Lease renewal — Notice — Third party — Respondent tenant serving notice on appellant — Claim for new 90-year tenancy — Appellant contending notice invalid for failure to serve on appropriate persons — Meaning of third party – Whether respondent’s failures invalidating notice — Sections 40 and 42 of and Schedule 11 to Leasehold Reform, Housing and Urban Development Act 1993 — Appeal dismissed
The appellant trust was the freehold owner of a flat in London SW1. The flat was subject to a headlease in favour of C Ltd. The headlease was subject to an underlease held by the respondent, for the same term less one day. The original underlessee had taken the underlease pursuant to a contract between the then landlord and E. E had agreed prior to the underlease to assign the benefit of it, and had accordingly been named as a party to the underlease.
The respondent served notice upon the trust, pursuant to section 42 of the Leasehold Reform, Housing and Urban Development Act 1993, of its intention to claim a new 90-year tenancy under section 39 of the Act. The trust applied for a declaration that the notice was invalid, since it had not been served, as required by section 42(2)(b) and (a) of the Act respectively, on: (i) E, as a third party to the underlease; or (ii) C Ltd, the landlord as defined in section 40. The judge found that E was not a third party within the meaning of the Act. He further held that since the trust fell within the definition of “any other landlord” in para 2 of Schedule 11 to the Act, the notice given to it was valid, notwithstanding the respondent’s failure to comply with the additional para 2 requirement, applicable in such circumstances, to serve a copy on C Ltd, as a person known to be the “competent landlord”. The trust appealed.
Held: The appeal was dismissed.
1. Tenants were required to give notice to third parties under section 42(2)(b) because, under section 57(9), such persons would be parties to the new lease, and their rights and obligations in relation to the tenant would continue during the early years of the lease. In the instant case, however, E was a party only in the sense of having executed the deed granting the underlease. Thereafter, he had no further interest in the underlease. The word “lease” was used to describe the interest in land, not merely the document creating it. E was not a party to the underlease in that sense. Accordingly, the respondent had not been obliged to serve notice upon him: Keepers and Governors of John Lyon Grammar School v Secchi [1999] 3 EGLR 49 distinguished.
2. A failure to give notice to the landlord as defined in section 40, in breach of section 42(2)(a), did not of itself invalidate a notice, so long as it was valid under the provisions of Schedule 11. Although the respondent had failed to comply with the requirements of para 2 of Schedule 11, by not serving a copy of the notice on a person known to be the “competent landlord”, para 4, which set out the consequences of such failure, did not impose the penalty of invalidity. Under para 4(1), such a failure would render the notice invalid only if the relevant landlord had previously notified the tenant of his interest in the property in response to a section 41 enquiry. Where that was not so, as in the instant case, para 4(2) applied, and that paragraph did no more than create a liability to compensate any loss occasioned by the tenant’s failure.
Kenneth Munro (instructed by CMS Cameron McKenna) represented the claimant; Howard Smith (instructed by Amhurst Brown Colombotti) represented the defendant.
Sally Dobson, barrister
