and Leasehold Reform Act 2002, S168(4), a breach of paragraph 4 of the lease was occasioned by the grant of the shorthold tenancy of the lower maisonette in April 2015. It is against that determination that the Appellants now appeal to this court, permission for a 2 nd appeal having been granted.
Factual Background
The factual background is summarised as follows in the UT judgment (neutral citation [2016] UKUT 325 (LC)) where the ‘appellant’ is Roundlistic (Respondent to this appeal) and the ‘respondents’ are the current Appellants:
“11. The property of which the lower maisonette forms part is a building known as 22–22A St Ann's Road, London SW13 and comprises two maisonettes known as 22 and 22A.
12. By a lease dated 8 September 1978 Invincible Properties Limited as lessor demised to Michael Benjamin Yahuda as lessee the lower maisonette for a term of 125 years at the rents and upon the terms and conditions therein contained. The first recital to the lease made clear the nature of the building and how it contained the two maisonettes. The second recital was in the following terms:
“(2) The Lessor has previously granted a lease of or intends hereafter to grant a lease similar in length and term to this lease of the premises in the Mansion other than the…”
Premises hereby demised and has in such lease imposed or intends in such lease to impose the restrictions set forth in the First Schedule hereto and covenants and stipulations similar to those contained in Clauses 2 3 4 and 5 hereof to the intent that the Lessee for the time being of any parts of the Mansion may be able to enforce the observance of the said covenants and stipulations by the lessee of the reminder thereof.”
13. Clause 2 of the lease provided as follows: “2. The Lessee hereby covenants with the Lessor and with and for the benefit of the owner and lessee from time to time during the currency of the term hereby granted of the upper maisonette that the Lessee and persons deriving title under him will at all times hereafter duly perform and observe all and singular the restrictive and other covenants and stipulations mentioned in the First Schedule hereto.” Accordingly the lessee thereby gave the covenant in paragraph 4 of the First Schedule being the covenant referred to in paragraph 3 above.
14. By clause 6(b) the lessor covenanted with the lessee as follows: “6(b) that the Lessor will require the persons to whom it shall hereafter transfer or grant a lease of the other premises comprised in the Mansion to covenant to observe the restrictions set forth in the First Schedule hereto and to enter into covenants and stipulations similar to those contained in Clauses 3 4 and 5 hereof and until the Lessor so transfers or grants such a lease as aforesaid the Lessor will nevertheless contribute the requisite amounts over and above those contributed by the Lessee hereunder towards the costs and expenses involved under Clause [4] hereof.”
15. The second schedule made provision for the rights and privileges granted to the lessee and these included in paragraph 5 “the benefit of the restrictions contained in the lease of the remainder of the Mansion granted or to be granted.”
16. It appears clear that by 26 August 1980 no long lease had yet been granted of the upper maisonette. By a deed dated 26 August 1980 between the same parties as the parties to the 1978 lease it was recited that the deed was supplemental to the lease and that the parties were desirous of adding to the terms of the lease in the manner there appearing. Clause 1 of the deed provided as follows: “The Lessor covenants with the Lessee and his successors in title (a) that any future lease of the Upper Maisonette granted for a term certain exceeding twenty one years will be in similar form as the Lease and contain inter alia covenants on the part of the Lessee to perform and observe covenants and stipulations similar to those contained in Clauses 2, 3 4 & 5 of the Lease and (b) that until the Upper Maisonette is let on a lease as aforesaid the Lessor will repair maintain uphold and keep the Upper Maisonette so as to afford all necessary support shelter protection and access to the Lower Maisonette and that (if so required by the Lessee) the Lessor will so far as is possible enforce against the occupier of the Upper Maisonette the restrictions and stipulations similar to those contained in the First Schedule to the Lease entered into by the occupier of the Upper [sic] Maisonette on 6 the Lessee indemnifying the Lessor against all costs and expenses in respect of such enforcement (including in the case of any litigious proceedings the costs and expenses incurred as between a Solicitor and his client) and first providing such security in respect of costs and expenses as the Lessor may reasonably require”.
17. There appears to be little or no evidence as to what was the state of occupation of the upper maisonette from August 1980 until the grant of the extension lease in June 2012. However the FtT proceeded on a basis, which was not suggested by either party to be inaccurate (and which I adopt) that no long lease was granted of the upper maisonette at any stage and that the occupation of the upper maisonette was either by way of an officer of the lessor for the time being occupying for his/her own benefit or by the lessor granting tenancies including assured shorthold tenancies to occupational tenants.
18. In due course in 2012 the then lessee, namely Ms Scott, served the relevant notice under section 42 of the 1993 Act requiring the grant of a lease extension. The appellant was by this date the owner of the freehold of the building and accepted that Ms Scott was entitled to the grant of an extension. In the result the new lease was granted on 27 June 2012 for a term from 8 September 1978 expiring on 8 September 2188 (in lieu of the term set out in the existing 1978 lease) and at a rent of a peppercorn. The new lease did not make reference to the 1980 deed. The new lease was expressed to be made upon the same terms and subject to the same covenants conditions and stipulations in all respects as those contained in the existing lease save as to the rent and the term of years granted and save as modified therein. The new lease stated that it was to take effect as if such terms covenants etc were repeated in the new lease in full but with such modifications as were made in the new lease. The new lease in clause 6 provided: “No long lease created immediately or derivatively by way of sub-demise under the term hereby granted shall confer on the sub-tenant as against the Landlord any right under Chapter II of Part 1 of the Act to acquire a new lease.”
19. The new lease was registered at the Land Registry. In due course the respondents took an assignment of the new lease and became the registered proprietors thereof. It may be noted that the official copy of the register of title of the new lease included in paragraph 3 of Part A: Property Register the following text: “(20.07.2012) The Lease prohibits or restricts alienation.”
20. The respondents became registered with title to the lease on 2 October 2013. They purchased from Ms Scott. During their negotiations...
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