Leasehold enfranchisement — Leasehold Reform, Housing and Urban Development Act 1993 — New extended lease application — Section 42 notice — Competent landlord failing to serve counternotice — Parties proceeding on basis that sublessor would grant new lease on terms to be determined by leasehold valuation tribunal — Tenant later relying upon Willingale v Globalgrange Ltd [2000] 2 EGLR 55 — Tenant claiming new lease on terms in original section 42 notice — Whether tenant prevented from relying upon failure to serve counternotice by doctrines of estoppel and waiver — Whether waiver of procedural or substantive requirements — Whether waiver going to jurisdiction of court
The claimant tenant held an underlease of a flat from W, the second defendant, for a term expiring on 21 December 2036. W held a headlease for a term expiring on 14 March 2126. The first defendant owned the freehold of the building. On 17 February 1999, the tenant’s solicitor served a notice on the first defendant, under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993, claiming a new extended lease. A copy of the notice was also served on W. The new lease was for a term expiring in December 2126. It was therefore not a lease that W had any power to grant. In the mistaken belief that W was the competent landlord, S, W’s solicitor, which also acted for the first defendant, served a counternotice on behalf of W. The tenant’s solicitor communicated with S, having assumed, because of a miscalculation of the lengths of the leases, that W was the competent landlord. However, in October 1999, the tenant’s solicitor reached her original conviction that the first defendant, and not W, was the competent landlord.
Between October 1999 and May 2001, when the tenant first took the point that the first defendant had failed to serve a counternotice, the parties proceeded on the basis that no point would be taken over this failure and that the tenant would be granted a new lease. The tenant’s then application to the county court was compromised by a consent order referring the resolution of terms of the new lease to the leasehold valuation tribunal. In March 2000, W was granted a lease by the first defendant and thereby became a competent landlord. The parties agreed that this new lease would be assigned to the tenant when terms were determined in the leasehold valuation tribunal, to which applications had been made. The claimant’s application to the county court for a declaration that, since the first defendant had not served any counternotice, the new lease must be granted on the terms of the original section 42 notice, namely at a premium of £40,000 (rather than the £117,000 advanced by the first defendant), was dismissed by the recorder. The tenant appealed, contending that the first defendant could not rely upon waiver, since any waiver went to the jurisdiction of the court.
Held: The appeal was dismissed. The provisions for notices under the 1993 Act can be waived in exactly the same way as defects in notices in the Landlord and Tenant Act 1954. The fact that the consequences of a failure to serve a notice under the two statutes may be different does not change the nature of the requirements of each statute for giving notices or the statutory scheme of each. Under both, the steps are procedural and are not of such a nature that public policy requires that waiver should not be permitted. The requirements of section 45(1) of the 1993 Act, that a counternotice be served by the competent landlord, expressed in mandatory form by that section, is one that can be waived on a purposive construction of the Act. Thus, by agreeing to treat the counternotice by W as valid, as if validly given by the competent landlord (the first defendant), the claimant did waive his right to a counternotice from the first defendant.
The following cases are referred to in this report.
Daejan Properties Ltd v Mahoney [1995] 2 EGLR 75; [1995] 45 EG 128, CA
Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850; [1970] 3 WLR 287; [1970] 2 All ER 871; (1970) 22 P&CR 74, HL
Morrow v Nadeem [1986] 1 WLR 1381; [1987] 1 All ER 237; (1986) 53 P&CR 203; [1986] 2 EGLR 73; 279 EG 1083, CA
Willingale v Globalgrange Ltd; sub nom Willingale v Global Grange Ltd (2000) 80 P&CR 448; [2000] 2 EGLR 55; [2000] 18 EG 152
This was an appeal by the claimant, Mr AK Latifi, from a decision of Mr Recorder Elvidge, sitting in West London County Court, dismissing an application by the claimant for a declaration in proceedings against the first defendant, Colherne Court Freehold Ltd, concerning the Leasehold Reform, Housing and Urban Development Act 1993.
Daniel Lawson (instructed by Woodroffes) appeared for the claimant; Janet Bignell (instructed by Mishcon de Reya) represented the defendants.
Giving judgment, Cook J said:
Introduction
[1] This is an appeal from the decision of Mr Recorder Elvidge, in West London County Court, refusing the claimant a declaration that he was entitled to acquire a new long lease of flat 109 Colherne Court, Old Brompton Road, London SW5, on the terms that he had proposed in the notice he had served under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 (hereafter called the 1993 Act).
Facts
[2] The essential facts are these.
(i) The first defendant, Colherne Court Freehold Ltd (to whom I shall refer as Colherne), leased this flat to the second defendant, Woolf Securities Ltd (to whom I shall refer as Woolf), for a term of 130 years less 10 days from 25 March 1996, so that the lease was due to expire at midnight on 14 March 2126. Woolf had let the flat to the claimant for a term of 65 years less three days from 25 December 1971, so that the underlease was due to expire at midnight on 21 December 2036.
(ii) The claimant wished to use the provisions of the 1993 Act to apply for an extension of the term of the lease, and, provided that he qualified, he would be entitled, under the terms of the 1993 Act, to an additional term expiring 90 years from the expiry of his current lease, in other words, at midnight on 21 December 2126.
(iii) The way in which the 1993 Act works is that such a lease would be granted by the “competent landlord”, which means the most immediate landlord that is in the position to grant a lease of that length. It will be readily appreciated from the dates set out in this judgment that the lease from Colherne to Woolf expired 89.25 years after the expiry of the claimant’s current lease, so that Colherne was, and Woolf was not, the “competent landlord” for the purposes of the 1993 Act.
(iv) The claimant’s solicitor was a Ms Janet Keeley, at Fladgate Fielder, who gave evidence at the trial of her dealings with Mr Jeffrey Stein, the solicitor at Simmons Stein & Co, who was instructed to act, and did act, for both Colherne and Woolf in dealing with the application made by the claimant in respect of a new lease. There was no evidence as to the interrelationship of these two defendants, but there was sufficient community of interest for them to co-operate with one another in relation to the claimant’s application, to instruct Mr Stein, and to seek to resolve problems, when they arose, in co-operation, one with the other, in order to bring about an extension of the lease to the claimant at a premium to be ascertained by the leasehold valuation tribunal.|page:79|
(v) Ms Keeley, upon being instructed by the claimant in January 1999, assessed the length of the leases and rightly concluded that the claimant should give a section 42 notice to Colherne as the competent landlord, while serving a copy on Woolf as an interested party, and on the managing agent also. This was duly done on 17 February 1999, setting out the details prescribed by section 42, including the terms of the extended lease that was proposed by the claimant.
(vi) On 22 February 1999, Woolf acknowledged receipt of the notice and stated that the matter would be referred to its solicitor. On the following day, Simmons Stein acknowledged receipt on behalf of Woolf, and requested that title be deduced and statutory declarations provided to it, these being obligations owed by the claimant to the competent landlord, who was, of course, Colherne and not Woolf. Ms Keeley did not address her mind to this point at the time, and, in any event, Simmons Stein was acting for all three interested parties on the landlords’ side of the fence. She provided the material sought, and, in due course, in response to a request from Simmons Stein, the deposits of 10% of the proposed premium as required by the regulations. She responded to Simmons Stein as if the requests had been made on behalf of the competent landlord, which, of course, they were not.
(vii) At that time, Mr Stein had miscalculated the leases and was working on the basis that Woolf was the competent landlord and therefore, in the time permitted by sections 42 and 45 of the 1993 Act, which expired on 28 April 1999, he served a counternotice on behalf of Woolf on 13 April 1999. That counternotice was expressed to be served by Woolf.
(viii) Ms Keeley acknowledged receipt of the counternotice, and there then followed further correspondence between the respective solicitors, all of which proceeded on the basis that a valid counternotice had been served. Following service of the section 42 notice, up to 28 April 1999, both the claimant and Woolf, through their respective solicitors, were treating Woolf as the competent landlord: Mr Stein because he thought Woolf did have that character and Ms Keeley because, when she reconsidered the matter on 13 April, wrongly miscalculated the terms of the leases and herself concluded that Woolf was the competent landlord.
(ix) It is plain and undisputed that if the error had been pointed out to Mr Stein at any time between 13 and 28 April 1999 he, then acting on behalf of both Colherne and Woolf, would have taken steps to serve a counternotice in the name of Colherne.
(x) The mutual misapprehension formed the basis of the respective solicitors’ dealings until October 1999, when Ms Keeley made an application to the leasehold valuation tribunal, on 7 October, as against Woolf, seeking a determination of the terms of the lease and the premium to be paid for it, since no agreement had been reached by negotiation in the interim and the time limit of six months from service of the counternotice for such an application expired on 13 October 1999.
(xi) Upon receipt of the acknowledgment of the leasehold valuation tribunal of the application against Woolf, Ms Keeley again recalculated the lease terms and reached her original conviction that Colherne was the competent landlord.
(xii) What is plain from the letter of Mr Stein of 14 October 1999 is that the issue was then discussed between Ms Keeley and Mr Stein, as she testified, and that Mr Stein said that Woolf would take no point as to incorrect service on the competent landlord. The letter referred to an agreement reached that the claimant would accept a new lease from Woolf for a shorter term than 90 years, namely expiring on 12 March 2126, rather than 23 December 2126, which Colherne could have given.
(xiii) Ms Keeley was none the less concerned that the leasehold valuation tribunal might not accept an application against a party that was not the competent landlord, so she instituted proceedings in the county court on 18 October 1999, seeking the court’s determination of the terms upon which a new lease should be granted to the claimant on the basis of sections 45 and 49 of the 1993 Act, which provide that where no counternotice is served by the competent landlord, the court may make an order on the terms proposed by the claimant in the section 42 notice. She was thus now conscious that the counternotice had been served by a company that was not the competent landlord, but in making the application to the court on the basis of the absence of the counternotice from the competent landlord, she sought and obtained agreement from Mr Stein on the terms of a consent order to be made by the court.
(xiv) In her accompanying letter to the court, her letter to Mr Stein of 18 November, which refers to a telephone conversation with Mr Stein, a further letter of 25 November, and the enclosures to be found at pp143-156 in the bundle, Ms Keeley made it plain that the intention was, as must have been discussed with Mr Stein for Colherne, to grant a lease to Woolf, so that Woolf could be the proper party to the leasehold valuation tribunal determination of the terms of the lease, and the consent order must therefore be read in that light.
(xv) The consent order made by the court on 19 November 1999 reads as follows:
Upon reading the documents recorded on the court file having been read and by consent it is hereby ordered that
(i) the claimant is entitled to the grant of a new lease under section 42 of Leasehold Reform Housing and Urban Development Act 1993
(ii) the proceedings are transferred to the leasehold valuation tribunal for the terms of the new lease to be determined.
This order, as I have already mentioned, was made by consent in an action between the claimant and Colherne. This agreed order constitutes an agreement between the claimant and Colherne, for whom Mr Stein was also acting, for the grant of a new lease by Colherne or Woolf on terms to be determined by the leasehold valuation tribunal, and implicitly therefore contained an agreement to treat the Woolf counternotice as valid.
(xvi) The letter of 25 November, at p156 in the bundle, from Ms Keeley reinforces this, envisaging the likely extension of Colherne’s lease to Woolf “to simplify matters”. Neither Ms Keeley nor Mr Stein were concerned about the identity of the landlord who was to grant the lease to the claimant, nor the exact length of the 89- to 90-year lease to be granted. The important point was to resolve the terms of the lease that was to be granted to the claimant, by reference to the leasehold valuation tribunal, as necessary.
(xvii) For that purpose, Ms Keeley, for the claimant, and Mr Stein, for both Colherne and Woolf, were treating the counternotice served by Woolf as valid. All three parties who could be affected by it were therefore agreed on this point.
(xviii) On 21 December 1999, Ms Keeley, in response to the leasehold valuation tribunal telling her that the earlier leasehold valuation tribunal application of 7 October could not proceed, as Woolf was not the competent landlord, issued a fresh valuation tribunal application against Colherne, which was, on the claimant’s case, invalid, in the absence of a valid counternotice from Colherne, and out of time, if the counternotice from Woolf was to be treated as valid, as the parties had already agreed to do. In the accompanying letter to Mr Stein, sending copies of her new leasehold valuation tribunal application against Colherne, Ms Keeley asked to be informed about the progress made on the new lease to Woolf “who will no doubt become party to the application once that is resolved”. The letter to the leasehold valuation tribunal withdrew the earlier application against Woolf because it was said to be invalid.
(xix) By exchanges of correspondence in January and February 2000, Mr Stein and Ms Keeley discussed the grant of a new extended lease by Colherne to Woolf and the substitution of Woolf in leasehold valuation tribunal proceedings against Colherne, once that had been done.
(xx) In March 2000, there was agreement between Ms Keeley and Mr Stein as to the registration of the new lease to Woolf, whereby Mr Stein considered that Woolf had become the competent landlord for the grant of any new lease under the 1993 Act. Correspondence from both confirmed, however, that this new lease would be assigned to the claimant following resolution of the terms of the lease to the claimant. Miss Keeley sought, and Mr Stein then agreed to, the joinder of Woolf in the leasehold valuation tribunal proceedings. However, by June |page:80| 2000, it was agreed that Woolf should grant a 90-year lease on the same terms as the new lease granted by Colherne to Woolf, while discussions continued between surveyors as to the premium to be paid, although, by this stage, the claimant was also saying that, because no counternotice had been served by Colherne as competent landlord, section 49(1) of the 1993 Act required that the court should grant a lease on the terms proposed in the claimant’s original section 42 application.
[3] From this, it is plain that: (i) the claimant, by his solicitor, agreed to take no point as to the invalidity of the counternotice and to treat it as fully effective in relation to the claim under section 42, and both Colherne and Woolf accepted this position also; (ii) Colherne was the competent landlord at the time of the original section 42 notice and the 7 October leasehold valuation tribunal application; (iii) by the end of March 2000, the competent landlord for any application to the leasehold valuation tribunal had become Woolf; (iv) the claimant did not mind whether the extended lease was to be granted to him by Colherne or Woolf in real terms; and (v) it was agreed that the leasehold valuation tribunal should determine the remaining issues on premium and lease terms in order for such an extended lease to be granted.
[4] It is against this background that, on 25 May 2001, the claimant first took the point that, in the light of the recent decision in Willingale v Globalgrange Ltd [2000] 2 EGLR 55 no valid counternotice had ever been served by the competent landlord at the time when such counternotice was due, that is by 28 April 1999, and that the claimant was therefore entitled to an extended lease on the terms proposed in his section 42 notice, it not being possible for any waiver of the defect to take place. The inequity of this is immediately obvious, since the effect would be, in line with the decision of the Court of Appeal in Willingale, on a comparable section to section 49, that the court had no discretion not to grant a lease on the terms proposed by the tenant: here, at a premium of some £40,000, as opposed to the figure of approximately £117,000, which, I am told, was the figure put forward by Colherne as the appropriate valuation.
[5] The claimant accepts, for the purposes of this appeal, the finding by the recorder as follows:
The defendant’s case is that invalidity of the counternotice was waived by the conduct of the claimant and his solicitor so that he is estopped from denying that the counter notice is valid… It seems to me clear beyond doubt that the claimant did everything he could to uphold the validity of what he knew by October 1999 to be an invalid counter notice and I so find as a fact.
[6] The claimant, however, maintains, as he did below, that neither waiver nor estoppel can, as a matter of law, assist Colherne here for essentially two reasons. First, the claimant submits that the doctrines of waiver and estoppel may not be invoked to give the court a jurisdiction denied to it by statute, or so as to undermine the statute. Second, the claimant submits that only what can be described as purely procedural requirements, as opposed to jurisdictional requirements, enacted for the sole benefit of one party, may be waived by that party, so that where benefit accrues to others, neither waiver nor estoppel can be invoked. The key decisions upon which the claimant relies on these two points are the decisions of the House of Lords in Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 and the decision of the Court of Appeal in Daejan Properties Ltd v Mahoney [1995] 2 EGLR 75.
[7] In making these arguments Mr Daniel Lawson, for the claimant, points out a number of features in relation to the 1993 Act and the facts of this case that, he says, distinguish this case from others where defects in notices of various kinds, in the context of Landlord and Tenant Act applications, have been found by the courts to have been waived:
(i) There was, here, no counternotice served by the competent landlord at all. This is not, he says, a case where a notice was served that was defective in some particular as against the prescribed form. There was simply no notice at all from Colherne.
(ii) The effect of serving, or not serving, a counternotice in accordance with section 45, by the terms of section 48 and section 49 of the 1993 Act, is to vest jurisdiction in either the leasehold valuation tribunal (if a counternotice is served: see section 48) to determine the matters in dispute for the grant of the new lease, or in the court (if no counternotice is served: see section 49), in order for it to grant a new lease on the terms proposed by the tenant. In this context, the claimant relies upon the comments of May LJ at pp57E-58 of Willingale.
(iii) The effect of section 40(2) the 1993 Act is that the competent landlord has to conduct, on behalf of all other landlords of the premises, whether superior or inferior, any proceedings arising out of a section 42 application by the tenant, and Schedule 11 has provisions that cater for resolving any conflict of interest between them as to the apportioned sums each should receive from the premium paid by the tenant or any disputes in relation to the other terms of the lease, by giving each of them the right to be represented and heard. A conflict of interest is, the claimant says, therefore possible between landlords such as Colherne and Woolf.
[8] The principles relied upon by the claimant in relation to the doctrine of waiver and the facts of the present case are those set in Halsbury’s Laws vol 16 at paras 922 and 962. Para 922 reads, so far as material, as follows:
A person who is entitled to rely on a stipulation, existing for his benefit alone, in a contract or of a statutory provision, may waive it, and allow the contract or transaction to proceed as though the stipulation or provision did not exist. Waiver of this kind depends upon consent; and the fact that the other party has acted on it is sufficient consideration.
Para 962 reads:
Estoppel against Statute. The doctrine of estoppel may not be invoked to render valid a transaction which the legislature has, on grounds of general public policy, enacted to be invalid, or to give the court a jurisdiction which is denied to it by statute, or to oust the court’s statutory jurisdiction under an enactment which precludes the parties from contracting out of its provisions.
[9] The claimant says that what was supposedly waived here was a point that went to the jurisdiction of the leasehold valuation tribunal and was a requirement that was not for the benefit of the claimant alone.
[10] As to the first point of jurisdiction, Mr Lawson, for the claimant, relied upon the House of Lords decision in Kammins, as did Ms Janet Bignell, for the defendants. The claimant drew attention to the passage in the speech of Lord Pearson, at p875F, as the key point. The House of Lords had there to consider the effect of section 29(3) of the Landlord and Tenant Act 1954, which reads:
No application under subsection (1) of section twenty-four of this Act shall be entertained unless it is made not less than two nor more than four months after the giving of the landlord’s notice under section twenty-five of this Act or, as the case may be, after the making of the tenant’s request for a new tenancy.
The application to the court, in that case, was in fact made less than two months after the landlord’s notice.
[11] The key passage, at p875F, reads thus:
Two questions arise viz (1) whether the requirements of section 29(3) are jurisdictional, so that the court has no jurisdiction in any case to entertain an application made prematurely, or whether the requirements are only procedural, so that the landlords have a right to ignore or object to a premature application but can waive their right. (2) If the requirements are only procedural, did the landlords in this case by their conduct waive their right to… object to the premature application?
Lord Morris expressed the point in similar fashion at p861B-C, whereas Lord Diplock and Lord Reid treated the matter simply as one of construction of the statute and the question of whether it prohibited agreement to waive its requirements.
[12] The claimant, by his counsel, said that the decision of the House of Lords, that waiver of the time limit was permissible, was founded upon the conclusion that the time limits were procedural and for the sole benefit of one party, and had the point waived gone to jurisdiction, or benefited others than the waiving party, there would have been no possibility of an effective waiver. Colherne said that the House of Lords decision meant that all the requirements for notice in the 1954 Act were procedural requirements only, and that those of the 1993 Act partook of |page:81| the same character, and that, on the facts of the present case, the point waived was for the benefit of the claimant alone.
[13] The claimant relied upon Daejan, where an estoppel was alleged against landlords who had accepted a non-qualifying person as a statutory tenant, which meant that they could not now contend otherwise, although the person was not, and could not be, such a statutory tenant. Bingham LJ (as he then was) referred to para 962 of Halsbury and continued, at p77D:
It is, I think, true that a party cannot achieve by estoppel what he could not achieve by express agreement to the same effect. A statutory tenancy is, as the name makes clear, a creature of statute and it is of course a personal interest, not strictly an interest in land. Statute provides that such a tenancy arises when a qualifying contractual tenant holds over and may be transmitted either on the death of a statutory tenant by succession to a spouse or other member of the statutory tenant’s family residing with him for the requisite period before his death… or by an agreement satisfying the requirements of para 13 of Part II of Schedule I of the 1977 Act. Neither of the first two situations is applicable here, and it has already been shown that the agreement made did not satisfy the requirements of para 13. Since the appellant could not become a statutory tenant by an agreement not satisfying para 13, the landlords cannot be estopped from denying that the appellant is in law a statutory tenant. Parliament having clearly prescribed the way in which a statutory tenancy can arise or be transmitted, a statutory tenancy cannot arise or be transferred in any other way and the judge quite rightly held that an estoppel cannot have the effect of giving rise to a state of affairs which would indirectly confer on the court a jurisdiction denied by Parliament. Since the appellant did not become a joint statutory tenant by an agreement in the only form sanctioned by Parliament she could not become such by estoppel. So far the judge was quite right.
But have the landlords, by their representation on which the appellant and her mother relied, estopped themselves from denying that the appellant and her mother would be treated by them as if they were joint tenants (and so joint statutory tenants, since a statutory tenancy was the only tenancy in existence at the relevant time)? That seems to me a natural and unstrained construction of what the landlords said, and this construction is not subject to the vice already described because it is implicit in it that the appellant and her mother were not joint statutory tenants but would be treated as if they were.
[14] Bingham LJ accepted that there were difficulties in working out this estoppel in practice, in relation, for example, to permissible rent increases, but he held that this was no bar to the court holding that an estoppel existed. This he did in the following words, at p77M:
the landlords argued that this alleged estoppel would be unworkable in practice. They drew particular attention to the difficulty of registering an increased rent if the appellant was not in law a statutory tenant, and to problems which could arise on succession. I am not, on the facts of this case, clear how any problem could arise on succession. Nor am I sure that the difficulty of assessing an increased rent is necessarily insuperable. But I am prepared to accept that the landlords could face real difficulties in these respects. That does not, however, in my judgment, provide a good reason for relieving the landlords from the effect of a representation which, as I conclude, they made and on which the appellant and her mother relied. To do so would expose the appellant to an even greater injustice. It is accepted that as an assured tenant the appellant would be exposed to the risk of paying a substantially increased rent. That might not matter to the appellant so long as the increase was covered by housing benefit, which the appellant currently receives, but it is clear from regulation 11 of the Housing Benefit (General) Regulations 1987 that housing benefit would not necessarily be increased to cover an increased rent of this flat. This is a risk to which the appellant would not have been exposed had she not, in reliance on the landlords’ representation, rejected the offer made by Westminster City Council in 1991…
I would allow the appeal and declare that the landlords are estopped from denying that the appellant is entitled to be treated by them and their successors in title as if she were a statutory tenant of the flat.
[15] Hoffmann LJ found an estoppel existed on a different basis. He said, at p79L:
If the judge had been right in thinking that joint statutory tenants were conceptually impossible and therefore could not come into existence by agreement, then I would agree that they could equally not be brought into existence by estoppel. The true principle, as it seems to me, is that a party cannot be estopped from denying something to which, on the proper construction of the statute, he could not have agreed in the first place. Parties cannot contract out of the Rent Act and therefore cannot be estopped by a representation that the Rent Act will not apply. Likewise, the rent officer only has jurisdiction in respect of regulated tenancies and the parties cannot agree or be estopped from denying that he shall have jurisdiction over a tenancy which is not regulated. But in respect of those matters upon which the parties are at liberty to agree, there seems to be no reason why the ordinary doctrine of estoppel should not prevent a party from denying that he has so agreed. Mr Saxby’s letter was a representation that the landlord recognised Mrs Mahoney and Josephine as joint statutory tenants. That was a state of affairs to which the landlords could under para 13 have lawfully agreed. In my judgment, the representation upon which Josephine acted estops them from denying that they did so.
It is true that the effect of the estoppel is to allow the transfer of the statutory tenancy to take place without the written agreement between outgoing and incoming tenant as required by para 13(1). It seems to me, however, that this is a formality for the protection of the individual parties rather than one imposed in the public interest. The parties are therefore entitled to waive it…
Hoffmann LJ thus recognised that the effect of the estoppel was to create a statutory tenancy where one would not otherwise have existed and thus to confer jurisdiction upon a rent tribunal, but because the parties could have agreed this, had they gone through the proper formalities under para 13 of the regulations, this did not matter. Saville LJ, it appears, agreed with both judgments.
[16] The claimant also relied upon a passage in Woodfall’s Law of Landlord and Tenant in the October 2000 edition, at para 22.070.01, which reads as follows:
It is not possible, however, for the parties, by waiver or agreement, to confer upon the court a jurisdiction which it does not have. Accordingly, while in some circumstances a landlord may be taken to have waived his right to object to a late application by the tenant, he cannot by waiver validate an application by someone who is no longer the tenant. Thus where the application is not made until after the date of termination specified in the section 25 notice the applicant no longer has the status of tenant, and consequently the application will be bad.
[17] The claimant asserts that the requirement for the competent landlord to serve a counternotice is not a provision for the sole benefit of the tenant. The claimant says that it operates to benefit both the landlord itself and other landlords, who can then make submissions as to whether, and upon what terms, the extended lease should be granted. This point is, however, entirely met by two factors: (i) as appears from the above summary of facts, all the interested parties, Colherne, Woolf and the claimants agreed to treat the Woolf counternotice as validly served, as if served by the competent landlord; (ii) more importantly, the point waived by the claimant was the point as to invalidity of the counternotice, a point from which the claimant alone stood to benefit. As at 28 April 1999, which was the last day for the service of the counternotice, no party other than the claimant stood to benefit from arguing that the counternotice was invalid. It is the waiver of the invalidity of that notice that counts in the context. Twenty-eighth April 1999 is the relevant date, since the claimant represented, by conduct, that the counternotice was validly given, and this was relied upon by Mr Stein, who acted for Colherne and Woolf, and acted to Colherne’s detriment in not serving a counternotice on behalf of Colherne before the expiry of the relevant time limit. Had, of course, that been done, this would have obviated all the difficulties that have since arisen.
[18] The sole issue, therefore, as to the validity of the waiver by the claimant, is whether the waiver is invalid as a waiver of a requirement that goes to the court’s jurisdiction, or a waiver of a procedural right, or awaiver that, for some other reason, is one that cannot be countenanced as a matter of law.
[19] I was taken to a series of passages in Kammins, and also through the structure of the 1993 Act as compared with the Landlord and Tenant Act 1954, which was under discussion in the House of Lords decision. The parallels between the two are very close indeed. The scheme of defining the landlord in section 44 of the Landlord and Tenant Act (compared to section 40(1) of the 1993 Act), and providing for a series of notices and counternotices and applications to the court (see sections 23 to 29 of the Landlord and Tenant Act, as compared to sections 41 to |page:82| 49 of the 1993 Act), and the earlier provisions of the 1993 Act, dealing with collective enfranchisement at sections 21 to 25 of that Act, closely mirror one another. There can be little doubt that the 1993 Act scheme was based upon that of the 1954 Act.
[20] What is plain from a study of the 1954 Act and from the decision of the House of Lords in Kammins is that the 1954 Act is concerned with providing a framework for the resolution of such disputes as to the grant of new business leases as cannot be agreed between the parties. This is plain not only from section 28 but also from the speeches of the House of Lords. At every stage of the process, there is room for agreement, and the Act is there to facilitate agreement, dealing with the private rights of the parties in the absence of such agreement. The time limits are set out in such a way as to enable agreement to be reached, if at all possible, prior to any application to the court.
[21] The same is true of the 1993 Act. The time limits work in a similar fashion, and an application to the leasehold valuation tribunal is made only by application of either party under section 48, in order to determine the matters remaining in dispute as to the terms of the lease or the premium to be paid for it. If all the terms are agreed, neither the court nor the leasehold valuation tribunal has any part to play, in exactly the same way as under the 1954 Act.
[22] The heading to Chapter II of the 1993 Act is “Individual right of tenant of flat to acquire new lease”. The Act deals, therefore, with personal rights between the tenant and his landlord. The provisions set out steps to be taken by those concerned, and therefore relate to those rights.
[23] In Kammins, Lord Pearson and Lord Reid referred to the equivalent steps in the 1954 Act as “procedure”: see pp857H, pp873F-874B and pp876E-877F. Lord Reid found nothing to indicate that contracting out was forbidden by the Act, rather that the parties were encouraged at every stage to come to an agreement. Lord Morris referred to time limits as “procedure”: see p862E. Lord Diplock, at pp880-881, adopted a purposive approach to the statute in a passage at p880B, from which I will quote extensively:
A conclusion that an exception was intended by Parliament, and what that exception was can only be reached by using the purposive approach. This means answering the questions: What is the subject-matter of Part II of the Landlord and Tenant Act 1954? What object in relation to that subject-matter did Parliament intend to achieve? What part in the achievement of that object was intended to be played by the prohibition in section 29(3)? Would it be inconsistent with achievement of that object if the prohibition were absolute? If so, what exception to or qualification of the prohibition is needed to make it consistent with that object?
The subject-matter of Part II of the Landlord and Tenant Act, 1954, is the mutual rights and the obligations of the parties to tenancies of business premises. Its object is to give to one of those parties, the tenant, a right enforceable by him against the other party, his landlord, to the grant of a new lease of the premises when his current lease comes to an end. It contains consequential provisions for the continuation of the existing tenancy with the object of enabling this right to be exercised by the tenant effectively, and provides for the enforcement of the right by the High Court or county court on application by the tenant.
The Act contemplates that the right to a new lease which it confers upon the tenant may be given effect to by agreement between the parties (section 28). An application to the court to enforce it is needed only (i) where the landlord opposes the grant of a new lease to the tenant, which it can do only on the ground specified in section 30; or (ii) where the landlord, though willing to grant a new lease, does not reach agreement with the tenant as to all its terms; or (iii) where the landlord, although entitled to refuse to grant a new lease, is liable to pay compensation to the tenant under section 37, and he and the tenant do not agree to settle that liability without an order of the court; (see section 38(2)).
The general policy of the Act to encourage the parties to a business tenancy to give effect by agreement to the rights conferred upon the tenant by Part II is again exemplified by the provisions in sections 31 to 35 which require the court to incorporate in the new lease that it orders any terms which the landlord and tenant agree between themselves. By section 36 the landlord and the tenant may agree not to act upon the order after it has been made; and the tenant may require the order to be revoked.
The only express restriction upon agreements between the landlord and tenant is upon those which purport to preclude a tenant from making a request, or an application to the court, for a new tenancy or in certain cases agreements to exclude or reduce compensation under the Act if they are made before the right to compensation has accrued.
In view of the detailed analysis to which sections 25 and 26 have been subjected to by your Lordships, I will not rehearse their provisions for the procedure and the time-tables to be followed by landlords who want to terminate tenancies and tenants who want new ones. Suffice it to say that there are several provisions which say that the landlord’s or a tenant’s notice, as the case may be, “shall not have effect unless” certain specified requirements as to its contents or as to the time at which it is given are fulfilled. These requirements are clearly imposed solely for the benefit of that party to whom the notice is given, whether he be the landlord or tenant.
It would seem inconsistent with the intention to encourage agreement between the parties disclosed in the other sections of Part II of the Act to attribute to Parliament an intention to preclude the parties to a tenancy from agreeing that a notice given by one of them should have effect notwithstanding the specified requirements were not fulfilled. And apart from this distinctive feature of this particular statute, where in any Act which merely regulates the rights and obligation of private parties inter se, requirements to be complied with by one of those parties are imposed for the sole benefit of the other, it would be inconsistent with their purpose if the party intended to be benefited were not entitled to dispense with the other party’s compliance in circumstances where it was in his own interest to do so.
Upon the purposive approach to statutory construction this is the reason why in a statute of this character a procedural requirement imposed for the benefit or protection of one party alone is construed as subject to the implied exception that it can be “waived” by the party for whose benefit it is imposed even though the statute states the requirement in unqualified and unequivocal words. In this context, “waive” means the party has chosen not to rely upon the non-compliance of the other party with the requirement or has disentitled himself from relying upon it either by agreeing with the other party not to do so or because he has so conducted himself that it would not be fair to allow him to rely upon the non-compliance.
[24] There was, therefore, both a characterisation by some members of the House of Lords of the Landlord and Tenant Act system of notices as procedural as well as the time limits themselves, and a view expressed by others that there was no reason against contracting out of the statute. There is no discernible public policy against waiving any requirement in that scheme that operates in favour of the waiving party, as Lord Diplock held.
[25] All of this applies with equal force to the 1993 Act, as the passage in May LJ’s judgment in Willingale, at p57E, shows, by referring to the procedural timetable for Part I of the 1993 Act and the equivalent procedures under Part I and Part II of the 1954 Act, all of which resemble Part II of the 1993 Act, with which the court is concerned today.
[26] I have no difficulty in saying that the provisions for notices under the 1993 Act can be waived in exactly the same way as defects in notices in the 1954 Act, as many cases in relation to 1954 Act notices have held. These are summarised in Woodfall at para 22.069, which reads as follows:
Estoppel and waiver.
It has been said that a representation about the legal position — about the legal effect of a document, for instance — can give rise to an estoppel but the representation must be clear and unequivocal. It must be intended to be acted on, and in fact acted on. Thus, a landlord or tenant who accepts the other’s section 26 or 25 notice, which is invalid by reason of some deficiency in form, contents or service, as being valid and persuades the other to take (or dissuades him from taking) further steps under the Act to his detriment, may find himself estopped from setting up the invalidity of the notice in question.
The kinds of defect in a notice or request which may be waived include the fact that the notice was unsigned; the fact that it was addressed to one only of joint tenants; the fact that the landlord was wrongly named; the statement of an incorrect termination date; the use of the wrong prescribed form. It would appear therefore that in principle there is no kind of defect in a notice or request which is incapable of waiver.
It has been held that the service of a counter-notice by a tenant, indicating his unwillingness to give up possession is explicable only as a response to a valid section 25 notice, and hence operates as a waiver of a defect on the face of the notice.|page:83|
[27] Reference is made, in a footnote in Woodfall, to the decision of the Court of Appeal in Morrow v Nadeem [1986] 1 WLR 1381*. This was the case that the recorder held was closest on its facts to the present case, and to which I will revert in a moment.
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* Editor’s note: Also reported at [1986] 2 EGLR 73
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[28] It is said by the claimant’s counsel that, in this case, there was no counternotice from a competent landlord, and that this case therefore falls into a different category from cases where notices have been served that were deficient in one way or another. But in one such case, the “landlord”, as defined in the 1954 Act in much the same way as the competent landlord is defined in section 40 of the 1993 Act, was wrongly named and it was held that this was a defect that could be waived. So a notice given on behalf of someone who was not the true landlord can be treated as if it had been so given.
In Morrow, the Court of Appeal (Nicholls, Slade and Neill LJJ) accepted that the defect in a notice given by a landlord under section 25 of the Landlord and Tenant Act, whereby the landlord was wrongly named in the notice, which meant that the notice was not in the prescribed form, was capable of being waived, while deciding, on the facts of the case, that there was no actual waiver. The effect of the defect was serious, as Lord Nicholls pointed out at p1386C:
what is contemplated is that by the form the tenant will be given the information sufficient to enable him, if he so wishes, to avail himself of his statutory rights by serving the requisite counter-notice on the landlord within two months and thereafter applying to the court for a new tenancy between two or four months after the service of the section 25 notice. To such an application the relevant landlord would be a necessary party… The information needed by the tenant for those purposes will include information as to the identity of the landlord for the purposes of Part II of the Act of 1954 who may not be the same person as the person who granted the tenancy to the tenant, or the person to whom the tenant pays his rent: see section 44 of the Act of 1954.
… In this case the notices did not include the name or address of the competent landlord. What is more, the notices mis-stated the name of the landlord, in that the natural implication to be drawn from language used in these notices was that the landlord was Alfred Danzig for whom Philip Ross & Co were expressed to be acting as solicitors and agents. Accordingly, in my judgment these notices did not comply with the statutory requirements.
[29] At p1390G, Nicholls LJ said:
It was suggested, that on receiving the notices from a person whom she did not know, Dr Morrow should have taken the point about possible invalidity there and then and made this point when serving the counter-notices. On matters involving waiver, or estoppel, or election each case turns on its own particular facts and on the facts of this case I can see no basis upon which Dr Morrow was obliged so to act, so that her failure to do so precluded her from taking the point thereafter.
I should add, finally, that Mr Lightman submitted en passant that the defect in these notices was a defect which in any event was not capable of being waived. I did not accept this. I can see no reason why this particular type of defect should be accorded some particular immunity regarding waiver.
It was thus argued, and the cases cited in argument contain references to, and some citation of, Kammins, that this type of defect could not be waived, but the argument was rejected, however faintly it was put.
Both the other lord justices agreed that the notice was bad but was not waived on the facts, thus accepting implicitly, it would appear, that the defect was capable of waiver.
[30] The difference to which the claimant’s counsel draws attention, between the position under the 1993 Act and the 1954 Act where a defect of this kind is involved, is the effect of serving or not serving a counternotice. Under the 1954 Act, if it is not served in time, later service can be effected and the lateness as a defect waived. So it can under the 1993 Act, as Mr Lawson accepts. But where no counternotice is served under the 1954 Act, it is the same court that would go on to hear the tenant’s application for a new lease under Part II in exactly the same way as it would resolve a dispute if the landlord did serve a counternotice.
Under the 1993 Act, however, the service of a counternotice means that, in accordance with recent notions resolving such disputes, issues as to the terms of the lease would fall to be decided by the leasehold valuation tribunal, whereas if a counternotice was not served, it would be the court that would order a new tenancy on the tenant’s proposed terms. In the light of Willingale, it would have no discretion to change those terms at all if the other requirements for granting a new lease were met.
The fact, however, that the consequences are different does not, in my judgment, change the nature of the requirements of each of the statutes for giving notices, or the statutory scheme of each. Under both the 1954 and the 1993 Acts and both Part I and Part II, the steps are procedural, and are not of such a nature that public policy requires that waiver should not be permitted. Indeed, the whole thrust and spirit of the legislation on a purposive construction is to the contrary. Lord Diplock’s comments in Kammins, at pp880-881, are equally as applicable to the facts here as to the facts in Morrow.
[31] In consequence, I hold that the requirements of section 45(1), that a counternotice be served by the competent landlord, expressed in mandatory form by that section, is one that can be waived on a purposive construction of the Act in exactly the same way as the time limits under the 1954 Act in Kammins, and other defects as set out in Woodfall. Thus, by agreeing to treat the counternotice by Woolf as valid, as if validly given by the competent landlord, Colherne, the claimant did waive his right to a counternotice from Colherne so that the leasehold valuation tribunal proceedings against Colherne can be progressed. As the competent landlord is now Woolf, and it was agreed that it should be joined in the leasehold valuation tribunal proceedings, it must be joined in those proceedings, if that has not already been done. The leasehold valuation tribunal should then proceed to assess the premium if this cannot be agreed between the parties along with those other terms of the new lease where agreement has, as I understand it, already been reached.
I will hear any submissions as to any appropriate orders that I ought to make in the light of those rulings in dismissing the appeal.
Appeal dismissed.